Mr. SFROULE.

I think we ought to have an explanation from the right hon. First Minister (Sir Wilfrid Laurier).

Sir \\ 1LFRID LATJKIERj. R.esoiution (a) provides, for the support of the government and the legislature, $50,000. That is based upon the figures of the British North America Act. It is the same as Manitoba. Then, in regard to the proposed subsidy of 80 cents per head of the population, I may say that by the British North America Act it is enacted that Ontario should be paid 80 cents per head of the population of 1861, which was then in round numbers 1.400,000 souls, or 1,396,000 souls. It is distributed equally. Quebec received 80 cents per head of the population upon the census of 1861, which showed a population of a little over 1,110,000. Then, all the other provinces, that is to say, Nova Scotia, New Brunswick, Manitoba, and so on, were paid 80 cents per head until they reached the maximum of 400,000 souls. It was obviously impossible to accept this maximum for the provinces of Saskatchewan and Alberta, because already the two together have a population which exceeds the minimum limit of 400,000 souls, so we have suggested that the gradation should go on until they have reached in each province a population of 800,000. You have to fix some arbitrary figure, but it seems to me that the figure that has been arrived at is as near justice as can be expected.

Mr. R. L. BORDEN.

It seems to be a very arbitrary arrangement after all. Do hon. gentlemen know on what it is really based ? If I remember aright in Nova Scotia at the time of confederation when the people were very much opposed to entering confederation, the cry was that we were being sold for 80 cents a head.

Mr. FIELDING.

The price of a sheepskin.

L, BORDEN. Y'es, for the price of a sheep skin. How is this SO cents a head arrived at ? Why is it that the allowance now is so- much smaller in this instance ?

Mr. FIELDING.

Eighty cents a head was simply an arbitrary rate reached in order to allow what was thought to be a reasonable sum on the population to assist in the maintenance of the local government. There has never been any particular question about that because it was 80 cents all around ; the real difficulty that has from time to time arisen with the provincial governments is with respect to the limitation on population.

Mr. R. L. BORDEN.

That is what I was asking about.

Sir WILFRID LAURIER.

Mr. FIELDING.

That is the real difficulty, and I confess I have never been able to understand the precise reason why these limitations were put on the provinces. It would seem reasonable that if the provinces were to receive a proportion of their income from the federal treasury, their needs would increase with their population, and that whatever that population might be in the future, they should be paid an allowance per capita, although not necessarily the same allowance, because one can conceive that if tlie population increased very largely a proportionately smaller rate per head might serve as well for the purposes of government as a larger rate would in a thinly populated country. The reason for tlie limit of 400,000 souls in Nova Scotia and 800,000 as we. are now making it in these provinces in order that it may correspond with the general principle of the Act, has never been made very clear, and I do not know if any of my bon. friends have ever heard a reason given. It is the cause at tliis moment of very considerable dissatisfaction in all the provinces and it has been proposed from time to time that that limitation should be removed, and that as the provinces increased in population the amount of their allowance should also increase. But inasmuch as in the past there has been a fixed limitation in the provinces we are making this analogous to it, making a liberal allowance for the growth of the provinces.

Mr. SPROLfLE. There have been many applications from Quebec and tlie other provinces for a. readjustment of their subsidies and we know that from the maritime provinces in the last few years there have been representations of this kind. In the first instance, as I understand, they ail received 80 cents a head and they were to receive that up to a limit of population ; that was regarded as a fixed and proper sum which each should have. In view of these repeated applications from the different provinces does the government think that_ they are justified in fixing the new provinces at the same sum now ? If the experience of the past has proven that that is not enough, would this not be the proper time for them to consider what is a proper amount and fix it at that sum for the new provinces at the present time, rather than have to go over the whole question when applications are received from the various provinces for an increase of their subsidy ? If you consider applications from Nova Scotia, New Brunswick, Prince Edward Island. Quebec, Ontario and Manitoba, you would have to consider the case of the Northwest Territories as well, and this may occur next year. It seems to me that our experience ought to enable us to determine very well whether this is the correct sum or not, and if it is not a large enough sum we should strike the present rate for the

new provinces at what in our judgment is a correct amount, and then let the others level up to that.

Sir WILFRID LAURIER.

For my part I would not concur with the view just now enunciated by the hon. member for East Grey (Mr. Sproule). Speaking for myself personally. I think that the whole system of giving subsidies to the provinces is one subject to very serious objection, but we have adopted it at the time of confederation and wrong or right we have to abide by it and live up to it, although it is wrong in principle. As has been said by the lion. Minister of Finance (Mr. Fielding) it is not a system satisfactory to the provinces. I agree with the Minister of Finance to this extent that if you adopt this principle of going by estimate-it is wrong, but you have adopted it, you have put ' it in your Bill, and the reason for it was that the Dominion took away from the provinces their sources of revenue, customs and excise. If that be the case there is strong reason to support the view of the Minister of Finance that there should be no limitation to population, that there should be a system of adjustment which would work automatically, whereby the subsidy of 80 cents per head would increase with increasing population. That is a view of the case which is well worthy of consideration. The province of Quebec has complained against the present system it is true, but the province of Quebec is not alone in that complaint; all the provinces have complained, and without at all committing the government, speaking for myself. I think it is one of the questions which will have to be taken up by the federal government in conjunction with the provinces at no distant date, but I do not think at this present time, as we are legislating within the corners of the British North America Act, that it would be advisable to depart in favour of these provinces from the principle which has been applied to the other provinces. There is in the other provinces a limit of population beyond which their subsidy does not increase and so long as this is the case for the other provinces, I think there ought also to be a similar limit imposed upon the new provinces which we are about to create.

Mr. SPROULE.

I am not objecting to the limit of population because that seems to be on the same principle throughout, but 1 want to draw attention to what the hon. member himself has admitted. What is the cause of these repeated applications from the provinces? They are made because we took away from the provinces their sources of revenue. Need I draw attention to the fact that their sources of revenue were customs and inland revenue, and what they could make from their timber, lands and mines? We did not take from the other

provinces their timber, their lands and their mines, but we have taken these assets from these new provinces, and whereas we took away only a portion of the sources of revenue from the other provinces, we are taking the whole of the sources of revenue away from these new provinces, and yet, notwithstanding that, we only allow them the same proportionate rate as we allowed to the provinces which retained part of their sources of revenue. It is true that we give them for the. land-

Mr. FIELDING.

We are allowing them for the land besides.

Mr. SPROULE

it is true we give them something in lieu of the lands, but we are assuming that they have a certain number of acres of land and we are putting an arbitrary value on that which would be about the lowest value you could put on land in the Northwest ; not the value of lands there at the present time. The estimate of the land is not at all the amount of land that is within their territory nor is the arbitrary value the value that the lands could be sold at in that territory to-day, because if the lands were left in the possession of the new provinces and they could sell them at the price which they might fairly realize for them to-day they could secure a very much larger sum for them. But after a while, when a portion of the lands are sold, the crowding of population becomes greater and the lands inereasq, in value to $10 or $15 or $20 an acre, and yet there are millions of acres of land in their territory unsold, but held by the Dominion government, what about these people ? They are not allowed the advantage of the revenue derived from those lands nor are they receiving any part of their enhanced value. That will be a source of annoyance to them in the future, and will probably be a reason why they will come back here and ask a readjustment of the subsidies. Therefore I think we should fix the subsidies on some principle that will be a finality. I remember on two different occasions, when this question was being considered in this House, and additional subsidies were being granted to the provinces-I think it was in 1884. when we granted additional subsidies, that we were told that the arrangement then made was to be a finality, as the previous arrangement wa s understood to be ; and yet the matter was brought up again afterwards, and the Hon. Edward Blake said this was a finality of a finality, and it was never to be taken up in this House again. And yet we are likely to take it up again, and the right hon. the First Minister himself is admitting the justice of the claim. Is it not better to settle the matter on some basis that will be a finality, and let the provinces understand that they must adopt some other means of raising a revenue and keep their expenditure within that revenue, otherwise they cannot expect to come back to the

Dominion government from time to time and ask to be recouped in the form of an increase in their subsidy -which might represent-I do not say it does-extravagance rather than a wise and economic expenditure of money. I think we should adopt some principle with reference to the new provinces that would not be subject to the same difficulties and drawbacks that have occurred in regard to the other provinces. I think experience has proved that the principle we have acted upon is not a good one, and we should learn from that experience and shape our policy accordingly.

Mr. FIELDING.

The lands clause will come up a little later, when that question may very well be considered. I mentioned, In the remarks which I addressed to the House on the second reading of the Bill, that I might desire to make some changes in the financial clauses, not as affecting their amounts, but as to their form ; and when we come to the land clauses, I will have a suggestion to offer which may perhaps in part meet my hon. friend's views in reference to the lands. We are hardly in a position to-day, however, with this measure before us, to take up the general question of a readjustment of provincial subsidies. That is a very large question, and will require very careful consideration.

Mr. BERGERON.

Is there any proposal to do that ?

Mr. FIELDING.

The provinces have no question in their own mind that they want it, but there is no proposal at present with the government to deal with the matter, although it is constantly agitated. My hon. friend the Premier lias expressed the opinion that the day is not far distant when that question will have to be considered, not merely on behalf of Quebec, but on behalf of all the provinces; and if a change Is made, it must be on some principle that will apply to all. The essence of the proposal of the provinces was that the limitations with regard to population should be removed. In the resolutions which were adopted by the provincial premiers some years ago in Quebec, I think they included a provision that they should receive eighty *cents per head up to a certain population, but that where a population was thickly settled and its needs would not be so great as those of a population sparsely settled, the subsidy for the additional population should be sixty cents a head.

Mr. BERGERON.

When was that ?

Mr. FIELDING.

I think that was at the conference in 1887, and it was adopted by ail the provinces. I think their demand is now practically a revival of the demand of that conference. The last conference was about a year or eighteen months ago, when the provincial premiers of the day, Colonel Prior of British Columbia, Mr. Roblin of Manitoba, Mr. Ross of Ontario, Mr. Mr. SPROULE.

Parent of Quebec, Mr. Murray of Nova Scotia, Mr. Tweedie of New Brunswick and Mr. Peters of Prince Edward Island, met here. Although the record will speak for itself, my impression is that they simply revived the resolutions of the Quebec conference, the substance of which I have stated. To take up that whole matter and determine it finally is a large question, and as the Prime Minister said, some of these days we may have to do it, but I do not think the House is ready to do it to-day. In the meantime, it is admitted that we must proceed with this Bill with regard to the Northwest provinces, and we might as well deal with them in the same* way as we have dealt with the other provinces ; and if, one of these days a change is made, it must be made on some principle that will apply equally to ail.

Mr. HENDERSON.

While I do not agree generally with the hon. Finance Minister, I quite agree with him that the principle of granting subsidies to the provinces is all wrong. There was no other reason why eighty cents a head was paid to the different provinces than the fact that the revenues of the different provinces, which they derived from customs and excise had been taken away from them ; and, in order to make good to them the revenues which they had lost by coming into confederation, they were paid eighty cents per head of their population, fixed I may say in a rather arbitrary manner, because, so far as the subsidies for Ontario and Quebec are concerned, they still remain on the basis of the population of 1861, while the subsidies to the other provinces are not so fixed. I am not complaining of that. The Minister of Finance has said that a country sparsely settled requires more per head than a country thickly settled. Assuming that the province of Quebec doubled its population, I do not ' know that it would cost very much more to govern it than it does at the present time, because the population might not be increased by reason of more territory being populated, but by reason of the population becoming more dense in the ctities, towns and villages. However, what I want to draw attention to is this, that the principle is bad. I do not blame the fathers of confederation for the system they adopted in 1867 Possibly it was the only way out of the difficulty that they had to deal with. But we are on a different basis to-day. We are dealing with a province which has neither customs nor excise revenue. Why apply to such a province the same principle that was applied to the old provinces ? It seems to me that an opportunity is offered now of getting rid of a bad principle, something we do not approve of, but the only one which so far as we can see could be acted upon in 1867.

I do not see anything in the argument that the principle which we think is not the best should be applied to the new provinces un-

der entirely different conditions, X think there ought to be some other way of getting out of the difficulty and that a splendid opportunity presents itself for adopting another principle and possibly one that by-and-by might be applied to the older provinces when the whole matter is brought under review by the government. We propose to take away the lands, or rather retain the lands. I should prefer myself to use the expression ' take away the lands,' because we are taking the lands which belong to the provinces and giving them a consideration in return. When we do this can we not, on some broad principle, come to an arrangement by which this plan of handing over in a bulk sum eighty cents a head to these people would be got rid of ?

I do not say for a moment that we should be niggardly in starting out these provinces in their new sphere. I think it would never do to adopt any plan which would not give these people sufficient revenue, but we must admit the principle that where one government is collecting the revenue and another government is spending it, there is not the same inducement to the spending government to act with economy as if they were collecting it and directly responsible to the people from whom they took it. If we can in some way hold those people responsible to those who contribute the money, we would be making a radical change which might be taken advantage of at some future day possibly with regard to the other provinces. At" any rate I think we would be starting out on a basis that would conduce more to economy than the principle we are adopting at present. I do not think that in the province to which I belong, the province of Ontario, it was ever conducive to economy in the administration of that province to have simply one million or one and a half million dollars taken out of the pockets of the people generally, chiefly through customs revenue, handed in a bulk sum over to its local government. The local government of Ontario arc not responsible to the people of that province for the taxation by means of which that money was raised, and consequently could not be called to task, as they should be, for any extravagance in the expenditure of it. I would hope that the right hon. gentleman, who no doubt has given great consideration to this question, could by some means or other devise some other plan which would be in advance of that which the fathers of confederation felt compelled to take, and more especially as we are now told that the conditions in those new provinces are quite different from those which prevailed in the older provinces in 1807. I must confess however, that although I have thought over the matter a good deal, I am not prepared to make any suggestion. Neither should I be called upon to make one because X am not one of the governing party in the country. We are in a minority of eighty-one

and look to the other side to provide a policy. I would be glad however, to make a suggestion, and I submit this suggestion to the right hon. gentleman for what it is worth. We are starting out these new provinces under new conditions, and I believe we can devise some plan under these new conditions, which would be more acceptable and perhaps more profitable in the end to the people in that new country as it would throw them upon their own resources entirely. If they were permitted to know now just what their revenues will be and had to work out their own destiny with what we give them now for all time, and if they were not in a position to come back time after time and ask for more, the new local administrations about to be established would naturally be more economical in the administration of their affairs, and that of course would inure largely to the benefit of that great country.