House of Commons, 9 February 1949, Canadian Confederation with Newfoundland



Wednesday, February 9, 1949

The house met at three o'clock.



Mr. Frederic Dorion (Charlevoix-Saguenay): Mr. Speaker, I rise on a question of privilege. I am one of two counsel for Count de Bernonville, a citizen of France who is before the court contesting an order for deportation. It is for this reason that I strongly resent the untrue and unfounded statement made yesterday by the hon. member for Winnipeg North (Mr. Stewart), when the orders of the day were called. He said:
Is the minister aware that this man is a traitor. and that he betrayed our allied soldiers to the gestapo?
Had I not been convinced, not only of this man's innocence, but especially of his assistance to our soldiers during the war, I would not have acted for him. My conviction is based on authentic and true documents which are in my possession. I invite anyone, especially any hon. member of this house, to come to my office and examine those documents if he so wishes.



Mr. Alistair Stewart (Winnipeg North): Mr. Speaker, I have been asked to present to this house, on the same basis as previously, a petition signed by 625,510 Canadians requesting a bill of rights. I now present this petition, although I do not agree with the religious views of the organization which promoted it.


Right Hon. L. S. St. Laurent (Prime Minister): Mr. Speaker, I desire to lay on the table several documents in connection with the protests from organizations in Newfoundland concerning the procedure followed in connection with the union of Newfoundland with Canada. There are two communications addressed to the former prime minister, and the answers which he made thereto. The first communication is dated the 29th of July, 1948, and the answer is dated the 30th of July, 1948. It was a telegram. The other communication is dated the 10th of August, 1948, the answer being dated the 11th of August, 1948.


(Questions answered orally are indicated by an asterisk).
Mr. Hatfield:
1. What amounts were paid out by the agricultural prices support board during the years 1947 and 1948?
2. What quantity of each agricultural product was purchased, showing agent's name?
Mr. McCubbin:
1. Calendar year 1947, $97,286.84; calendar year 1948, $3,961,357.82.
2. 1947—Potatoes: F. W. Pirie Company Ltd., Grand Falls, NB., 11,047,575 1bs.; Geo. E. Full & Sons, Hunter River, P.E.I., 1,496,840 lbs.
1948—Apples: Nova Scotia apple marketing board, 1,694,202 bbls.
Mr. Hatfield:
1. What was the quantity and value or cost of apples in their natural state that were shipped to Brazil by the agricultural prices support board or its agents?
2. What was the quantity and value or cost of apples m processed state and apple juice shipped to Brazil by the agricultural prices support board or its agents?
3. Did the agricultural prices support board make arrangements with the Brazilian importers to accept oranges in payment for the apples or apple products shipped?
4. Were the oranges sold in Canada and how much money was received in the transaction?
5. Who handled the oranges in Canada and at what port were they received?
6. Were the oranges put into storage upon arrival?
Mr. McCubbin:
1. None.
2. None.
3, 4, 5 and 6. Answered by Nos. 1 and 2.
394 Newfoundland HOUSE OF COMMONS
Mr. Cockeram: I do not have to.
Mr. Abbott: I am aware of the special interest which he has in the matter. I shall take his question as notice and see whether I can give him an answer at an early day.
Mr. Cockeram: The minister is always frivolous in his replies to questions.



The house resumed from Tuesday, February 8, consideration in committee of Bill No. 11, to approve the terms of union of Newfoundland with Canada—Mr. St. Laurent— Mr. Golding in the chair.
On section 22—Fisheries.
Right Hon. L. S. St. Laurent (Prime Minister): Mr. Chairman, before proceeding further with this section may I make a brief statement. The information I gave the committee last night about the recommendation I had received as to the distribution of posts of senators for the island of Newfoundland has created some uneasiness there. I said it had been represented to us that there were three main groups of the population, divided according to religious denominations among Anglican, Roman Catholic and adherents of the United church. That has been taken to mean that it would exclude the possibility of anyone not belonging to those three denominations being considered for a Senate appointment. That is not at all what I meant, nor was it the real meaning of the recommendation made to us.
The recommendation made was that there were these three groups, namely the Anglicans, the Roman Catholics, the members of the United church and adherents of other denominations not forming part of the United church. The high commissioner reported that my statement might create a false impression and I feel it is desirable to have any false impression corrected. So I wish to say that those recommendations did comprise in the group described as the United church group the adherents of the United church, and members of other denominations being neither Anglican nor Roman Catholic, and that would include Presbyterians, adherents of the Salvation Army and other denominations.
Mr. Graydon: Do not forget the Baptists.
Mr. St. Laurent: I understand there are a few Baptists there, but that they have not yet established any denominational schools. The information given to me was that there were Anglicans, Roman Catholics, and others, most of whom belonged to the United church. But it was not intended that anyone would be excluded from consideration because of his religious views.
Mr. Knowles: So long as he is a Liberal.
Mr. Gillis: I did not think we would ever reach the point when the House of Commons would discuss appointments to the other place, or anywhere else, on sectarian grounds. However, that is not the point I had in mind when rising.
We are dealing with section 22 of Bill No. 11, dealing with fisheries. I consider the subject matter now under discussion one of great importance to the whole fishing industry of Canada, because the provisions of this bill could affect that industry in the wrong way.
It seems to me that at this time it would be necessary for the Minister of Fisheries to give us a comprehensive statement about the whole industry. For example, according to a press dispatch it was stated that a fisheries treaty was to be signed within a few days. That procedure took place in the United States. I understand eleven countries were represented, that Canada and Newfoundland are part of the set-up, and that this particular treaty deals with research. We are acting together in that field.
In Quebec and the maritime provinces fishing can be considered as one of the basic industries. I notice that section 22(2) states:
Subject to this term, all fisheries laws and all orders, rules, and regulations made thereunder shall continue in force in the province of Newfoundland as if the union had not been made, for a period of five years from the date of union and thereafter until the parliament of Canada otherwise provides, and shall continue to be administered by the Newfoundland fisheries board; and the costs involved in the maintenance of the board and the administration of the fisheries laws shall be borne by the government of Canada.
While I am not sure of the accuracy of my information, I am informed that the fisheries board which regulates marketing in Newfoundland is representative of the fish dealers only, and that the industry is not represented thereon. I am further advised that the commission of government as such has no representatives on the board. If that kind of marketing arrangement is to continue for five years in Newfoundland, I think it is wrong. If my information is incorrect, I would ask the minister to give the correct information. If what I say is the fact, then surely this section should be rewritten.
My greatest concern, and the point about which I wish to be most specific, is the bounty now paid maritime fishermen. This is a fixed amount. If Newfoundland is now to be in— cluded in the bounty arrangement—and it would seem that it is—the result would be a reduction in the amount of money paid to FEBRUARY 9, 1949 Newfoundland 395 Quebec and maritime fishermen. Surely it is time the Fisheries Act was amended to preclude any such results. For the benefit of members of the house, and fishermen generally, I believe an explanation as to the way the bounty was established might be in order. I am aware that most fishermen know very little about it and I confess that I did not myself until a few days ago. I am indebted to the Department of Fisheries for the information that I have received and I think it should be a matter of record.
This bounty to the fishermen is known as the Halifax award. It was established by the treaty of Washington which was entered into in 1871 between the United Kingdom and the United States. Under that treaty United States fishermen were permitted to take fish off the coast of the maritime provinces, Quebec and Newfoundland for a certain term of years. For that privilege the United States paid $5,500,000 to the British government. The British government then paid $1 million of the award to Newfoundland and $4,500,000 to Canada.
The Canadian payment was placed in the consolidated revenue fund and after $500,000 had been deducted as expenses the net amount of $4 million was recognized as the payment received by Canada for the grant of these fisheries concessions. In 1882 parliament made provision for an annual grant of $150,000 for the purposes noted in the act, and that sum was later raised to $160,000. It is from this grant that the annual fishing bounties have since been paid.
That summary is taken from the report of the royal commission on fisheries which sat in 1927, which report goes on to say:
From the House of Commons debates of 1882 when the resolution upon which was founded the legislation of 1882 was passed, it is plain that this annual grant was regarded as the interest upon the amount of the Halifax Award.
As I said in the beginning, the amount of money available for the purposes of paying this annual bounty is now $160,000. Fishing is the largest single industry in Newfoundland, and if under this agreement all the Newfoundland fishermen are to be eligible for payments under that grant, and if no additional money is to be disbursed, it will mean that the grants to Quebec and the maritime fishermen will be cut down.
I suggest that our Fisheries Act should be amended in order that the amount of the grant may be increased so that grants now paid would not be cut down because of the Newfoundland fishermen coming under the provisions. I should like to ask the minister if the governor in council have not the necessary power under the regulations to increase this amount. The regulations are to be found in P.C. 5366 of 1947, section 14 of which reads:
The amount of the bounty to be paid to fishermen and owners of boats and vessels will be fixed from time to time by the governor in council.
I am making these remarks in order to get a definite and specific answer from the minister. The fishing industry is very important to the whole of Canada and at the present time it is facing many difficulties. If we are to bring in another large group of fishermen then I think it is time the Canadian government began to pay more attention to this industry than has been paid in the past.
I want to give some credit to the Minister of Fisheries. He comes from the west coast and when he took office he had not had very much experience. Immediately after being appointed he took his duties quite seriously and made a trip across Canada and today I think he knows a great deal about the industry. I hope the cabinet will have just as serious views in connection with this basic industry as has the minister.
As in practically every industry, a fight is going on now in the fishing industry. It has reached the stage where mechanization is the order of the day. A struggle is going on between the shore fishermen and the trawlers which will have to be settled. I think it is the obligation of the government. to view that particular angle very closely. The fishermen claim that the trawlers are depleting and destroying the industry. That is the assertion that has been made to me and if it is true it is the responsibility of the government to see that the industry is not destroyed.
The best methods will have to be found to perpetuate this industry because it is an important food industry and deserving of much more consideration than it has had in the past. With the bringing in of another large group of fishermen, with the fight that is going on between owners and fish dealers and those engaged in the industry, I think the time is ripe for a thorough examination of the whole question. I should like the minister to answer the questions I have posed.
Mr. Mayhew: Mr. Chairman, I shall not at this time attempt to answer the hon. member for Cape Breton South, but I shall start out by answering the question that was put to me last night by the hon. member for Winnipeg North Centre. I am pleased indeed to have an opportunity to speak briefly about the Newfoundland fisheries.
As all hon. members well know, the fishing industry is the oldest industry on the island. But it is more than that; it is by far the most 396 Newfoundland HOUSE OF COMMONS important industry. lt is the most important, not necessarily because of the annual dollar value of its products but because of the number of people engaged in it directly and indirectly and because of the unique way in which it has affected the whole economy of Newfoundland and even the character of the Newfoundland people.
The hon. member for Winnipeg North Centre was quite right when he suggested that we in Canada might profit from the knowledge and experience of the Newfoundland fishing industry. To my mind, we stand to gain a great deal by coming into association with Newfoundland fishermen, shore workers and management in that industry.
I should like to pay a tribute to these magnificent people of Newfoundland. The Newfoundland fishermen come from a hardy race of men and by their courage and resourcefulness they have built up a long and honourable tradition of life on the sea. From generation to generation they have faced without question the challenge and the hazards of the sea; they have gone out in very small boats and battled the elements; they plied their perilous trade long before the advent of steam and other modern improvements and safeguards. In spite of the many obstacles they have had to overcome—and have overcome—they have forced their way into the markets of the world. They have succeeded, not only because of their initiative and courage but also because of their skill in the methods of processing and because of their attention to the quality of their products.
A comparison of the history of Ontario and Quebec and the history of Newfoundland would perhaps emphasize the contribution that fisheries has made to the heritage of the island. Here in the interior of Canada our forefathers cut down the forests, plowed and cultivated the land and reaped the harvests. Farming became the very backbone of our economy and was the determining factor in our social evolution.
Exactly the same thing occurred in Newfoundland, except that the sea took the place of the land. The harvests of the sea formed the substance of life for Newfoundlanders, and the life of the sea has left its impact on the character and the economy of the people.
The fishing industry is the one industry that has held Newfoundland together over the years. The sturdy fishermen have provided the island with the first line of defence from the very beginning. They are the real Newfoundlanders, and will make real Canadians. We should be proud to welcome these fellow Canadians.
I should like to quote, if I may, from a recent book entitled "Newfoundland", edited by Dr. R. A. MacKay. Dr. MacKay is well known in this city. The passage I wish to read is as follows:
At least as early as the sixteenth century annual fishing voyages began from western Europe, the banks becoming as well known to the fishermen of the west of England, of Spain and Portugal, of Brittany and Normandy, as the Caribbean was to the fighting men of Spain. Proximity to the fisheries ultimately induced permanent settlement in Newfoundland, and determined its distribution about the coasts. The annual fishing voyages ceased with the Napoleonic wars, and the English fishing industry became resident on the island. The local economy which developed was pre-eminently a fishing economy. A merchant class concerned with the export of the fish and the import and distribution of supplies was established on the island, particularly about St. John's, which early became the commercial capital. The whole business life of the island developed around the fishery. Retail merchants branched out to become wholesalers as well as retailers, importers and exporters. insurance brokers and ship owners. bankers, and in more recent times manufacturers. Although conditions have changed greatly within the past half century, the stamp of the fishing industry still marks the economic and social life of the island.
For four centuries, up to 1900, the fishery was the only industry in Newfoundland of any real significance. In the period 1901 to 1905 the value of fishery exports amounted to just over $8 million out of total exports of $9-6 million. Later the pulp and paper industry, and mining, exceeded fishing in the value of exports; but as I intimated before, from the standpoint of the number of people engaged in the three industries, the number in fisheries has remained in first place.
The fishery of Newfoundland has always centred primarily around the dried-codfish trade. Generally speaking, "fish" to Newfoundlanders means "cod". Recently there has been a development in the fresh and frozen trade. This branch of the industry, however, has tended to supplement rather than to supplant the salted fish production. In addition, Newfoundland has important lobster, herring, seal, and whale fisheries.
There is a wide range in the types of dried salted fish produced, and in the requirements of the various foreign markets. Newfoundland ships fish to many markets in Europe and in the western hemisphere. The Mediterranean markets of Portugal, Spain, Italy and Greece have long been the principal markets for Newfoundland codfish. Substantial quantities are also sold in such markets as Brazil, the British West Indies, and other Caribbean countries.
Dried codfish is essentially a cheap source of the protein used in semi-tropical countries, and its keeping qualities give it a decided preference over other protein foods. The fact that markets for dried codfish are, for the most part, in countries in which a large part of the population exists on a very low FEBRUARY 9, 1949 Newfoundland 397 standard of living, renders the industry somewhat susceptible to world economic conditions.
The development of the fishing industry in Newfoundland has not been one of continuous progress. Over the four centuries of its history there have been many ups and downs, and a number of remedies have been applied to bring about recovery. When the world economic depression struck in the early thirties, the economy of Newfoundland was unable to cope with the pressure exerted on it by falling markets for its principal export economy. In the period of 1926 to 1930 the codfishery yielded close to $13 million annually in value of exports, but from 1931 to 1935 the average was cut approximately in half to $6.4 million.
In the face of these conditions, in 1936 the commission of government established the Newfoundland fisheries board, and endowed it with wide powers over the production and marketing of salted codfish. This was a drastic change in tactics made necessary by drastic economic conditions. The board was given authority not usually vested in such an organization in a democratic country; but as I have said, the desperate plight of the fishing industry made such a step imperative.
As world conditions improved, the fishing industry, and indeed the whole economy of the island, began a slow recovery. The value of exports of fishery products, which stood at $6.9 million in 1937, rose to $8.1 million in 1940, and then rose sharply throughout the war to a peak of $33.8 million in 1946. In 1947 the Newfoundland association of fish exporters, NAFEL, was formed by the board. All exports from the island are now controlled by this association.
This has been but a brief survey, Mr. Speaker, of the Newfoundland fisheries. I am sure you would not expect more from me at the present time, although it would be very profitable to anyone to read the many books and articles that can be found in the library.
Before answering the hon. member for Cape Breton South (Mr. Gillis), I should like for a minute to give a brief outline of the method by which the fisheries committee proceeded with its part of the program of bringing about union. It was felt that any time you tackled the fishing industry you were tackling a very live nerve centre in the whole economy of both countries. Therefore it had to be dealt with in a spirit of good will on both sides. When the committee was set up, I asked them to come to my ofiice. Mr. Walsh was the chairman of that committee. He and his associates visited the office, and with the departmental officials we sat down to consider the problems before us. Before proceeding I suggested to him that we would not consider them in the manner of horse traders. I said that I realized they were here to do a job—to negotiate—a job which they would want to live with, not only in the immediate future, but for years to come. I asked them to look upon us in the same way. I assure you that this was the spirit in which we approached the whole problem.
At the beginning I suggested to them that we all knew, facing each other as we did, that there was one problem about which there would be some difficulty, and that was the fisheries board and NAFEL. At that time I intimated to them I had had some experience in the splitting of wood, and had found it was very desirable to put a wedge in at the knot to open it up, and that the rest of the block would then fall apart in an easy and fairly reasonable way. That is exactly what we did. We started immediately to discuss the things that we knew were going to be hurdles, and somewhat difficult to get over.
After spending two or three hours in exchanging views on this matter, we proceeded by way of memorandum. We were given a list of questions which the delegates wanted us to answer. We answered these questions and then discussed our answers in another meeting. After various meetings, by a process of elimination, we finally reached a list of understandings which will be found in this pamphlet. I believe all hon. members have a copy of the pamphlet, and they will find the questions on page 8. These were the questions this committee was finally able to submit to a committee of the cabinet and of which we were finally able to get approval. These questions then found their way into the pamphlet which we have before us. I want to show that never at any time were there any harsh words. At all times the matter was viewed in a reasonable and businesslike way and we are very pleased with the results.
Some of the questions which were asked this afternoon have to do primarily with our own position, and the fight between trawlers and shore fishermen. I think those questions can quite easily be left to be dealt with when our estimates are under discussion.
A question was raised about the fisheries board. The fisheries board was set up in 1936 by the commission. It is composed of a chairman and two members. This board has fairly wide powers, I will grant you. In 1947 a company was set up known as NAFEL, which is an exporting company.
Mr. Knowles: What is that word?
Mr. Mayhew: NAFEL, a Newfoundland association of fish exporters. We are not 398 Newfoundland HOUSE OF COMMONS getting all the privileges that were originally given the company. We agreed to let them retain the export market for salt fish only, which will amount to about $14 or $15 million 3 year, depending of course on market conditions. NAFEL has nothing to do with the rest of the fishing industry.
From the various departments we are taking over the freezing facilities, the inspection service and the research department, incorporating these into the federal system of fish management.
I believe I have answered all the questions except the one concerning the bounty. Please do not ask me to give the dates in connection with this question, because I do not remember them. In substance, however, the Newfoundland people received a million dollars as their share of the bounty; that was considered as their reward. The matter of sharing the $160,000 a year with the fishermen of Newfoundland was not discussed during the conference. It will be divided therefore, as it always has been divided, between the maritime fishermen.
Mr. Gillis: Am I to understand, then, that this $160,000 which I understand is interest on the original $4 million grant Canada received, will continue to be distributed between the Quebec and maritime fishermen? The Newfoundland fishermen will not share in that sum until such time as there are other arrangements.
Mr. Mayhew: That is my understanding, and it was not discussed at any other meeting.
Mr. Baker: As I am interested in seeing this union between Newfoundland and Canada go through, and I do not want to do anything that may impede it, I shall be very brief. Taking the long view, this union will be of strategic, economic and social advantage to both Newfoundland and Canada. Dealing specifically with fisheries, I know the union will prove to be mutually beneficial. True, the salt fish industry in Newfoundland is going to be, so to speak, on its own, to a certain extent for five years, but that is quite understandable. It takes a certain amount of time to adjust these things.
There has been an historical association between the fishermen of Newfoundland and the fishermen of our great province of Nova Scotia. Many of the Newfoundland fishermen have fished out of Nova Scotia's ports, and particularly out of the home port of the Minister of Reconstruction and Supply, Lunenburg. These men are well known to us all. There is one point I should like to mention and that is that, as a result of Canada and Newfoundland coming together, the hand of the Minister of Fisheries will be strengthened. We all realize the fine job he is doing. I think this union will help him because it is going to make the fishing industry a very large industry. Few people realize it is an industry that brings in a large volume of United States dollars. It is an industry that is growing.
The Louisburg project is one example of the co-operation between the federal government and Nova Scotia on behalf of the industry. With Newfoundland becoming a tenth province of Canada, we may some day be able to establish a continental shelf, which I think is of the utmost importance.
Now I bring up my perennial story. The stronger the claims of the fishermen become, and the claims of seafaring people in general, the greater the opportunity of having some sort of coastguard system, perhaps not exactly the same as the one the United States set up. I believe this union will help strengthen our request for such a system. There may be some difficulties during the period of transition but I am sure, taking the long-range view, this union will prove to be beneficial to Canada, Newfoundland and the maritime provinces in particular.
Mr. Archibald: I should like to ask the minister about this Newfoundland association which has control over the export of fish. If an individual desired to set up a business for the export of fish, would he have to pay a fee of $10,000 in order to belong to that association?
Mr. Mayhew: My understanding is, and I think I am right, that the regular fee for joining NAFEL is $10,000. Four or five men may get together and take out one membership. A person who has fish to export may ask a member of the association, and there are in all some 43 members in NAFEL, to sell his fish for him. It will be sold for a commission of from 3 to 5 per cent.  
Mr. Knowles: I want to thank the minister for the trouble he has taken in replying at length to the question I asked last night. This is a subject in which the people concerned are keenly interested. Some hon. members may wonder why I should be interested in the subject, since I come from the centre of the continent. I suppose it is partly due to the fact that, as a child, I was brought up on stories of my Nova Scotian ancestors who had gone fishing on the grand banks. I dared to hope when I asked the question last night that the permission to Newfoundland to retain their present set-up, at least in part, for five years, was a concession to the fishermen themselves, the men who actually do the work. But after listening to the minister's description of the set-up today, particularly in view of his answer to FEBRUARY 9, 1949 Newfoundland 399 the question just put to him by the hon. member for Skeena, it looks to me as though it is the old story: it is a concession not to the men who do the work but to a privileged few. In the beginning the set-up sounded good, in that the marketing and export of fish were under the direction and control of a state fisheries board. Had it stopped there, one might have said "hear, hear." But, lo and behold! that board seems to have turned over all its rights and privileges to a fishing association, which is a fairly select group, if it is true that there is a fee of $10,000. If that is the situation, I hope that the department will get out of it any advantages there are. But I also hope that, in the interests of the men who do the work, modifications of this set-up will be made as quickly as possible.
Mr. Archibald: Can that fishing association do what the fisheries council of Canada did with the west coast co-operatives, namely, turn down on political grounds an application for membership?
Mr. Mayhew: I do not think I should be expected to answer that question. There seems to be in the minds of a few of the members an impression about which I think I should say something, and it will take me only a minute or two. They seem to think that the coming in of Newfoundland and the bringing in of another $30 million or $35 million of business will in some way affect the industry in the maritime provinces. As a matter of fact, there will be no more fish for sale by reason of Newfoundland coming in than there would be if she stayed out. Both countries will be doing business in the same markets. I believe one will strengthen the other in looking for markets, and that both will be able to go after business together in a better way than would be possible separately.
Mr. Gibson (Comox-Alberni): In the event of a maritime fisherman finding it to his advantage to take his fish to Newfoundland, would he be entitled to sell his fish through NAFEL? Or conversely, would a Newfoundland fisherman be able to bring his fish to the maritimes and sell it through NAFEL? I refer to codfish.
Mr. Mayhew: That is salt fish. The answer is no.
Mr. MacInnis: I quite agree with the point the minister has made, that bringing Newfoundland into confederation does not increase in any way the world fish supply or the North American fish supply. The fish supply is much the same as it was before; that is, the production of Newfoundland as a dominion and the production of the maritime-province section of this dominion will be much the same after confederation as before. But it may affect the maritime fishermen if the assistance given to the fisheries board, or to the organization that has been set up by the fisheries board—which, as has been mentioned, is a purely big-business commercial organization—will give the board a greater advantage in the markets of the world than the Canadian fishermen have under production conditions in Canada, where better labour conditions prevail—conditions which are none too good but perhaps better than they are in Newfoundland. That is the point I wish to make. I think we should be satisfied here, because of the understanding that the dominion government is to pay the costs of the fisheries board for the next five years.
Mr. Mayhew: We are paying only the deficit. I do not think there is any difference in the opportunity that Newfoundland has. I do not think the people are in any better position than we are in the maritime provinces at the present time. They operate some boats of their own between Newfoundland and the West Indies and have enjoyed that market right along. I expect they will continue to do so. Those boats will be taken over by the Department of Transport. There is in Newfoundland a bait-freezing service which I think is a better one than we have in Canada. We shall have to do something to improve ours so that it will be equal to Newfoundland's.
Mr. MacInnis: The minister said that, according to the terms of the agreement, Canada was undertaking to pay only the deficit in the administration of the Newfoundland fisheries board. Is that the statement the minister made? Before he answers, I may say that is not the way I read it in subsection 2 of term 22, which reads as follows:
Subject to this term, all fisheries laws and all orders, rules and regulations made thereunder, shall continue in force in the province of Newfoundland as if the union had not been made, for a period of five years from the date of union and thereafter until the parliament of Canada otherwise provides, and shall continue to be administered by the Newfoundland fisheries board; and the costs involved in the maintenance of the board and the administration of the fisheries laws shall be borne by the government of Canada.
This subsection does not say anything about assuming responsibility for the deficit only:
Mr. Mayhew: There is in the hon. member's mind a little bit of confusion between the board and NAFEL. The board will be considered part of our official organization, will be treated the same as are our officials, and will be paid by the government.
400 Newfoundland HOUSE OF COMMONS
Mr. MacInnis: Part of the Department of Fisheries of Canada?
Mr. Mayhew: Yes.
Mr. Isnor: I think there is one point we should bear in mind with regard 'to this five- year period. As I understand, the Newfoundland fisheries board will operate as a federal agency under the control of the governor in council. If I am correct in that, it does away with some of the worries that the hon. member opposite has in regard to its operation. But I take a wider View of awards than did the hon. member for Cape Breton South, because that Halifax award applies largely to the inshore fishermen. He also raised the question as to the operation of the fishing industry. I think Canada and Newfoundland, or the maritime provinces including Quebec, will be in an exceptionally fortunate position having regard to the future fishing industry of the world. We certainly will be able to take care of a population of 160 million, or all the consumers on the north American continent. In this fisheries development, we should take a long-range view not only of the benefits to Newfoundland, the new province, but of the effect it will have on our Canadian fishing industry. I for one welcome the thought that we are going to be able to join our forces and export in still larger quantities than ever before. I do not expect any trouble between the maritime provinces and Newfoundland in regard to regulations, because they have already shown a willingness to co-operate in developing new and more extensive markets.
May I say a word about the trawler? A number of years ago I was drawn into the trawler question. In fact I was almost crucified by certain groups and papers in the maritimes, but I am just as firmly convinced today as I was when I took my stand, in 1938, if I remember rightly, that the fishing trawler is necessary if we are to develop a large export market. You cannot sell in small quantities in a profitable way. It is all right for the inshore fishermen. I am familiar with the inshore fishermen. In the summer months I live right next door to them. I am friendly with them and am anxious to see them prosper, but they can only prosper by developing and holding a market in central Canada and in foreign countries. Therefore the trawler is necessary. A continuity of supply must be maintained if we are to continue in any developed market. Because of that, I am sure that those who say the trawler must be done away with are unfamiliar with this important question.
I quite agree with the hon. member for Cape Breton South that there are differences of opinion in the matter. There are those who say that if you allow the unrestricted use of the trawler it will destroy our fishing grounds. I wish to point out that today the fishing banks of Canada and Newfoundland are quite close. We have an advantage over the United States fishermen. As I said a moment ago, we must continue to operate the fishing trawler if we are to bring in large quantities of fish, process them and ship them to export markets, and in that way bring additional money to this country, which we as a progressive people are seeking. We are seeking increased export markets.
The hon. member for Cape Breton South is anxious to rise in his place and take exception to my remarks. I would ask him to wait a minute. It was not my intention to take part in this debate, but I know that from the maritime point of view the fishing industry is an important one. At the present time we have a minister who is interested not in the one section of the country which he represents in this house, namely the extreme west coast, but in all sections of the country. He has shown his interest by coming to the extreme east, and he has made himself familiar with our needs. Because of these visits to the different parts of the country we shall have a better transportation system to help the extreme east and west to market their fish in a better condition in central Canada. We are anxious to ship larger quantities to central Canada than we are doing at the present time. We realize that industrial central Canada, with its large population, roughly speaking 64 per cent of the population of the country, is a real market for our fish and the few products that we have to sell. We must ship our fish in a better condition than we have in years gone by.
I am pleased that the minister has shown his interest in our problems. He has promised us that we shall have a more rapid transportation system to make available to the people of central Canada the fine type of fish that we catch along the Atlantic coast, particularly in Nova Scotia.
Mr. Archibald: Are there any qualifications or terms demanded by the Newfoundland association of fish exporters other than the $10, 000 fee?
Mr. Mayhew: Nothing that I know of.
Mr. Archibald: Do the members of the board have to belong to the association? Are they all members of the association?
Mr. Mayhew: Is the hon. member talking of NAFEL or the fisheries board?
Mr. Archibald: Are the members of the fisheries board also members of the fish exporters association?
Mr. Mayhew: No, it is entirely different.
FEBRUARY 9, 1949 Newfoundland 401
Mr. Hazen: Will the laws, and regulations made thereunder by the dominion government, which affect trawlers and drifters, apply to the trawlers and drifters owned by the citizens of Newfoundland when Newfoundland becomes a tenth province, or will these laws not be applicable until five years have passed?
Mr. Mayhew: If the hon. member will refer to page 8 of the statement of questions he will find the answer to his question. At the present time the Newfoundland trawlers are not allowed to fish within a twelve-mile radius of the shores along the maritime provinces, but they may fish within three miles of Newfoundland. The Newfoundland fishermen will be allowed to fish in the same way as Canadian trawlers. We shall have to change the regulations to bring that into effect. If the hon. member will read the top of the page dealing with trawling he will get the answer.
Mr. Hazen: I notice that in subsection 2 of section 22 the words used are: "For a period of five years from the date of union". That is a definite period. I presume it was put in at the request of the Newfoundland delegation. Was any consideration given to the fact that Newfoundland might apply prior to the end of five years, or within five years, for a change? In other words, were the words "from the date of union" the governing factor? Could these words not have been inserted, "unless the province of Newfoundland requests that they or any of them be terminated at an earlier date? Why is it so definite, a period of five years?
Mr. Mayhew: My understanding is that this can be changed at the request of the Newfoundland government. That is what they wanted.
Mr. Knowles: I should like to ask a question on subsection 4. Half way through the subsection we find the following words, "... may be revoked or altered by the body or person that made them." Am I to take it that that body or person may refer to NAFEL? Has NAFEL the authority to change the regulations that they have made? Our concern is that the fisheries board set up by the state apparently has not much power left; most of the power is in the hands of this $10,000 per person private club.
Mr. Mayhew: NAFEL itself has no authority to make regulations. The regulations will be made by the board. The board was set up by the commission form of government and is now under the direction of the federal government.
Mr. Knowles: Do I understand that the board, which will now become a creature of the federal government—
An hon. Member: Agency.
Mr. Knowles: All right, an agency—directs and controls the affairs of NAFEL?
Mr. Mayhew: That is right. We have what we call an eastern division and a western division, and now this will be the Newfoundland division. This board will be the agent for the Newfoundland division of the Department of Fisheries.
Mr. Knowles: We wish to be sure that the board controls NAFEL, and not NAFEL the board.
Mr. Mayhew: That is right.
Mr. Nicholson: The minister has indicated that this is a most important industry in Newfoundland. Did any discussions take place with the Newfoundland delegation regarding the future of the industry? I understand a large volume of fish was sold in the British market, and that at the present time Great Britain is finding difficulty in getting the dollars to pay for Canadian products. With Newfoundland becoming part of Canada, there will be tariff barriers which will prevent the importation into Newfoundland of goods which previously came from Great Britain. Thereby a problem will be created which may make it difficult for Great Britain to accept and pay for the quantity of fish which formerly came from Newfoundland. Will the minister say whether there was any discussion of that problem, and whether any assurance is being gîven to the Newfoundland fishing industry that they might expect to sell as much fish under the new arrangement as they did under the earlier one?
Mr. Abbott: I did not hear everything the hon. member said, but I understood his remarks related to what arrangements could be made with respect to the sale of fish by Newfoundland in European countries either for sterling or for other European currencies.
Last year an arrangement was made by the British government whereby it took over from Newfoundland the currency proceeds of sales of fish in those areas—escudos in Portugal, or lira in Italy—and gave to Newfoundland blocked sterling for those other currencies. The Newfoundland government gave to the fishermen equivalent amounts in. dollars to pay for the fish.
The blocked sterling thus acquired was held in a special account available, and available only, for the reduction and the servicing of the sterling debt of Newfoundland held in the United Kingdom. The Newfoundland government approached the United Kingdom 402 Newfoundland HOUSE OF COMMONS at the time discussions of union with Canada were under way, and asked them if they would renew that arrangement for the coming season. The United Kingdom government has agreed to do 50. In other words, the United Kingdom has agreed to take from Newfoundland the proceeds from sales of fish in those European markets, and give them blocked sterling for it, which will be placed in this account. Then, of course, the government of Newfoundland would have to provide dollars for the fishermen.
On the part of Canada, we as a country— Newfoundland being a part of this country, or soon to become a part—would be able to make the necessary dollars available to Newfoundland for those proceeds, because under the terms of union Canada has undertaken to assume the payment of. sterling debt. We would therefore be in a position to use the proceeds of such sales for the servicing and reduction of that sterling debt.
Mr. Matthews (Kootenay East): I should like to ask a question regarding the latter part of subsection (5), where it says:
And employees of the Newfoundland fisheries board shall become employees in that department in positions comparable to those of the employees in that department in other parts of Canada.
Does that mean that when these regulations come into effect there will be a general stepping up of salaries of those employees beyond what they are now receiving?
Mr. Mayhew: We will try so far as possible to have an equalization of salaries. In some cases it would be a stepping up, while in others it might be a stepping down.
Mr. Archibald: With respect to liquidation of the Newfoundland debt by accepting blocked sterling for fish exports, is there any chance of getting rid of some apples and canned salmon so as to help liquidate the debt of Newfoundland in that way?
Mr. Abbott: Perhaps we could answer that when we are considering Newfoundland's debt. It is expressed in terms of dollars. The Newfoundland sterling debt is expressed in terms of dollars at $62 million. It has varying maturities. Canada will have to service the debt until it is repaid, and in due course will have to provide for payment. In order to provide for payment Canada will have to acquire the necessary sterling; and it will acquire that sterling by giving to the United Kingdom treasury the equivalent amount in dollars. Presumably the dollars will be used as part of the general dollar reserve of the Bank of England or the United Kingdom treasury, and used for whatever purposes their laws provide. But I do not think Canada would be in a position to impose con ditions upon the Bank of England or the treasury of the United Kingdom as to how such proceeds would be used.
Mr. Dickey: Mr. Chairman, before the section is carried I should like to support what was said by the minister and also by my colleague, the senior member for Halifax, with respect to the industry generally.
The Nova Scotia and Newfoundland fishing industries are quite similar. I believe the union of these industries under one jurisdiction will be a source of strength and will result in far-reaching benefits for the industry as a whole both in Nova Scotia and in other parts of the maritime provinces, as well as in Newfoundland. As the Newfoundland industry stands, having been developed under a separate jurisdiction, it is unavoidable that at the present time there are certain arrangements and regulations concerning the industry which are different from those under the Canadian jurisdiction as applied to the industry in Nova Scotia and the other maritime provinces.
I believe it indicates a desire of all parties to see that the two industries are united under one jurisdiction, with the least amount of damage to either, when it is pointed out that arrangements have been made to continue in force for a period of time certain of these special regulations under which the Newfoundland industry. has developed, in order to provide an orderly and proper unification of the regulations which in future will apply to the industry as a whole.
The fact that theseregulations have been continued in force does not in any way show that these particular regulations and arrangements are approved, that they will be continued in force permanently, or that any of them will be made to apply to the industry in those parts of the maritime provinces which already form a part of Canada. That the whole question received the greatest possible consideration is shown by the great detail set out in section 22, now under consideration, and more particularly by the very detailed discussion of the various questions involved, and information which has been given in the committee. The industry as a whole will benefit through the efforts of the Department of Fisheries to improve methods of packing and transporting fish products to market. As a result of benefiting to that extent the industry will be able to bring about considerable expansion.
The hon. member for Cape Breton South rather left the impression that trawlers were destroying the shore fishing industry. My colleague pointed out that there were two schools of thought on that matter. I think it is generally agreed that if there is to be FEBRUARY 9, 1949 Newfoundland 403 any considerable expansion of the fishing industry in the maritime provinces and on the Atlantic coast a continuing and regular supply of suitable fish will have to be provided. The only basis upon which that expansion can be built is the proper use of trawlers. Far from destroying the shore fishing industry, the proper use of trawlers will contribute to its prosperity.
Mr. Hazen: I have had the opportunity of looking at this pamphlet containing the statements of questions raised by the Newfoundland delegation. On page eight it is stated that Newfoundland trawlers will be permitted to fish to the three-mile limit off the coast of Newfoundland. Will that be for the next five years or for a longer period?
Mr. Mayhew: When union is consummated Newfoundland will be a part of Canada, and normally the laws of Canada would apply. Throughout the rest of Canada trawlers must operate beyond the twelve-mile limit, but we are saying that as far as Newfoundland is concerned its fishermen may continue to fish up to the three-mile limit. Legislation will be brought in to make that legal.
Section agreed to.
On section 23—Debt.
Mr. Macdonnell (Muskoka-Ontario): I think it would be desirable that a statement should be made to the committee with regard to this section. It reads:
Canada will assume and provide for the servicing and retirement of the stock issued or to be issued—
I refer particularly to those latter words.
Mr. St. Laurent: I think it is desirable that there should be some explanation of this clause for the information of hon. members and the public generally. The expression "issued or to be issued" refers to the replacing of certain securities by other securities. There is a provision for the replacing of securities issued under the loan act of 1933 without changing the amount at all.
On the basis of conversion at the rate of $4.04 to the pound, the amount outstanding under the loan act of 1933 is $71,911,467.24. There is a sinking fund amounting to $9,326,650.26, which leaves a net outstanding debt of $62,584,816.98.
Mr. Probe: Is that dollars or pounds?
Mr. St. Laurent: It is dollars converted at the rate of $4.04 to the pound. According to the latest information available, the amount of the internal debt was $10,465,593, with a sinking fund of $879,368, leaving a net internal debt of about $9,500,000 as of December 31, 1947.
Mr. Brooks: Would the total debt be $72 million? I do not just understand the difference between internal debt and national debt.
Mr. St. Laurent: Securities were issued in sterling in the United Kingdom, the net amount of which at the present time is $62 million. Then securities were issued in Newfoundland in dollars, the net amount at the end of December, 1947, being approximately $9.5 million. An attempt was made to determine what portion of the total debt incurred in respect of the services would have been in respect of federal services had union taken place before the expenditure was made, and what proportion referred to services which would have been provincial services had union been in effect. According to the report of 1933 it was estimated that approximately $67.5 million of the debt at that time was the result of capital expenditures and current deficits in connection with the railway enterprise and war expenditures.
We reduced that $67.5 million in the proportion in which the total debt existing at that time had been reduced over the years and it was found that that brought the amount down to $54.8 million. The Newfoundland delegates represented, and after consideration it was found that their representations should be accepted, that there had been issued for war purposes during the last war a total of $6.5 million in war loans and savings certificates. That added to the $54.8 million made a total of $61.3 million.
That figure was found to correspond quite closely to the debt owing in the United Kingdom in sterling. It was agreed that in bringing about the union Canada would take over, as a debt incurred for what would have been federal purposes, an amount equivalent to the United Kingdom debt, and that the government of the province of Newfoundland would retain the debt of approximately $9,500,000 as a debt incurred for purposes which would have been provincial. There was this slight discrepancy. In making the mathematical computation we arrived at $61.3 million whereas the amount of the sterling debt was $62.5 million. It was pointed out to us, however, that in connection with the railways and the war, not only had there been capital expenditure of a federal nature, but that a portion of it had been incurred presumably for the erection of public buildings, and that the public buildings were going to be distributed according to the space in them occupied for what would be either federal or provincial services. It was found therefore that the fairest approximate calculation that could be made would show that the amount of the sterling debt was just about as close 404 Newfoundland HOUSE OF COMMONS as we could get to the amount of indebtedness incurred for purposes which would have been federal purposes.
It was for that reason that the sterling debt was assumed, and that the provincial government was to be left with its dollar debt owing to residents of Canada or of Newfoundland.
Mr. Jackman: May I ask whether the sterling debt of Newfoundland is held by British nationals? If so can we offset some of the sterling balances, which we own in London, against the payment of this debt?
Mr. St. Laurent: The debt will have to be paid in sterling, and we will be entitled to pay it in any sterling that we have. Of course, we have not endeavoured to trace the securities, but presumably they are securities that were issued in England and issued in sterling. We assumed that they were probably held in the United Kingdom, but whether or not they are held there they are payable there, and they are payable in sterling, and we can use whatever sterling we have to redeem them.
Mr. Macdonnell (Muskoka-Oniario): I take it the Prime Minister means not only that they are payable in sterling but that they are payable only in sterling.
Mr. St. Laurent: Only in sterling.
Mr. Macdonnell (Muskoka-Oniario): The Prime Minister referred to the wording where it says, "Stock issued or to be issued". As I understood him, that means that new stock can be issued, but only to replace existing stock. That gives rise to this question. Does that mean merely to replace stock that is lost, or does it mean that if under the sinking fund you pay off a certain amount you can then issue up to the old amount?
Mr. St. Laurent: No; it means it is only to replace securities originally issued. My understanding is that under the Loan Act, 1933, there were securities issued to replace former securities, and that there are some of those that have not yet been converted.
Mr. Macdonnell (Muskoka-Ontario): So the net result is that it will be the original amount not subject to increase, and subject to decrease to the extent of the sinking fund?
Mr. St. Laurent: That is correct.
Mr. Fleming: My question has to do generally with the financial terms, and it applies to article 23 and several of the other articles which are to be found under the general heading, "financial terms". I should like to ask the Prime Minister to supply a little more information as to the net result as far as the annual charges that will be borne by Canada are concerned. The information which has been furnished to the house is not quite up to date. The document which has been circulated entitled "Report and documents relating to the negotiations for the union of Newfoundland with Canada" deals at page 70 with the question of probable revenues and probable expenditures accruing to Canada from Newfoundland. That information is based on 1947 figures, and also relates to the terms offered to Newfoundland in 1947. The figures at page 70 are a part of annex No. 4, which is annexed to the so-called "proposed arrangements for the entry of Newfoundland into confederation," which accompanied the letter of October 29, 1947, of the former Prime Minister of Canada to the governor of Newfoundland, to be found at page 57 of this same document.
As I gather it, the position under the terms offered in 1947 was roughly to this effect. Canada might anticipate drawing from Newfoundland into the federal treasury approximately $20 million per annum on the assumption of a continuation of the 1947 level of economic activities in Newfoundland. It was calculated also that probable expenditures on Newfoundland out of the federal treasury, embracing tax agreement payments, old age pensions, family allowances and other departmental expenditures, would total approximately $27 million. On page 71 it is pointed out that there are four items not included in the estimate of $27 million odd. They are: first, the transitional grants; secondly, the cost of servicing that part of the Newfoundland debt assumed by Canada; thirdly, any costs in respect of the Newfoundland railway or its auxiliary steamship services taken over by Canada; and, fourthly, any capital expenditure.
I pause at that point to make this comment. In trying to arrive at the net result, it would appear that on the basis of the 1947 offer the net result to the treasury would be a deficit of roughly $7 million as between federal revenue and probable expenditures, plus three and a half million dollars of transitional grants in each of the first three years of union, plus the other three of the four items referred to on page 71. But those are not the terms that are before the house today. The terms were revised in 1948, and the result has been to increase very substantially the amounts of the transitional grants that are offered by Canada to Newfoundland. It is proposed to increase the grants substantially during the first eight of the twelve years during which transitional grants are payable. By doing some arithmetic one finds that the total of transitional grants contemplated in the 1947 offer was $26,250,000, whereas the-transitional grants that are contemplated by article 28 of the terms of union total $42,750,000. I assume that the amount FEBRUARY 9, 1949 Newfoundland 405 of the transitional grants was increased in the interval between 1947 and 1948 for the purpose of making the terms of union more acceptable to the people of Newfoundland, and perhaps to meet some of the opposition that had been encountered there towards confederation.
I should like to ask the Prime Minister if he is in a position to give to the house now up-to-date figures as to the probable net result to the federal treasury of union based on the figures on pages 70 and 71 as varied, first by the increase in the transitional grants, and. secondly, by any possible changes arising from the use of 1947 figures as basic. It may be the government is in a position to give us more recent figures than those used here.
Mr. St. Laurent: I should not like to attempt to go into the details of those calculations. Those estimates that were made are contained in this annex 4. They were rough estimates and it was found that, in many respects, more precise information could be supplied than had been available in 1947. It was found that, in order to leave the provincial government in a position to carry out its responsibilities and give to the people of Newfoundland services that would be progressing up to the scale of services provided in other provinces, without imposing taxes which it would not be practical to try to make effective at once, additions in the transitional grants were required. It is because of that feature that those increases in the transitional grants were provided.
I think the Minister of Finance and his officers did make calculations before recommending to the committee the reasonableness of the proposals, and I think he would be in a much better position than I to give my hon. friend such information as his officials were able to obtain.
Mr. Abbott: As the Prime Minister has suggested, perhaps I might follow that up, Mr. Chairman. When the first delegation was here discussing terms of union, certain figures were made available as to the probable revenues in Newfoundland. It was on the basis of those figures or estimates that the original financial proposals were made.
Following the holding of the plebiscite and the arrival of the new delegation a good deal of additional work had been done with respect to the probable revenues and expenditures in Newfoundland. The Newfoundland delegation had retained the services of a very capable accounting firm. A careful analysis had been made of the probable revenues in Newfoundland and an attempt was made to forecast a probable provincial budget. As the committee will appreciate, it was rather difficult to do that because of the difficulty of assessing the extent to which the federal services would accomplish what, in the past, had been done by the province, and just how much would be carried on by the province. That was, of course, on the expenditure side.
On the revenue side of a proposed provincial budget, it was necessary to take account of the fact that union would effect a rather revolutionary change in the tax sources of Newfoundland. Up to the time of union, the major sources of revenue were sources which either were exclusively within the purview of the federal government or would be shared by the federal and provincial governments. The major source of revenue in Newfoundland has always been the customs duty. This revenue would no longer be available to the new provincial government. Income taxes, corporation taxes, succession duties and the like are fields that are shared by the two governments. The difficulty in assessing what the revenues would really be was considerable.
It was, of course, realized by the Newfoundland delegation and by the Canadian delegation that it would be possible and necessary to develop new sources of revenue, in the light of those which are utilized in other Canadian provinces, but that inevitably it would take some time to develop those sources of revenue. For that reason, it was decided it would be necessary to increase the transitional grants which, as the committee will have appreciated upon looking at the terms of union, commence at the figure of $6.5 million for the first two years and diminish to nothing at the end of the twelfth year.
It was upon that basis that these additional transitional grants were arrived at, and that was the consideration which prompted the Canadian government to recommend these increased grants. The Canadian government felt they were fair and were necessary in order to enable the new provincial government to have a reasonably adequate budget to provide a scale of provincial services necessary in the new province.
Mr. Fleming: I appreciate the real difficulty in arriving at very precise estimates of the probable revenues and probable expenditures in a situation like this, which has some novel features about it. If the minister would be kind enough to clarify this matter, I should like to ask him whether my understanding of the situation is correct in so far as the net cost to the Canadian treasury is concerned. The anticipated total annual revenue from all sources after union, which will include the personal income taxes, corporate taxes, succession duties, customs duties, import taxes, as well as all the other forms of taxes which 406 Newfoundland HOUSE OF COMMONS were enumerated on page 70, will be in the neighbourhood of $20 million.
Mr. St. Laurent: That was our estimate.
Mr. Fleming: Yes, I understand this was the estimate of the Canadian government. Against that, there are anticipated expenditures of approximately $27 million per annum. The tax agreement payment, which I presume is the subsidy payment which is provided for in article 26, is estimated at $6,820,000; old age pensions, between $2 million and $2,600,000; family allowances, $8,350,000; other departmental expenses, $9,400,000. This makes up the total I mentioned. There would appear up to that point to be an annual deficit of $7 million in round figures.
The increase in the transitional grants from $3,500,000 to $6,500,000 would bring the deficit up to $13,500,000, approximately, per annum, but that does not include three other figures: first, the costs of servicing that part of the Newfoundland debt assumed by Canada; secondly, any costs in respect of the Newfoundland railway or its auxiliary services taken over by Canada; thirdly, any capital expenditures. Could the Minister of Finance give any estimate at all of those three latter factors, as to what they might be expected to amount to, and could he say a word as to the anticipated additional cost of defence, so that we will have as complete a picture as it is possible to draw at this stage of the net result for the treasury of Canada?
Mr. St. Laurent: Before the Minister of Finance gives his estimate, possibly I should give the estimate that was brought back to us in 1948 by the Newfoundland delegation. They disputed our estimate of the revenues as being too modest. Our estimate of what Canada would derive in 1949 was $20,185,000. Their estimate of what would be derived on the level of economy of 1949 was $26,922,000. They made that as their estimate of what Canada would derive from those various sources—personal income tax, corporation tax and so forth. They also disputed the $27,150,000 because that included the old age pensions payment at $2,600,000, and they said it would not exceed $2,400,000. So they came back this time telling us that our estimate of the revenue Canada would get, on the level of the economy of 1949, was too low, that it should amount to $26,922,000; and that our estimate of the expenditure on these items was a little bit too high and would be $26,970,000, practically balancing each other. Of course those figures are merely estimates. Before the Minister of Finance gave his own figures, I thought I should give to hon. members the representation that had been made by the delegation from Newfoundland.
Mr. Abbott: I forget for the moment what other things my hon. friend had in mind particularly.
Mr. Fleming: I went on to deal with the factors enumerated at the top of page 71 of the booklet. I asked if the minister could give any estimate at all as to factors 2, 3 and 4, which are as follows:
(2) Costs of servicing that part of the Newfoundland debt assumed by Canada;
(3) Any costs in respect of the Newfoundland railway or its auxiliary steamship services, taken over by Canada:
(4) Any capital expenditures.
I also asked whether the estimate of their expenditure, this figure aggregating $27 million in round figures, took any account of the increased burden of national defence. There is an item here entitled "other departmental expenditures", but it is an amount of only $9,400,000. Does that take any account of the increased burden of national defence which will now fall on the federal treasury with respect to the defence of Newfoundland?
Mr. Abbott: No. I have not any revised figure as to probable federal revenue from Newfoundland, and I would prefer not to hazard any further statement on that matter at this time. We are, however, in process of preparing estimates to be included in what would be the main estimate in order to provide services in Newfoundland. While those are not completed yet, they are fairly well advanced. Those expenditures, including expenditures for veterans' benefits and one thing and another, which are not included here, will be substantially higher than the figure of $27 million shown on page 70. Including all those special items, I think it will probably be something of the order of $50 million, including additional estimates for defence and the like.
Mr. Fleming: I should like to be clear with regard to that figure of $50 million. Is that in addition to the $27 million?
Mr. Abbott: No. What I am saying is this. Of course, before union is completed I shall be bringing down the main estimates for the fiscal year from April 1, 1949, to March 31, 1950. Therefore I have decided that, in the main estimates, we should not include Newfoundland items, but that they should be brought in as special supplementary estimates. I think it is an advantage to deal with the matter in that way, in that it will show to members of the house in detail the additional expenditure which it is contemplated will be necessary for Newfoundland. Those estimates will be brought in. My present intention would be to table those estimates on or about March 31, on the assumption that FEBRUARY 9, 1949 Newfoundland 407 the legal formalities will have been complied with in order to make union effective about that date. Present indications are that the over-all amount of those estimates, including the other items to which I have referred— those relating to veterans and the like—will be something of the order of $50 million.
Mr. Fleming: For clarity's sake, may I ask this further question. That $50 million will include the $27 million, plus the transitional grant, plus the other three factors at the top of page 71?
Mr. Abbott: That is correct
Mr. Fleming: It is an inclusive figure?
Mr. Abbott: That is correct.
Mr. Nicholson: Can the minister make any breakdown of this additional $23 million? I am referring especially to item 3:
Any costs in respect of the Newfoundland railway or its auxiliary steamship services. taken over by Canada.
In the report of meetings between delegates from the national convention of Newfoundland and representatives of the government of Canada, part II, at pages 67 and those following, the section dealing with transportation makes some mention about present freight rates, express rates and passenger rates in Newfoundland. I understand that the freight rates there are about twice as high as the prevailing rates in the maritimes. I was surprised to find that it is so much more costly to travel by train in Newfoundland than it is to travel by air. The cost of travelling from St. John's to Gander is a good deal higher by train. I am told that the rates are about twice as high as the prevailing rates in Canada.
As to the condition of the property, at page 69 I read:
Such evidence as is available would indicate that the Newfoundland railway system is badly run down and would require the expenditure of substantial amounts for rehabilitation. Estimates of the probable cost of such rehabilitation can only be guesses on the basis of data at present available. It would appear that the rails would need to be renewed on the whole of the railway within a period of ten years. and that at the same time ballast should be renewed, embankments and cuts widened. drainage restored or improved and that & majority of the bridges would need renewing. The cost of such rehabilitation over a ten-year period would be of the order of $10 million.
The rolling stock of the system would also need rehabilitation. Much of the car equipment is of wooden construction and a number of the locomotives are not worth repairing. It may be hazarded that the cost of rehabilitating rolling stock over a ten-year period would be of the order of $7 million.
I read that the rates of pay, as far as can be judged from the sample given, are on the whole somewhat lower than those in Canada. Under the heading "Results of operation", it is reported that there was a deficit of about $525,000 in 1944-45 and $698,000 in 1945-46, after adjustment of a non-recurring item.
The point upon which I should like some information is this. Does it now become the problem of the Canadian National Railways to take over the Newfoundland railway? Is there an undertaking to bring the rates of pay up to Canadian levels and to bring passenger and freight rates down to Canadian levels? If so, what is the probable deficit which might be expected? What about the capital debt of the Newfoundland railway? Does it become a charge on the consolidated revenue of Canada, or is it added to the already heavy burden of the Canadian National Railways, which is about twice as high as the debt of its competitor, the Canadian Pacific Railway? Can the Minister of Finance answer some of those questions?
Mr. Abbott: The Newfoundland railway will be operated by the Canadian National Railways; that is to say, management will be provided by the Canadian National Railways, but they will operate it as agents of the Canadian government in the same way as the Canadian National Railways operate the Intercolonial railway. If there is a deficit, and I think it is fairly certain that there will be one, any deficit incurred will have to be voted by this house in the same way as deficits of the Canadian National Railways and just as we have in the estimates each year an item for statutory obligations in connection with the Intercolonial railway. At the moment I have not available any estimates of the possible or probable deficit of the Newfoundland railway. There is no doubt that it will require substantial capital expenditures, which will be classified as capital, and which presumably would increase the earning power of the railway by improving efficiency. But from an operating point of View the deficits, if any, will be a charge upon the taxpayers of Canada in the same way as are the deficits of the Canadian National Railways and of the Inter« colonial railway. I have forgotten my hon. friend's other question.
Mr. Nicholson: Are the rates of pay prevailing in Canada to be made available to Newfoundland?  
Mr. Abbott: I am afraid that that is a question which is not within my province. The Minister of Transport is not here at the moment. That question comes within his jurisdiction.
Mr. MacNicol: The rates would have to be applied to Newfoundland.
Mr. Bentley: In taking over various public utilities such as railways and hotels in Newfoundland, under the terms just announced 408 Newfoundland HOUSE OF COMMONS by the minister, will a careful audit be carried out, and will they be taken over at the actual replacement value or at their value regardless of how much actual over-capitalization there may be?
Mr. Abbott: No valuation is placed on them. We take them over as an asset of the government of Newfoundland. As the Prime Minister indicated a moment ago, we have assumed the payment of the sterling debt, a large portion of which was incurred in the building of the railway, among other things. We will own the railway as an asset of the Dominion of Canada. As I indicated, the offsetting liability is a portion of the debt. I might add, the arrangement provides that the railway will be left with adequate working capital, stores and so on, and that is part of the adjustments which are made on union.
Mr. Jackman: After what my leader has said in welcoming Newfoundland into confederation, I am sure that we shall be glad to accept the young lady without any dowry whatsoever. But this committee is entitled to know just what revenues we are likely to receive from taxation in Newfoundland and also what the expenditures will be. The information which the Minister of Finance has given has been anything but illuminating. I do hope that he has not entered into a financial transaction on the scanty basis of information which he has so far given to the committee.
The document which was given to hon. members was printed in 1949. It refers to a conference series published in 1948. One might expect that the information would be at least reasonably up to date, but either the minister or the Prime Minister has said, when dealing with the federal revenues which we can expect from Newfoundland, that the original figure of $20,185,000 had been upped by the Newfoundland delegation when they went back home and made a further investigation, and that they retained a very capable firm of accountants—I am sure they were very capable—who upped these revenues to an estimated $26,922,000. Do we accept that revision of the estimate of revenue which we shall get from Newfoundland?
Mr. St. Laurent: We neither accept it nor dispute it. We shall get such amounts as will be provided by the present rates of taxation applied to operations which actually take place. These are estimates. We accept them as estimates, but we do not guarantee that these estimates will prove to be accurate.
Mr. Jackman: I am not asking for a guarantee. Of course they must be estimates in the very nature of things, but one certainly does a little checking and double checking. The delegation met here with our own representatives for weeks, if not for months. Surely there must be a very good idea in the minds of members of the government as to what a reasonable estimate is. I am asking a specific question. Is the reasonable estimate in the eyes of our own advisers and our own responsible ministers $20 million or is it nearly $27 million, which was the final estimate of the Newfoundland delegation? That is a simple question. Surely the government holds at least a belief that it must be nearly one or the other. I know that when we apply our taxation laws to Newfoundland we get a certain figure. We do not know exactly what it is, but we must have made some estimate which we hoped would bear some accuracy, because it is simply amazing, when the budgets are brought down year after year and estimates are made running up to hundreds of millions of dollars, how accurate they sometimes are, although I admit that in the last few years the surpluses have been a little higher than the government could ever possibly have expected.
As members of this committee, we should inquire into what these probable expenditures are going to be. The minister, in his usual slapdash fashion, has said that the figure of $27 million applies to transitional grants which are now $6,500,000—
Mr. Abbott: Total payments. The main additional item, if my hon. friend will permit me, will be approximately $14,500,000 under the transitional grants, the tax agreement, and other payments to the province. Add $14,500,000 to $27 million and you get up to $41 million odd. Then there are veterans benefits of $4 million or $5 million, and one thing and another.
Mr. Jackman: It is this "one thing and another" to which I object. This committee is entitled to know what we are doing. As I said before, we are willing to go into this irrespective of any dollars and cents. The question of union with Newfoundland rises above that; nevertheless we owe a duty to our own people in Canada and we need the information. I would ask the minister not to give me a few figures on this and that and say, et cetera, et cetera, then arrive at $50 million. What I want to know is this. What is added to the probable expenditures of $27 million, which I think the minister said had to be revised upwards? I should like to know what the additional figures are. I want them itemized to make up the total of approximately $50 million which the minister gave us. We have the transitional grants. which are $6,500,000. Then we have the cost of servicing the Newfoundland debt, which I presume will be somewhere in the neighbour FEBRUARY 9, 1949 Newfoundland 409 hood of $2,400,000. The minister can correct me if I am wrong. Surely he knows what the experience is in operating the Newfoundland railway even with the high freight rates and passenger rates which we heard about, and possibly a lower wage scale than we have in Canada. What has been the experience there in the last few years?—because in the nature of things it is not likely that there will be too radical a change in a short time. What is the deficit on the Newfoundland railway likely to be, if there is a deficit? It may be a profit, for all I know, but I want a figure on that. I want to know exactly what other items, including the cost of veterans allowances, will go to make up the figure of $50 million more or less which will be the cost to Canada of the first year of operation. I have not said a word about the revenues, which are estimated on the basis of 1947, I think, because that was applying the tax laws as they existed in Canada at that time, and we, representing the people of Canada, surely expect that the tax rates will be much less, therefore the tax revenues will be much less. However, I will not ask the minister to make any estimate in that regard just now. If he would throw some light on how the $50 million probable expenditures are made up I should be very grateful.
Mr. Abbott: That question is fair enough. I am afraid I cannot give the information at once. The reason I gave the round figure of $50 million was that I asked the officers of the various departments to segregate the expenditures in the different departments relating to Newfoundland. The other day I asked what the total of these estimates would be and I was informed that it was something of the order of $50 million or $55 million. I have not the details here. I will get them. This discussion will probably go on for some time. The full detail of course will be, set out in the special supplementary estimate to which I referred a moment ago, but I cannot give my hon. friend a breakdown of that here now.
The major item is the extension to Newfoundland of rehabilitation grants and- other veterans benefits, which run to quite substantial sums of money. That is a major item in the increase. It may well be that the gross figure which I have given also includes an estimate for deficit on the railways but I shall have to ask my hon. friend to allow that to stand and I shall try to give it to him either tomorrow afternoon or certainly before the discussion finishes.
Mr. Fleming: Going back to my now familiar problem about the net result, the minister has now said that the total probable expenditures for a full year would be $50 million to $55 million. The Prime Minister has indicated that the estimates of federal revenue in a year are, on the one hand, the Canadian estimate of $20 million, in round figures and, on the other hand, the Newfoundland estimate of, shall we say, $27 million, in round figures. This means that, with those figures, the net cost to the federal treasury through union would be a minimum of $23 million per annum, and might run up to as high as $35 million, based on the assumption of the continuance of the present scale of economic activity, and also on the continuance of the present scale of federal taxation. If, as we sincerely hope, there is a substantial reduction in rates of taxation this year, the anticipated revenue from Newfoundland would be reduced accordingly, and the net charge on the federal treasury would be increased accordingly.
Would the minister comment upon that? According to my arithmetic the figures of cost would be somewhere between $23 million and $35 million per annum.
Mr. Abbott: That is probably right. But, as the hon. member appreciates, those are estimates. If, in fact, the federal revenues from Newfoundland are of the order of $20 million, and if in fact the federal expenditures in Newfoundland, of one sort or another, are of the order of $50 million, obviously there would be some $30 million paid out more than is taken in, in direct revenue.
My hon. friend is right when he says that. But I am sure he appreciates that in the early stages of union it is perhaps not a fair test of the ultimate revenue-producing capacity of Newfoundland, nor is the amount received in revenue at the outset a fair test of the value of Newfoundland, or the contribution it may make to the Canadian federation. I do not think we can do that—and I am sure my hon. friend was not suggesting that we could. I am simply pointing out that we cannot judge this entirely in terms of either estimates or dollars and cents.
Mr. Fleming: I agree entirely with what the minister says. I would not wish anyone to think that I am basing my judgment as to the advantages of union either to Newfoundland or to Canada on these figures which have been brought out this afternoon upon inquiry. However, this is a matter of some importance, and inquiries have been made with a view to eliciting essential information. On the other side, if we were thinking in terms of a ledger balance in respect of the union, of course we would have to take account of the economic advantages accruing to both sides as a result of the increased facilities for trade, and other similar advantages. It is a separate and distinct problem.
410 Newfoundland HOUSE OF COMMONS
Mr. Probe: Referring to this deficit, which is estimated variously as running from $23 million to $35 million annually, as of this year, would the minister indicate what the position will be in five, ten or fifteen years. Some of these are non-recurring debts and expenditures as of this or next year. This figure, whatever it may be, of the present deficit, will be sharply or gradually reduced to what figure in what time?
Mr. Abbott: As I have often had occasion to say in the house, I claim no gift as a prophet; and anyone who could attempt to forecast what the revenues and expenditures of a province or of the dominion would be years ahead is a worker of miracles. It is absolutely impossible to make anything but a wild guess. But if one assumes that Newfoundland develops and occupies a full place in the Canadian economy, I think it is fair to assume that its revenues will expand; and my experience as Minister of Finance has been that expenditures will also expand.
Mr. Probe: Is it the minister's view that this temporary or this present apparent deficit will narrow considerably as soon as conditions stabilize?
Mr. Abbott: I should think that is bound to happen. Such matters as veterans affairs payments and transitional grants are both diminishing items. But I wish to take this occasion to say that I am never one who looks on the balance sheet of a Canadian province, the revenue from that province, or the federal disbursements in the province as a fair test of the contribution the province makes. We have "have" provinces in this country, and certain provinces which do not collect as much revenue. I am not one who accepts that as a criterion of the place that province occupies in confederation.
Mr. Probe: In section 23 it is stated that Canada will assume certain debts of the province of Newfoundland, and that the province itself will retain its surplus, as indicated in section 24. May I ask first of all in regard to section 23 whether there are in Newfoundland at the present time any arrears of debt for which Newfoundland is responsible, or for which she would be responsible if she were not entering confederation?
Mr. Abbott: No. The debt of Newfoundland has been fully serviced and all maturities have been met. The debt which Canada is assuming, as the Prime Minister explained, is its external debt, the debt which is payable in sterling. I am informed that all of that debt is now callable, if that is desired, at any time on three months' notice.
Mr. Probe: With respect to the guarantees for corporations or institutions within Newfoundland, are they also up to date or are there arrears of debts for which Newfoundland has some responsibility?
Mr. Abbott: So far as I am aware—and I am sure I am correctly informed—all obligations of Newfoundland have been fully met.
Mr. MacNicol: Mr. Chairman, I agree with some of the remarks made by the minister. I do not think we should split hairs, or be too much alarmed by a consideration of what Canada is going to get at the present time or in a certain number of years as a financial return from Newfoundland. The island has not had the opportunity it should have had. I have made an exhaustive survey of the facts, and I am convinced that it can do much better than it has done. I believe we have nothing to fear in that regard.
The railway has been mentioned. The first thing I would suggest to the minister and the government would be a plan for reservicing the railway for standard-gauge cars. It is a narrow-gauge line, and much more time is required to go from Port aux Basques to St. John's than should be required. The faster the trains could cover that distance, the more money would be made by the railway.
Therefore that is one of the first suggestions I would make, namely that it be made a standard-gauge line. Then I would suggest further equipment for the port of Port aux Basques so that larger ships, capable of carrying cars, could be unloaded quickly and reloaded rapidly at Port aux Basques. I can see myself at some time in the future boarding a train at Toronto, one properly equipped and having proper sleeping accommodation, and remaining on that train until I reached St. J ohn's, Newfoundland. I do not see how the railway can be made to pay unless it is equipped so that people can travel on it in modern equipment.
It will take a few years to have that done; but the sooner it is done the sooner that railway will be able to produce a revenue. At the present time the passenger traffic on it is not as heavy as it should be. I have found the general service satisfactory, although the sleeping accommodation was a little cramped for me. However, a modern car would eliminate that difficulty. I found the meals quite satisfactory.
We will have an opportunity, not only to build up Canada but to build up this new province. I would not hedge at all in giving it opportunities to develop. It has vast resources of pulpwood. If the hon. member for Dufferin-Simcoe were here he could tell FEBRUARY 9, 1949 Newfoundland 411 the committee much more effectively than I can just what results might be expected from that pulpwood. A condition exists there that does not exist in Canada or anywhere else that I know of, although it may in Norway, whereby the forests regrow in thirty years. I never saw such forest growth in my life as I saw in Newfoundland. This is brought about by the moisture content of the air and the ameliorating temperatures, the country being of course surrounded by water.
I hope the minister does not become distracted by thinking there is any possibility that we are not going to be able to carry out our obligations. Give the island a chance and it will pay its way. It has not had a chance up to the present. The same applies to the fisheries. The whole service should be made more rapid than it is today so that people may travel back and forth more quickly. They should be able to ship more rapidly the goods they sell and in that way develop their business. The more business they do, the more they will be able to buy from us.
I made a comparison of the costs to the consumer in Newfoundland. I found that people along the coast were generally opposed to confederation. One argument I used was that it would cost them much less to live if they were part of Canada because their present rates of duty are so high. I found that the cost of ordinary groceries, food and other articles was from fifty per cent to one hundred per cent more than in Canada. If these people are given an opportunity to buy at rates comparable to what we pay, they will buy much more. That will be better for the older provinces of Canada and it will help to reduce the deficits on the railroad by providing more freight.
I am for one not going to endorse the expectation that Newfoundland is going to embarrass Canada financially. I look at the bright side of things. I think union will be most helpful to Canada. We can work together. They should be given a chance to come up to our standards in every way.
Mr. Green: Has the government any plans in mind for the promoting of industry in Newfoundland? Section 24(2)(c) reads:
(c) no part of the surplus shall be used to subsidize the production or sale of. products of the province of Newfoundland in unfair competition with similar products of other provinces of Canada. but nothing in this paragraph shall preclude the province of Newfoundland from assisting industry by developmental loans on reasonable conditions or by ordinary provincial administrative services.
Apparently that contemplates that the provincial government of Newfoundland will assist in the development of industry, but I think it is of the utmost importance that the federal government should also promote the establishment of industries in Newfoundland. We have much the same kind of problem on the west coast. There is a greater need for assistance of this kind in the remote provinces than there is in the central provinces. Can the minister tell us whether the government has in mind assisting in the development of industries in Newfoundland.
Mr. Abbott: My hon. friend will appreciate that primarily this comes under the jurisdiction of the Minister of Trade and Commerce. The minister was down in Newfoundland last week, and prior to that officers of his department, acting on the assumption that union was probable, were down in Newfoundland going over the industrial situation and making a survey of what could be done and in what way the federal government could assist, not only during the transitional period but in the development of such industries as might be suitable to Newfoundland.
The paragraph to which my hon. friend has referred was put in because, as may be seen from the section itself, Newfoundland is being permitted to retain its surplus, which amounts to some $26 million. That is a rather unusual provision when the dominion is taking over most of the debt, but it was felt that it was quite proper that that should be done and the surplus made available to the new provincial government for whatever purposes it saw fit to use it in the interests of the province. However, it was felt that it would not be appropriate that it should be used to subsidize the sale of Newfoundland products so that they might enter into unfair competition with those of the other provinces. That was a condition in the original proposals for union and it was continued in this arrangement.
Mr. Green: The minister has said that this matter of industry would come under the Department of Trade and Commerce, but I would point out to him that the industrial development bank comes under the Department of Finance. It seems to me that that bank could be of great help in Newfoundland and I should like to know whether any steps have been taken by the industrial bank authorities to see in what way they can help out in Newfoundland.
Mr. Abbott: I am glad my hon. friend raised that point. It may be premature, but it is the intention of the industrial development bank to have offices in Newfoundland, as they have in other provinces. Naturally the management of that bank will be not only willing but anxious to do what is done in 412 Newfoundland HOUSE OF COMMONS other provinces of Canada in assisting in the development of industries.
Mr. Green: I hope they will adopt a different attitude from that adopted elsewhere. During recent months we have been receiving complaints in the west that the industrial development bank is getting very sticky about assisting industry. If they adopt a policy of that kind in Newfoundland there will not be a very bright outlook for the people there.
Mr. Abbott: I do not know on what my hon. friend is basing his statement that they are becoming sticky. The management of the bank has the responsibility of making loans which have good prospects of being repaid. I think the hon. member will find when we come to consider the industrial development bank that they have been making loans in his own province and that the bank has adopted a very fair policy there, as it has in most other provinces.
Mr. Green: If the minister will check up the statements made by some of the officials of that bank and of the Bank of Canada I think he will find they were to the effect that a policy has been deliberately adopted of not being so free with loans. It is not a matter of whether the loans will be repaid; it is simply a matter of holding down expansion. There has been considerable criticism over a policy of that type being adopted on the west coast and I suggest to the minister that he check the situation because I think it is as I have stated.
Mr. Abbott: I am sure my hon. friend does not want me to debate the operations of the industrial development bank. I have been following them pretty closely and there will be an opportunity later in the session to consider its operations.
Mr. Claxton: I should like to supplement the answer of my colleague to the question put by the hon. member for Vancouver South about the promotion of industry. I can say that, in anticipation of the possibility or probability that union would take place on March 31, officers of the Department of Trade and Commerce were sent to St. John's. There is also a committee of senior officials in Ottawa specially appointed to deal with problems of the continuation and development of industry in Newfoundland. Further, a special inquiry was made by a team of ofl'icials into the prospects and outlook of' the seventy-five relatively small industries that exist in Newfoundland to see by what means they could be assisted and encouraged. If the Minister of Trade and Commerce were here he would, I think, be able to give one or two rather striking illus trations of the way in which we expect that union will assist the development of industry in Newfoundland.
Mr. Green: Does the Minister of National Defence know of any definite plan for assisting industry there?
Mr. Claxton: Yes. Some steps have already been taken to meet certain special needs of Newfoundland industry—for example, in the supply of raw materials.
The Deputy Chairman: We are dealing with section 24. When the hon. member for Vancouver South rose I was just about to . ask the committee if they would carry section 23. I wonder if they would do that now?
Mr. Macdonnell (Muskoka-Ontario): As I understand it, we still have to get certain information which has been asked for under section 23, and which the Minister of Finance is to give us tomorrow.
Mr. Abbott: Whether it comes under section 23 or section 24 is immaterial. Section 23 happens to relate to the assumption of the debt. I undertook to obtain for the hon. member for Rosedale, and I should be able to have it at the opening of the house tomorrow afternoon, a statement by main heads of the major items of expenditure. I could not give it to him broken down by individual departments, but I presume the committee want to know the main headings showing how the figure of $50 million which I have given is made up. I hope to be able to have that tomorrow afternoon. There are, of course, a great many non-recurring items in that figure. There are amounts which have to be paid in adjustment of accountable advances, taking over consumable stores, and that sort of thing, which are referred to in the document. I will have that statement available for the committee tomorrow afternoon.  
Mr. Macdonnell (Muskoka-Ontario): I would suggest that section 23 be left over. It seems to me it is always better to have a section still under review, and not be discussing it afterwards when it is supposed to have been passed. Then we seem to be at a disadvantage in asking questions.
The Deputy Chairman: I should like to say to the hon. member that the only point I had in mind was to keep things in order. I wanted to keep the record straight. But if the committee decides to let section 23 stand, that is all right.
Mr. Abbott: For instance, I could give the information under section 26, which provides for the financial payments to Newfoundland. I think it is immaterial under which section I give it.
FEBRUARY 9, 1949 Privilege-Mr. Cockeram 413
Mr. Jackman: The minister has been good enough to say he will give a breakdown of probable expenditures. Will he also give us a breakdown of the estimated federal revenue? We have been given two figures, $20 million and $27 million. I am sure that each of the items which go to make that up- and there are about nine or ten listed in the pamphlet—was the subject of considerable discussion between our delegation and the Newfoundland delegation. I believe we are entitled to know on what the estimate is based.
Mr. Abbott: I could give that at once. I have that here if my hon. friend wishes it, but I have to put the expenditure item over until tomorrow.
Mr. Jackman: If the minister would table it, I think it might be quite adequate.
Mr. Abbott: Perhaps I might do that at the same time tomorrow afternoon.
Mr. Jackman: May I ask the minister whether or not there are any outstanding tax agreements between Newfoundland and any taxpayers in the former dominion. If there are any such agreements, is it to be the policy of Canada to honour them?
Mr. Abbott: On the question of the agreements to which my hon. friend refers, the colony or dominion of Newfoundland has entered into agreements, for income-tax concessions and customs concessions, with certain corporations in Newfoundland. In the terms of union there is a provision, section 27, subsection 4, which reads:
The government of the province of Newfoundland shall not, by any agreement entered into pursuant to this term, be required to impose on any person or corporation taxation repugnant to the provisions of any contract entered into with such person or corporation before the date of the agreement and subsisting at the date of the agreement.
The "term" referred to in that clause is the term enabling them to have a tax agreement with the dominion. The tax concession agreements to which my hon. friend has referred are agreements which of course were entered into with the government of Newfoundland and not with the government of Canada. The policy to be followed with respect to those agreements will be a matter for this parliament to decide.
Mr. Jackman: The minister does not care to express an opinion on the policy which he thinks would be a fair one in the circumstances? After all, there are certain agreements in Newfoundland with high contracting parties, certain sovereign powers. I presume those agreements might be respected in the same way as taxation agreements. In other words, would the minister care to say whether the policy in the case of a high con tracting party such as the United States will be different from the policy for an ordinary taxpayer?
Mr. Abbott: Of course, the agreements to which my hon. friend refers are contracts, and there is in the terms of union nothing that deprives the contracting parties, the beneficiaries of these tax concessions, of any legal right which they have. Newfoundland will of course become a province of Canada, and residents of Newfoundland will become subject to Canadian laws.
The Deputy Chairman: Order.
Mr. Fleming: There is one point I should like to raise. Someone suggested that the information should be tabled. I suggest that it ought to be put right into Hansard.
Mr. Abbott: It is not lengthy, and I think my hon. friend's suggestion is a fair one. I will put on Hansard early tomorrow afternoon the heads of estimated expenditures and the heads of estimated revenues.
Sections 23 and 24 stand.
Progress reported.



Mr. Alan Cockeram (York South): Before the house adjourns, I rise to a question of privilege. I did not do so earlier for the reason that it was necessary for me to check the Hansard record to make sure of the words used by the Minister of Finance (Mr. Abbott). I wish to refer to the statement made by the Minister of Finance earlier this afternoon in which he implied that, in putting the question I asked before the orders of the day, I did so as a representative of special interests. Referring to myself he said:
I am aware of the special interest which he has in the matter.
I ask the Minister of Finance to withdraw that statement. I asked the question because the gold mining industry has a far-reaching influence on the general economy of Canada, and on the welfare of every Canadian citizen. My only interest is that of a Canadian, and I resent the imputation contained in the minister's words.
Mr. Abbott: Mr. Speaker, of course I have nothing to withdraw.
Mr. Cockeram: You certainly have.
Mr. Abbott: I said what I know to be a fact. My hon. friend has a special interest in the subject on which he questioned me. I 414 Privilege—Mr. Cockeram HOUSE OF COMMONS have reason to know that, because on numerous occasions he has spoken to me about it; he has made numerous speeches in the house on the subject, and I made a completely accurate statement of fact.
Mr. Cockeram: Mr. Speaker, I object to this whole proceeding, because I have never obtained an honest or frank statement from the minister on any question I have asked in this house. He always comes back with a flippant reply which does not mean a thing.
Mr. Abbott: If I were given to rising on questions of privilege I would ask my hon. friend to withdraw the statement that he has never received an honest statement from me, but knowing my hon. friend as well as I do I will not bother to ask him to withdraw it.
Mr. Drew: Mr. Speaker, because of the particular manner of the reply that has been made by the minister, there can be no doubt whatever that the words implied a special interest on the part of the member, and he should withdraw that imputation.
Mr. Cockeram: I am not prepared to let it go at that. The manner in which the minister made that statement implied dishonesty or some such thing on my part, and I want him to withdraw.
Mr. Speaker: I believe both sides of the house have accepted the statement made by the hon. member, and the statement made by the minister. I do not believe the character either of the member or of the minister has been assailed. There is no doubt about the honesty of either, and I think both sides should be satisfied.


Mr. Knowles: What is the business for tomorrow?
Mr. St. Laurent: The business for tomorrow will be the same program as we have had today, with the exception that there are no questions or notices for the production of papers.
At six o'clock the house adjourned, without. question put, pursuant to standing order.


Canada. House of Commons Debates, 1875-1949. Provided by the Library of Parliament.



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