Hon. H. J. Flemming (Minister of Forestry):
Mr. Speaker, I think I should express my appreciation for the warmth of the welcome which has attended my first contribution in any formal debate in this chamber. I appreciate the warmth of the feeling expressed by all my hon. friends from every quarter.
In rising to make some observations in connection with this amendment at present before the house I am very confident that most hon. members who listened to the able review of the Minister of Finance yesterday, when he dealt with the matter in general terms and also in specific terms to some degree, are thoroughly satisfied in their minds that this amendment is ill-conceived and ill-intentioned. It is a flagrant attempt to becloud the whole question of dominion-provincial relations in this country and to convey an erroneous impression to the Canadian people.
I do not claim familiarity in detail with all questions which come before this house. I would not be presumptuous enough to make that claim in the limited time I have been here. I am familiar, however, with amendments of a like nature to the one before us, since it has to do with dominion-provincial relations with which I have had indirect and direct connections for something like 16 years.
It has also, in my opinion, another element with which I am familiar. That element, in my view, Mr. Speaker, is that this amendment constitutes a political manoeuvre. It is designed with a political end in view. I do not for a moment believe that it will have the desired effect, but I do want to quote the amendment. It is as follows:
That all the words after the word "that" be struck out and the following substituted therefor:
In view of the fact that the federal government at the October conference (1960) with the provinces proposed fixed subsidies in place of the equalization payments provided under the present tax sharing arrangements, and that this October proposal is a repudiation of the principle of equalization;
Therefore be it resolved that this house strongly favours the continued application of the principle of equalization of direct tax revenues pledged to the provinces by the Prime Minister at the federal-provincial conference in July, 1960, and defined at the time by the Prime Minister as a payment by Canada to the provinces to bring the per capita return from the three taxes at
standard rates up to the average per capita yield in the two provinces in which per capita yield is highest.
The amendment, of course, is a motion of non-confidence in the government. It suggests that by virtue of its attitude toward and its leadership in the field of dominion-provincial relations, this government no longer retains the support of this parliament. I have listened with great interest to the debate on this amendment up to now. The arguments advanced by various speakers have been of interest. I wish now to give to the house a review of my experience in dealing with the previous government in dominion-provincial relations as a representative of a province, and then dealing with their successors in office. I wish to apply the test of comparison to this government with the previous Liberal administration and then compare the results. That, to my mind, is the acid test.
My indirect experience with federal-provincial relations came as an opposition member in the New Brunswick legislature for a period of something like eight years. Time after time the Liberal premier of that day reported to the New Brunswick legislature concerning various dominion-provincial conferences. He would report in general terms, and would state that the arrangement concluded with the federal authorities was the best that could be secured in view of conditions prevailing. It seemed difficult to secure information in detail in those days. Suffice to say that the principle of special consideration for the province of New Brunswick did not seem to be seriously considered at that time.
I wish now to skip over a few years and to give the house some information concerning the 1955 dominion-provincial conference, at which I was honoured by making the presentation for the province of New Brunswick. I wish to deal with the representations made, the consideration given, and the results achieved.
I have in my hand the official report of that conference. I consider some of the submissions made of sufficient importance to read here and now. This is the first proposal that was made, and it is found in the official report of the conference at pages 29 and 30. After I had mentioned the difficulties which smaller and less wealthy provinces were having, I had this to say to the conference at that time:
Yet, Mr. Chairman, most of us will admit that certain deficiencies and weaknesses in this course of national development have become very evident. It is true that Canada as a whole gained in prosperity and social security and all provinces have made considerable progress since 1945; yet, at the same time, the discriminatory features of our federal system have not been overcome and, in some respects, have tended to grow greater over the years.
New Brunswick has derived considerable benefits from federal social security provisions and no doubt this is true in any province where the low income groups are relatively great in number and the per capita income tends to be low. Yet, although supplementary family income from social welfare sources is welcome and useful in raising regional standards of living, the fact remains that such matters still depend and must always depend upon the regional economy in the final analysis. It will be the submission on behalf of our province that this matter can only be dealt with by a national policy specifically designed to improve regional income through helping to increase the productive capacity of areas which fall below certain indices to be determined.
At this point, I would exchange principle for concrete example by mentioning the great problem which confronts the government and people of New Brunswick at the present time. I refer to our vital need for relatively cheap power. This question has none of the academic qualities and values of constitutional and ethical discussions. It is a matter of economic life or death and any representative of the province would be derelict in his duty if he failed to call the matter to the attention of this gathering at the earliest possible opportunity.
As many present have reasons to know, our province has made great efforts over the past few years to secure federal assistance in meeting the demand for more electric energy at lower cost and we have been told that compliance with our request would contravene national policy and that there is no provision for it in the articles and conventions which bind the nation and its component provinces together.
I do not propose to argue the questions of whether these decisions have been right or wrong, just or unjust, expedient or inexpedient. Our proposal at this time is for the purpose of giving the matter of federal assistance to the provinces for resource development the place and importance which it undoutbedly deserves so far as New Brunswick is concerned.
That is the first quotation. I therefore suggested that the first item on the agenda- and I would like this house to keep in mind that this is the year 1955 about which I am speaking-should be "Discussion of national policy of assistance to the provinces for resource development."
The second item which I requested should be placed on the agenda for discussion was "Future tax rental agreements should include a factor which would take into consideration the difference in taxable capacity among the various provinces." My pertinent comments in connection with taxing capacity read as follows in one paragraph to be found on page 32 of the report. I might call the attention of the hon. member for Gloucester to this point. He called my attention to it and I refer him to it also, because this is what I submitted to the government which he supported and which I presume he still supports-that is, their successors-without any results.
What I have said about the lack of taxable capacity for our province also applies in the case of New Brunswick municipalities. The trend in municipal finances indicates that local authorities are becoming increasingly dependent upon grants
Dominion-Provincial Relations and subsidies from other levels of government in order to meet their traditional responsibilities as well as the new demands upon them. Inadequate transfers of income from the federal authority in turn prevent the province from making transfers to the municipalities, upon a scale adequate to their needs. Furthermore, in the event of business recession the demands upon municipalities would greatly increase. The problems of municipalities is another reason for considering the principle of taxable capacity. I submit, therefore, agenda item as follows:
That taxable capacity of the provinces be a consideration in determining annual grants.
No. 3, Mr. Speaker, had to do with the Duncan and White awards, and I will not go into the detail of it at the moment. No. 4 was a recommendation for the agenda. It had to do with the trans-Canada highway and its extension and revision. I feel quite certain that all hon. members will be fully sympathetic with the aims and objects of this particular submission.
I have gone into some detail concerning this preliminary conference with this end in view; that members of this house might be aware of the problem existing at that time, in 1955, and of the representations which were made to the federal government in that year. I should like to draw the attention of hon. members once again to the conference itself, which took place on October 3, 1955. For the information of the house I might mention that a preparatory committee had been working subsequent to the preliminary meeting.
So far as New Brunswick was concerned, our formal submission might be summarized as follows. We requested that tax rental agreements be renewed and that a definite renewal clause be inserted to that effect. We submitted also that low income provinces should receive a national adjustment grant. The submission in this connection was as follows, and I quote again from my remarks at the conference itself:
Experience, however, has indicated that the tax rental agreements do not go far enough to meet the needs of low income provinces in that they are largely based upon a per capita plan of compensation. We are firmly convinced that these provinces should receive a national adjustment grant to compensate them for their lack of taxable capacity in respect of those sources of revenue remaining to them.
It has seemed to us that the conditions which favour this conference permit a reconsideration of one of the major recommendations of the Rowell-Sirois commission designed to correct regional maladjustments. In this connection, the language of the Rowell-Sirois report is still eloquently persuasive in regard to the principle of adjustment grants. The following quotation is taken from chapter V, book II of that report:
"They (the grants) are designed to make it possible for every province to provide for its people services of average Canadian standards and they will thus alleviate distress and shameful conditions which now weaken national unity and handicap many Canadians. They are the concrete expression of the commission's conception of a
federal system which will both preserve a healthy local autonomy and build a stronger and more united nation."
The government of New Brunswick urges with all the force at its command that, in addition to the tax rental agreements, there should be adjustment grants to the low income provinces, and we submit herewith a formula based on relative per capita personal income which would, we consider, accomplish this purpose in a simple and equitable manner.
You will note, Mr. Speaker, that I submitted a formula which will be found on pages 50 and 51 of the report. I repeated my request for reconsideration of the Duncan-White commission awards, and I outlined the need for federal financial assistance for projects. To be specific, I now quote exactly what was said in that connection as reported on page 53:
The government of New Brunswick proposes that the federal government should extend financial assistance to the provinces for approved natural resource development projects which are in the national interest. The assistance should take the form of loans to the provinces at low rates of interest. To limit the commitment of the federal government, the maximum loan which would be extended to any provinces at any one time could be restricted to two hundred dollars per capita. Such a program would bring great benefits to the federal government in the form of increased revenues from personal and corporate income taxes.
The question of sewage disposal units was discussed, and this seems significant in view of the legislation which has been passed by the house during the present session. Misgivings were expressed in connection with the pollution of our provincial rivers and streams; the serious effect of this pollution on the fishing industry and on tourist traffic was mentioned. We also suggested a continuation of farm credit policy and a more aggressive performance of all its functions. We expressed our approval of the health program, and may I say at this point that the former minister of health was always co-operative with the province of New Brunswick; I should like to pay him that tribute here and now. We requested assistance for electric power development, and I should like to quote again from page 56 of the report. This is somewhat lengthy, but it does sum up the submissions made to a federal-provincial conference and, after all, we are talking about federal-provincial conferences at the present time:
The government of New Brunswick comes to this conference table representing a province united in its determination to accept no substitute nor make shifts for the rights of full citizenship in this great and growing nation. Today, in our province, you will find a new spirit of enterprise new capacities-a new determination to take our place beside our fellow Canadians on terms of full economic equality. Such ambitions and endeavours have not always been practical for us-but they are practical now. We know that we have resources which, properly developed, can furnish our people with the means to greatly
improve our public services and our provincial standard of living as per capita income rises. Through the efforts of the provincial government, and by the enterprise of our people, we have already made important advances in the improvement of our economy. We are co-operating with private capital and doing everything possible to create the favourable economic situation which can encourage the fuller use of our resources. In fact, everything that government and people can do is being done and will continue to be done; yet our progress will be slow without assistance-our full development can only come about with financial help from an interested outside source. The interested source should be the federal government.
We have applied to the central authorities for assistance in electric power development, which is the key to our provincial future; so far without result. We have been led to believe that federal assistance in this respect is contrary to national policy. But we now find that this is not the case. Those listening to the C.B.C. national news bulletin at 11 p.m. on September 13, 1955 heard the announcement that Canada and the province of Ontario had agreed in principle to jointly finance a portion of the Alberta natural gas pipe line. In order that there shall be no possible chance of misunderstanding, I propose to quote the applicable portion of the newscast.
"Agreement in principle has been reached on a plan to have the federal and Ontario governments jointly finance a major section of the proposed Alberta natural gas pipe line."
We are pleased to note that the federal government is adopting a new policy of assisting provinces to obtain additional sources of energy for industrial development.
New Brunswick expects the principle of joint financing to apply to us. Certainly we need it. Surely, you cannot and will not deny it to us.
The details of the arrangement can easily be worked out between your capable officials and ours who are equally efficient, faithful and interested.
We in New Brunswick have no quarrel with other provinces-no quarrel with the federal authority. We are not coming hat in hand to this or any other conference table. Yet we know that we represent an important principle, far beyond considerations of area, population and voting strength in its importance. It is the principle of justice and equity, and no federation of any kind can survive without it.
That conference met again early in 1956 and finalized the five-year agreement for 1957-62. The point I wish to make here and now is this. No action was taken in connection with the special situation existing in the low income brackets which particularly affects the Atlantic provinces. We were led to believe that this could not be undertaken that all the provinces comprising the nation should be prepared to accept the principle that a formula of general application must be applied and should be accepted. We were obliged to accept the conclusion that this was the policy of the government of the day, and that from then on we could expect no recognition by way of special adjustment grants for the Atlantic provinces.
I proceed now with the history of those years. April 1, 1957 ushered in a new fiscal policy. A federal election was called in June, and I took some part in that election. I was
Dominion-Provincial Relations delighted when the new government came into office and was sworn in on June 21. The reason I was delighted was that-well, of course, it was my party; but there was another reason, and a good reason. We had received no action from the Liberal party on repeated requests for recognition of the special situation with respect to the fiscal need, no action regarding special situations with respect to development, no action regarding special situations with respect to the lack of reasonably priced electric energy. And so our only hope, Mr. Speaker, lay with the new administration. What were we going to get from them? That was the question with which we were faced.
Topic: DOMINION-PROVINCIAL RELATIONS TAX-SHARING ARRANGEMENTS