Mr. Ashbourne I want first of all to congratulate most heartily Mr. Newell and Mr. Keough, two
young men unknown to me
until just recently, on their maiden speeches. In resuming
the debate on this motion, I ask the earnest consideration of
the members present for a few observations which I shall make. I
wish it to be understood that I am regarding this report as a valuable
one. We cannot be too fully informed on the financial and economic conditions
of our land. I came to this Convention with an open mind, and with a firm
desire to ascertain as well as I could, for myself and for the people who
sent me here, a true picture of Newfoundland. Before my election I was
asked what form of government I favoured. My reply was that I
refused to have my hands tied. I realise, sir, that if I had my mind made
up before I came I might as well come and cast my vote and then go home.... I
would like to approach this important Convention with an unprejudiced
mind. This is a View which I made clear to my district, and I feel that I
lost some votes because of my association in former days as a member of
responsible government; some of my constituents may have thought that
I still favoured responsible government. I realise that in the north there
is a very strong sentiment in favour of Commission government. The matter of selection
of Commissioners has often been debated, some
people preferring a form by which the people themselves would elect the
Commissioners. I believe the fishermen and other producers
in the country, have realised that there has been a certain stability and
security evident for some years, particularly in the ordinary marketing of
our staple products of the fisheries. It is perhaps true that in other
sections of Newfoundland there may be decided preferences
for some other form of government, or for responsible
government. I have no doubt, sir, that the seeming indifference and apathy
which was reflected, particularly in some outports, in the
small number of votes cast in the election in June, was perhaps because
the people were not sufficiently informed about the matter. I had
no public meetings. I got out a manifesto and distributed it. When it was
my privilege to sit in the House of Assembly about 20 years ago I said I had
no doubt but that half a dozen men could govern Newfoundland.
My first experience, sir, with this chamber, was as a boy when I stood in the gallery
yonder and looked down upon this house. The one person that I remember was Sir Robert
Bond, that great statesman that we remember with pride and affection, who represented
the honourable and his toric district of Twillingate, having as its chief town the
metropolis of the north. This great leader in the political arena was one of the greatest
statesmen Newfoundland ever produced, whose wise and stable leadership is a matter
of history. I remember well Sir Robert, and, although I cannot at the moment recall
his exact words, he talked about a bubble which would be made to expand and occupy
such a large space, but which would utterly disappear when touched by such a small
thing as a pin-point. When the people of Newfoundland decide that it is time to take
up the duties of responsible government there should not be the shadow of a doubt
about the ability of the people to carry on successfully the various tasks of government.
It is no easy task to govern a country wisely and well. It is an easy matter, often
times, to borrow money, and much easier to spend it, but we all know where that generally
leads. We have suffered in the past in Newfoundland, and I believe it is largely because
of a lack of education. I believe that we need here in the city of St. John's a university,
and we need in our city, and also in our outports, the very best teachers that we
can procure. The monies now being spent on education will, I hope, bring rich rewards
in the future. I have no doubt in my mind whatever, Mr. Chairman, about the honouring
of
40 NATIONAL CONVENTION September 1946
the pledge given us by the British government.
The British government came to our aid
generously and fully in our days of need, and
advanced us $11 million, and let us show our
appreciation of this fact. We live in a world in
which we are interdependent. No man lives to
himself, no country lives to itself. As the ebb and
flow of tides continue, so a mutual world trade
and commerce will ever be present upon the vast
expanses of our ocean, bringing us, we hope, the
necessary essentials of life, and also carrying our
own products by which we live and by which we
have flourishing industries, and to provide the
necessities of life....
Our strategic position between the new and
old worlds, being the Gibraltar of North America,
gives us a wide bargaining power. We have near
our shores vast treasuries of the deep, which
when properly developed and effectively
marketed will enhance our economy. We realise
we have been fortunate in having UNRRA and
the rehabilitation associations to help us out in
the marketing of our produce, and as we face the
future it gives us some concern regarding the
competition which will soon be evident from
fishing countries on the other side. We must see
to it that our capital assets bring to our shores that
necessary wealth by which our people can live
and maintain themselves in dignity and security.
That is why people long for freedom from want
and a sense of security, so that they will be able
not only to have three meals a day, but there will
be that dignity and that prestige which we as
Newfoundlanders desire. It is unthinkable that
we should do without the necessary amenities of
life in order to provide and build up an expensive
administrative form of government. We have
many drawbacks, some of them resulting in
unemployment. In the north, people can only
work for a period of a few months, necessitating
quite a bit of spare time. There is a serious curtailment in the earning power of
Newfoundland
as a result which we must try to overcome. Our
social conditions need improving, the cost of
living needs to be lowered. In this great task of
building a better Newfoundland we are digging
the foundation. Let us find the solid ground on
which we can help to build a better Newfoundland, realising that we are building and
working together, and let us see to it that we do
not labour in vain.
[The debate was adjourned, and the Convention
resolved into a committee of the whole to hear the
address of the Commissioner for Finance]
Mr. Wild I believe it is the wish of the members of the
National Convention that I should this evening give a broad outline of the
financial position of Newfoundland as I see it.
The Report on the Financial and Economic
Position of Newfoundland, prepared by the Secretary of
State (which I shall refer to as the White Paper) which has been
prepared for the assistance of the Convention, covers a good deal
of the same ground and gives more detailed information than I shall be
able to attempt today. I would also like to refer to the survey on
Newfoundland, edited by Dr. MacKay
[1], copies of
which have, I believe, been circulated to members and which contains
much valuable information. What I have to say will not be new, as I believe
that most of you have already given a good deal of private study to these
important questions and fully appreciate the essentials of
the present position, but my talk will, I hope, be of some help in bringing
these matters into focus.
It is chiefly with government revenue and
expenditure that, I take it, you are concerned at
the moment, although in your present deliberations this must be considered in relation
to the
economic position of the country as a whole.
Perhaps it would be most convenient if I
started by reference to government expenditure.
The table on page 5
[2] of the White Paper-shows
a rise in expenditure between June, 1934, and
March, 1946, from $11.6 millions to $29.1 millions. The latter included over $6 millions
of
reconstruction expenditure, so that a figure of
$23 millions should be taken for comparative
purposes. The estimates for the present year
again provide for a total of $23 millions, if we
exclude reconstruction and special expenditure
amounting to $11 millions to which I shall refer
later. This increase from $1 1.6 to $23 millions in
ordinary expenditure, i.e. the cost of maintaining
government services at their present level, including the service of the public debt,
is large -
September 1946
NATIONAL CONVENTION 41
the cost has been just doubled, and you will wish
to know the main reasons for it. As the White
Paper shows, maintenance of social services
(Public Health & Welfare and Education) account for $5 millions of the increase, and
maintenance of public services (Posts & Telegraphs,
Customs, Justice, Natural Resources, Public
Works and grants to the Newfoundland Railway)
for $4 millions. There have been increases of
lesser degree under other heads.
There has, as you are aware, been a very
considerable increase during the last 12 years in
the scope of government services, To meet needs,
which in the view of the Commission were urgent, we have increased the size of our
hospitals
and other public institutions including the erection of some 14 cottage hospitals;
we have extended the nursing services, clinics,
anti-TB services, etc. We have substantially increased the rates of assistance given
to the infirm
and aged. Sir John Puddester will be able to give
you a fuller account of these improved social
services.
Educational services have been very considerably improved, particularly the status
and
emoluments of teachers; the introduction of compulsory education has led to an increase
in the
number of children attending educational establishments. The present maintenance vote
of over
$3 millions for education compares with a total
of half a million dollars to which the service had
been cut in the days preceding the period now
under review. The increases of cost in the Departments of Posts and Telegraphs and
Customs are
not so large and are counterbalanced by increased
revenue. In the Department of Justice the strength
of the police and fire services have been considerably extended. While in the Department
of
Natural Resources there have been established
services such as the provision of bait depots, and
substantial grants to the Newfoundland Fisheries
Board; this department has also introduced the
Ranger Force and inaugurated numerous
schemes for the encouragement of agriculture
and for rural development which did not exist
before. In passing I might mention that an item
of $500,000 on page 58 of the estimates for
1946-47, representing payments to the Salt Fish
Marketing Fund, which are counter-balanced by
similar receipts under the head of customs, will
in future disappear as this Fund is now being
wound up. There have been considerable
developments in the services rendered by the
Department of Public Works, including the maintenance of roads, public wharves and
buildings,
and geological surveys.
But quite apart from the widening of the scope
of government services, we have to bear in mind
the increased costs for salaries, supplies and
materials which are the inevitable result of reduction in the value of money through
the war.
Furthermore, we have to remember that in 1934
government services had been pared to the bone,
as in the case of the educational service to which
I have referred particularly, and a considerable
increase over the levels to which expenditure had
been cut in the time of severe depression could
be expected in the natural course of events.
I should point out that the provision of $23
millions in the present year for ordinary maintenance expenditure, including the service
of our
public debt, makes little provision for unemployment relief, although the total of
over $1,300,000
actually provided for assistance to the infirm and
aged is very much greater than it was a few years
ago. In 1937 we spent over $1,600,000 on unemployment relief at the rates than current,
and
it is certain that, if similar unemployment conditions returned, we should require
a very much
larger amount to meet this need. Quite apart from
the possibility of provision having to be made in
the future for unemployment relief, we cannot, in
my view, expect any reduction in the figure of
$23 millions at present provided for maintenance
services. Savings may be effected in certain
directions, but they will be more than counterbalanced by normal expansion of activities,
which is the inevitable trend in any progressive
community. We can, indeed, expect additional
costs of well over half a million dollars a year in
respect of the operation and maintenance of new
institutions, such as the new sanatorium on the
west coast, the extension of the sanatorium in
St. John's by the incorporation of one of the naval
hospitals, and the operation by the Department of
Public Health and Welfare of a former military
hospital at Botwood, The provision of these improved social services has undoubtedly
led to a
better standard of living, which I am sure you will
agree was urgently needed; it would certainly
lead to great hardship and probably suffering if
these benefits were not maintained. A question
42 NATIONAL CONVENTION September 1946
you will have to consider is whether they do not
need to be further extended.
We have also provided in 1946—47 for $11
millions in respect of reconstruction and special
expenditure. As I explained in my last budget
speech, of which copies are available to members
of the Convention, reconstruction expenditure,
which we might alternatively call extraordinary
expenditure, relates to important extensions of
existing services and to new projects, mostly of
a capital nature, such as new hospitals, public
buildings, roads, harbour improvements, etc.,
which are essential for progressive development
of economic and social conditions. It is expenditure which could be drastically reduced,
even if
not completely out off, if financial stringency
dictated such a course, although it would mean
leaving a number of worksunfinished and would
be a most unfortunate happening so far as the
development of the country is concerned. We
have applied the term "special expenditure" to
certain recoverable advances which we are
making, mainly by way of loan, such as advances
to the St. John's Housing Corporation. It might
reasonably be argued that this is not expenditure
at all in the true sense, but we have included it in
the budget in order to get statutory authority and
to show a complete picture.
The main items of reconstruction expenditure,
which for 1946—47 amounts to $8 millions, are in
respect of advances to the Newfoundland Railway for capital improvements, the cost
of improvements in the internal telegraph system,
costs of civil re-establishment and vocational
training, grants for the extension and improve
ments of school buildings; schemes for the
development of the forests, fisheries and rural
districts under the Department of Natural
Resources; improvement and reconstruction of
roads and bridges and the building of new roads,
the construction of new hospitals and other public
buildings and of ' new harbour facilities, the
provision of homes for indigent persons, etc., all
under the Department of Public Health and Wefare such as that for the extension of
the general
hospital at Comer Brook, and special assistance
to new local councils. Details of these reconstruction services can be obtained by
reference to the
current estimates as well as to the memorandum
on reconstruction and development schemes
which has been prepared for your information.
Members will no doubt wish to consider this
memorandum at greater length. As is explained
in the opening paragraphs of the memorandum,
the schemes which are not already in hand must
be regarded as tentative. Progress would depend
entirely on the availability of funds and particularly on the state of current revenue,
out of
which it would be hoped to meet as large a part
as possible of such reconstruction expenditure,
with the object of conserving the island's surplus
balances to meet the needs for a rainy day. It is
pointed out in the memorandum that, while a
considerable number of the schemes would not
involve additional recurring costs of maintenance, in other cases such a consequence
must
be considered. This is of particular importance in
the case of new roads, which call for heavy
recurring expenditure in maintenance. On the
other hand, some of the schemes should lead to
increased revenue or the saving of expense. I
haVe previously referred to special expenditure,
which amounts in the estimates for this year to
approximately $3 millions. Over $2 millions of
this is in respect of loans for housing purposes;
$250,000 is for loans for the development of the
fishing industry; and the balance is required to
finance operations at the Gander Airport, the cost
of which we hope to recover. This is a matter
about which the Commissioner for Public
Utilities and Supply will be able to give you
further information.
If you will refer again to the table on page 5
of the White Paper, you will be able to trace the
growth of revenue from $9.6 millions in 1934-35
to an estimated $30 millions in the current year
and an actual revenue of over $33 millions in
1945-46. Present indications are that actual
revenue in the current year will exceed the estimate as, you will be glad to hear,
actual collections are in advance of the revenue which we had
received in the corresponding months of last
year. We are still experiencing a "boom"
economy which has not yet begun to recede. How
long we can expect this happy state of affairs to
continue is a matter of conjecture. In any event,
we can, I think, expect a considerable increase
over the level of revenue attained in the years
before the war. Just as the depreciation in the
value of money has increased government expenditure and earnings generally, so we
may expect
a corresponding increase in ad valorem customs
September 1946 NATIONAL CONVENTION 43
revenue (subject, of course, to tariff adjustments),
and also in the yield of income tax based on
earnings and profits. To maintain ordinary expenditure at its present level, we shall,
as I have
already pointed out, require at least $23 millions
a year, and the more we can raise in excess of this
figure, the better shall we be placed to undertake
development projects.
I have been asked if I would give to the members an estimate of the total national
income of
Newfoundland. This is, of course, an important
index by which to measure taxable capacity and
I have always regretted that we are not so well
equipped in Newfoundland as in some other
countries to measure this factor, which is being
used to an increasing extent for taxation purposes. The answer to the question can
best be
obtained by reference to the appendix on page
528 of the survey, edited by Dr. MacKay, to
which I have already referred. It will be noted that
lack of adequate basic information has prevented
the writer from making more than a rough estimate and has compelled him to make it
with
reference to a pre-war period. His estimate
amounted to approximately $45 millions per
annum, which he suggests had been doubled
during the war. I do not know whether any of the
members present are familiar with the intricacies
of calculation of national income according to the
formulae normally employed. It is a very complicated business and no statistical calculations
can
be of much value unless adequate and accurate
basic information is available. It is certainly not
available in Newfoundland at the present time
and the only practical way of getting down to the
task would probably be to take samples of in
dividual incomes of cross-sections of the community as a basis to work on. One of
our greatest
difficulties in obtaining basic statistics in Newfoundland has been the reluctance
and suspicion
of the persons called upon to give the necessary
information, and it will need something in the
nature of an educational campaign before we can
obtain the data which we require for the purposes
we are considering. Our difficulties are all the
greater because of our scattered population and
because such a large proportion of our population
work as individuals rather than as wage-earners
in industrial undertakings. I might add that notwithstanding these difficulties we
have been considering whether we could enlist technical
assistance to carry out a survey of the kind which
would be required, and I hope that it will be
possible, in due course, to give a closer estimate,
though I am afraid it will still be merely a rough
estimate, of our national income. I should like to
make it clear that, although our statistical information has not reached the standards
we desire,
it is nevertheless much more complete than it was
a few years ago. We have indeed made consider
able advance in this direction and, moreover, we
have greatly improved the methods of collating
the information obtained. Returns of imports and
exports are, for example, now produced quarterly
and much more promptly than formerly. I have
brought with me a copy of those for the quarter
ended 31 March, 1946, which members can examine if they wish. I should be pleased
indeed to
arrange for any members who so wish to see the
very modern and extremely interesting machines
which we have installed in the Department of
Finance for statistical and other purposes.
There is no doubt that our taxable capacity has
increased considerably since before the war. The
country is stronger in a number of ways and a
good deal of money has been spent in the reorganization and improvement of the fisheries,
but
there is still room for considerable development,
as the chairman of the Fisheries Board pointed
out the other day. To increase our standards of
living we must, of course, increase our output per
capita. Although we cannot expect the price of
fish to continue at its present level, there are
promising signs, such as the activities of the
International Food Organisation, which suggest
that a determined effort will be made to stabilise
prices and to ensure that primary producers are
given a fairer deal than they often were in the
past. We have a number of promising new industries, such as the canning factory which
is
being installed on the west coast, and the
prospects of the paper and logging industries, for
the next few years at any rate, are distinctly
bright: the companies concerned are looking for
additional labour. The future in regard to mining
is not quite so clear, but work is steady at the
present. We also have to take into account the
several thousands of men engaged in steady
employment at the American bases and the
Gander and Goose airports.
In assessing, on this very broad basis, prospective levels of production, to which
our taxable
44 NATIONAL CONVENTION September 1946
capacity is closely related, we must also bear in
mind the stronger position of the country by
reason of accumulated savings, both personal and
corporate, to which reference is made in tables 4
and 5 appended to the White Paper. These
savings should ensure for some years to come a
steady demand for goods and services and act as
a most valuable buffer against the effects of possible depression.
As you are aware, we have considerably increased direct taxation during the war, and
it now
amounts to more than half the yield from customs
duties, on which we used mainly to depend. Some
revision of our tariff will undoubtedly be necessary as the result of international
trade discussions which have been under consideration for
some time and which are now scheduled to start
next month. We shall, of course, endeavour to
secure more favoured treatment for the entry of
our produce into other countries but, at the same
time, we shall be expected to make concessions
in return. Until these negotiations have reached a
more advanced stage, it will be impossible to
assess the effect on our yield from customs duties
but, in any event, we must be prepared for some
reduction in this source of revenue, as our tariff
is undoubtedly still heavy on certain classes of
commodity, although, as you will see from paragraph 17 of the white paper, during
the last 12
years the average rate of duty over all imports has
been reduced from 36.5 to 25.5 per cent. We can,
I think, expect some increase in revenue from the
Department of Posts and Telegraphs as its
telecommunication services are improved and
extended. On the other hand, we must be
prepared for some decline in the revenue from the
Board of Liquor Control, as a falling off in consumption above the war time levels
is already
taking place.
I should like next to refer briefly to the public
debt. You will find a statement of the debt and
sinking funds as at 31 March last on page 35
[1] of
the White Paper. This includes both the sterling
debt, and the local loans of $1,500,600 (3.75%),
$1.5 million (3.25%) and of $2 million (3%)
raised in 1940, 1942 and 1943, respectively.
Since that date we have paid further annual sinking fund instalments of ÂŁ177,950 and
$41,250 on
the sterling 3% guaranteed stock and on the dollar
3.75% war loans, respectively, so that the net
figure of $82,188,000 shown in the statement
must be reduced by these amounts. If we allow
for the recent 10% appreciation in the Canadian
dollar and interest accrued on sinking funds since
31 March, the net debt is now reduced to the
equivalent of approximately $73,876,000. As is
mentioned in the memorandum on reconstruction
and development schemes, we have recently set
aside, at interest, an amount of ÂŁ800,000 (approximately $3.2 million), to meet the
repayment
of the two remaining sterling trustee stocks which
mature in 1950 and 1952, respectively. This sum
was obtained from the government of the United
Kingdom as the first repayment of the loans
totalling $12.3 million which we made as a
voluntary contribution to the war effort in the
years 1941- 1944. The balance of these loans still
due to us by the government of the United
Kingdom is now approximately $9. 1 million, and
applying the repayment of $3.2 million to the
reduction of debt, the total amount of our public
debt is reduced still further to $70.5 millions.
This figure excludes a 2.5% loan to the railway arranged in 1941 from the Defence
Supplies
Corporation of the United States for the purchase
of equipment, of which the balance outstanding
is now $1,493,000. It also excludes the value of
unredeemed savings certificates, amounting to
some $2,257,000, out of total issues of
$3,103,000, since we have balances set aside to
meet in full the government's liability in respect
of these certificates. Out of the proceeds of
savings certificates, we lent $1,800,000 to the
United Kingdom (part of the $12,300,000 I have
already mentioned), which will be available
when we want it. The balance required to meet
outstanding certificates is on deposit, at interest,
at the Bank of Montreal, St. John's; this is the
source from which current redemptions are met.
At the end of March, 1946, we had an accumulated revenue surplus of $28,669,000. Of
this,
$10.5 million was loaned to the government of
the United Kingdom (since reduced by the repayment of $3.2 million to provide for
the redemption of the two sterling securities I have
mentioned). The balance, apart from some
$240,000 used to finance the payment of allotments, etc, of men serving overseas with
the
imperial forces, was deposited at interest at the
Bank of Montreal. I should explain, however,
September 1946 NATIONAL CONVENTION 45
that additional advances in respect of similar
agency services, have been made by the bank on
a guaranteed overdraft basis, instead of being the
subject of issues from the exchequer. The amount
of such outstanding advances at the present time
is approximately $1.2 million. They will be
cleared as soon as audited accounts are rendered
by the Newfoundland departments concerned to
the service departments in the United Kingdom,
who, I might add, have been pressing for these
accounts as they are anxious to clear them as soon
as possible. This matter is well in hand and I am
informed that a large batch of audited accounts
has been despatched to the United Kingdom
during the past week.
I understand that the Convention wishes to
have further information regarding the 1% sinking fund on the 3% guaranteed stock.
The annual
payment, as shown in the published estimates, is
the figure of ÂŁ177,950 which I have already
quoted. It has been paid every June since 1938,
when the first payment became due, to the trustees to invest the sinking fund contributions
in the
guaranteed stock, as well as the interest which
they receive on the sinking fund investments. In
addition to the statement in the white paper, you
will find this information in the accounts published with the Comptroller and Auditor
General's
report.
[It was agreed that Mr. Wild would be requested
to meet the Convention again on September 24.
The Convention adjourned]
