Newfoundland’s Finances To Be Reviewed

Press, Volume XCV, Issue 28237, 27 March 1957, Page 18

Newfoundland’s Finances To Be Reviewed

(From a Reuter Correspondent)

OTTAWA. A Royal Commission is to inquire into the financial position of Newfoundland, eight years after it joined the Canadian union, to see how the new province is getting on under confederation. Its chairman will be Mr John McNair, Chief Justice of New Brunswick, with Sir Albert Walsh, Chief Justice of the Supreme Court of Newfoundland, and Professor John Deutch of the University of British Columbia, as the other members. Professor Deutch. formerly an economist for the Dominion Government and Secretary of the Treasury Board, is an acknowledged expert in the field of Federal-provincial finances. Review Foreseen When Newfoundland entered into confederation with Canada in 1949. it was recognised on both sides that a review would be necessary to determine how financial arrangements were working out in practice. Section 29 of the Articles of Agreement therefore provided for such review by a Royal Commission within eight years. This has been appointed, before the deadline specified, March 31, 1957. To tide Newfoundland over until her own sources of revenue could be further developed, transitional payments were arranged beginning at 6,500,000 dollars annually for the first three years, but tapering rapidly and ending within 12 years. Next year, for example, Newfoundland will receive only 1,400.000 dollars in these transitional grants. No Extra Taxes Under the terms of union, it was agreed that Newfoundland should be enabled to continue the level of public services reached under confederation without havirg to i esort to taxation more severe than that prevailing in Canada’s other maritime provinces, Nova Scotia, New Brunswick and Prince Edward Island. As part of its duties the Commission will have to examine the financial position of these other provinces. This led to Opposition demands in Parliament that the Royal Commission should be extended to cover all the Atlantic provinces, particularly since the Gordon Royal Commission on Canada’s economic prospects showed the whole region to be lagging behind the rest of the country in economic developments. Provincial Survey Since the agreement with Newfoundland calls for a special Royal Commission, there is no

prospect that this body will survey the problems of the whole Atlantic provinces region. But there is a possibility that a separate commission will be appointed for that purpose after the Federal election expected in June. Newfoundland has made great strides economically since joining Canada, but there is still room for great improvement. In particular, the level of general welfare under the Canadian system of family allowances for all children has been raised considerably. The Gordon Commission found that between 1949 ai_d 1955 net incomes a head in Newfoundland had increased by 20 per cent, in real purchasing power compared with an increase of 12£ per cent, for Canada as a whole. But Newfoundland was in financial straits at the time of the union and had much ground to make up. Lower Incomes The Gordon Commission reports that even families living in towns in the island have incomes averaging roughly, 25 per cent, below those in the rest of Canada, whereas those on the mainland maritime province are only 15 per cent, lower. Real poverty is to be found in Newfoundland in the fishermen’s “outports.” Newfoundland representatives will draw the attention of the new Royal Commission to the acute transport problems. The Gordon inquiry established that Newfoundland’s greatest single need is for the extension of her road network, both to open up resources for development and to bring land communication to the outsorts, many of which are at present only accessible by sea. There is also a stretch of 700 miles of the trans-Canada highway, between Port aux Basques, in the South-west, and St. John’s, the capital, at the eastern end of the island, for which the Federal Government is helping to pay. New Roads Built During its eight years in the confederation, the Newfoundland Government itself, under its Premier, Mr Joseph Smallwood, has built roughly 1500 miles of new roads. Newfoundlanders also point to the change in direction of freight traffic since the island became part of Canada. Whereas formerly this was predominantly seaborne, today, because Newfoundland is within the Canadian tariff, much of it moves east and west over the ancient, narrow-gauge railway between Port aux Basques and St. John’s. This line, they say, is inadequate for handling the new trade

between the island and the rest of Canada. Newfoundland members of the Federal Parliament are confident that the Royal Commission will recommend further interim financial aid to the province. They hope for something between 5,000,000 dollars and 10,000,000 dollars a year. Because it is generally recognised that Newfoundland still stands in great need of development, the Federal Government will undoubtedly seek new ways to establish the province firmly on its financial feet.