Dominion-Provincial Relations
Publication:
The Empire Club of Canada Addresses (Toronto, Canada), 21 Nov 1946, p. 98-108


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Pattullo, The Hon. Thomas D., Speaker
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Text
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Speeches
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The innumerable complexities with which we find ourselves surrounded as a consequence of discovery and invention, and the profound effect upon our industrial and social regimen and even upon our spiritual thinking. How that is so. The needs to use our most heroic effort to preserve peace, while never overlooking the responsibility to fortify ourselves in the means of preserving it. Canada dependent upon foreign trade to maintain her prosperity. The problem of being strong externally if our internal condition is one of disintegrating strife. Two questions of major importance confronting us: that of Dominion-Provincial relations, and Industry and Labour. An examination of the depression of the 1930's. The depression as a powerful factor in bringing problems to a head. The setting up of a Royal Commission to study and report upon the whole question of Dominion-Provincial Relations. The Provinces finding themselves at disadvantages in the scheme of Confederation and, from time to time, making representations to the Dominion authority in this regard. The financial proposals of the Commission, which would establish in the Dominion a very definite and intimate control of Provincial borrowings, more than they possessed at the time. Negative response by the Provinces. Consequences of the unemployment of the depression and how it is still effecting Canada, and Canada's future. Costs of keeping people employed. The Dominion-Provincial Conference of 1941. An illustration of the Provincial position towards taxation. The speaker's suggestion that Ottawa should abandon its insistence upon securing exclusive jurisdiction in the Income Tax field; how and why this could be done. The Labour Question. Viewing with alarm the relationship of Labour and Industry. Being in the midst of a period of gangsterdom. The speaker's suggestion that it is obvious, in respect of Industry-Labour relations, that codes must be formulated for the maintenance of the orderly processes of living, and that these codes must be mandatory. Obstacles in the way of agreement upon procedure. Suggestions for solutions. Statute books which must contain laws to preclude force in the settlement of disputes, including the strike and the picket. Courage as the quality most lacking in our public life. The need to keep goods and services moving in orderly and profitable fashion.
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21 Nov 1946
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English
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DOMINION-PROVINCIAL RELATIONS
AN ADDRESS BY THE HON. THOMAS D. PATTULLO, K.C., LL.D.
Chairman: The President, Major F. L. Clouse
Thursday, November 21, 1946

MAJOR CLOUSE: Gentlemen of the Empire Club of Canada and our audience of the air.

As an emergency measure in war time, the Federal Government took over from each of the nine provinces certain fields of taxation. Since the conclusion of the war the question of the resumption of collecting those taxes by the provinces has been a very live issue. I understand three of the provinces have concluded their agreements with Ottawa. The Province of Ontario has not yet done so. This is only one feature our speaker will cover. The platform of this club does not lend itself to political discussions but this question, in respect to this meeting, should under no consideration be viewed in a political sense but rather from the standpoint of interpretation--I might say legal interpretation--of agreements-precedent--and justice to all taxpayers.

Our guest of honour today may truthfully be said to hold a supreme position as an authority on the subject he has chosen. Past Prime Minister of B.C.--a member of the legal profession--a parliamentarian--author--newspaper editor--and a businessman, his activities in many fields have extended all the way from Ontario, the province of his birth and early education, right through Canada to the Yukon where he engaged in business. From his knowledge of the west and his background of the east he may well speak with authority, not only on problems of one section of Canada, but on the problems of Canada as a whole.

Gentlemen--it is my pleasure to re-introduce to an Empire Club audience--the Hon. Thos. D. Pattullo, K.C., LL.D., who's subject is

"DOMINION PROVINCIAL RELATIONS"

HON. THOMAS D. PATTULLO: Mr. Chairman and Gentlemen:

I appreciate the courtesy of this opportunity to make a few observations.

The innumerable complexities with which we find ourselves surrounded as a consequence of discovery and invention nave had profound effect upon our industrial and social regimen and even upon our spiritual thinking.

In considering our problems we cannot dissociate the past from the present, nor the present from the future.

That which each of us does in his own sphere may seem relatively small in relation to the sum total of effort, but, great or small as the effect of our effort may be, it is all a part of the overall pattern which warns us to have a care of all our activities for, if not a sparrow falls without cause and effect, how shall we estimate the atom about which we know so appallingly much and so frighteningly little.

When Adam and Eve were the sole occupants of the good earth it would seem, in modern parlance, that they had the world by the tail, yet there was something lacking. So soon was man's acquisitive propensity in evidence. If two heads are better than one, then it would appear that more than two would be better than two. Our illustrious progenitors apparently had not considered that too many cooks might spoil the broth, but rather that in the multitude of counsel lay wisdom.

The growth of the family necessitated the formulation of rules and regulations for its orderly guidance, notwithstanding which Cain killed Abel, thereby establishing precedent for the gruesome designs of individuals and ultimately the barbarous atrocities of whole peoples.

Meantime we find that the family increased and multiplied until they became tribes. These tribes scattered afar and required further rules and regulations for their guidance and customs were established which finally took the force of law. Then it came to pass that varying conditions brought about varying and various characteristics and these circumstances created prejudices and hard feelings, because some peoples high-hatted others, while covetous eyes were cast upon each other's possessions.

In course of time the tribes, through further increase of population, developed into nations and hence further laws had to be made for the governance of society, which was ever becoming more complex, so complex that it became necessary to endeavour to fix relationships as between nations.

Experience is a capricious teacher, sometimes tantalizingly slow, at other times embarrassingly fast.

Discovery and invention whirled along as fast as the earth moves and brought forth, amongst other things, new implements and instruments for the destruction of human life. Thus there was provided for the greedy and avaricious the means to accomplish their nefarious purposes. Now we find that the means to create war and destruction must be used to preserve peace and construction.

Not to labor the argument, but rather to suggest something practical as to Canada's position, which has become so increasingly important in world hegemony, it seems clear that we must use our most heroic effort to preserve peace, the while never overlooking the responsibility to fortify ourselves in the means of preserving it. Not only is peace necessary for the preservation of life, but there can be no lasting prosperity without peace.

In preponderant degree Canada is dependent upon foreign trade to maintain her prosperity, but how can we be strong externally if our internal condition is one of disintegrating strife?

At this moment there are two questions of major importance confronting us, namely, that of DominionProvincial relations, and Industry and Labour.

The depression which we suffered in the '30s should not have been surprising. Ever since Confederation we had been spending huge sums upon railroad construction. Concurrent with railroad expansion private endeavour was likewise expanding. For many years a vigorous immigration policy was followed which, of itself, created new endeavour and added strength to our national wellbeing. Suddenly railroad expansion ceased; correspondingly, so did private endeavour; immigration was curtailed, while tariff barriers were a detriment to international trade. Is it any wonder that our far-flung Canada, with its sparse population, found itself faced with an aggravated unemployment problem?

During the depression the problem of unemployment became so acute that some of the Provinces found themselves under the necessity of issuing Treasury notes to the Dominion Government.

Ever since Confederation various of the Provinces have felt themselves at disadvantage in the scheme of Confederation and, from time to time, have made representations to the Dominion authority in this regard.

The depression was a powerful factor in bringing matters to a head. In consequence of the many considerations involved the Dominion Government appointed a Royal Commission to study and report upon the whole question of Dominion-Provincial Relations. The Commission engaged in a very exhaustive study and their report constitutes a compendium of useful and valuable information, but, their financial proposals followed the trend that had been in evidence, governmentally in Ottawa, for a considerable time.

Prior to the setting up of the Royal Commission the Dominion had been endeavouring to secure larger control over Provincial finance and conceived the idea of the establishment of a Loan Council to which all Provincial borrowing would be submitted. The argument was that the proposal would make for the orderly marketing of Provincial securities without conflict one with the other.

It was obvious that this procedure would establish in the Dominion a very definite and intimate control of Provincial borrowings, more than they then possessed.

The Provinces did not approve of these proposals.

The unemployment of the depression period has had repercussions of various character upon our people and is still an ominous spectre as to what the future may have in store.

During the depression the Dominion did not appear to have any comprehensive plans to meet the grave situation casued through unemployment. The policy of the Dominion at that time appeared to be to provide only such ways and means as would keep the unemployed physically alive. This policy was devastating in its effects and was not only breaking down the morale of the unemployed, but was causing grave disquiet and concern to all our people.

It is true that to put people to work does, for the moment, cost more in dollars and cents than to feed and shelter them in idleness, but, not to keep people employed is a costly business, both in money and morale.

Dominion expenditure, at the time of the depression, was under one-half billion dollars annually. To put employable unemployed to work upon public undertakings would have cost from 100 to 200 millions more annually, and would have compelled increase in taxation. Ottawa was aghast at such proposals. It was preposterous to think of anything of the kind and so we continued to drift upon the cold, gray rocks of unemployment.

Dominion expenditures have, since that time, reached ten times the amount then spent and our people have been persuaded that we can readily carry the obligations which we have since assumed, but, time marches on and World War No. II took us out of a depression, just as had World War I.

During World War II and following submission of the Report of the Royal Commission on DominionProvincial Relations, the Dominion called a DominionProvincial Conference in 1941.

The exigencies of the War were designated as the reason for the calling of the Conference at that time, but, the financial proposals were of permanent and, in practicality, of irrevocable character, namely, the surrender to the Dominion of exclusive jurisdiction in Income and Corporation Tax and Succession Duties.

Without reference to the Provinces the Dominion prepared an agenda for the Conference. This agenda provided for the appointment of Committees, one of which was a Finance Committee. The only term of reference to this Committee, as proposed in the agenda, was Plan I of the Royal Commission Report, under which the Income and Corporation Tax and Succession Duties were to be placed, in the exclusive jurisdiction of the Dominion.

Contrary to reports which were circulated all across Canada, that three nefarious persons representing three of the Provinces, had sabotaged the Conference, all of the Provinces were anxious to proceed with discussion of all questions at interest between the Dominion and the Provinces, but, the Dominion refused to depart from the terms of their own agenda and, consequently, three of the Provinces would not proceed upon that basis.

You will, perhaps, better appreciate the Provincial position by illustration.

British Columbia first imposed the Income Tax in 1876 and our finaneial economy had largely been built upon it. Ottawa did not levy Income Tax until 1918. The Minister of Finance of that date expressed regret at the necessity which was caused through the exigencies of World War No. I.

The Dominion collection at first was less than that of the Province, but, gradually increased until it has reached its present major proportions.

The last Provincial levy, in 1940-41, brought in some 12 million dollars, and the last Dominion collection was approximately 160 million dollars.

At the time of Confederation it was not thought that it would be necessary for the Dominion to enter the Income Tax field, but, it was definitely anticipated that the Provinces might be compelled to do so in order to carry out the responsibilities placed upon them under the British North America Act, hence, the Provinces were specifically vested with authority to impose direct taxation.

In adjusting this portentious issue there is one thing to be borne in mind, namely, that if the British North America Act is amended so as to place the Income Tax field within the exclusive jurisdiction of the Dominion such action would be irrevocable. We must not overlook this.

In my opinion the Provinces would be improvident, indeed, if they ever surrendered the Income Tax field to the exclusive jurisdiction of the Dominion. Nor does there appear necessity for taking a so drastic course. It should be recognized that in a country as far flung as Canada single yardstick cannot measure the requirements of each economic unit of the Dominion and it would seem the part of prudence that each of the Provinces should be so placed as to enable it to carry out its responsibilities in confederation.

Periodically each of the Provinces should have opportunity for revision of its position in the general economy, but to suggest that the Dominion economy should be so weighted that each Province must conform to the general average of all would be equivalent to saying that of a family of nine no one member shall rise above the general average of -all, which, as Euclid would say; is absurd.

To be specific, in the present situation I suggest that Ottawa should abandon its insistence upon -securing exclusive jurisdiction in the Income Tax field. That it enter into agreements with the Provinces for a limited period for the exclusive levy of Income and Corporation Tax and Succession Duties with payment to the Provinces of such sums as may be agreed upon in lieu thereof. During the interval of the ensuing period no time should be lost in endeavouring to reach a more perm Anent basis.

To ensure this end the Dominion should undertake to assume its proper responsibility in the unemployment problem. It should also make clear its position in respect of various social and welfare problems. It should agree to co-operate with the Provinces in clarification and confirmation in certain other considerations. With these matters adjusted, I suggest that the Dominion be given exclusive jurisdiction in the levy of Succession Duties. Thereafter there should be periodic adjustments of amounts to be paid to the Provinces in lieu of Income Tax, but, the Provinces should not abrogate their rights of jurisdiction in the Income Tax field. The Dominion did not exercise its authority to levy Income Tax from 1867 to 1918, but there was no abrogation of its authority to do so.

It is possible that the proposals which I have made may not receive unalloyed approbation, nevertheless some common ground must be reached. Conditions dictate that there should be ever increasing co-operation between the Provinces and the Dominion. To achieve this there must be a mutual spirit of goodwill.

NOW THE LABOUR QUESTION

From the manifestations which have taken place over the past year, one must view with alarm the relationship of Labour and Industry. Is it going too far to say that we are in the midst of a period of gangsterdom, and we, the people, have permitted a situation to develop, the end of which appears, to say the least, disquieting?

It was my fortune for many years to take part in Labour and Social Welfare matters in the Province of British Columbia. I think it may be said that our Province was considerably in advance of other portions of Canada, as well as the United States, in this regard. At all events, I may say that I was told many times by financial men in this City of Toronto and elsewhere, that we were going too fast in our Labour and Welfare legislation and were setting a bad example to the rest of the country. I did not then, nor do I now, think so.

I think that the country, as a whole, has allowed labour problems to get out of hand. We have followed a course of shallow expediency and we have allowed ourselves to drift into very dangerous waters. Internationally we are trying to outlaw war and to create an organization which will be able to avert war, yet, we cannot keep the peace within our own territory and we permit single units to set up and gravely embarrass the daily economy of our lives, because we have not taken definite action to prevent such occurrences.

Experience has taught us that, for the general and individual welfare of society, certain prohibitions and restraints are necessary.

Is it not perfectly obvious, in respect of IndustryLabour relations, that codes must be formulated for the maintenance of the orderly processes of living? I suggest that it is and that these codes must be mandatory.

Generally speaking, I think that neither Industry nor Labour has heretofore favoured compulsory measures; that is, compulsory legal measures. Both have thought that they would probably get the best of the deal by leaving the problem wide open.

One of the obstacles in the way of agreement upon procedure has been the distrust by both Labour and Capital in such procedure as might be established.

It seems to me that events have been such as to crystalize the situation pretty clearly. Nevertheless I am not sure that the lessons which the present conditions teach are yet fully appreciated. Is it not evident that the kind of negotiations which have proceeded, and adjustments which have been made, are only stopgaps and that something more fundamental is essential if we are to avoid continual disruptions in the production of essential goods and services ?

I suggest that the strike and the picket should be outlawed. That Boards of Arbitration should be established in the various Provinces, with a Board of Appeal of Dominion-wide character. This, of course, would necessitate co-operation between the Dominion and the Provinces.

I suggest that responsibilities of Labour organizations should be fixed as well as those of employers. That both employer and employees must abide by the awards of arbitration. Appropriate penalties should be provided for breach of award.

I am not unmindful of the many factors that must be taken into consideration in making this legislation effective. Many people argue that you cannot compel men to work if they do not want to do so. I say, yes, that you can do so, without curtailment of legitimate personal liberty. There should be more doing of those things which we ought to do and less doing of those things which we ought not to do. The kind of thing to which we have been submitting constitutes conspiracy to achieve ends by the unlawful use of force.

Our statute books must contain laws to preclude force in the settlement of disputes, and that includes the strike and the picket, for they both involve the use of force. The only time that physical force should be used is to enforce the law.

Our Legislators generally reflect public opinion and they have been timid in action just as public opinion has been timid. Fear is a fearful foe.

From long experience in public life, I would say that the quality most lacking in our public life is courage, arid this lack of courage is probably largely superinduced by fear of what the people back home will think, or fear of what a powerful minority may do,--for a powerful minority is often more effective in action than a complacent majority.

In a nutshell, one thing we must do-we must keep goods and services moving in orderly and profitable fashion.

If I have seemed to over simplify the problems which I have presented, I am not unmindful that we must be unflinching in our purposes and equally unflinching in carrying them out. The more timid orderly purpose is, the more ruthless sinister purpose becomes.

As we are now drifting we are, at one and the same time, necessitating and facilitating extreme action of drastic and regrettable character.

Notwithstanding untoward conditions, we must never lose heart.

When precedent is good let us follow it. When precedent is bad let us junk it, and when it is desirable to create precedent, let us resolutely do so.

In spite of so many seeming contradictions I refuse to believe that the world is going to the dogs. It is true that we have been passing through a disgraceful episode in the life of one of the meaner planets, but I believe that man who has transcended such heights and fathomed such depths, is not en-route to extinction, but to greater glorification.

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Dominion-Provincial Relations


The innumerable complexities with which we find ourselves surrounded as a consequence of discovery and invention, and the profound effect upon our industrial and social regimen and even upon our spiritual thinking. How that is so. The needs to use our most heroic effort to preserve peace, while never overlooking the responsibility to fortify ourselves in the means of preserving it. Canada dependent upon foreign trade to maintain her prosperity. The problem of being strong externally if our internal condition is one of disintegrating strife. Two questions of major importance confronting us: that of Dominion-Provincial relations, and Industry and Labour. An examination of the depression of the 1930's. The depression as a powerful factor in bringing problems to a head. The setting up of a Royal Commission to study and report upon the whole question of Dominion-Provincial Relations. The Provinces finding themselves at disadvantages in the scheme of Confederation and, from time to time, making representations to the Dominion authority in this regard. The financial proposals of the Commission, which would establish in the Dominion a very definite and intimate control of Provincial borrowings, more than they possessed at the time. Negative response by the Provinces. Consequences of the unemployment of the depression and how it is still effecting Canada, and Canada's future. Costs of keeping people employed. The Dominion-Provincial Conference of 1941. An illustration of the Provincial position towards taxation. The speaker's suggestion that Ottawa should abandon its insistence upon securing exclusive jurisdiction in the Income Tax field; how and why this could be done. The Labour Question. Viewing with alarm the relationship of Labour and Industry. Being in the midst of a period of gangsterdom. The speaker's suggestion that it is obvious, in respect of Industry-Labour relations, that codes must be formulated for the maintenance of the orderly processes of living, and that these codes must be mandatory. Obstacles in the way of agreement upon procedure. Suggestions for solutions. Statute books which must contain laws to preclude force in the settlement of disputes, including the strike and the picket. Courage as the quality most lacking in our public life. The need to keep goods and services moving in orderly and profitable fashion.