Federal attempts at relieving regional economic disparity : Newfoundland's experience with D.R.E.E

Bilous, Marlene Sonia (1973) Federal attempts at relieving regional economic disparity : Newfoundland's experience with D.R.E.E. Masters thesis, Memorial University of Newfoundland.

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Abstract

Regional economic disparity refers to the average differences in the living standards experienced by people in the five regions which make up the Canadian federal state. The objective of this thesis is the assessment of the federal efforts at combating this disparity in Newfoundland, the province most afflicted with regional economic retardation. The thesis deals with the period from 1949 to January, 1973. It places particular emphasis on the activities of the federal Department of Regional Economic Expansion (DREE) which was established in 1969. -- From 1949 to 1957, transfer payments and the Term 29 allotment constituted the total federal contributions to the Newfoundland treasury. The equalization payments and the Atlantic Adjustment Grants were further added during the 1957 to 1962 Diefenbaker period. The Pearson Era, 1963 to 1968, featured the first real attempt by the federal government to combat this problem through such programs as Area Development Agency (ADA), the Atlantic Development Board (ADB), and the Agricultural Rehabilitation and Development Act (ARDA). However, these federal programs were not very successful in alleviating Newfoundland's experience with regional economic disparity. Consequently, in 1969 the federal government under the leadership of Prime Minister Trudeau set up the Department of Regional Economic Expansion (DREE), with the expressed objective of reducing regional economic disparity through programs aimed at "economic expansion and social adjustment" in the disadvantaged regions of Canada. Since its inception, DREE has committed a total of $173,534,894 million and employed a strategy emphasizing urbanization, as opposed to rural development, in an attempt to combat this problem during the period from 1969 to January 1973. The DREE urbanization approach accounted for 91% of the total commitment, or over $159 million, and was composed of two programs: industrial incentives and infrastructure assistance. The rural development portion of the program accounted for the remaining 9% of DREE funds, namely $14,063 million. -- This thesis concludes that these federal efforts have been ineffective in relation to DREE's essential goal. Newfoundland's economy is still in a critical state when compared with national economic standards. The Newfoundland per capita personal income, calculated as a percentage of the national average, has only risen 9% during the 1949 to 1971 period. Furthermore, in January 1973, Newfoundland experienced an unemployment rate of 18% which represented 234% of the national average rate of 7.7%. It is our claim that the federal government could have reduced regional economic disparity in Newfoundland more effectively through the exploitation of Newfoundland's unused and under-utilized human and natural resource potentials. DREE strategy should have shifted its emphasis from one based on urbanization to one based on rural development so that both approaches could have been utilized effectively. Its strategy should have interlocked more effectively with Newfoundland's small business character, attempted the development of an urban growth corridor pattern, and exploited Newfoundland's vast potential for rural development. Furthermore, the federal government should have co-ordinated the objectives of its fiscal, monetary, transportation, manpower and external trade policies with those of DREE so that the root causes, rather than the symptoms of regional economic disparity, could have been more effectively dealt with.

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