COVER/SPECIAL REPORT

NEWFOUNDLAND:

JOHN DeMONT,GLEN ALLEN August 23 1993
COVER/SPECIAL REPORT

NEWFOUNDLAND:

JOHN DeMONT,GLEN ALLEN August 23 1993

NEWFOUNDLAND:

COVER/SPECIAL REPORT

The huge island stands, with its sheer, beetling cliffs, out of the ocean, a monstrous mass of rock and gravel, almost without soil, like a strange thing from the bottom of the great deep, lifted up, suddenly, into sunshine and storm, but belonging to the watery darkness out of which it has been reared.

—American missionary R. T. S. Lowell upon visiting the Avalon Peninsula, Nfld., in the 1840s

Dramatic, unforgiving, Newfoundland’s rugged landscape is the perfect metaphor for life on “the Rock.” Adventurous Norse explorers, after colonizing Iceland and Greenland, failed to carve out a permanent settlement in their new found land 1,000 years ago. And centuries later, only a handful of established fishing villages existed along the stark coastline. Throughout the 20th century, Newfoundlanders have constantly found their force of will and character tested. Their history is a saga of endurance, their victories often simply survival itself. They

have refused to surrender to the ravages of war, fire and famine, countless economic setbacks and the harshness of their unrelenting climate and geography. Yet, even by those standards, the challenges they now face are immense. The optimists among them say that long, hard years are ahead, while the pessimists warn that the province of Newfoundland and labrador may be dying. But virtually everyone agrees that the people of the magnificent, forbidding land have reached a dangerous turning point.

Recession is no stranger to Newfoundland, which has seen its fortunes rise and fall with the prices fetched for its fish, trees, minerals and hydro power. But this time is different. The mining and pulp-and-paper industries have long since passed their peaks. The northern cod, which has drawn Europeans to its offshore banks since before the explorations of John Cabot 500 years ago, has diminished to the point of disappearance. Other fish species are running scarce. Offshore oil is an uncertain promise. In truth, only a dramatic reshaping of the economy can provide jobs for those laid off from the mines and mills—or for the more than 20,000 fishermen and fish-plant workers thrown out of work in-

definitely by the suspension of the northern cod fishery on July 2,1992. ‘Trying to turn this economy around is like sitting in the dentist’s chair for 24 hours a day, 365 days a year,” says Chuck Furey, provincial minister of industry, trade and technology. What to do is a preoccupation of officials in Ottawa as well as in St. John’s. And the threatening economic pressures are rekindling debate about whether the former British colony’s decision to join Confederation in 1949 was good for Newfoundland or, indeed, for the rest of Canada.

All Canada holds a critical stake in Newfoundland's struggle for survival

In fact, Newfoundland and Canada need each other. For one thing, as Premier Clyde Wells points out, cutting the province adrift would deny Canada the riches in and below a vast area of the North Atlantic. And Wells cites a government study indicating that for every dollar of wealth generated in his province, Canada gains up to 10 times as much revenue as Newfoundland in taxes and reduced expenditures on social benefits (page 25). Beyond material matters, the province contributes its special social and cultural values to Canada.

The challenge facing Newfoundland is already tearing its unique social fabric, which shapes its distinct identity and allure. It is an allure that draws thousands of exiled Newfoundlanders, who live “away” for the jobs, back to the province on frequent visits, especially during “Come Home Year” celebrations in their natal communities. Exiles from far and wide returned this summer for Come Home days in more than a score of communities, to such saltwater towns as Heart’s Delight on Trinity Bay and Bellbums on the northwest coast, to Howley, a lakeside former logging town on the now-trackless route of a former crossisland railway (page 26). Thousands more return to resume residence.

Newfoundland’s net loss of population by migration has fallen from a rate of more than 10 per thousand before 1987 to 1.9 per thousand last year. But the fact remains that there are more departures than returns. Coupled with a 30-year decline in its birthrate from Canada’s highest to the lowest, Newfoundland’s population, now an estimated 577,700, is barely growing. The province is just a statistical step away from voluntarily fulfilling a highly controversial economic solution proposed in studies more than 20 years ago—an organized program of out-migration. Economist Parzival Copes, at Memorial University until he moved in 1965 to Simon Fraser University in Burnaby, B.C., argued in those studies that Newfoundland simply lacked the resources to sustain its population. And similar arguments now, if less bluntly stated, centre on whether Canada can afford to continue encouraging Newfoundlanders to stay at home, or return home, with such programs as unemployment insurance and the current $800-million-a-year fishery compensation package.

The debate is far from straightforward. Confederation, obviously, has not brought prosperity. And while the current recession has battered the entire country and the collapse of the fishery rocked all of Atlantic Canada, nowhere do things look as bleak as they do in Newfoundland, which has the country’s highest unemployment rate and lowest per capita income. Unless the province can wean itself from its long reliance on natural resources and government supports, its very future seems in jeopardy. At best, in the view of Wade Locke, an economics professor at Memorial University, “we’re talking about years of stagnation.”

It could have been worse. Forty-four years after Newfoundland joined Confederation (on March 31, 1949), the monetary benefits to the province are clear. Transfers of money from Ottawa to St. John’s under three major federal-provincial programs will provide the Newfoundland government with 45 cents of every revenue dollar this year. And according to a province-by-province “economic dependency” report by Statistics Canada in June, Newfoundland tax filers received the highest level of benefits from Ottawa in 1991—for each $100 of employment income, an average $41.66 in federal payments, including unemployment insurance, compared with $23.47 for Canadian tax filers generally. Said Brian Peckford, Newfoundland’s premier from 1979 to 1989 and now a Vancouver business consultant: “I’d hate to see where we would be today without Ottawa lending a hand.”

As true as the Ottawa dollars may make that assertion, the story of Newfoundland since Confederation is filled with disappointments, many of them linked to the island’s loss of independence. Newfoundland had enjoyed a large measure of autonomy before the Great Depression drove it back under the British imperial wing in 1933. To this day, the decision to cast its lot with Canada still rankles wih many who would have preferred allying themselves with the United States or regaining

their own independent government. “We were once our own nation,” explains James Halley, a retired Stjohn’s lawyer, “it is hard to forget that.”

Many Newfoundlanders still blame Ottawa for yielding to outside pressure that killed the historic sealing industry in the 1980s. Others point to the abandonment of the Newfoundland railway (the “Newfie Bullet” passenger service in 1969, all remaining trains in 1988), despite Ottawa’s pledge to maintain the line when the province entered Con-

federation. Even harder to forget is the 1969 agree ment allowing Hydro Quebec to buy most of the power generated from Churchill Falls, Labrador, at bargain prices. The 65-year deal, which Ottawa has de dined to overturn under its powers over interprovincial commerce, is estimated in St. John’s to cost the province at least $800 million a year in lost income.

Newfoundland’s biggest complaint, though, is over Ottawa’s management of the fishery, the historic lifeblood of 400 of its 700 isolated communities. When Ottawa gained jurisdiction over the Grand Banks in 1949, it took control of one of the world’s richest fisheries. Now, the fish that Cabot found to be so plentiful that “they sometimes stayed his shippes” seem to be on the verge of extinction. Federal fisheries scientists, who overestimated the size of the cod stocks, are still trying to determine whether the cause is overfishing, an explosion in the cod-eating seal population, abnormally cold water temperatures or a combination of factors.

In Ottawa early in August, cabinet ministers launched efforts to devise a survival plan for Newfoundland. Officials of the employment and fisheries departments conferred. But according to a senior federal official, ‘There is just no quick fix on the horizon.” Conservative MP Murray Dorin (Edmonton Northwest), chairman of the influential Commons finance committee, says that his studies of the situation over several years led him to conclude that Newfoundlanders should be encouraged to move to places with better employment opportunities. In an interview with Maclean’s, Dorin argued that “rather than spending money through UI, special programs and transfer payments to keep people existing there in a hopeless situation, we’d be far better off to consolidate those resources to move them, and to get some training for what they could do.”

The stark reality is that Newfoundland’s harsh climate, scattered population and cyclical, resource-based economy have always made widespread prosperity difficult to deliver. And Newfoundland itself must shoulder its share of the blame for its woes. Desperate for investment, it has routinely fallen victim to smooth-talking outsiders touting questionable schemes, usually requiring government funding, including the infamous oil refinery project at Come-by-Chance and the Sprung Greenhouse in St. John’s.

Under the surface lurks another problem. Explains Robert Greenwood, a business professor at Memorial and senior consultant to the provincial Economic Recovery Commission, which is seeking ways to diversify the economy: “Whether it was England, the federal government or multinational corporations, we have always looked for outsiders to fix our economic problems.” Economists, politicians and business leaders agree that many years of dependence on government handouts and regional development programs have spawned a welfare mentality in parts of the province. In particular, the critics fault the federal unemployment insurance system, which allows fishermen to become eligible for 42 weeks of benefits after as little as 10 weeks of work, leaving recipients with little motivation to retrain or to seek work elsewhere.

And Ottawa’s Northern Cod Adjustment and Recovery Program is criticized for similar reasons. To qualify for maximum benefits under the compensation package (average weekly benefits are $344 for fishermen and $273 for plant workers), recipients are required only to upgrade their education or undergo retraining, mostly at government expense. Fully 14,000 of the 17,000 people enrolled in education programs are simply aiming for more specialized jobs within the fishery—despite repeated warnings that even if the cod return, most of the jobs will not.

Fostering a new spirit of independence and selfsufficiency will be painful. Last month, former federal fisheries minister John Crosbie indicated that the millions going to fishermen under the fisheries compensation package will not continue indefinitely. Although cutting off benefits altogether, which would only exacerbate the pain in the outports, seems out of the question, Wells has held discussions with Prime Minister Kim Campbell about forging a new support system. Among other things, it would provide a low guaranteed income for all Newfoundlanders—but with built-in incentives to get the unemployed back into the workforce.

‘There is no quick fix on the horizon

COVE R

All the same, providing new jobs is the biggest challenge. In that regard, the province’s policy-makers are taking revolutionary steps. Underpinning the Wells government’s approach are sweeping educational reforms designed to reduce the province’s alarming 44-per-cent illiteracy rate and to educate workers for employment outside the fastdisappearing resource sector. Said Karl Kenny, CEO of Matrix Technologies Inc., a St. John’s company that makes navigation computers for ships and digital imaging equipment: “We have to be training our people for the jobs of the future, not the past.”

The Wells government has big plans to diversity the economy. Fishery-related employment will remain the bedrock in many of the outports. But in a plan unveiled last year, the government pointed to opportunities for profit from manufacturing, tourism, culture and technology. “We’re playing catch-up ball,” explains Susan Sherk, a member of the Economic Recovery Commission, “but we have got to get people thinking beyond the fishery.”

In particular, the government identified homegrown entrepreneurs as the province’s potential economic saviors. In the view of the planners, the future of Newfoundland may lie with people like Derrick Rowe, 33, who began his working life on an offshore oil rig. Today, Neweast Technologies Inc., the company he founded in St. John’s, develops, manufacturers and sells mobile voice and data communications equipment, mainly for foreign customers. Declared Rowe: “If our company and others like it don’t make it, Newfoundland is finished.”

Some people are already getting the message that there is no future in simply harvesting fish, trees and minerals. A shift into service industries is already under way: since the beginning of the 1980s, the proportion of the workforce engaged in services, as opposed to goods-producing industries, has risen from 67 per cent to over 75 per cent. One example: Loyola O’Brien, a fisherman from Bay Bulls, a St. John’s bedroom community, who concluded almost 10 years ago that the cod were disappearing. Bird Island Charters, the company he operates with his

brother Joseph, grossed $250,000 last year taking tourists out to view the puffins, cormorants and kittiwakes that nest on the offshore islands.

Other converts to the new attitude are the citizens of Buchans, a village of 1,200 in the province’s interior, which was on the verge of becoming a ghost town in 1985 when the copper, lead and zinc mine that was its mainstay shut down. The townspeople set up the Buchans Development Corp., sold shares to raise capital and took over the assets of the bankrupt mining operation. Now, 28 employees make parts in a former mine workshop for defence contractors in Europe and the United States. Concludes Sean Power, the former mayor who is president of the fabricating company: “The time has come to start accepting responsibility for our own future.”

Not everyone is prepared to wait around to see if the Newfoundland economy can move into the 20th century. Many experts predict a largescale migration into bigger urban areas and to the mainland as the picture darkens in the outports. Yet as regularly as they leave, Newfoundlanders return. “There’s something about the place which draws you back,” says Karl Kenney, who left in 1982 to start a computer-component manufacturing firm in Seattle, only to move back in 1989. “We’ve got our own anthem, and a strong awareness of our own special identity.” He left something out—the quiet endurance and survival instinct of the people, which helped them through centuries of setbacks. In the years and even decades ahead, which threaten to be some of the hardest ever seen on the Rock, that quality of perseverance will be put to the ultimate test.

JOHN DeMONT

GLEN ALLEN