February 17, 1970.
FEDERAL-PROVINCIAL CONFERENCE
OTTAWA
FEBRUARY 16 and l7 1970
STATEMENT OF CONCLUSIONS
General
The Prime Minister of Canada and the Prime Ministers
and Premiers of the ten provinces met in Ottawa on February
l6 and l7, 1970. They discussed the economic situation and
related subjects, including inflation and the agricultural
situation. They also considered the problem of pollution and
received the Report of the Tax Structure Committee.

The Federal-Provincial Conference first discussed the
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The Economic Situation
economic situation, giving particular attention to the problem
of inflation.
The Governor of the Bank of Canada gave the Conference
his assessment of the economic and financial situation and outlook
The Governor expressed the view that while the restraints which
have been at work throughout 1969 are beginning to affect the
pace of economic activity, combatting inflation remains a most
urgent task for
governments.
all Canadians and a priority responsibility for
The Chairman of the Prices and Incomes Commission
reported to First Ministers on the results of the National
Conference on Price Stability which was held in Ottawa on
February 9th and 10th. He outlined anti-inflationary steps
which the Commission proposed for consideration by the federal
and provincial governments.
The Federal-Provincial Conference,with some reservations
expressed satisfaction with the results of the Conference on Price
Stability, and commended the Canadian business community, and
the other sectors of the economy who were represented at the
Conference, for
pricing policies during l97O. There were reservations expressed
the willingness shown to exercise restraint in
by Manitoba about the effectiveness of the proposed procedure
that would be followed by the Prices and Incomes Commission
whereby review would take place after,rather than before,price
increases.
There
would seriously
varying degrees
live, and would
was general agreement that continued inflation
impair the future well-being of Canadians, in
in whichever region of the country they may
dangerously alter the stability of Canadian
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society. The Conference confirmed the determination of the
federal and provincial governments to co-ordinate and renew
efforts to bring back price stability and sustained economic
growth and social progress throughout Canada.
At the same time, the Conference recognized that
inflationary pressures were distributed unevenly across the
country, and that some parts of Canada were suffering from
unemployment or lack of development as well as from inflation.
In view of this, it was recognized that anti-inflationary
policies should be applied as far as possible in a way which
would not add to the difficulties of regions which were experien-
cing high unemployment or economic problems. In this connection,
some Premiers maintained that, at the same time as broad anti-
inflationary measures are carried out, the federal government
should take such actions as would offset any negative effects
on the economies of slow growth areas, and which, with additional
federal input, would further help the basic problems of regional
imbalance of the Canadian economy.
Some provinces expressed the view that the federal
government must give leadership in solving the inflationary
situation, and British Columbia and Alberta suggested that the
federal government should decrease or eliminate certain taxes,
particularly the indirect sales tax and tariffs, to reduce
some of the current pressures on prices in Canada.
Some First Ministers also stressed the importance of
ensuring that governments do not over-react to inflation to an
extent which could lead to widespread unemployment and recession,
particularly since a number of economic indicators already point
to the possibility of higher unemployment and slower growth in
l97O. A concern was also expressed that emphasis needs to be
given to continued and expanded productivity and economic
growth.
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With these qualifications, the Federal-Provincial
Conference recorded its support for the efforts of the Prices
and Incomes Commission, and to this end:
(a)
(b)
(c)
(d)
The Heads of Government Endorsed the
Commission’s plan to call without delay upon business
firms generally to follow the basic principle adopted
by the National Conference on Price Stability, namely
to reduce the number and size of price increases they
would normally make in 1970 by ensuring that such price
increases are clearly less than the amount needed to
cover increases in costs. First Ministers urged all
Canadians to co-operate actively in restraining price
and income increases during 1970.
The federal government and the provincial governments
undertook to observe the same principle in the prices
or fees charged for goods and services offered for sale
by government departments and agencies and publicly
owned business enterprises, and provincial governments
agreed to take such action as they deem appropriate
with a view to having local governments observe the
same basic principle in their pricing policies.
The First Ministers agreed that governments should
exercise as much restraint in their spending, taxing
and borrowing as was practicable, without damaging
essential services or retarding economic development.
Provincial governments agreed to consider as a priority
matter the possible establishment or strengthening of
procedures for reviewing increases in rentals charged on
existing self—contained residential accommodation in
major urban centres during l97O, in keeping with the
basic principle adopted by the National Conference on
Price Stability.

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(e)
The First Ministers agreed that, to the extent they were
in a position to exert influence in this area, they
would urge professional associations to postpone or
limit increases in existing fee schedules for
pro-
fessional services during 1970. Some Premiers urged
care, however, that such action should not result in the
loss to a province of professional skills.
(f)
The Government of Canada and most provincial governments
expressed the hope that government sanctions would not
be required but agreed that if necessary they
use such means as are within their control to
with cases of serious non-compliance with the
criteria as reported by the Commission. Some
pointed out that sanctions must be applied by

all
provinces to be effective and that action by any one
province by itself would not be effective.
In addition, the Conference discussed the matter of
limitations on consumer credit as a possible means of strengthening
action against inflation. It was noted that general credit
restraints flowing from federal monetary policies, had recently
resulted in containing the expansion of consumer credit.
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The Western Agricultural Situation
The Premiers of the Prairie Provinces spoke to the
Conference concerning the seriousness of the western agricultural
situation, and urged that additional action by the federal govern-
ment be undertaken to alleviate the crisis.
Various suggestions were made for possible measures to
help western agriculture including acreage payments for diversion
of wheat acreage or for withdrawal of land from production, farm
storage payments, cash advances on stored grain, and repayments
from first sales for provincial cash advances, a two-price system
for agricultural produce, freight rate reductions, and more
aggressive selling of Canadian agricultural products abroad.
Some other Premiers, while acknowledging that particular
difficulties in the Prairies required special action, observed
that the agricultural industry in other parts of the country was
suffering from problems also.
The federal government agreed that while the wheat
marketing situation was improving, further assistance to the
agricultural industry was required. It was reported that several
steps were now being taken to alleviate the problem, including
an increase in the amount of advances available under the Farm
Credit Corporation Act. The Conference was also informed that
study of various other possible approaches to meet this problem
was underway and it was hoped that further steps could be announced
before Spring.

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Pollution
The Federal-Provincial Conference examined government
actions now underway and additional steps that could be taken
in future to combat the problem of pollution.
The federal government made reference to the Canada
water Bill, currently before Parliament, and expressed the view
that this would provide a practical vehicle for intergovernmental
co-operation in dealing with management and pollution of water
resources. Reference was made also to the importance of the
federal government’s role in the field of research and its function
in seeking international agreements to control pollution.
Many provinces agreed with the objectives of the Canada
Water Bill as an important step to facilitate anti-pollution action;
some provinces e;§§esééd reservations that some provisions of the Bill
raised jurisdictional problems. One province underlined that the Bill
was unacceptable in its present form and proposed major modifications.
The provinces stated their intention of taking further
extensive steps to control pollution, subject to the limitations
of their current difficult financial situation. Some provincial
First Ministers called for federal financial assistance or a
transfer of fiscal resources to provincial governments to make
more anti-pollution programmes possible at the provincial level.
In particular, some provinces felt that additional funds should
be made available by the federal government to assist munici-
palities in the construction of sewage systems. Also, some
provinces felt that assistance should be made available to enable
older industries to install anti-pollution facilities, while
others felt that industry should bear this cost.
All First Ministers shared the view that pollution has
become a serious problem in Canada and that additional steps
must be taken to preserve the quality of Canada’s natural environ-
ment. It was agreed that discussions should continue between
governments before the adoption of the Bill to ensure close
co-operation in the development of practical measures to meet
the urgent problems that now exist.

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Report of the Tax Structure Committee
The Prime Ministers and Premiers considered and agreed
to publish a Report submitted by the Tax Structure Committee.
The Report had been prepared in accordance with the conclusion of
the Constitutional Conference, in February 1969, that the Tax
Structure Committee should be reconvened to examine the occupancy
of tax fields and arrangements concerning shared-cost programmes.
Occuoancy of tax fields
The Conference discussed the fiscal review and outlook
which had been prepared by the Tax Structure Committee, and
which included data on the fiscal projections of the federal,
provincial and municipal governments for the next two years.
The data indicated that there is an immediate financial problem
facing governments in Canada, since there would be an increasing
deficit in respect of government operations as a whole, unless
tax increases are introduced or strong curtailments in expenditure
growth are achieved.
It was understood that the Ministers of Finance would
continue to study these questions at their regular meetings.

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5hared—cost programmes
The Conference also discussed the review of shared~cost
programmes which had been carried out by the Tax Structure
Committee. It was noted that a large part of the current fiscal
pressure on governments can be attributed to rapid erpenditure
increases in four major joint programmes – hospital insurance,
medical care, the Canada Assistance Plan and post~secondary
education. The First Ministers agreed that every effort must
be made to increase cost effectiveness in these programmes and to
hold down the rate of cost increase.
with this purpose in mind, the Conference agreed that
the federal and provincial Ministers responsible for these
programmes, together with the Ministers of Finance and Provincial
Treasurers, should jointly seek the best means for moderating the
rate of expenditure increase in these programme areas; To this
end, these Ministers, the President of the Federal Treasury Board and
theiriofficials should jointly undertake an analysis of studies
already concluded by task forces on health and welfare programmes,
and continue with further studies as appropriate.

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