April 30, 1959

?

An hon. Member:

What about old age pensions?

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LIB

John Whitney Pickersgill

Liberal

Mr. Pickersgill:

-such as all the money paid to McKim's and all the additions to travelling expenses. But I do not intend to be diverted from my speech into making the speech of the hon. member for York-Scarborough. Next on this list, in paragraph C, we have "grants to municipalities in lieu of taxes on federal government property". This is described as a contribution to the provinces, and it is so ridiculous that it is not even worth wasting words upon. We have left, in the whole of this table, just three items: equalization payments, stabilization payments and the Atlantic provinces adjustment grants.

Dominion-Provincial Relations

Everywhere I have been I have given the government full credit for the Atlantic provinces grants. I think they are a good thing. I wish we had felt that we had been able to make them when we were in office. But I would remind hon. members that between 1956 and 1957 the increases, not in grants or contributions but in the share of the taxation that went to the provinces of this country as a result of Mr. Harris' new deal, were very much higher than the Atlantic provinces grants. In fact, they were three or four times as great, though the Atlantic provinces grants were a good and needful thing and I give the government full credit for them.

The equalization payments and the stabilization payments are, of course, grants to the provinces. That, I admit, and I admit it with the more enthusiasm because this was a Liberal achievement, one of the greatest Liberal achievements of our domestic policy, and, I may say, one which was opposed bitterly by the Tory party from start to finish. Mr. Drew did his utmost when he was premier of Ontario to prevent it. He attacked it unsuccessfully all the time he was Leader of the Opposition. My friend the hon. member for Lapointe this afternoon recalled the attitude that the hon. member for Eglinton expressed in this house as recently as 1956. Indeed, this whole equalization policy was a policy which the Tory party was pledged to end. The Solicitor General said that this basis of grants was a wicked thing and as soon as his government got into office they would change the whole basis but we have not heard much on that subject from the Solicitor General since he became a minister of the crown. Of course, we understand the rules of cabinet solidarity; at least some ministers observe it.

In the year 1957-58 the amount of the equalization payment was $136 million and the amount of the stabilization payment was $3,400,000; that is to say, a total of approximately $140 million. That represented some small increase over the previous year in the equalization feature-a very small increase indeed-but the bulk of that $140 million was the direct result of the formula in the taxsharing law as it was enacted by this parliament in 1956 when the Liberals were in office. There has been only a small increase in these payments to the provinces apart from the Atlantic provinces grants since this government came into office. In fact, the word "contributions" is used rather than "payments" and indeed if they were payments it might have been another matter, but the only contributions since this government came into power apart from the Atlantic provinces grants were the equalization features of the 3 per cent we are talking

about today and the equalization aspect of this is, of course, a relatively small proportion of the total amount which I have not taken the time to work out but which no doubt the minister could give to the committee.

In order to indicate how very different that is from what the minister said the members of his party were going to do, let me remind the committee of one or two things he said as recently as last year. I have here extracts from several speeches and broadcasts he made. Perhaps I should read this to the hon. member for Quebec South. This is an extract from a speech made by the Minister of Finance on the French television network program, "Les Affaires de l'Etat", on November 24, 1958. This was after the election. It was even after the Montmagny by-election. As closely as I can make out it is an exact repetition and an accurate translation of what was said in the Montmagny by-election and that is perhaps why it was repeated. It reads as follows:

(Translation):

In the same way, we have respected provincial rights. We have injected into federal-provincial relations a new spirit of co-operation and respect. And so it is estimated that under the new taxsharing formula with the provinces-

The new formula is exactly the same Liberal formula.

-the new tax-sharing formula with the provinces, Quebec will receive $19 million more than under the Liberal government.

(Text):

Again claiming that the taxes that Quebec collects itself are a contribution from this generous government. I continue: (Translation):

We have increased the provincial share of each tax dollar paid by the Canadians, thus reducing proportionately the federal share.

(Text):

That was before the budget; it is all changed now and in fact it is just the reverse. I continue:

(Translation):

Unlike the Liberals, we are not-

(Text):

That is a real joke. I continue: (Translation):

-we are not centralizers, but constitutionals. (Text):

That was also before the Prime Minister's statement of March 25, this claim that the Conservatives were constitutional. I do not want to sit down without saying a word or two about what was said a while ago by the hon. member for Quebec South. He said that the Liberal scheme was impossible and un-

Dominion-Provincial Relations satisfactory. Why? Why was this Liberal scheme unsatisfactory? What was the great reason? He said:

(Translation):

None of the provinces are satisfied.

(Text):

I think that is evident. It is still true and in 1962 it will still be true and when the hon. member and I are both dead it will still be true. There would be something dead about any federal state in which both national and provincial authorities were fully satisfied with the fiscal relations, because the people who are elected to look after provincial affairs have a responsibility to do the best they can for the people of their province and they are never really going to admit they have enough money to do it, especially when they think they can get the money from the generous Minister of Finance. The hon. gentleman need not think that a new formula is going to change that very much.

What will be disturbing to many people and I am sure it was extremely disturbing to the friends of the hon. member for Quebec South and those of the Minister of Finance in the province of Manitoba was something else he said. He trotted out the old Tory idea which I thought the Prime Minister buried during the 1957 election when he spoke in Manitoba. He did not talk about it in Ontario but when he was in Manitoba he apparently got in a funk and declared, "We believe in equalization, too. We are just as much in favour of equalization as the Liberals are." Here we have the hon. member for Quebec South coming back with the old doctrine under which they would divide up the tax fields and let the provinces collect their own taxes and the federal government collect its own taxes and everybody would be happy. I will tell the hon. member that if the people in Quebec did the arithmetic they would not be very happy about this doctrine but I am not now talking about Quebec, I am talking about Manitoba where more than any place this doctrine of equalization was devised by Mr. Bracken and Mr. Garson many years ago when we had the problems that we had in the thirties in the western provinces.

I can tell the hon. member that any politician, no matter what party he belongs to, who goes out and tells the people in Manitoba, New Brunswick, Nova Scotia, Saskatchewan, Prince Edward Island, Newfoundland or even Alberta, I suspect, that equalization is going to be done away with and the provinces can raise their own revenues-

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PC

Jacques Flynn

Progressive Conservative

Mr. Flynn:

I did not say that.

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LIB

John Whitney Pickersgill

Liberal

Mr. Pickersgill:

If the hon. gentleman

wants to tell us what he did say, he can correct me as soon as I am finished. What I understood him to say was that temporary aid would be given to the poorer provinces when they needed it but that it should be temporary. The plain fact is that at least six of the provinces in this country all the time, if they have to depend upon the taxes that they can collect within their own borders, will not be able to give decent Canadian services to their people. That is the whole reason for equalization. That is why we did it and that is why we Liberals are proud of it. We believe that if Canadians are going to have an equal citizenship they must have at least a rough approach to equality of services and opportunities.

This notion that in Saskatchewan, Manitoba, Newfoundland or even in Quebec you can impose a level of taxation and raise enough money there to provide provincial services without imposing punitive taxation upon the people is just not a fact. Of course, it can be done in Ontario. Why? It can be done in Ontario because of the protective tariffs and many other economic advantages that Ontario now has, not all of which are natural advantages, though many of them are.

What was the system we had at the beginning of confederation? Why do we have those statutory subsidies mentioned in that table? We have them because in 1867 Quebec would not have entered into confederation without statutory subsidies. Nova Scotia got them raised within three years of confederation. New Brunswick would not have come in without the statutory subsidies. The only people who would have been satisfied with this system of having provincial revenue raised exclusively through taxation were the people of Ontario. For a long time they will continue to be the only province where that would work. Unless we want to have disunity, division and inequities in this country, that would not be tolerable at all.

Although I do not think it is expedient to be asking us here in this parliament every year to pass this same resolution and do this same thing, I do say that the fundamental policy, of which this resolution is a small amelioration, a very small amelioration, as I think I have shown in what I have said, is fundamentally and basically a good policy; and the best reason for contending that it is, is the fact that after two years in office the ingenious and hard-working Minister of Finance, with all those commitments behind him and all those promises behind him, has not been able to devise anything better.

This government will not meet the provincial governments in conference. Why? Because they have nothing new to suggest, and they have now called-and I refer to the speech from the throne, and there was no motion about this subject, sir, since you are beginning to get restive-they are going to ask civil servants of the federal government and the provincial governments to try to get together and work out some ideas for them.

Where are those wonderful ideas that the Solicitor General had before the election that were going to sweep this rotten Liberal system out of existence and put something better in its place? Where is this better thing? It is just another vision, sir, and it is worth about as much as the rest of the vision.

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PC

Jacques Flynn

Progressive Conservative

Mr. Flynn:

Mr. Chairman, if I am permitted to answer the hon. member for Bonavista-Twillingate I will say that what I proposed was a formula based on two principles: the first one, maximum fiscal responsibility; and, the second, federal aid to the poorer provinces in the form of a subsidiary measure on a temporary basis; but "temporary" may be as long as needed.

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LIB

John Whitney Pickersgill

Liberal

Mr. Pickersgill:

I do not think I did the hon. member much injustice.

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PC

Jacques Flynn

Progressive Conservative

Mr. Flynn:

I am more optimistic on the future of Newfoundland than the hon. member for Bonavista-Twillingate seems to be.

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CCF

Douglas Mason Fisher

Co-operative Commonwealth Federation (C.C.F.)

Mr. Fisher:

May I ask the hon. member a question? Is the point of his speech this: the policy of this government is identical with that of the Liberal party so far this particular question is concerned?

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LIB

John Whitney Pickersgill

Liberal

Mr. Pickersgill:

No, I did not say the policy was identical. I do not think they have any policy. They are simply continuing to use our formula because it is a good one and because they have not been able to think of anything better.

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CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. Argue:

Mr. Chairman, I feel that at this time dominion-provincial relations are at a very low ebb. I think the government is getting a decided bad reaction from the provinces, not only because of what the government is doing but the manner in which it is being done.

The resolution which is before us at this time will carry into effect for another year the motion and the provisions which are being followed at the present time. We had expected that, as a result of many promises made in the recent election campaign, there would have been a new arrangement worked out on a satisfactory basis with the provinces by mutual agreement in a way which would improve provincial financing. Before the

30, 1959 3205

Dominion-Provincial Relations election the government seemed to keep in mind the long complaints that the provinces have had as to the need of additional revenue, and seemed to take the feelings of the provinces into account; but immediately the election was over the government's consideration for the welfare of provincial governments seemed to come to an end.

On January 25, 1958, as reported at page 3795 of Hansard, the Minister of Finance, in announcing the formula that is today being discussed, had this to say:

The estimated cost to federal treasury is over $62 million. This is an interim measure pending reconvening of dominion-provincial conference to seek fiscal settlements.

This was the message that was sent out to the provinces. We are waiting, Canada is waiting, for this solemn commitment to be fulfilled. Instead of the government having brought about an agreement, if possible by mutual discussion, by mutual arrangement, the government at this time has sent an ambassador, a civil servant, out to interview officials of provincial governments. This is a unique way, to say the least, to carry on federal-provincial relations. I am certain that no provincial government has asked that this method be followed. I am certain that this type of action by the government is not one that will inspire confidence from the provinces.

We have asked in this house on previous occasions what progress has been made as a result of this one-man ambassador's travels across the country. At this time when we are discussing very large sums of money the minister owes it to the house to give us a progress report, to tell us when, if ever, we are going to be able to get away from this ad hoc method of handling federal-provincial relations.

The present formula that is being proposed by this resolution and that will be continued has a number of faults, one of which from the standpoint of have not provinces and those whose revenues are most inadequate to meet their needs is that the amounts are too low. The second very strong criticism is that although the percentage is fixed there has been no raising of the floor under these grants, so that although the Minister of Finance outlined in the house last year the amount of money that he forecast the provinces would receive because of the increased percentage that was being provided, these increases have not materialized.

One of the main considerations in federal-provincial relations and federal-provincial conferences in the past has been to place under provincial revenues floors that would be maintained in times of falling revenues. That has not been done in this case. There-

Dominion-Provincial Relations fore, the budgets of provincial governments become subject to the failure of the federal government to maintain a buoyant income, and when the federal government fails to provide full employment, full production and an increasing gross national product, provincial revenues suffer. If the government would place a 95 per cent floor under this additional amount as compared with the former amount it would provide a greater measure of stability for the finances of provincial governments.

The crying need in Canada today is to provide stability of provincial revenues and to provide the provinces with the kind of revenues they need to maintain the services that are their responsibility. Having regard to the way our federal constitution is drafted, responsibility for most of the main services rests with the provinces. They have the responsibility but the federal government has the ability to raise revenues out of all proportion to the responsibilities of the federal government. Having regard to the services that the provinces must provide, the federal government should act in order to give Canadians in every province the opportunity to enjoy the same level of services that is enjoyed in some provinces.

The action of the government in failing to consult the provinces on a high level basis, its failure to consult the premiers of the provinces, has not been well received. The minister has had certain correspondence with various provincial premiers, and as far as federal-provincial relations are concerned the government's attitude seems to be the same kind of attitude that is prevailing in other quarters. Instead of consultation, instead of mutual arrangements, the federal government says: "You can take it or leave it."

With regard to discussions with the provinces I suggest that the minister himself is guilty of using the kind of language that does not improve federal-provincial relations. Correspondence took place with regard to this particular formula with the premier of Saskatchewan, and the Minister of Finance, replying to a letter written to him by the Hon. T. C. Douglas, premier of Saskatchewan, said in part in a letter dated July 7, 1958:

My dear premier:

I acknowledge receipt of your letter of June 23. Notwithstanding your mistaken comments, my letter of June 17 is entirely clear and in accord with the facts. While I doubt if I can usefully add anything to what I previously said, perhaps in view of your apparent misunderstanding of the question some further clarification might have value.

The 1958 amendment to the Federal-Provincial Tax-Sharing Arrangements Act is likewise perfectly clear. I therefore find it extremely difficult to believe that one of your knowledge and experience would find it capable of misinterpretation,

particularly in view of the explanation given not only in parliament but through subsequent correspondence.

I suggest, Mr. Chairman, that the language contained in this letter was intemperate, uncalled for and that if it were designed to interfere with normal federal-provincial relations it could not have been drafted in a manner better calculated to achieve that regrettable result. There is much talk of the minister being transferred to another portfolio, that of the Department of External Affairs. I would hope that the new training he is being subjected to would result in an improvement in his attitude so that this kind of language is not used. I do not think that abusive language to a premier of a province is something that should be condoned by parliament or by any member of the House of Commons. It is time that the federal government learned from statements made in the past. Although the statement I am about to refer to was made by the Prime Minister in 1956, it could well have been a comment on federal-provincial relations at this time. This is what he said on July 24, 1956:

I believe this. I think it is fair to say that the attitude taken by the government at the last conference was an arbitrary one. The government simply said, "These are the terms." No opportunity was given for amendment or for amelioration of any terms. The recipe for a division of taxation was as final as the laws of the Medes and the Persians, and how similar that attitude was to the attitude of the government in this house, which is that power makes perfect anything they do.

Instead of taking action on the resolution at this time, the government should be placing before parliament new proposals agreed to by the provinces after full consultation, proposals designed to relieve some of the very heavy burdens now being borne by the provinces, designed to bring about an economy with full employment and full production, designed to strengthen the economic and democratic fabric of the nation.

Federal-provincial relations are at a low ebb. They have been damaged. I hope that the government will reconvene a federal-provincial conference and that it will cease to to delegate to a departmental official a role that in fact should be borne by the Minister of Finance.

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LIB

John Whitney Pickersgill

Liberal

Mr. Pickersgill:

Before the resolution carries, may I point out that the hon. member for Burin-Burgeo asked the minister some questions earlier this afternoon based on certain figures that were given by the Prime Minister in a television broadcast the other day. These figures purported to show how much in contributions, if I may use a word used by the minister, the government of Newfoundland and the people of Newfoundland had received from the federal treasury

since confederation, that is, since April 1, 1949. I know that the minister cannot provide these figures right now but it does seem to me that this information should be provided. I believe there was an order for return passed yesterday asking for somewhat similar information but the information should be provided now so that we will have it when the bill comes before the house. It should not be any more difficult to prepare it for the other provinces than it was for Newfoundland and I suggest that to prepare it for one province and not for the other provinces and not to make it available to all members equally is not a very satisfactory position in which to leave the matter. I wonder whether the minister can assure us that the material will be ready.

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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinton):

No, Mr. Speaker, I am sorry but I cannot give any such assurance. The material has not been prepared with respect to the other provinces. It would be quite a formidable task to prepare it. It is hoped that the bill to be founded on the resolution will be passed soon because until it is passed we are not in a position to make any payments to the provinces in respect of the additional 3 per cent of the yield from the personal income tax which the bill would authorize.

I may point out, Mr. Chairman, that the statement the hon. gentleman refers to is a statement made outside the house. It is something that is not in the context of this legislation. It relates to a great many other things as well and it is not relevant. The kind of statement he wants goes far beyond the context of the present measure.

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LIB

John Whitney Pickersgill

Liberal

Mr. Pickersgill:

I am quite astonished to hear this reply coming from the hon. member for Eglinton, and I call him that for obvious reasons because, in language that I do not intend to attempt to emulate, we heard charge after charge ring through this house from the day the hon. gentleman was first elected about the denial to parliament of information.

Here is basic information about federal-provincial fiscal relations which the minister must have prepared, or which his department must have prepared, for the Prime Minister. This information was used by the Prime Minister outside the house in a television broadcast, and was designed to influence public opinion. However, when we, as members of the house, ask for similar information about the other provinces, the minister says he is too busy and it takes too long to prepare; that it is very important to get this legislation through in a hurry. He says we are not entitled to have that relevant information, and it is relevant information.

66968-9-204

30. 1959

Dominion-Provincial Relations Surely, if we are asked to form an opinion as to whether or not additional moneys should be paid to the provinces, the basic information about what they are getting now should be in the possession of the committee.

In a matter of finance, above everything else, where the control of the house over expenditure is the very stuff of which the history of our institutions is made, it is an absolutely incredible position for the Minister of Finance to take. I hope he will reconsider it. I am quite sure that the difficulties of preparing this information would be no greater than the difficulty of assembling the information in that table that was put before us, which I examined this afternoon. It seems to me that the minister should reconsider, and remember those eloquent words he used to use about the rights of parliament.

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CCF

Erhart Regier

Co-operative Commonwealth Federation (C.C.F.)

Mr. Regier:

I wonder, now that a considerable length of time has elapsed since this resolution was introduced, and since the minister has now had an ambassador interview the ministers of finance in the provinces, whether the minister would be able to supply the committee with a report on the ambassador's visit?

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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinton):

I would be able to do that at the proper time, but that leads us into the question of a conference, which has been ruled out of order in the present debate. At the proper time I will be happy

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CCF

Erhart Regier

Co-operative Commonwealth Federation (C.C.F.)

Mr. Regier:

Looking over the wording of the resolution, it starts: "Resolved, that it is expedient-". I was wondering whether or not the minister would be able to report that as a result of the visit to the provincial ministers of finance most of our provincial governments would agree that it is expedient at this time to have this resolution dealt with?

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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinton):

The purpose of this consultation was not directly related to the present measure. It was related to the proposal for the holding of a conference between provincial treasurers on the one hand and the Minister of Finance on the other, to be followed by the studies that have been discussed earlier at the official level. This does not hinge on the present measure.

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CCF

Erhart Regier

Co-operative Commonwealth Federation (C.C.F.)

Mr. Regier:

I have another matter about which I should like to question the minister. Is it reasonable to expect that if we endorse this resolution there may be an announcement within a matter of a week or so that, over and beyond the provisions of this resolution, there will be a new cost-sharing arrangement announced by the federal government in relation to Manitoba?

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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinton):

What does the hon. gentleman mean by "cost-sharing arrangement"? We are here dealing with a pro-

Dominion-Provincial Relations posal that the federal-provincial tax-sharing arrangements be enlarged so the provincial must have prepared, or which his department share of the yield from the personal income tax would be increased from 10 per cent to 13 per cent. As the house is well aware, this is the change that is proposed by the federal government for this fiscal year, and this is the only one that affects the unconditional grants payable under the Federal-Provincial Taxsharing Arrangements Act.

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CCF

Erhart Regier

Co-operative Commonwealth Federation (C.C.F.)

Mr. Regier:

I think I am within my rights in asking the minister at this time, when he asks for the endorsation of this resolution, whether it is within his knowledge that the government of Canada is intending, within a limited number of days, to make an announcement in regard to assistance to a province over and above what is contained in this resolution.

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April 30, 1959