Newfoundland and Labrador

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Confederation

By the end of the war there were surplus funds in the province’s public treasury. With the crisis that had led to British intervention resolved, the British government decided to present the people of Newfoundland with choices for their form of government. In 1946 and 1947 the possible choices were debated by an elected convention. The convention primarily considered either a continuation of the commission or a return to responsible government. However, one of the convention delegates, Joseph Smallwood, argued for union with Canada. He influenced the British government to include the choice of union on the ballot that went before the Newfoundland people.

The voters subsequently eliminated the commission but failed to give either union or responsible government a majority. In a second referendum, union with Canada was chosen by 52 percent of the voters. On March 31, 1949, Newfoundland became Canada’s tenth province. Smallwood, the leader of the Liberal Party in Newfoundland and Labrador, became the first premier.

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Political Developments

One of the conditions for union was that Canada would review Newfoundland’s financial status after eight years. On the basis of that study the federal government has, since 1958, provided annual grants to the province.

Newfoundland’s government was completely dominated by Smallwood’s Liberal Party for more than two decades after 1949. Smallwood, who served as premier until 1972, focused on economic development. Provincial grants helped modernize the fishing industry, and government loans aided the development of new industries. One successful project was the hydroelectric plant at Churchill Falls. However, support for Smallwood’s government began to erode in the late 1960s. Concerns about a decline in fish stocks became widespread, and most of the government-supported industries established in the 1950s were in financial trouble.

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In 1972 the Progressive Conservative Party succeeded in winning a majority in the provincial legislature. Progressive Conservatives governed Newfoundland and Labrador for the next 17 years, giving way to the Liberals in 1989. The Progressive Conservatives returned to power in 2003.

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Economic Developments

In 1983 Newfoundland and Labrador’s deep-sea fishing companies were on the brink of bankruptcy. In response, the federal and provincial governments reorganized them into a single company, Fishery Products International Ltd. The federal government became the majority stockholder in the new company and the province acquired 25 percent of the company’s stock. In 1986 the provincial government began selling shares in Fishery Products International to private investors. Continued overfishing by Canadian and foreign fishers led to the imposition of fishing quotas by the federal government and to a deep slump in the province’s fishing industry in the late 1980s and early 1990s.

In 1992 the federal government placed a complete moratorium on cod fishing in an effort to save the cod stocks after decades of overfishing. The ban initially put many people out of work, but new fisheries were soon developed, especially for crab and shellfish, leading to a partial recovery of the fishing sector. In 1997 the Canadian government partially lifted the cod fishing ban, while carefully monitoring fish stocks to determine whether more extensive fishing would be allowed. Today, limited commercial fishing for cod continues, subject to quotas enforced by the federal government.

Beginning in the 1980s, hopes for a sustained economic revival in the province were pinned to a newly discovered natural resource—oil and natural gas fields located off the coast of Newfoundland. However, in 1983 and 1984 the supreme courts of Canada and of Newfoundland and Labrador declared that the federal government owned the offshore resources. In 1985 the federal government agreed to give the province some control over offshore oil and gas management and to allow it to tax production. Then, in 1990, representatives of the federal and provincial governments and a consortium of four oil companies signed an agreement to develop the large Hibernia offshore oil field. Construction of production facilities finally began later that year. The facilities started producing oil in 1997, and a new facility opened at the Terra Nova oil field in 2001. A third oil field, called White Rose, was scheduled to begin production by 2006.

In 1993 the discovery of a rich nickel deposit at Voisey’s Bay in northeastern Labrador aroused further hopes for the province’s long-term economic resurgence. Discovery of the deposit, one of the largest base metal deposits found in North America since World War II, sparked a staking rush; by 1996 more than 170 Canadian companies had staked their claims near the Voisey’s Bay deposit. After many delays, the provincial government announced in 2002 that an agreement had been reached with a privately owned mining company, Inco Ltd., to mine the deposit and to build facilities to refine the nickel locally. Other new mining facilities under development include the Pine Cove gold mine near Baie Verte and the Duck Pond copper-zinc mine near Buchans.

Despite the modest resurgence of economic vitality in the late 1990s, Newfoundland and Labrador still records the highest unemployment rate and lowest per-capita income in Canada. At the same time, the province has experienced an ongoing population decline. The province’s birth rate, historically the highest in Canada, is now the lowest, and many people—especially the young—continue to leave in search of better jobs. Population losses were especially pronounced in rural areas. Achieving and sustaining prosperity in the context of this population shift is expected to remain a major challenge for the province in the years ahead.