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Letter No. 2 of Joseph R. Smallwood on Confederation



Editor Daily News,

Dear Sir,


A point that puzzles many Newfoundlanders is this: why should Canada be willing to accept Newfoundland ? If, as I shall show, Canada would pour much more money into Newfoundland than she would take out, why would Canada even consider accepting us?


If Confederation were a net gain to Newfoundland, it must be a net loss to Canada - so some people contend. Why would Canada accept us on those terms ?


Some go further and scoff at the whole idea, saying: "You can bet your boots that if Canada accepts us, it's because she sees a way of getting the best of the bargain."


On this same reasoning, Canada would be glad to be rid of the three Maritime Provinces and the three Prairie Provinces; and to have only Quebec, Ontario and British Columbia. The Dominion Government of Canada receives nearly half its entire revenue from the one Province of Ontario . Between them Ontario, Quebec and British Columbia give the Dominion Government the overwhelming bulk of its revenue.


If Canada consisted of Quebec , Ontario and British Columbia alone, the Dominion Government would have more money than it would know what to do with; or else it could so lower taxes that the people of those three Provinces would live like lords. If the Dominion consisted only of Ontario arid Quebec, it would be far and away the richest country of the earth.


What must be remembered is that the Dominion of Canada is not a private business enterprise seeking a cash dividend each year, and concerned only with a favourable balance sheet. If it were it would, for efficiency sake, lop off the three Maritime and the three Prairie Provinces without hesitation or regret; for then it would be a much compacter unit, making very much more "profit." And it certainly would not consider admitting Newfoundland.


Newfoundland, a small country, must move cautiously, counting the cost, and deciding beforehand that there must be a net gain for herself before she moves into Confederation. An amount of a few millions one way or the other makes all the difference between loss and gain for Newfoundland. Twenty million dollars sounds like very big money to us. What does it mean to a government dealing in thousands of millions?


The Dominion Government pours more money into the three Maritime Provinces and the three Prairie Provinces than it gets back from them, or is even interested in getting back. This is what Confederation means.


The British North America Act which created the Confederation of Canada in 1867 is today as archaic as would be a goat-drawn cart on the streets of Montreal. The framers of that Act had just about the average conception of Government as most people of the age. To them, the chief jobs of a National Government were to secure the country's defence against external foes; to maintain a postal system; to build national highroads; to maintain penitentiaries and the like, to build and maintain light-houses and so forth. Certainly, they did not have the modern concept of Government as an agency for social reform and social amelioration.


The framers of the Act, consequently, seemed scarcely able to imagine enough functions for the Government of Canada to perform - and of course, in any case, they were fearful lest they make the Central Government too powerful. They placed precious few duties and responsibilities upon the Dominion Government.


On the other hand they gave the Dominion Government very great powers of taxation; or rather, they assigned to the Dominion Government those sources of revenue which would inevitably yield the greatest amounts. Consequence: as Canada grew prosperous, the Dominion Government became almost embarrassed by its great revenue and small responsibilities (except of course, in time of war).


But the Act piled all kinds of functions upon the Provincial Governments, and at the same time carefully limited the taxing powers of those Governments. Consequence: the Provincial Governments, as Canada grew, definitely became embarrassed by continued shortage of funds - always excepting Ontario, Quebec and latterly British Columbia .


If the Canadians had not sensibly got the B.N.A. Act amended from time to time; and then done all kinds of things (by Dominion-Provincial agreement) which the Act still doesn't actually permit (because it didn't envisage them) the situation would have become impossible. The maladjustment of powers and responsibilities amongst the Dominion and Provincial Governments would have crippled all progress in Canada .


The problem has been largely overcome in this way: the Dominion Government, though not giving up any of its taxing powers, has deliberately taken upon itself ever more and more functions which would normally be Provincial functions, though always with full Provincial consent.


This has meant the pouring of ever more millions of Dominion Government money into the Provinces but especially the less wealthy Provinces. These latter welcome the procedure (in fact, they have always clamoured for it), the wealthier Provinces sometimes welcoming the procedure with something less than enthusiasm.


Current proposals of the Dominion Government would carry this process (of taking on more and more functions and pouring more and more Dominion Government money into the Provinces) several important steps further; and it will be interesting to see how the proposals finally get on.


Increasingly for years past the Dominion Government has found all kinds of guises and disguises by which to help the less wealthy Provinces; and wise statesmanship, necessary statesmanship, it is that prompts them to do it.


Real Canadian statesmanship demands that all Canada shall be prosperous and healthy, not merely the wealthier parts; and looking to that end Canadian statesmanship has designed an official policy at Ottawa which in effect is a peculiarly Canadian share-the-wealth movement that has received less attention than it deserves.


Canada is determined to become an even greater and more prosperous nation of the world, and she is currently framing a policy to help that objective along. This means, in brutally plain language, a sort of Robin-hood policy of "robbing" from the rich to give to the poor - collecting far more taxes from the rich Provinces than she gives back, and far less taxes from the less wealthy Provinces than she gives back. It is a matter of treating Dominion taxation and revenue as a sort of gigantic equalization fund for spreading prosperity and well-being more equitably throughout the entire Dominion.


My suggestion is that if we become the tenth Province we will benefit by this very wise and progressive statesmanship - we shall receive more than we give.


Source : Joseph R. SMALLWOOD, Letter to the Editor, The Daily News, March 2, 1946.




© 2004 Claude Bélanger, Marianopolis College