I agree with the minister about the importance of this bill, because there are certain things in connection with public affairs and business which are important. One is to have the assurance that within a certain period of time things will either be maintained at their present level or improved. With this assurance, provincial governments know where they are going and have
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something upon which to base their views. The stability to which the minister referred is most important.
It seems to me that a bill which suggests that within five years payments to the provinces will increase from $li billion to $li billion is most important and anticipates a great improvement in the economic welfare of the country. It is a great thing to be an optimist. Generally speaking, people who accomplish things are optimists and go ahead on the assumption that conditions are going to improve. Some members of my party have been accused of being prophets of doom, but in this connection I find it reassuring that the government-I do not necessarily mean the government, but rather those entrusted with the administrative functions of government-consider that it is perfectly in order for them to suggest that payments may increase from $1 billion to $11 billion in five years.
The question of stability is most important for the provinces. To a degree my remarks are made from that point of view; it is difficult to get out of the habit. Without question, the matter of revenue raising in the provinces is of great importance, and it is a tremendous thing for the provinces to be assured that should their revenues fall below the national average because of lack of revenue capacity, the federal government will make up the difference. As far as the province in which I reside and which I represent is concerned, $165 per capita will be made up by the federal treasury, according to the minister. Multiplied by the population, that is no small sum. If I were running a provincial government I would feel reassured to see this bill presented with the expectation that it would pass this House in its entirety.
The minister quoted from the report of the Rowell-Sirois commission which said that the federal government has an overriding financial role in the pursuit of national growth and stability. Another point the report made was that fair standards of public services and taxation in all regions of the country are vital to our national unity. Of course they are and we all know that, but to have it quoted by the minister is a very fine thing.
The report also made the point that co-ordination in tax policy between the central government and the provinces is essential in a modern industrial state. Of course it is. I am sure that each province realizes that only by co-ordination of the efforts of all will the well-being of the country be enhanced and we will make progress as a nation. I realize that every province cannot have the same amount of growth and taxing capacity, but I am sure that the 100 per cent stability guarantee gives them confidence in regard to their general operations and financing.
Equalization is also tremendously important. Then we must consider the question of fair standards of public service and fair taxation in all regions. This is important. I think many of the matters mentioned in the minister's speech and contained in the bill will be good for the country because uncertainties will be disposed of.
The bill also envisages the federal government undertaking to agree, on behalf of the provinces, to collect personal income taxes and corporation taxes as well as succession duties and gift taxes levied by the provinces. There has been lack of communication between the federal government and the provinces on the matter of succes-
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Federal-Provincial Fiscal Arrangements
sion duties and gift taxes. We were told, when the capital gains tax was introduced, that the government was vacating certain tax fields; it would not levy succession duties and gift taxes. In the case of New Brunswick, for instance, the provincial government has moved into that tax field, or it wishes to do that. It seems to me that the federal government can be criticized for not having made arrangements under which provinces could enter the tax field vacated by the federal government.
Since capital gains tax is to be levied, it seems to me that arrangements should have been made with the provinces to avoid double taxation. Therefore, I suggest that the federal government may be open to criticism on that score. I say that it is most unfortunate to contemplate the incidence of double taxation in New Brunswick. If small or even large family businesses are saddled with succession duties, those businesses may have to be sold at sacrifice prices. That situation will do no one any good, and those wheels which have been contributing to our economy in that area may be stopped, perhaps for a long time to come. I feel the government has overlooked that. Whether the situation can be corrected at this late date I do not know. I know the matter is serious in my province.
I am pleased to see that under the bill there is a five-year guarantee which provides that each province shall receive as much revenue from the reformed personal income tax system as it would have received under the old system. That certainly will reassure the provinces.
The next item, as I read it, extends for two years the existing system of federal payments for post-secondary education and certain technical changes in the established program are to be made with regard to Quebec. We are all concerned about such matters. After all, although we sit here as federal representatives we all come from a province and are interested in back home.
I remember a few years ago coming into the New Brunswick legislature with some details about a federal-provincial tax agreement. My recollection is not perfect in regard to every detail; however, I remember that after the Second World War the premier of New Brunswick used to report to the legislature when he returned from provincial conferences. He would report that an arrangement had been made with the federal authorities for the rental of the income tax field. That is how we referred to it in those days. We rented the tax field, thereby giving the federal government authority to collect taxes. He would give the details of the arrangement and then say that it was the best arrangement that could be secured in view of conditions prevailing.
The amount of money that this involved for New Brunswick under the tax rental agreement of those days has little relation to the amount that New Brunswick now receives under the equalization formula. Actually, at present there seems to be no connection between the amount rented out, so to speak, and the amount received under this act. I put that difference down to inflation, Mr. Speaker. If I may digress for a moment, let me ask where this extra money is coming from. The extra cash the province receives in return for vacating this field can be put down to the workings of inflation. It seems to me that we are suffering a good deal of inflation and if present rates of inflation continue for 10 or 15 years the consequences will be serious. This is a problem to which we
should attend. Should we not address ourselves a little more diligently to the question of inflation?
From time to time, especially during the last two or three years, there have been strikes involving Air Canada. We have been bothered by the strikes, not knowing whether we could travel to our destinations by air. They caused great inconvenience. The strikes have now been settled. But the other day I talked to a man who had been involved in a strike and he said yes, they had accepted a settlement but he felt the cost of living had risen so much in the interval that the amount he would get after the strike would not buy much more than it could have bought before the strike. The point is that we must recognize the fact of inflation. The President of the Treasury Board (Mr. Drury) the other day brought down a record spending budget. The question is, where will all the money which the government will spend come from? I am afraid that much of it is the result of inflation. If I am right, the implications for us are serious. That is something that we in this chamber should address ourselves to in an attempt to find a solution as quickly as possible.
If I may refer to 1955, let me say that in the Dominion-Provincial Conference of that year we made certain proposals to the government which, although not entirely implemented at that time, have pretty well been implemented since. We said it was important to discuss the principle of federal-provincial assistance to the provinces for the broad purpose of resource development, this proposal being designed to meet a situation with which most provinces had grown familiar. I would say, generally, that the suggestions we made in 1955 have now been recognized by the federal authorities as valid.
During the ten-year period following, and even subsequently, there was broad development of our national economy. At the same time, social welfare measures, either entirely as introduced by the provinces or in part supported by federal revenue, accomplished much to bring about a certain levelling of incomes. These accomplishments, both economic and social, have been substantial and those whose foresight and administrative ability had contributed to the success of those programs were people active on both the national and provincial scene. They certainly had a hand in the improvements that came about. I think all those people deserve full credit for what has happened.
At the same meeting, the second matter we wanted to discuss was the difference in taxable capacities of the provinces. That is what I have been talking about; it is what is embodied in this bill. This principle, which has now been accepted, has been expounded by the minister. It makes me feel pretty good that we were on such solid and safe ground when we made that request back in 1955.
I have always felt that general economic conditions in every part of Canada are the basis upon which the future unity and progress of our country depends. I would like to repeat those words because I think they bear repeating: I have always felt that general economic conditions in every part of Canada are the basis on which the future unity and progress of our country depends. I still believe that. I believe in a national policy specifically designed to recognize income disparity and to do something about it,
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to improve regional incomes by appropriate fiscal measures, to increase productive capacity so that every ablebodied and healthy adult is able to make a full contribution to production.
It is a shame that we have so much unemployment today. It is not only a question of the person who is unemployed but it is the lack of productivity caused by the fact that the individual is not producing. That is most serious. These are some of the most necessary elements in the process of growth and progress which will cement our country into one strong and viable unit which is the objective of us all. That is what it will do, but surely we are capable of a great deal more. I hope we may succeed in that endeavour.
I return for a moment to the question of the 1955 conference because there are some further points I wish to make. The third subject that we wished placed on the agenda at that time was the special awards that were made to the maritime provinces as a result of the Duncan and White commission reports in 1927 and 1935 respectively. I realize a good many members sitting in this chamber may not have heard of these awards; however, I will not define them in detail. The reports to which I have referred recognized that the maritime provinces had a valid claim on the federal government for special consideration by virtue of the fact that they as provinces had not received any additional public lands as was the case with practically all the provinces from Quebec west. I mention this point so that the minister will be familiar with the basis of our claims of that day which, incidentally, I submit are still valid.
Two maritime provinces had come into confederation when it was set up in 1867 and became the Dominion of Canada consisting of the provinces of Ontario, Quebec, Nova Scotia and New Brunswick, with Prince Edward Island coming in a few years later. The rest of Canada remained a very large and important productive area for future development. However, when the western sections of the country came in and were set up as provinces, which was just a few years later, their boundaries were enlarged, mostly northward, by adding to their areas a great many square miles of northern land. This was the case with Quebec, Ontario, Manitoba, Saskatchewan, Alberta and British Columbia. But the maritime provinces had no northern lands that could be added to their areas, due to their geography; and no special, tangible recognition has ever been made of this special situation.
Many unforeseen changes have taken place since the provinces to which I have referred had their areas greatly increased. Today, the hinterlands referred to have become tremendously valuable to the provinces claiming them. As we all know, the exploitation of natural resources is continuing from month to month. On the other hand, as I have mentioned, the maritime provinces are prevented from adding to their wealth in this way, owing to their geographic location.
At the time these areas were added to the provinces they may have been considered of questionable value. This may have continued for a good many years. However, they have now become fields of large capital investment and are seen as areas speculative resource development with the resulting large increase in tax revenues accruing to the fortunate provinces concerned. Almost
Federal-Provincial Fiscal Arrangements
every week we read of discoveries of oil and gas in what has generally been regarded as the north, and from this we all take the greatest satisfaction. This enhances the strength of the claim of the maritime provinces for special recognition. The royal commission to which I have referred recognized this principle in their reports in 1927 and 1935, and it is surely very evident that with the passing of time and ensuing development the claim of the maritime provinces becomes more and more valid.
I said that no attention has been paid to our special situation, but that is not exactly the case. With the coming into office of the Diefenbaker government in 1957, an act setting up the special adjustment grants was passed, under which $125 million was made available to the Atlantic provinces over the subsequent five-year period. At the end of that period this sum was increased to $175 million over the next five years.
I have always been at a loss to understand the reason for doing away with the special adjustment grants in 1967, because I believe it was over and above the ordinary equalization concept and should never have been considered part of it. I submit it was largely due to our vested interests in the northern lands in respect of which disposition was made subsequent to the coming into confederation of the western provinces. As I said, a large area of land was made available to the provinces from Quebec west. I ask the minister to keep this claim in mind when application is made by any of the Atlantic provinces for special consideration, and to recognize that we should have a very large credit balance on the books of the central government due to our interest in northern lands which has never been properly dealt with.
I return to the history of 1955 because I believe it is of interest and is certainly applicable to the present situation. At that time we asked that consideration be given to speeding up completion of the Trans-Canada highway project and that assistance be given to the Atlantic provinces to this end. This has been done under governments of different political complexion. It has had the effect of linking Canada from coast to coast so that traffic is not only possible but is becoming greater and greater with the passing of the years. The Fathers of Confederation had the correct view when they said traffic and trade should move east and west to the greatest possible extent. This is now coming into being.
When I see large trailer-trucks coming through New Brunswick with Vancouver, British Columbia, Calgary, Alberta, Regina, Saskatchewan, Winnipeg, Manitoba and Toronto, Ontario, licence plates, I am impressed by the link that we know as the Trans-Canada Highway which joins Canada together from east to west, or west to east as the case may be, and brings with it the ability to move traffic and expand trade to an even greater extent.
The next item with which I shall deal is one with which this Parliament is very familiar. It perhaps exists to a greater extent today than when we made the report in 1965. I do not blame anyone in particular for it, but it is in existence. I shall quote the exact words which we used when asking that this matter be considered by the conference in 1955. I shall quote it exactly because I do not think I can improve on the language:
The fifth item which the government of New Brunswick feels should be placed on the agenda is the laying down of a compre-
March 2, 1972
Federal-Provincial Fiscal Arrangements hensive national policy to deal with the problem of unemployment. A policy of this kind can only be carried out under the vigorous leadership of the federal government. Unemployment must be dealt with in two ways:
(1) The implementation of proper fiscal and monetary policies by the national authorities. This should include a program of capital grants to the provinces and to the municipalities so that public investment may be expanded as unemployment reaches
(2) Responsibility for the relief of the unemployed be taken over by the federal government. Neither the provinces nor the municipalities have the resources to deal with this problem during a business recession. It will, of course, be remembered that this was one of the principal recommendations of the Rowell-Sirois Commission.
That last recommendation has now been implemented. So the items discussed at the conference in 1955 can be summarized as follows: some of the proposals have been implemented and some have not:
1. Federal assistance to the provinces for the purpose of resource development.
This has been done by successive governments. I am not taking any partisan position on it at the present time.
2. Future tax revenue agreements should include a factor which will take into consideration the difference in taxable capacity among the various provinces.
This has been recognized and done.
3. Reconsideration and review of the Duncan and White Commission's awards.
This is one request which has not been recognized. If the minister will take the trouble-as I know he would if he had the time-to see what I have said about the Duncan and White Commission's awards, I should be greatly obliged because perhaps he does not have up to date information on this subject. I have referred to it only in general terms though, I believe, in appropriate terms.
4. Extension and revision of the Trans-Canada Highway program.
This has been done. The country has been joined from east to west.
5. A national policy to deal with unemployment.
I question whether this has been done by any government. If the minister were to ask me what I would do about unemployment, I do not think I should be able to tell him without a great deal of thought, and perhaps not even then. Everyone acknowledges that this is a very difficult problem. We were talking about it in 1955 at the Dominion-Provincial Conference and we are still talking about it today; it is still with us, unfortunately.
We in the maritime provinces are very conscious that some of these requests made during the 1955 conference have been complied with by this government and by previous governments of all political complexions. There still remains, however, recommendation No. 3.1 do not ask the minister to do anything about it at the moment because I cannot speak on behalf of any provincial government, though of course I have their interests in mind. We must differentiate between our federal responsibility and responsibility to our province and its claims. But I think the minister should acknowledge that we have a credit balance on his books; and I am referring again to recom-
mendation No 3. So when representatives come from the provinces looking for special consideration, I trust he will receive them with his usual courtesy.
Topic: GOVERNMENT ORDERS
Subtopic: FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS ACT. AUTHORIZATION OF FISCAL PAYMENTS TO AND TAX COLLECTION AGREEMENTS WITH PROVINCES