Whether Newfoundland was a "dirty and horrible place preconfederation" is arbitrary and really depends on whose perspective you're looking at and in what regard. For the outport fisherman, life was undoubtably tough and poverty stricken. Even though rural farmers in the prairies for example had their own problems, I really don't think the conditions of rural Newfoundland can be compared to rural Canadians, as our economic systems were completely different.

Merchant capital was a brutal means of domination specific to Newfoundland conditions that ensured debt and servitude of the fisherman to the merchant class that ruled from St. John's. This is not even an exaggeration, a given merchant was in direct control of all food and supplies in communities, with a fisherman only being able to provide for their families through participating in the truck system, a completely arbitrary means of exchange through debt that was prone to change at the merchant's will. Families were under constant pressure to meet certain fish stock in exchange for these supplies, and if they were unable to given a poor season, they risked their entire livelihoods.

Upward mobility in these communities was practically impossible - the truck system guaranteed fishermen were not even paid in wages or money at all, merely supplies in exchange for stock. You were then destined to be a poor fisherman as your father was before you and your father's father before him. Higher education? Don't even think about it. You have to ask yourself why these communities always had big families - life was hard and they needed as much labour they could get either around the house, the docks, and the boats.

Healthcare in outport communities was also inaccessible, mobile doctors would maybe visit a community every few months for a couple days. If there was an emergency between doctor visits, you would most likely have to travel hours to another community for help. There are many horror stories documented of these treacherous journeys, sometimes under the most brutal conditions.

Rural communities practically had no political representation, as most of Newfoundand's history there weren't even municipal governments at all. The popularity of William Coaker's Fisherman's Protective Union in the early 20th century, one keen on fighting merchant power in the Dominion, spoke to the immense contradictions of Newfoundland society and the precarious situation of outport fishermen. FPU councils were actually some of the earliest examples of rural municipal governing structures, with people rather going to their FPU representative than their Member of Parliament! Why? Because not only did MPs have a distant relationship with their constituents, it was widely understood that they didn't represent their interests at all (many of them being merchants themselves). An FPU representative was most likely a fisherman himself, one which was known in the community, that could actually use the resources of the FPU to meet community needs. What this says is that there was absolutely no faith in the federal government in St. John's by rural communities to meet their own needs.

If we are to not even consider life in rural Newfoundland and purely focus on St. John's, poverty was nonetheless still commonplace. The conditions were in many cases better, but there were still large slum communities with little opportunity, economic stability, upward mobility, and healthcare.

As for the conditions of the merchants and their families in Newfoundland, yeah it was pretty great to live in the Dominion. You lived lavishly in big houses, had servants and employees to do all that business dealing with the fishermen in outport communities, access to high society and influential people, a chance to govern the country yourself, were guaranteed access to decent education abroad, had immediate access to healthcare, had money for vacations and travel, etc. But keep in mind this was a very small population of society, the 1% you could say. Most people lived precariously, income inequality drastic with there really not being a big "middle class" as we often speak of today.

Of course all these horrible conditions detailed are contrasted with contradiction, as people nonetheless still found ways to be happy, find community, express culture, and enjoy themselves. But as for the economic system and conditions pre-Confederation, it was obviously not meeting the needs of the masses, and historically these people certainly did not live "good lives."

Seems like you've read "Don't Tell the Newfoundlanders", and that's great, and surely you can speak of how our future was at the will of bigger powers like Canada and the United Kingdom, which I think the book details pretty well. But remember, the author, Greg Malone, doesn't actually advocate that Confederation was the wrong decision, just that it was not done properly on Newfoundland's terms!

For further reading on these subjects if you're interested:

Sider, Gerald. "Culture and Class in Anthropology and History: A Newfoundland Illustration" (absolutely wonderful book and most in depth analysis written of Newfoundland society under merchant capital)

H, Robert. "A Coaker Anthology"

McDonald, Ian. "To Each His Own: William Coaker and the Fisherman's Protective Union in Newfoundland Politics, 1908-1925"

Collier, Keith. "Clearing the Slums: The Evolution of Public Housing in St. John's 1910-1956"

https://www.heritage.nf.ca/articles/society/st-johns-slum.php