May 8, 1905

LIB

Wilfrid Laurier (Prime Minister; President of the Privy Council)

Liberal

Sir WILFRID LAURIER.

For my part I agree very largely in everything said by my hon. friend from Halton (Mr. Henderson). If we had a condition of things jvith which we could deal ourselves on the line he believes to be right and I believe to be right. I would agree at once to his suggestion : imt unfortunately we are confronted with the same difficulty as confronted the fathers of confederation in 1S67. The principle he has laid down that those who have the spending of the revenue should also have the responsibility of collecting it, is so obvious and true that it is a matter of surprise to those who look through the debates of 18(55 and the Act of confederation as it is. that the fathers of confederation should have consented to depart from a principle so true and obvious. Why then did they depart from it ? Simply because it would have been impossible to get any one of the provinces to enter confederation unless it was given a subsidy to meet its own expenses. The people of this country are afraid of taxation, and especially of direct taxation, and it was the spectre of direct taxation which forced those who were responsible for framing the Act of confederation to agree to the plan adopted. Some forty years have elapsed, and since then I do not think that the people of any of the provinces would be disposed to part from the principle there laid down, and agree to telease the federal treasury of the subsidy they receive every year. The conditions are exactly the same in the new provinces of Alberta and Saskatcnewan as they were in the older provinces. It is true that these new provinces have not to surrender their excise and customs to-day ; but if they were not in confederation, they would be free to collect their own excise and customs. Therefore when they came into confederation they surrendered, as did the provinces of Quebec, Nova Scotia and New Brunswick, the right to deduct excise and customs duties,

5444:

and are consequently, for all practical purposes, in the same condition as were these In 1867. Whenever a province enters confederation, that very day it surrenders its right to collect excise and customs and places itself in the same condition as that in which were the older provinces. Suppose you were to say to-day to the provinces of Saskatchewan and Alberta : Will you agree to come into confederation without compensation or subsidy at all ? They would reply no. Of that there can be no doubt, and the gentlemen who represent these provinces to-day will agree in what I say. What is to be done under such circumstances ? We are not introducing a new principle but simply applying that which was accepted in 1867.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
CON

Thomas Simpson Sproule

Conservative (1867-1942)

Mr. SPROULE.

And which has been found a failure for the object in view.

Sir IVILF ItID LAURIER. I will not discuss that now. But suppose it were a failure, where would you apply the remedy ? Would it not be where the failure had taken place? That failure has not taken place in the new provinces, but in the provinces that exist to-day. If you are to introduce the principle of reform, you ought to introduce it, not where there lias been no failure, but in all the provinces generally. 1 agree with my hon. friend (Mr. Sproule) that it may be that the question of principle may' have to be taken up at some future day. For my part, I think we shall have to revise the subsidy question. If I propose the present plan, it is not because I am satisfied that it-is the best that could be. It is not the ideal. But we have to conform to the measure the people will accept, no more. But the day may come, probably at no distant time, u hen the whole subject of the provincial subsidies will have to be taken up in a more radical way than any in which we can deal with it to-day. But, as a matter of fact, it is not possible to take it up today'. We have to legislate within the four corners of the constitution, not only within the good elements, but within the blemishes also. Even though there may be a blemish, we must accept it and carry it out loyally. I have to repeat what I had occasion to say on introducing this Bill, that confederation was, above all things, a compromise. It was almost a superhuman effort to get the several provinces of Nova Scotia, New Brunswick, Quebec and Ontario to agree to surender theii identity' and merge it in a common whole. And those who wanted that conclusion had to sacrifice a good deal to gain it.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
CON

Joseph Gédéon Horace Bergeron

Conservative (1867-1942)

Mr. BERGERON.

I may not-quite understand it, but it seems to me that the entry of the original provinces into confederation and the entry of the Northwest Territories into confederation are not the same thing

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
LIB

Wilfrid Laurier (Prime Minister; President of the Privy Council)

Liberal

Sir WILFRID LAURTER.

at all. Confederation was a union of sovereign provinces who made a compact. They existed before confederation, and they had their sources of revenue, and. before they gave these up, they exacted something from the common government, demanding so much per head of their population. It was fixed at 80 cents per head. I do not know why it was fixed at that figure, but it was the consideration agreed upon. But the Northwest Territories are not, in the proper sense, provinces coming into confederation. They are Territories, they are lands w'e have bought. We. the Dominion of Canada, the province who form confederation are the buyers, or the owners, if I may use that word, of these provinces which were for a long time Territories. Those Territories are peopled by some who were formerly inhabitants of the older provinces and also by many immigrants who have come in from all over the world. We are deciding to-day to erect them into provinces and to give them autonomy. But we are not in the same position with regard to them as we were with regard to the older provinces. So, it has struck me, as it lias struck my hon. friend from Hal-ton (Mr. Henderson) that we do not owe these new provinces SO cents per head on their population for the same consideration that we owed that money to the older provinces. I would not say that I am opposed to giving it, because I can imagine that some strong consideration must have-actuated the government in deciding upon this proposal. But it seems to me that the argument of the hon. member for Hal-ton is a very strong one. As to any change in the allowances to the provinces generally, we have heard of that for many years. I should have thought that my hon. friend the Minister of Finance would have been able to give something of the reasons for the demands made upon the Dominion government to increase the allowance, he having taken part in the conference of some years ago. I think the allowance proposed was to be $1 per head.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

My hon. friend (Mr. Bergeron) may be right. It was a good many years ago.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
CON

Joseph Gédéon Horace Bergeron

Conservative (1867-1942)

Mr. BERGERON.

The reason why I think it was .$1 per head was that I recollect it being stated that sfl at the time of the conference -was about the same as 80 cents at the time of confederation. There must have been an answer from the Dominion government to the demand made by the conference. What was the answer ? I think that was in 1888 or 1887.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

It was in 1887.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
CON

Joseph Gédéon Horace Bergeron

Conservative (1867-1942)

Mr. BERGERON.

The right hon. lender of the government (Sir Wilfrid Laurier) at that time was sitting on this side of the House. Since he has been in power I can

understand, though, of course, X do not know, that the same demands have been made again upon the government, and this government must have given about the same answer as the previous government gave.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
LIB

Wilfrid Laurier (Prime Minister; President of the Privy Council)

Liberal

Sir WILFRID LAURIER.

They gave no answer at all.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
CON

Joseph Gédéon Horace Bergeron

Conservative (1867-1942)

Mr. BERGERON.

That is more embarrassing. Apparently they could not find an answer.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
LIB

Rodolphe Lemieux (Solicitor General of Canada)

Liberal

Mr. LEMIEUX.

it was completely ignored by the government.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
CON

Joseph Gédéon Horace Bergeron

Conservative (1867-1942)

Mr. BERGERON.

X do not wish to express an opinion now, as I understand the question may come before the House. But it seems to me that it is a question to be handled with a great deal of care. The fathers of confederation, when they fixed tlie powers of the provinces on the present basis had in mind that the provinces would impose just what my right hon. friend (Sir Wilfrid Laurier) said a moment ago they were so much afraid of-direct taxation. That is why they were not given a great deal of power. I understand that one man who was looked upon as a great authority on the Liberal side at that time, Mr. Holton, expressed the opinion that it was the duty of the provinces, and their safeguard, to impose direct taxation. I imagine why the government came to the conclusion of granting the provinces their demand. It would be only for a few years. But it is the way in which they carry on their finances, that is the cause of tire difficulty in which the old provinces are to-day. Of course, that is not the subject under consideration, and I do not want to discuss it any further. But X wished to say that, in my opinion, there is a good deal in what my hon. friend from Halton (Mr. Henderson) said, that if we gave 80 cents per head of population to the older provinces it was because we were taking something from the provinces, but that we are taking nothing in the same way from the new provinces.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
?

Mr. I@

There is force in the remark of the hon. member for Halton (Mr. Henderson) and the hon. member for Beauharnois (Mr. Bergeron) that these are not sovereign political entities, and therefore up to the present they have not had the right to collect customs and excise revenues for themselves. But, looked at from the practical standpoint, as to the giving to them of revenue derived from the Dominion, I agree with the Prime Minister, and would not make any distinction between the position they occupy and the position of the older provinces. If they were created into provinces by the imperial parliament outside of this confederation, we should find them collecting excise and customs as the older provinces did. So, whether we give 80 cents per head or not,

we must give them something equivalent to what was given to the other provinces. Behind that altogether is the very important point which was raised by the hon. member for Halton and referred to by the hon. member for Beauharnois, the question of the principle on which to determine the allowance to the different provinces. And the Prime Minister has made the very important statement, if I understood him correctly, in suggesting that it may be the duty of the government in the present year to consider the position of the subsidies to the provinces, which now constitute the confederation. I should have thought that, if that is the position of the government, it would have been extremely desirable to deal with the question at least concurrently with the measure no\v before the House. There will not be so good an opportunity in the history of this confederation to deal with this question as that which now' presents itself.

In the creation of these new' provinces you have the best possible opportunity of dealing once and for all with the question of what shall be the subsidy to be allowed by the Dominion to the provinces. I quite agree W'ith the Prime Minister in his criticism of what was done at the time of confederation, though I am disposed to admit that I do not see exactly what could have been substituted for that arbitrary allowance. It seems to be entirely arbitrary. It is said that it was in lieu of! the customs and excise. Well, then, surely it was Illogical to fix an arbitrary amount and to fix the limit of population. I submit that for two reasons. The province of Nova Scotia is limited to

400.000, and the province of New Brunswick is limited to 400,000. The province of Nova Scotia may reach a population of

800.000, and when it does, the amount which it will contribute to the customs and excise will be very much greater than the amounfwhieh it contributes when it has a population of only 400,000. The same is true witjhi regard to! the population of Quebec and Ontario, and with regard to the amounts payable to them. But'there is another reason why this allow'ance made to the different provinces is absolutely illogical. Every lone who has made the slightest study of political economy knows that the producing power of money varies from time to time. Therefore, 80 cents per head of the population of the provinces in 1905, is an absolutely different thing to what 80 cents per head was in 1867. In this connection I may say that one of the provinces of confederation is at the present time making a claim which, perhaps, may be entitled to some consideration, whether W'e agree with it or not; the province of British Columbia is making a claim at the present time, as I understand, upon this government for the reason that it costs so much more to construct public

works there than it does in the eastern provinces, and also because the cost of living and the rate of wages are much higher than they are in the east. We should not be unmindful, in dealing with these two new provinces, of two considerations, one of which is that probably it will cost more there to carry out public works-as it does now in British Columbia-than it costs in the eastern provinces ; in addition to that, we have to remember the sparse population and the necessity of spreading out public works over a large area. These are considerations which we ought to take into account. But what I want to come down to is, after all, the practical question, that is, the entire absence of any principle which, apparently, has been found to guide the government in fixing the subsidies "for these provinces. Along what lines have they proceeded, upon what principle have they acted in selecting the figures of 800,000 of a population as the limit upon which they fix the allowance ? There may possibly have been considerations which would have induced them to fix that at a larger amount, such as the higher cost of public works and the sparse population spread over a great area. They have departed from the limit of population fixed for the maritime provinces, and they have departed also from the limit of the population fixed for Ontario and Quebec, and they have adopted a somewhat middle course. But I cannot see upon what principle they fix that particular limit of 800,000 population for the new provinces. Is it based on any principle whatever, or is it simply arbitrary, as was the limit fixed for Nova 'Scotia, New Brunswick, Quebec and Ontario, in the first instance ? How is it arrived at ? Is it simply a guess at the. amount which should be considered proper, or is it fixed as a sort of half-way house between the 400,000 for Nova Scotia and New Brunswick and the 1,400,000 for Quebec ?

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
LIB

Wilfrid Laurier (Prime Minister; President of the Privy Council)

Liberal

Sir WILFRID LATJRIER.

That is a fair question. When we came to discuss this clause we would have been glad to know what principle the population limit had been fixed for Nova Scotia and New Brunswick at 400,000, and for Manitoba at

400,000. The record shows us uothing at all about that. But looking at the history of the case, we found that this sum was given, as has been stated already, to start the provinces with, to give them some compensation for what they were losing in entering confederation. The first thought evidently of those who framed the Quebec resolutions was to take the basis of the population as it was in the census of 1861. They did that for Quebec and Ontario. But at that time the population of the maritime provinces, Nova Scotia and New Brunswick, was very small, if I remember right about 100,000 each.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

330,000 for Nova Scotia and 250,000 for New Brunswick.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
LIB

Wilfrid Laurier (Prime Minister; President of the Privy Council)

Liberal

Sir WILFRID LAURIER.

Well, the Pmit of population was fixed for them at

400,000, beyond which their subsidies could not be increased. Therefore it did not seem unreasonable that we should fix a limit double that amount for these new provinces, which have so much larger an area, so much more territory, and which already start with an estimated population of 250,000 each. With regard to Manitoba, the case is absolutely hopeless. Everything with regard to Manitoba seems to have been done in a purely arbitrary manner, without any principle which we can discover. Therefore the best thing we could do was to say that we will give these new provinces subsidies on an estimated population double that which has been fixed as the limit for Nova [DOT]Scotia and New Brunswick. Can the hon. gentleman suggest anything better than that ?

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

We do not claim on this side to have given the matter the same consideration which the government have given it in framing this Bill. Only by way of criticism can we endeavour to arrive at some better conclusion, if any can be found. But it would seem to me that the reason which the right hon. gentleman advanced is not so much one which would lead us to fix their limit at 800,000 as it is one which would lead us to give them a larger per capita allowance in the first instance, when the population is sparse and the territory very great. I do not see that you will logically reach the result claimed by the hon. gentleman, if you follow the statement of the case which he has made. In the commonwealth of Australia there is an appropriation for customs and excise by the federal legislature, but if I recollect rightly, the provinces receive, not an arbitrary sum, but a proportionate part.

It may be impossible-I am not suggesting it would be possible-to carry that out here because goods to a very large amount, entered in one province, are eventually consumed and indirect taxation upon them is possibly paid, to some extent, at least, in another province. I do not know that you could get a great deal of comfort out of that, perhaps, but still the basis of proportion, would naturally appeal to one as a somewhat more logical basis than the arbitrary basis which was adopted by the fathers of confederation and which has been followed ever since. The difficulty, of course, is to suggest wliat we would substitute, but that only brings me back once more to what I pointed out in the few remarks that I made a moment ago, and that is the extreme importance of dealing with the whole question as far as all the provinces are concerned, if it is really proposed to deal with that question, at

. 5449 MAY 4, 1905 5450

the time we are creating these new provinces. We would not want in the slightest degree to he unjust to the new provinces. I am not suggesting that. We want to be generous to them in every possible way. They are deserving not only of fair but of generous treatment from this parliament. I am merely suggesting this for the purpose of convenience, because when, parliament is creating these new provinces, it would be much more convenient, it seems to me, to treat the whole subject from the standpoint of some better principle, if it can be found, than it will be years afterwards, or even one or two years afterwards, when these provinces may be calling upon this government to make good certain claims which my hon. friend the ex-Minister of the Interior (Mr. Sit'ton; foresaw in respect to the question of lands, for example. I do not know whether the government have taken the question of the revision of subsidies sufficiently into consideration to give to the House any information as to what their proposals are at this moment. I would infer not, from what my right hon. friend has said, but I can only express my regret that the government have not been able to overtake that question, if they do propose to deal with it, in time to present it to the House concurrently with the question we are now considering. It may be that it is impossible to do so. I know how much political duties interfere with administrative and executive duties on the part of any government, but still I think it is a matter for verv great regret that the question is not dealt with at this time if it is proposed to deal with it in the near future. # Mr. BERGERON. I hope my right hon. friend the Prime Minister has some other reason than the one he gives, because it seems that he wants to give the committee to understand that he came to the conclusion to double the limit of population of the Northwest Territories because these new provinces were starting with double the population that Nova Scotia and New Brunswick had at the time of confederation. Sir WIEFRID LAURIER. More than double the territory. Mr. BERGERON. I understood my right hon. friend to say that we are going to double the limit of population in these Territories because they are starting with a great deal larger population than the maritime provinces which were limited to 400,000. He was reminded immediately by my hon. friend the Minister of Finance, that Nova Scotia and New Brunswick had together more population in 1867 than the new provinces have to-day. Therefore, my right hon. friend must have another reason than the one he gave for doubling the limit of population in the Northwest Territories. Sir WILFRID LAURIER. Perhaps I did not express my idea correctly. The popu- iatiou of these two provinces must eventually be much larger. They have each a population of 250,000 notv and they are only commencing to keep house. They have ten times the territory that the maritime provinces have, and therefore, as they must have a much larger population, they require more revenue. Mr. BERGERON. That is later on, but my right hon. friend will remember that they have not so many people to-day as the maritime provinces had in 1867. Mr. FIELDING. It must be admitted that there was no logical reason for adopting the 400,000 limit in the original Act of confederation and there is no very logical reason for adopting the 800,000 in this. It is an estimate of the probable growth, and we know that in these Territories the growth is likely to be much more rapid than in the maritime provinces, but my own judgment is that before this arrangement has been in operation a few years the whole question will have to be considered in the light of what has been said to-day, and then perhaps the system will have to be general in its application. In the meantime, with all the weakness of the system, what can we do to-day but conform to the principles laid down in the British North America Act V Mr. SPROULE. I wanted to ask the hon. Minister of Finance if he had collated any data regarding the finances of the different states, as to what they do in regard to their financial arrangements and whether, in view of our experience-because it was an experiment for us and our experience has not been perfectly satisfactory-the government have considered any other plan for supplying a revenue, and if there is any correspondence between Mr. Haultain and the government of the Northwest Territories and this government in regard to the subject V Sir WILFRID LAURIER. No. Mr. FIELDING. I think I am correct in stating that in the United States they have no system in regard to subsidies at all but that each state has to regulate its own finances. I admit that there is something to be said in favour of the provinces doing so here if we could start afresh. I want to say a word in defence of the fathers of confederation, and I am not very much given to defending the fathers of confederation in Reference to the financial arrangements that were adopted at the time of confederation. If we had been dealing with the provinces as we are now dealing with the provinces of the west we might have demanded from them such terms as we pleased. We might have said : Get your taxation in any way you please. But, that was not the condition in 1867. Each ot these provinces was an independent body when it was asked to come in,_ and the fright at the idea of direct taxation which

my right lion, friend the First Minister (Sir Wilfrid Laurier) lias referred to undoubtedly had a great effect on some public men. They said : Each of these provinces levies excise and customs duties, and if you take away from us our excise and customs duties you must give us some portion back. I do not think that was an unreasonable thing.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
CON

Joseph Gédéon Horace Bergeron

Conservative (1867-1942)

Mr. BERGERON.

Not for the old provinces.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink
LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

If we admit that it was a reasonable tiling for the old provinces, what position are we in to-day ? Shall we say to the new provinces: We gave a

portion of the excise and customs back to the old provinces but we will uot give it to you '! We collect customs and excise from the old provinces and we give them some back; we will collect the excise and customs from the new provinces and we will in the same way give some back. This is the uniform practice to-day. My hon. friend (Mr. Sproule) wanted to know if any other plan has been suggested, and I am frank enough to say. that, notwithstanding that there is something to be said in favour of some other plan, I have no expectation that you can arrange the finances oil any other basis. There is no province which is willing to give up its subsidy. The system is a part of our constitution. It is provided for by tlie British North America Act wholly beyond change by ourselves and we would be obliged to go to the imperial parliament to change it. I believe that the provinces would be rivalling eacli other to get their delegates on tlie other side in opposition to the proposal if we asked for anything of the sort.

I fully anticipate that if any revision is made it will have to be on the lines of the present system. We may devise some system, which, while adopting the present principle, will work the details out in some other way.

Topic:   PROVINCIAL GOVERNMENT IN THE NORTHWEST-SUBSIDY TO ALBERTA.
Permalink

May 8, 1905