Federal-Provincial Conference on Constitutional Matters, Submission of the Province of Nova Scotia on Questions of Regional Disparity (5-7 February 1968)
By: Nova Scotia
Citation: Federal-Provincial Conference on Constitutional Matters, Submission of the Province of Nova Scotia to the Federal-Provincial Conference on Constitutional Matters on Questions of Regional Disparity (Ottawa: 5-7 February 1968).
Other formats: Available soon.
SUBMISSION OF THE PROVINCE OF NOVA SCOTIA TO THE FEDERAL PROVINCIAL CONFERENCE ON CONSTITUTIONAL MATTERS ON QUESTIONS OF REGIONAL DISPARITY
FEBRUARY 5, 6 and 7, 1968
SUBMISSION OF THE PROVINCE OF NOVA SCOTIA
TO THE FEDERAL PROVINCIAL CONFERENCE ON
CONSTITUTIONAL MATTERS ON QUESTIONS OF
REGIONAL DISPARITY FEBRUARY 5, 6, & 7, 1968
1. At this period in Canada 1 s history it is obvious that many Canadians are discontent. This seems strange when we think of the vast wealth of this country, and the many challenges which await Canada. Canada’s great future role in the world has been referred to often. We must first resolve our problems at home before accepting greater responsibility abroad. Canada will not long be respected abroad if we do not deal effectively with internal difficulties. All Canadians must understand that we have to solve two major internal difficulties. The language and cultural aspirations of French-speaking Canadians is one, and the other is· a perhaps more costly, but no less important problem: regional economic disparity has plagued millions of Canadians for years. There are no doubt many people in this country who are not aware that millions of Canadians do not enjoy an adequate standard of social services, nor have these millions of Canadians ever had the opportunity in their own Province to be employed in an occupation at a rate of pay which would give them a personal income anywhere near the national average. These same people are not making the contribution to national, regional or provincial economic growth that they would be able to make in other circumstances. Human resources are our most important resource. Let us realize fully the potential of these Canadians whose capabilities we in Canada have not
been putting to full productive use for these many decades.
2. At the Confederation of Tomorrow Conference in Toronto representatives of Provincial Governments acknowledged that regional economic disparity is a critical problem for millions of Canadians, and these representatives, we believe unanimously, agreed in principle that steps should be taken to correct this regrettable condition.
3. While this Conference will deal principally with constitutional questions of a legal nature, surely one of the most important considerations will be what do we want the Constitution to do. One of the answers to this question surely must be that it should provide the best means possible for fostering balanced regional economic growth. Balanced regional development has long been considered by many to be one of the most pressing problems with which Canadians must deal. Although cultural and linguistic problems of the Constitution must be the concern of all provinces, surely the existence of adverse economic conditions in any province of Canada requires that we place equal importance on the subject of provincial economic development.
4. The Economic Council of Canada has stated that there are two main interrelated considerations in developing better regional balance. The first is the “importance of reducing the relative disparity in average levels of income as they presently exist among the regions”. The second consideration is “the need to assure that each region contributes to total national output and to the sustained long-run growth of that output on the basis of the fullest and most efficient use of the human and material resources available to the region”.
5. The Council goes on to state that:
“These considerations focus attention upon the fundamental importance of improving the utilization of human and material resources in all regions. This involves their fullest possible use, combining them in the most efficient ways possible, and continually upgrading their productive capabilities. Moreover, the narrowing of interregional income differences depends upon a particularly rapid advance in productivity and income per employed person in the relatively lagging areas, and indeed at rates appreciably faster than the average for the economy as a whole.”
“Over the past four decades there has been relatively little progress towards the achievement of a better balance in the economic development of the different regions of Canada. Despite various policies and programs very wide disparities have continued to exist in average per capita income. Also there havecontinued to be wide differences in the extent to which the human and material resources of each region have found opportunities for productive use. The achievement of balanced growth and the narrowing of income disparities consistent with our other basic economic and social objectives, remains one of the most difficult factors confronting the country as a whole.”
6. The chief available statistical measure that shows the economic disparity between Nova Scotia and the rest of the nation is per capita personal income. To illustrate the seriousness of this gap we wish to draw the Conference’s attention to the following examples: In 1961 Nova Scotia’s per capita income was $1,097 or 76.5% of the Canadian average. In 1966 per capita income had risen in Nova Scotia to $1,583, 74.2% of the Canadian average. In absolute terms this amounts to a difference in per capita income of $551. (See Appendix Pg. I). It has been stated by the Council that there are two principal reasons for this disparity in income.
7. The first is the relatively low utilization of human resources, arising from the lack of economic opportunities. The lower utilization of human resources in Nova Scotia is illustrated by the persistently higher unemployment rates prevailing in the Province compared to Canada. In the past several years Nova Scotia’s unemployment rate has been 1.5% to 2% higher than the national average. (See Appendix Pg. II) Furthermore the age structure of Nova Scotia’s population is such that the Province has approximately 2% fewer people in the working age group (age 15-64) than is found in the nation as a whole (See Appendix Pg. VI).
Due to the lack of employment opportunities in the Province, there are relative to Canada, 5% fewer people in the Province over the age of 14 entering the labour force (See Appendix Pg. VI). Therefore, not only is there a smaller proportion of the Nova Scotia population in the working age group but of this proportion fewer are entering the labour force relative to Canada.
8. The second principal reason for the income disparity is the generally lower level of earnings in nearly all forms of economic activity which have resulted from our lower level of productivity. In 1966 the average earned income per employee in Nova Scotia was $3,800 while in Canada it was $4,799 per employee. This results in the average employee in Nova Scotia earning $999 less than the average Canadian employee.
9. Some of the factors causing these differences include Nova Scotia’s lower level of capital input. The Economic Council of Canada indicated in their Second Annual Review that in 1964, the average Nova Scotian had only 66% of the amount of capital equipment to work with as compared to the average Canadian. In the manufacturing sector alone this percentage drops to 43%. Not only does the average Nova Scotian have less total capital with which to produce, but the annual additions to this capital stock, namely capital investment, has been and continues to be lower than the national average. In 1966 capital expenditures per capita in Nova Scotia amounted to $529 while for the nation as a whole they were $744 (See Appendix Pg. III).
Other factors which result in our lower level of productivity include the different industrial structure in Nova Scotia relative to Canada, our smaller scales of production and our preponderance of marginal primary activities.
10. These statistics pertain to Nova Scotia particularly, but we know that millions of Canadians elsewhere face similar consequences resulting from regional economic disparity.
11. This historic disparity in regional economic development has been a fact of life in Canada for decades. Several different reasons account for the existence of this disparity. In the case of Nova Scotia, the shift in the pattern of trade and communications from a north-south axis to an east-weot axis had much to do with the creution and perpetuation of this economic disparity, as did the change in. the economic importance of our natural resources which once gave Nova Scotia such a favourable position in world trade. Technological changes have allowed other areas to overcome our advantages.
12. Geographic barriers to trade and economic development, largely created by this shift in trade patterns, have been a major obstacle to development of several regions of Canada, for these barriers have added very substantially to the oost of moving people and goods. We in Canada have not yet bean able to overcome this formidable barrier of transportation costs.
13. The political creation of Canada, in effect, did create a “national policy” under which people in all regions of Canada bought and sold for the most part, Canadian goods. Canada as a whole has benefited. However, the “policy” has been better for some regions of Canada than it has for other regions. The result of the “national policy” was to center development in some regions while other canters remained underdeveloped. We in Canada need a contemporary “national policy” to assist those regions which remain underdeveloped after one hundred years ot applying a policy related to conditions as they existed during the period the nation was being assembled politically.
14. Industries in Central Canada have flourished under the mantle of protection provided by this policy. We do not object to this – it is a good thing – but it is time to adopt policies which will do the same for us. Canadians have paid a price tor this, a price well worth paying. Reference to the automobile industry in Canada provides an interesting example. The difference in the factory selling price between the United States and Canada, excluding all taxes, transportation costs and markups, of a typical passenger oar, was, prior to the auto trade agreement, about $150.. Using this figure, the extra coat to all Nova Scotians of buying Canadian cars, rather than United States cars for the ten year period from 1956 to 1965 was $18,270,000. The comparable figure for Conada is $613,865,050. Other industries have had the same kind of protection. The best examples of this might be the farm implement industry and the electrical appliance industry. The industrial machinery, chemical, and drug industries are other examples. Nova Scotia supports this national course of action. We do not object to it. The results have been beneficial for ell Canadians. We now ask, howevert that in the next century a similar price be paid by all Canadians for our benefit. Nova Scotians have done much to help themselves. We are striving to close the per capita income gap which exists between Nova Scotia and more advanced regions of Canada. Nova Scotia’s efforts in this behalf have led us to undertake advanced very considerable capital investments in the last ten-year period, over $200 million having been invested directly and indirectly by the Province for the purpose of fostering industrial growth.
15. Despite these very substantial commitments by Nova Scotia we have not baen able to make progress which we consider to be satisfactory in closing the economic gap between our Province and wealthier regions.
16. Several federal programmes have been established which ndght have been designed in such a way as to become part of true regional policies. This was not often done. A very good example of this is the Area Development Agency programme. This programme provides assistance to manufacturing industries in certain areas as distinct from regions. Incentives to industry provided by this programme are precisely the same, whether the industry wishes to establish a plant in Gaspe, many miles from the nearest markets, or in the Georgian Bay area, close to a great concentration of wealth and population. We submit that it is obvious that the more remote regions have not much hope of attracting industry with this incentive when areas so close to the best market in Canada ofter the same incentive. It must also be emphasized again that the ADA programme is not regional because ot the exclusion from designation of industry growth potential areas such as Halifax and Saint John. Nova Scotia has sub1ni tted a written brief requestting appropriate ADA policy changes heretofore. We wish to emphasize these points to illustrate the fact that programmes such as ADA are not designed in such a way as to deal effectively with problems which arise in economically underdeveloped regions of Canada.
17. Another major undertaking of the Federal Government, the ARDA programme, fails to meet the obvious requirements of a regional policy. It too is concerned with areas, as distinct from regions. This serves to illustrate the contention of Nova Scotia, that we
have not, in our present economic programmes, designed national programmes which deal specifically with regional economic problems. ARDA programmes are undertaken in areas of all provinces, notwithstanding the fact that the needy area in question is in a prosperous region. The result is that ARDA funds are insufficient to deal with the great requirements of whole regions, as distinct from areas.
18. It is the essence of good economic planning to take into consideration all factors which can affect the efficiency of public and private expenditures plans. ARDA expenditures have. been made after examination of available primary resources of particular areas. This has been. a shortcoming of ARDA expenditure programmes. ARDA planning and expenditure should have taken into consideration all resources of a region to ensure that the maximum benefit is obtained from these expenditures. In other words, rural problems cannot be solved in isolation.
19. One obvious exception to this pattern of programme formation is the Atlantic Development Board. It is regional by design, and helpful. ADB legislation enables the Board to do many things, but ADB policy has restricted expenditure to improvement of the economic infrastructure of the Atlantic Provinces. Present expenditure programmes designed to correct economic imbalances have been of an ad hoc nature. An examination of these programmes is in order, to ensure that maximum benefit is derived from present expenditures of this nature.
20. Nova Scotia submits that what is needed to solve this problem of regional economic disparity is a national policy which is frankly regional in application and of massive size. It must make a major contribution by stimulating and encouraging secondary manufacturing and other forms of economic activity in these economically underdeveloped regions.
21. If we are to take appropriate steps to correct the economic imbalance to which we have referred, the magnitude of Canada’s financial commitments for this purpose will indeed have to be great. The Prime Minister of Ontario has made the suggestion that a Federal fund of one billion dollars be made available for the development of industry. It is in these terms that we must be prepared to act if any worthwhile progress is to be made towards a solution of regional economic imbalances. This is not, we submit, too much to suggest, in view of the more than $200 million capital investment which Nova Scotia alone has already made to improve industrial growth in Nova Scotia, and most of which we have invested specifically to help develop industry in the Province.
22. An integral part of the problem of regional growth is the disparity in the quality and quantity of public services found across Canada. These disparities were ably illustrated by the Economic Council of Canada in their Second and Third Annual Reviews. The disparities in provincial-municipal expenditures were found, as would be expected, closely related to the disparities in regional income. The Council clearly states that “the development of human and physical capital, the provision of services to assist private production, and the general advance of knowledge … are increasingly regarded as major factors in long-run economic growth, and interregional economic balance is likely to be significantly influenced by interregional disparities in what might be called ‘growth-related’ public expenditure.”
23. In the discussions in 1966 between the Federal and Provincial Governments that led to development of the new equalization formula, Nova Scotia submitted that the proposed new equalization formula would not amount to full equalization. This was because the new calculation takes no account whatever of municipal revenues, fiscal capacities or responsibilities. If this equalization formula had taken these municipal revenues into consideration, we believe that public services would be able to be taken care of by nearly all provinces. Nova Scotia will be glad when the day arrives when we become “disentitled” to equalization. We in Nova Scotia have been bending our best efforts to this goal for years.
24. We believe that the occasion of this Conference is a very appropriate time to bring forward for the serious consideration of all Canadians the difficult question of regional economic disparity.
25. It has been discussed at Federal-Provincial Conferences for several decades now, and has been the subject of an endless procession of studies of one kind or another. With great respect, Nova Scotia submits that the question of regional economic imbalance is just as important as our much publicized constitutional difficulties, with which we have great sympathy. Nova Scotia is of the opinion that economic problems underlie many of the frustrations that have received attention in recent years. We delude ourselves if we think that satisfaction of the demands respecting constitutional or human rights matter very much to the man, in any province of Canada, who is unemployed for months each year. In his mind, constitutional questions will take second place in his struggle to feed, clothe and educate his family. We feel that Federal and Provincial Governments have a responsibility to maintain an appropriate balance in dealing with the subjects of constitutional change and regional disparity. We must deal with constitutional questions effectively, but in so doing, let us remember that the average man, wherever he resides in Canada, simply has to be more concerned about earning a livelihood for his family in a productive form of employment than he can be about having his constitutional rights recognized, so long as his social environment is tolerable.
26. The contentions and submissions of the Province of Nova Scotia to this Federal-Provincial conference, particularly as these submissions relate to the position of the Atlantic provinces, are substantially supported in the volume entitled “Some Regional Aspects of Canada’s Economic Development 11 which was published under the authority of the Royal Commission on Canada’s Economic Prospects. We wish to draw the attention of the Conference to the following extracts from that volume:
“The persistence of the problem and the strength of the pattern of regional economi.c development suggest that the problem is deep-rooted and that no serious change can be anticipated without the adoption of substantial, imaginative and bold measures.”
“The long-term and ultimately effective solution of the problem must be expected to come from further resource development. The core of the problem is the creation of conditions which will attract capital into such development. It is thus important to relate improvements in transportation or.other public services, such as power, to this purpose. It has been recognized, for example, that the transportation problem of the region includes the provision of more adequate facilities of all forms of transportation.”
“The financial position of the governments of the Atlantic Provinces precludes any serious consideration of their capacity to undertake the heavy investments which must be contemplated in carrying out the necessary resource explorations and providing the additional services on a scale or at a cost sufficient to prove effective in overcoming the backlog of the past and inducing a healthy level of capital investment and economic expansion.”
“Few more impressive facts emerge from the study than the general conformity in the different regions over the past 30 years to changes in personal income per capita. Over the years the few scattered and relatively weak communities· of 1867 have achieved their purp6se and, having consolidated a vast territorial expansion, have established an economic unit which exhibits a remarkable uniformity of regional economic reaction to nationai and international phenomena. Any outstanding regional problems must, therefore, appear of very small
proportions in the light of such an achievement and the financial strength of the nation today.”
“It will be noted that the teport does not attempt to measure the arguments for or against rendering special assistance to the Atlantic or any other region. In regard to the former area there appears to be general agreement regarding the desirability of a special approach to its problems, and interest is therefore centred on the most effective method of rendering assistance. In one way, however, the analysis does, by implication, bear on the question. It shows, for example, that the nation, on a minimum basis, loses approximately 100,000 man-years of production each year by using man-power less adequately in the Atlantic Provinces than elsewhere in Canada. If computed on the basis of the average net value of production per worker in the Atlantic Provinces in 1951, the year on which these figures were based, the loss would amount to nearly $300 million. If computed on the basis of income earned per worker in these provinces in that year, the figure would be approximately $200 million. These figures indicate that any successful approach to the economic problems of the region would make a significant contribution to national income. Again, the figures form an important background in any consideration of the relative merits of federal investment in the Atlantic Provinces.”
27. Nova Scotia wishes to emphasize the importance of this question of regional economic disparity for three reasons: First of all, revisions of the Constitution may require months of deliberation, if we are to pursue all the suggested changes we have heard thus far. If we do not deal with the problem of regional disparity, now when, one may well ask, will it be dealt with? Second, and perhaps most important, is the fact that these two problems of constitutional rights and regional disparity are at least of equal importance to Canadians in every province. Third, there are in all likelihood more Canadians living in regions which are economically underdeveloped, than there are Canadians who would feel they have derived benefit from changes in the Constitution which recognize linguistic and cultural demands.
28. Canada has proven she is able to respond to crises. She acquitted herself with distinction in two world wars. We have responded to other challenges of great magnitude at home. Canada seems, however, to wait until crises are upon her before planning or taking action. Great changes are bearing down on us: changes in population, housing demands at home, world food crises, technological changes undreamed of ten years ago. Let us get on with the job and study, plan and act with speed in dealing with the problem of regional economic disparity. We have the resources, the people, and the funds are available if we wish to make sacrifices and these we must make before we are· faced with economic conditions in regions of Canada which can affect the political and geographical structure of Canada. 1968 is the time to proceed with imagination and vigor.
PERSONAL INCOME PER CAPITA, NOVA SCOTIA AND CANADA
Year Nova Scotia Canada N.S. as % of Canada Differential Canada – N.S.
1961 1,197 1,564 76.5 367
1962 1,252 1,667 75.1 415
1963 1,306 1,740 75.1 434
1964 1,379 1,822 75.7 443
1965 1,495 1,980 75.5 485
1966 1,583 2,134 74.2 551
Source: DBS National Accounts, 13-201
LABOUR FORCE (1) & EMPLOYMENT BY QUARTER, NOVA SCOTIA, 1964-66
Total Labour Force (‘000) Total Employment (‘000) Total Unemployment (‘000) Unemployment Rate N.S. Atl. Prov. Can. (%)
IQ 237 223 14 5.9 6.3 3.8
1Q 233 212 21 9.0 12.2 5.8
2Q 241 228 13 5.4 8.3 4.2
3Q 251 242 9 3.6 4.2 2.8
4Q 242 233 9 3.7 5.2 3.0
Mon. Avg. 242 229 113 5.4 7.5 3.9
1Q 237 217 20 8.4 10.7 4.9
2Q 244 233 12 4.9 5.9 3.5
3Q 259 249 10 3.9 4.1 2.9
4Q 250 240 10 4.0 5.1 3.1
Mon. Avg. 248 235 13 5.2 6.5 3.6
1Q 242 221 21 8.7 10.4 5.3
2Q 250 235 15 6.0 7.2 4.2
3Q 260 250 10 3.8 3.9 3.1
(1) Based on civilian population 14 yrs. of age and over, excludes inmates of institutions, members of the armed services and Indians living on reserves.
SOURCE: N.S. Dept. of Labour – “Current Labour Statistics for Nova Scotia” and D.B.S. 11-003
Capital Expenditures Per Capita, Nova Scotia & Canada 1961-1967
Business Housing Social Capital Total
N.S. Can N.S. Can. N.S. Can. N.S. Can.
$ $ $ $
1961 151 261 67 80 85 106 304 448
1962 137 268 59 85 102 116 299 469
1963 161 289 59 90 92 117 312 496
1964 212 343 62 105 84 119 358 567
1965 224 404 67 108 129 142 420 655
1966 preliminary 303 469 66 109 160 166 529 744
1967 intentions 322 459 66 106 206 174 604 740
SOURCE: D.B.S. 61-205
Notes Re Cost of Automobile Tariffs
to Canadian and Nova Scotian Consumers
To get an annual cost figure to the Canadian consumer for the protection of the Canadian automobile industry is very difficult. While tariff rates have fluctuated considerably in the last sixty years so has American components and American production which has been imported into Canada. The average Canadian car is made up of many parts which are manufactured in the United States and it is therefore difficult to arrive at the cost of the tariff on any one particular vehicle. To avoid this problem, in trying to arrive at an approximate figure, the difference in factory selling price between the United States and Canada for an average fourdoor sedan has been used. This difference excludes all state, provincial and federal taxation and also excludes transportation costs and dealer mark-ups. In 1935 this difference was $133: in 1955 $147 and in 1965 “Somewhat” less than $150. The sources for these figures are a study done for the Royal Commission on Canada’s Economic Prospects by the Sun Life Assurance Company (1955 and 1933). The 1965 figure was taken f.rom an article in the “Ontario Economic Review” published by the Ontario Department of Economics and Development.
The annual number of new car sales in Nova Scotia and Canada has been multiplied by $150 to produce an annual cost figure (these are not total car sales but only sales of Canadian and American cars). For the ten year period 1956 to 1965 inclusive the total cost for Nova Scotians was $18,270,000 and the total cost to all Canadian consumers was $613,865,000.
New Passenger Car Sales in Numbers (Canadian and American cars only) Cost of Price Difference* (dollars)
Nova Scotia Canada Nova Scotia Canada
1956 11,037 373,541 1,655,550 56,031,150
1957 8,987 332,590 1,348,050 49,888,500
1958 9,123 299,557 1,368,450 44,933,550
1959 9,084 310,920 1,362,600 46,638,000
1960 8,849 321,804 1,327,350 48,270,600
1961 10,773 336,122 1,615,950 50,418,300
1962 13,202 427,127 1,980,300 64,069,050
1963 14,975 506,311 2,246,250 75,947,650
1964 16,861 550,823 2,529,150 32,623,450
1965 18,909 633,641 2,836,350 95,046,150
*Price difference per auto assumed at $150
PARICIPATIONS* IN THE LABOUR FORCE
Nova Scotia Canada
1951 50.3 54.2
1961 49.3 53.7
1966 49.6 56.0
*Measured by the ratio of the number of people in labour force as a percentage of the number of people in the Province 14 years of age and over.
PERCENTAGE OF THE POPULATION IN THE WORKING
AGE GROUP —- AGE 15 TO 64
Nova Scotia Canada
1951 58.9 61.9
1956 57.6 59.7
1961 56.6 59.4
1966 57.4 59.4
NET OUT-MIGRATION FROM NOVA SCOTIA FOR
SOURCE: D.B.S. estimates