The speech talked about a detailed five-year plan. It was completed and made public in October, 1980, and was called “Managing All Our Resources.” As part of that, comparative economic indicators highlighted our very weak position:
GDP per capita was $5,951; the Canadian average was $11,317.
Average family income was $18,326; the Canadian average was $24,816.
Earned income per capita was $4,228; for Canada it was $7,798.
The number of people employed as a percentage of the adult population was 44.5%; the Canadian average was 58.6%.
The unemployment rate was 15.4%; the Canadian average was 7.5%.
Liquor taxes brought in as much money as corporate taxes.
And tobacco taxes brought in more money than all mining taxes and royalties.
If you used 100 as Newfoundland’s earned income, the next province would be Prince Edward Island at 114, 14% more; Saskatchewan at 71% more; Alberta and British Columbia were both over 200; and the Canadian average was 185—85% more. It is necessary to quote the document:
If Newfoundland is to become a full and equal partner in Confederation, it must overcome its dependence on transfer payments and the only way to do that is to generate real wealth within the province. To create wealth Newfoundland must have the same degree of control over its resources as the other provinces already have over theirs. It must always be stressed that Newfoundland is not asking for anything special, but merely the recognition that it has equal rights with other provinces. If the federal government controlled resources in other provinces, our stance might be considered unreasonable, but such is not the case. Newfoundland lacks control because its resources happen to be in the ocean, under the ocean, or in rivers in Labrador, and are somehow perceived to be different.
It goes on to say:
In order to understand Newfoundland’s need to control its resources, it is useful to examine the relative position of Newfoundland and the rest of Canada with respect to earned incomes, which is the real indicator of wealth. Newfoundland ranks a dismal last in Canada, and although the gap has closed slightly in the last twenty years, the average earned income in Canada is still 85% greater than in Newfoundland.
Therefore, just to reach the national average, earned incomes in Newfoundland would have to almost double to catch Ontario; to catch BC and Alberta they would have to more than double. In fact, the reality is even more onerous than this because the other provinces are growing at the same time. For example, if Ontario, Alberta, and BC grow at 3% per year in real terms over the next twenty years, then Newfoundland would have to grow 6.6% per year to catch them by the year 2000. This would be an almost four-fold increase in real earned incomes in twenty years to get up to the national average.
The budget of 1982 gives some sense of the enormity of the problem. Expenditures were $336,445,000 less than revenues on a total budget of $1.7 billion.
The budget records a 2% point rise on Personal Income Tax; Corporate Income Tax increased on large corporations from 10% to 16%; and interest on loans to fishermen, farmers, and small businesses increased from 8% to 12%. Additionally, wage restraint was announced for those receiving compensation from the province, and over the years that went from a 5% cap to 5%, 4%, and 3% (highest, middle, lowest-paid employees) to 3%, 2%, and 1%, and finally to no increase for two years.
The dependency on Ottawa was such that 48.8% of our revenues ($841,216,000 of which over $500,000,000 was equalization) came from the federal government and that debt payments were the third largest expenditure, ahead of social service expenditures.
It was obvious to me, my Cabinet colleagues, and our senior public servants that the present arrangements within the country, as it related to our province, could not see our province reach national average earned incomes. Even if everything went perfectly in our fishing, forestry, mining, agricultural, and tourism industries, we could not possibly earn sufficient revenue to attain anywhere near levels of income to approach the national average or attain “have” status.
This was the stark reality! There were some of society’s leaders who never accepted this—labour leaders, fishing industry leaders, other business leaders, and politicians (municipal, provincial, and federal). There were some who more or less accepted this reality and saw the best way was just to abandon this “highfalutin notion” (some called me a rural romantic and others thought I grew up sporting a massive chip on the shoulder) of somehow reaching “have” status and just “accept what you cannot change,” within the Confederation.
Our condition also manifested itself in other ways. For example, during my first election as leader of the PC Party, the nurses were on strike, and my last election the teachers were on strike. There just wasn’t enough money to provide reasonable remuneration to these large groups who were paid out of the provincial treasury. Interestingly, I won both elections. Sometimes the crowd has a better sense than the elites of what can reasonably be done. Similarly, during the first election, a generous drug program was proposed by the Liberal Party but gained little traction. Once again the wisdom of the populace seemed to be there when the leadership of the province seemed too content to fight their little parochial battles.
Yet the Opposition was strong and influential in attacking and opposing the larger agenda of fish, Churchill power, and offshore resources.
On the fish matter, the Fishermen’s Union never came onside and many fish companies remained ambiguous given that they were beholden to the federal government regarding quotas. Early on, the union was led by a former Liberal MP who unfortunately, at that time, took the interest of the union ahead of the province, although he possessed the ability to show leadership and take the larger view. I think he later regretted that stance. And even with the inherent conflict of interest—that is, trying to represent the offshore fishery, the inshore fishery, and the fish plant workers—the union was nevertheless a formidable force and had many friends in the federal bureaucracy. Unfortunately, there was little leadership within the fishing industry or the business community or in the populace at large to expose this conflict for what it was.
As it relates to the Churchill power situation, there was great public support, but among the elites there was simmering skepticism, and many in the business community were more interested in seeing the Lower Churchill projects of Gull Island and Muskrat Falls proceed, rather than protracted talks and court actions related to trying to change the infamous Upper Churchill contract, even though Quebec was earning more than $500 million per year from it.
The offshore was brand new, without existing constitutional impediments or unfair entrenched contracts. But from the start it was a battle royal and many voices inside and outside the province opposed our approach.
But the course was set, and from 1979 on we were determined to pursue those three actions with relentless argument and passion. That was the plan, our vision, our raison d’être on which we would never surrender.
In a speech to our annual meeting of the Progressive Conservative Party of Newfoundland on November 5, 1983, I exclaimed:
We hold in trust the welfare of generations unborn to chart a course with the proper and prudent development of our resources so that we shall reach equality with other Canadians within this confederation.
Let us step forward nurtured by the belief in Lin Jackson’s words: “We must develop a new, bolder self-respect—a renewed self-confidence in ourselves and in our ability, not simply to survive (as it always was), but to take our situation in hand and become masters of it.”
In so doing, we will be able to exclaim from the mountaintops— “One day the sun will shine and have not will be no more.”
However, we were only too painfully aware of the moment, brought home every day with either people protesting, striking, or petitions and representations from all over the province for basic services that were taken for granted in the other provinces of the country.
I remember well the agonizing meetings and arguments and trade-off
s in trying to come close to balancing the budget (that is, just the operating budget). The capital budget would all have to be borrowed. That was the brutal reality of having a credit rating, the lowest in Canada, of Baa1.
By the time we had taken care of the health and safety priorities of our municipal capital budget (over 90% of the municipalities could not finance their own capital projects), there was little left to begin new ones. The roofs on our trade schools were leaking and we would have to prioritize the worst ones and let the rest get stopgap repairs and hold out for another year or more for permanent repairs. Basic health services were well below the national average, and trying to implement some drug coverage while not balancing the budget was a challenge.
I remember suggestions (well-intentioned) from within government to look at our parks and Newfoundland Hydro for changes to get savings (privatize?), and after having such suggestions arise for a second year in a row, I blew my top and exclaimed: “Water and parks are off limits regardless of how bad it is or gets.”
The list of legitimate demands was endless. We were forced to bargain hard with all those who were paid by the government, which naturally led to acrimonious discourse with all union leaders, from the teachers and nurses to the Newfoundland Association of Public Employees and CUPE.
We introduced, and the legislature passed, Bill 59, which banned rotating strikes and provided for additional essential workers during a strike to protect health and safety. This of course meant harsh criticism from inside and outside the province and even attracted a United Nations agency (that font of all wisdom) to wade into the fray.
But these were unusual times that called for unusual measures if we were to struggle through—and by and large the people understood and supported us. It is something that you would not do in a perfect world, but we were hardly in a perfect world at the bottom of Confederation’s ladder on almost every meaningful measure.
Meanwhile, undaunted, we proceeded to build new hospitals and clinics in Labrador, Roddickton, Port aux Basques, and Clarenville, and made major improvements to hospitals in Grand Falls, Gander, and St. John’s, as well as various senior citizen homes around the province.
We established the first ever Status of Women Advisory Council, the first ever Arts Council, the first ever Environment Department (and attendant environmental assessment legislation), and the first progressive legislation enabling the establishment of ecological and wilderness reserves, a book publishers assistance program, a sustaining grant for the symphony orchestra, and provided funding for specific arts groups. We began setting aside moneys for a pension fund; at this time all pension payments came out of each year’s budget. We eliminated gender pay discrimination and introduced a policy where 1% of the capital cost of all new public buildings was to be spent on Newfoundland art.
We expanded the schools’ capital budget, reorganized the whole high school program with the introduction of grade twelve, and reorganized the trade school system into a professional community college system. The introduction of specific institutes, like the first bona fide school for the deaf, cajoled the federal government to help us support a new campus for the Institute of Fisheries and Marine Navigation (to become known as the Marine Institute), perhaps a one-of-a-kind post-secondary institution without equal in the world. We also built the first and only Fine Arts degree program at Sir Wilfred Grenfell College in Corner Brook.
On the resource side, while the eye was on the big prizes of fish, water, and oil, we did deal with the here and now simultaneously. New legislation was passed dealing with the forestry, streamlining and causing more reforestation and sylva culture, introducing the first Aquaculture Act, the development of a Labrador Resource and Transportation plan, updating mining legislation, introducing a prospectors assistance program (one of the discoverers of the giant Labrador nickel mine at Voisey’s Bay availed of this program), overseeing the opening of the province’s first gold mine, and having a Department of Rural Development with programs for leadership and small businesses.
We also expanded the Newfoundland and Labrador Development Corporation, which provided technological, administrative, as well as financial assistance to businesses. The corporation oversaw the Newfoundland Savings Bond Program (cancelled by a successive administration), which in one year collected over $20 million, and also administered a stock savings program with the private sector (which was also cancelled by a successive administration). Additionally, a loan guarantee program, especially for small and medium fish companies, was put in place along with other financial assistance programs for fishermen.
To fully appreciate the corporation’s work, the former president, Ira Bridger, whom I appointed, has this to say:
In 1967 the province established the Newfoundland and Labrador Industrial Development Corporation (NIDC) to provide long-term financing to industrial and resource-based projects, both through commercial investments or other financial arrangements. However, its role was a piecemeal approach, generally focused on large-scale projects. In any event, it was not a fully staffed organization engaged in promoting or providing financial services but rather an administrative mechanism that facilitated projects being advanced within a line department. Financial support for high-profile projects could also be undertaken through other Crown corporations.
Assistance to enterprises engaged in fish harvesting and processing was provided largely through the Fisheries Loan Board. [It is interesting to note that as early as 1943, the then Commission of Government began offering loans to fishing companies willing to invest in fish processing plants.] The agriculture sector was assisted through the Farm Development Loan Board.
Some progress towards providing a broader range of financial support for small- and medium-sized enterprises was made in the early 1970s. This arose primarily from the federal government’s creation of the Department of Regional Economic Expansion (DREE), which offered federal government support for various programs in regional economic development. Provinces could propose projects, which would be supported financially under General Development Agreements (GDAs) between the federal and provincial governments.
One of the initiatives arising from subsequent GDA proposals from Newfoundland was the creation of the Newfoundland and Labrador Development Corporation (NLDC) in 1972. Under a 10-year GDA, a revolving capital fund of $20 million for term-lending financial support to local business was established and to be managed by NLDC. Ninety per cent of the fund was provided by the federal government and 10% provided by the province. Operating costs for NLDC were shared 50–50. NLDC operated at arm’s length from the provincial government and was managed by an independent Board of Directors (with equal federal and provincial nominees).
For the next decade NLDC provided debt funding to a variety of rural-based enterprises but lending activities were restricted to the primary processing or manufacturing sectors.
In 1982, DREE was transferred to the Department of Trade and Commerce, and with the creation of the Department of Regional Industrial Expansion (DRIE), the federal government decided to wind down many of the earlier initiatives undertaken by its predecessor (i.e., DREE). The GDA model was disbanded. The province was subsequently given notice that the federal government’s participation in NLDC would end. The province decided to continue to underwrite both the capital and operating requirements for NLDC and to maintain its role as a mechanism for providing support to small- and medium-sized businesses while reassessing its future role in light of a review of a broader range of socio-economic development options.
In 1985, Premier Brian Peckford appointed a Royal Commission on Employment and Unemployment, which called for an integrated strategy for social and economic development and employment creation. The Summary Report “Building On Our Strengths” was presented in 1986.
A new president was appointed at NLDC in 1986 and the provincial budget for 1987 provided renewed support for the Corporation to expand and advance a wide range of innovative programs for small- and medium-sized busine
sses, which complimented the recommendations arising from the Royal Commission on Employment and Unemployment.
NLDC was given a broader mandate to invest in enterprise in all sectors of the economy. A number of new specifically designed and targeted programs were introduced, such as a Venture Capital Program (focusing primarily on technology commercialization) and a Youth Entrepreneur Program (focusing on entrepreneurs under the age of 25).1
A major innovation for promoting self-reliance was the issuance of Newfoundland Development Savings Bonds to provide capital funding for NLDC. The bond issue was primarily used to promote local enterprise and entrepreneurship. Bond sales were restricted to residents of the province, but some argued that there were more cost-effective ways to raise money that did not take into account the tremendous intangible advantage of providing a direct link to investment in one’s own community. As a result, the bond issue received tremendous positive support from local residents, was oversubscribed, and raised over $20 million.
In addition to the revitalization of NLDC, the Peckford administration introduced a Newfoundland Stock Savings Plan and Venture Capital Tax Credit Program, which provided provincial income tax credits to encourage residents to invest in the provincial economy.
In 1987, NLDC created a subsidiary operation, the Enterprise Network Inc., which created, promoted, and initiated the development of a province-wide Enterprise Network, a multimedia applications and support system for communications-and-IT-enabled socio-economic development in rural and remote communities, which also assisted in transferring the skills associated with the emerging information economy to business and economic development. This was an innovative, leading edge initiative that drew national and international attention.
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