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Canada's Terms to Newfoundland


[For the source of this document, see the end of the text.]
The terms upon which the Canadian Government is prepared to admit Newfoundland into the Confederation, as disclosed at Ottawa yesterday, will make it possible for Canadians, as well as for Newfoundlanders, to advance from the general question of union to an examination of the details.
Certainly on the general question of union, Canadians have many grounds for taking a favourable view. Newfoundland's admission into Confederation would be geographically natural, and (probably in the long run) economically profitable.
But estimates of Canada 's interest in consolidating union with Newfoundland cannot be considered entirely upon a strictly profit-or-loss basis. There would seem to be a considerable obligation also, especially in view of the changes that have taken place in the world in the last few years.
For if Newfoundland in the future should have experience of financial difficulties and revenue shortages, as have marked its history through many decades in the past, it will have to seek some solution for its problems by looking outside itself. Since Great Britain is unlikely to be in a position for many years to come to again aid Newfoundland in her problems, there might be need for some statesmanship on Canada 's part in order that Newfoundland may continue to find her appropriate destiny within the British Commonwealth .
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Yet emphasis upon the general desirability of union ought not to diminish nor to conceal the reality of the difficulties in adjusting the financial terms of union. According to the terms revealed by Mr. King yesterday, Newfoundland will receive from the Dominion Government the same financial terms it offers the present provinces, together with the special subsidies of $1,100,000 awarded to the Maritime Provinces after Royal Commission hearings. This would still leave a large gap between Newfoundland 's revenues and Newfoundland 's expenditures.
How to fill this gap has been the problem and the stumbling block in all previous negotiations for union. The Dominion Government now proposes to fill it by what are called "diminishing transitional grants". After eight years a Royal Commission will review Newfoundland 's financial condition.
An examination of Mr. King's words would seem to suggest that the Dominion Government is in effect postponing the financial problem rather than solving it. It is true that he says that these are final offers and that no change will be contemplated that would impose "further financial burdens" upon the Dominion. Yet he also says that these terms are "the best possible under the circumstances". This would leave the way open to adjustments at the end of the eight-year period.
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But to balance the picture it must be noted that under these terms of union Newfoundland, as well as Canada, would have to meet additional revenue standards. As far as Canada is concerned, it would seem that it could possibly collect $20,000,000 in annual revenues from Newfoundland . But it would have to pay out more than $26,000,000 in old age pensions, family allowances, and taxation agreement subsidies, thus leaving a gap of $6,000,000 a year.
But Newfoundland would have to pay more too. For if it entered Confederation it would surrender to the Dominion Government the greater part of its revenues. As a colony it collected between $35,000,000 and $40,000,000 annually. As a province only $3,000,000 of this revenue would still be collectable by her. Even despite the statutory and special subsidies that might be extended by the Dominion Government, it is evident that Newfoundland would have to increase its own taxes very considerably within its new provincial authority.
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The problems of financial terms, which have paralyzed all previous negotiations for union, have obviously risen again. They may raise difficulties for the negotiators on both sides. For opposition within Canada within Canada to added burdens, which may now be largely latent, may manifest itself; while the Newfoundlander's judgment of the issue may be influenced by the practical and immediate fact that union would involve higher local taxation.
The next step is primarily Newfoundland 's. But it may be hoped that in both countries the details of terms, difficult as they obviously are, may not entirely exclude recognition of the larger issues and possibilities. For if Newfoundland cannot find an adequate solution for its problems by itself, its natural solution and its natural home is as part of the Canadian Confederation.

Source : " Canada 's Terms to Newfoundland ", editorial, Montreal Gazette, November 7, 1947, p. 8.


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© 2004 Claude Bélanger, Marianopolis College