Province Législature Session Type de discours Date du discours Locuteur Fonction du locuteur Parti politique Manitoba 35e 5e Discours sur le Budget 20 avril 1994 Eric Stefanson Ministre des Finances Progressive Conservative Party of Manitoba Hon. Eric Stefanson (Minister of Finance): Mr. Speaker, I am honoured to present our government's seventh budget to the Legislative Assembly and the people of Manitoba. Founded on the aspirations, energy and enthusiasm of Manitobans and their families, this budget contains initiatives aimed at meeting today's challenges while continuing to build a strong and secure future. Manitobans have a clearly defined set of goals and objectives for their lives and for their children's future. They want secure jobs. They want their children to have an education that will enable them to be successful in a highly competitive labour market. They want to be confident that our health care system and social safety net will be accessible and effective far into the future. They want a balanced budget free from mounting deficits which threaten vital human services. They want to be able to walk on their streets and in' their neighbourhoods in safety and without fear. These goals were expressed many times in many different ways during the round of public consultations undertaken before the final drafting of the budget. In Winnipeg, Brandon, and Thompson, in Portage la Prairie, Altona and Russell, Manitobans from all walks of life provided their perspectives on the challenges facing our province. But most importantly, they provided their best advice on what can and should be done to meet those challenges. It was not surprising for me to learn that so many Manitobans have the same concerns, have the same hopes and dreams, and want Manitoba to be even more than it is today. I value and respect their advice, and I thank them for it. It is reflected in the measures taken in this budget, and we will be strongly guided by it. Mr. Speaker, our economic future is bright. Manitobans have the entrepreneurial spirit, the work ethic, the skills, the infrastructure, and the diversified economic base necessary for a thriving economy with abundant jobs and investment opportunities. Manitoba is a good place to live, to work and to invest, and we want to keep it that way. We must continue to develop the skills of our people through training and education. We must maintain and improve our infrastructure. We must take advantage of new trading opportunities which arise from reductions in interprovincial trade barriers, and internationally, under the Free Trade Agreement, the North American Free Trade Agreement and the General Agreement on Tariffs and Trade. Our businesses are seizing all kinds of new opportunities, and that means new jobs for Manitobans and better prospects for consumers and greater variety and better prices. The introduction of free trade with the United States in 1989 represented both a challenge and an opportunity to our businesses. What did they do in face of this challenge? They rolled up their sleeves and set to work upgrading their processes and their products. As government, we helped by making our taxes more competitive and by providing assistance where it was most needed, through measures such as the Manitoba research and development tax credit and the Manitoba manufacturing investment tax credit. Mr. Speaker, the results are impressive. In the last five years, manufacturing investment in Manitoba averaged 53 percent higher than in the preceding five years. Private research and development has more than doubled under our government. Since 1990, our exports to the United States have grown by 40 percent. In 1993, our rate of job creation was third best in Canada. We now have many dynamic sectors producing goods and services that are competitive and increasingly successful in world markets. Manitoba companies like Boeing, Bristol Aerospace, Carnation, Ford New Holland! Versatile, Gemini Fashions, Kleysen Transport, Loewen Windows, McCain Foods, Motor Coach Industries, Nygard International, Pollard Security Printing, Reimer Express, Simplot and Western Glove are proof positive of our competitiveness in world markets. There are many reasons for these successes. More and more, as potential investors consider our province they are attracted to Manitoba sites as locations for new and expanded operations. Fiscally responsible policies in Manitoba have created a positive economic climate. The obstacle of uncompetitive taxes has been removed, and business investment decisions are now based on our Manitoba Advantage. I would draw honourable members' attention to the special Manitoba Advantage budget paper enclosed with this address. Last year Premier Filmon released the Framework for Economic Growth which laid out a 10-point economic strategy emphasizing long-term commitment to fiscal management as the foundation of economic growth. As the Premier wrote in the forward to the Framework for Economic Growth, "Economic growth is not the sole objective, but rather the means to several more important goals. Manitoba's ability to provide jobs, vital social services and a high quality of life can only be sustained through the creation of new wealth and industry. " Mr. Speaker, the 1994 Manitoba budget continues to make jobs and economic development the top priority. Agriculture is a mainstay of the Manitoba economy and a major priority for our province. In addition to working with the farm community to combat unfair trade harassment, our government has extended participation in the Gross Revenue Insurance Program beyond its March 31, 1996, expiry date. As well, we are increasing our focus on agri-food processing and export opportunities. For example, support for the Crop Diversification Centre in Carberry and the Canola Council of Canada based in Winnipeg will ensure that farmers and processors are helped to diversify crop production and capture value-added processing opportunities. Our government's commitment to the promotion of economic development and expanded services in rural Manitoba is strengthened with additional allocations from lotteries for rural economic programs and the continuation of the successful Grow Bonds Program. My colleague the Minister of Rural Development (Mr. Derkach) will direct lotteries funding to rural libraries to augment the funding provided by Culture, Heritage and Citizenship. Under the direction of my colleague the Minister of Culture, Heritage and Citizenship (Mr. Gilleshammer), the Community Places Program is being expanded to allow $4.5 million in new projects that will improve facilities and create jobs throughout the province. In 1994-95 the total provincial public sector capital program will top $1 billion as investments by Manitoba Hydro, Manitoba Telephone and other provincial corporations and agencies will add $682 million to the $329 million provincial capital budget. The investment will create important jobs during the planning and construction phases, improve the overall efficiency of our economy, and lead to more long-term jobs for Manitobans. Later this year the province, the federal government and the City of Winnipeg plan to sign a new five-year, $75 million Winnipeg development agreement. All ~e partners are committed to ensuring that the focus of the new agreement will be on key economic and labour force development priorities and on reinforcing, on a city-wide basis, Winnipeg's vital role in the provincial economy. The Minister of Urban Affairs (Mrs. McIntosh) will be joining her colleagues soon for an announcement on the start of public consultations on the design of a new agreement. The Department of Industry, Trade and Tourism will continue its extensive work with many companies both in strategic sectors and traditional industries to facilitate new investment, expansion and job creation. We have seen a dramatic increase in opportunities for Manitoba, and these opportunities are being converted into thousands of new jobs and hundreds of millions of dollars in new investment. Understanding that small business provides the vast majority of new jobs in the province, our government has worked hard to lever opportunities and provide economic stimulus. The Business Start program launched in 1990 is a case in point. This initiative has helped over 300 entrepreneurs start new businesses and create 940 new jobs. Approximately 40 percent of the new businesses are owned and operated by women, and 27 percent are in rural areas. The Business Start program has been so successful that we are extending it for a further two years. With $1 million in loan guarantees, it is expected that 110 businesses will be started and 300 more jobs will be created each year. My colleague the Minister of Industry, Trade and Tourism (Mr. Downey) will pursue an innovative, five-year pilot program to provide expansion capitaf for existing small businesses in the service and manufacturing sectors. The small business expansion fund would involve a partnership of financial institutions, entrepreneurs and the provincial government. Long before the current federal government was elected, Manitoba was lobbying for a national infrastructure program that would create jobs and spare economic development. This is why we were among the first provinces to enter into an Infrastructure Works Agreement after the new federal government announced its commitment. The agreement provides for $205 million in investment in a regionally diversified set of projects throughout the province over the next two years. In co-operation with the federal and municipal governments, we are also striking a balance between longer-term strategic initiatives and traditional infrastructure thrusts, maximizing long-term benefits for our province. I am particularly pleased to note that Manitoba was the first province to have a large block of projects approved. Work will start in the near future. Initial project approvals will generate more than 2,300 jobs during construction and the legacy of stronger economic infrastructure for the future. Manitoba is financing our $68 million participation through a special allocation from lotteries funds. This ensures that Manitoba's commitment is new money and will not raise the province's deficit or reduce resources committed to programs. The substantial $33 million rural gasification project under the infrastructure initiative will help communities outside Winnipeg gain access to economical natural gas. This will reduce home heating costs and, perhaps more importantly, provide a new magnet to attract industry and new economic opportunities. Mr. Speaker, we have worked hard since 1988 to turn a hostile tax regime into one of the fairest and most competitive in the country. None of our major tax rates, the personal income tax, the corporation income tax, nor the retail sales tax, has been increased since this government took office. No other Canadian province can boast of a freeze on major tax rates over the last six years. Manitoba's basic rate of personal income tax was actually reduced starting in 1989, and targeted reductions for families with children were introduced at the same time. Only two other provinces have reduced their personal income tax rates since 1987. Manitoba's marginal rate of personal income tax is now the third lowest after having been the highest in Canada in 1987. This is a dramatic turnaround. Manitoba's retail sales tax rate is the lowest of any province which levies sales tax. The payroll tax burden has been reduced through increases in the exemption level and a training tax credit introduced in 1991. Fully 90 percent of all Manitoba businesses are now exempt from the payroll tax. Manitoba families are major beneficiaries of these policies. Earlier this month, Statistics Canada reported that family income after taxes in Manitoba recorded the strongest growth in Canada for 1992. At 7.8 percent, Manitoba's growth was four times the national increase. As well, the Conference Board of Canada expects personal disposable income in 1994 to increase by $435 for every man, woman and child in Manitoba. I am confident that our improved tax competitiveness, in combination with falling trade barriers and the fundamental strengths of the Manitoba economy, will underpin a significant expansion of our economy and create more jobs for Manitobans over the next decade. Mr. Speaker, I am pleased to announce that the longest-running tax freeze in Canada will continue. Again this year, there will be no increase in major Manitoba tax rates. There will be: No increase in personal or corporation income taxes; No increase in the sales tax; and No increase in payroll or capital tax rates. We will continue to take whatever actions are required to ensure Manitoba's taxes remain competitive. Mr. Speaker, in addition to continuing a tax freeze that is the envy of every government in Canada, this budget also provides a series of targeted tax cuts and various incentives. These measures are aimed at helping people and encouraging business to create more jobs. Over the past six years our government has placed a high priority on supporting the needs and aspirations of Manitoba families. We are committed to continuing this priority emphasis throughout 1994, the International Year of the Family. We support utilization of registered retirement savings plan funds, sheltered from provincial and federal income taxes, to assist first-time homebuyers. Mr. Speaker, to further assist families and to create more jobs in the construction industry, I am announcing a sales tax rebate program for all new homes purchased by first-time buyers between budget day and March 31, 1995. To focus the benefits of this relief, the maximum rebate will be $2,500, which is sufficient to cover the full sales tax on a typical $100,000 home. We are confident this will help build further on the recent strength in the housing sector. In addition, a special one-year $10 million program will assist Manitobans to renovate and upgrade their homes. Grant assistance of $1,000 will be available for projects focused on structural improvements to older homes currently valued up to $100,000. The program is intended to help Manitoba families renovate their homes, give the renovation industry a timely boost and enhance employment prospects for Manitobans. As a further measure of assistance to lower-income homeowners, Manitoba home renovation program grants will be extended to Residential Rehabilitation Assistance Program projects where the net costs to homeowners exceed $5,000. An estimated 600 jobs will be created and maintained as a result of these initiatives. Transportation plays a vital role in our economy, both in bringing Manitoba products to expanding markets throughout North America and elsewhere, and in bringing competitively priced products to our markets. We will, therefore, bring the railway diesel fuel tax rate more in line with other provinces with a phased reduction of 3.156 per litre. As well, Manitoba truckers will retain the benefits of the second-lowest diesel fuel tax rate among the provinces. These measures, along with the transportation component of the Infrastructure Works Agreement, will strengthen our position as an international hub for road, rail and air transportation. Manufacturing companies have worked hard to modernize and become more innovative and competitive, assisted by such measures as the Manitoba research and development tax credit and the Manitoba manufacturing tax credit which is scheduled to expire June 30, 1994. Mr. Speaker, to encourage continued growth and expansion of this vital sector, the following measures will be undertaken: The manufacturing investment tax credit will be extended to June 30, 1995; The sales tax exemption for direct agents used in manufacturing will be broadened to assist smaller manufacturers; and Sales tax on electricity used in mining and manufacturing will be phased out to further enhance the great Manitoba Advantage of fully renewable and environmentally friendly hydroelectric power. Our aim is to use that great resource even more aggressively to create additional investment and jobs for Manitobans, especially in mining and processing in the North, and in manufacturing. Mr. Speaker, earlier I referred to the high priority given to small business in Manitoba. It is the true backbone of our economy and consistently ranks as one of our most effective creators of jobs. In previous budgets, we acted to eliminate the payroll tax on jobs for small business. Today, to further assist small business expansion and job creation, we will take the following action: The small business capital tax exemption will be doubled to $2 million. As a result, some 600 additional small businesses will no longer pay this tax. As well, the small business corporation income tax rate will be cut from 10 percent to 9.5 percent for 1994, and to 9 percent in 1995. Business regulation is another crucial issue, especially for small businesses. Throughout the pre-budget consultations, we were told to address the problems and inefficiencies created by unnecessary regulations. We are responding to this concern with the creation of the Advisory Panel on Business Regulations. Along with Manitoba businesses, we are waiting with interest for the panel's report in June. We are committed to making regulations "smarter," to help ensure Manitoba continues to have one of the best economic climates in North America. Our vast and rich mineral deposits have always been among Manitoba's great assets. In the past, mining activity has been inhibited by an onerous tax structure. In previous budgets we took steps to foster exploration in the province, including the successful Manitoba Mineral Exploration Incentive Program. We have created a more hospitable regulatory and taxation environment. My colleague the Minister of Energy and Mines (Mr. Orchard) informs me that these initiatives are succeeding. Mining claims and oil exploration have increased dramatically. New mines are opening, and the potential of a number of promising sites is encouraging. One of the largest and most significant is in the Williams Lake area where successful exploration activity identified a new world-class nickel deposit for the province. To encourage translation of these and other prospects into quality jobs for northern Manitoba, I am announcing a new mining investment tax credit. The credit will allow up to 7 percent of investment in a new mine or major expansion of an existing mine as a deduction from mining taxes. It is effective from midnight tonight until December 31, 2003. As well, to encourage additional mineral processing and to further spur job creation, the processing allowance under the mining tax will be doubled to 20 percent for new facilities or major expansions. We are clearly taking aggressive and effective action to build on one of our greatest strengths, our natural resources. The federal decision to lower tobacco taxes in a discriminatory manner, and the parallel cuts by eastern provinces have created the potential for east-west movement of contraband tobacco and additional problems for western provinces. I fully share the concerns of many Manitobans who urged our government not to cut tobacco taxes. Lower tobacco taxes would send the wrong message to our young people and place an added financial strain on our health care system. We, therefore, remain firmly committed to maintaining our current level of tobacco taxes by using improved enforcement to deal with the new pressures. We have asked for full federal co-operation in dealing with what is clearly a federally created problem. I am very pleased with the active co-operation and financial support received from all the western provinces on this issue. We believe a strong and united approach to this difficult problem through such initiatives as increased information sharing among provinces, stiffer fines and penalties, marked tobacco product requirements and other related enforcement provisions will greatly reduce opportunities for smuggling cigarettes into western Canada. Mr. Speaker, a well-rounded and solidly based education, a high-quality and accessible health care system, and a reliable social safety net are key components in the kind of life Manitobans want for themselves and their children. Our government will continue to reflect these values through program enhancements in key human service areas. Health, Education and Training, and Family Services account for 72 cents of every dollar of program spending this year. In fact, of the entire $1.1 billion increase in program spending since 1987, over $1 billion, or 92 percent, has been devoted to these priorities. Mr. Speaker, we will continue to refocus education and training to meet our most important objective-equipping our citizens with the skills necessary to compete successfully in today's world. To ensure all Manitobans have comparable access to education, we will expand distance education opportunities. Several more school divisions will offer distance education services this fall, and by the 1995 school year a province-wide system involving interactive television, video conferencing and library access is expected to be in place. Consultations with all partners in education will emphasize ways to ensure that students meet higher measurable standards. My colleague the Minister of Education and Training (Mr. Manness) will hold a Parents Forum on Education at the end of this month, providing parents a unique opportunity for direct input in setting education priorities and establishing new directions. One of the major themes of the University Education Review Commission earlier this year was better use of post-secondary resources and skills-building programs for Manitobans. Consistent with the report, all skills-training initiatives have been consolidated, apprenticeship training is being revitalized, and the successful Workforce 2000 program is being continued. Youth initiatives such as Careers tart, Partners with Youth, and the youth programs are being sustained. We have approached the federal government regarding their possible participation in a tax credit savings plan to encourage Manitobans to secure skills training essential in a changing economy. The community colleges budget will increase 3.3 percent to build on their success in enhanced technical and vocational training. Universities will be asked to focus their activities more effectively. University operating funding will be reduced by 2.7 percent this year, while capital funding will be increased by two-thirds, from $6 million to $10 million. Once again, tuition fee increases will be limited to 5 percent. Mr. Speaker, this budget also places new emphasis on measures geared to improving self-reliance rather than fostering dependency. Priority is being maintained on providing social assistance where it is truly needed. Welfare to work and skills upgrading thrusts in this budget will meet the needs of individuals and families for adequate incomes while providing them with real hope and opportunity for their future. The departments of Family Services and Education and Training are earmarking $3 million for specific pilot projects. Given the federal government's position on pilot project funding, we look forward to their participation. In addition, we will participate with the City of Winnipeg and the federal government in a $10 million welfare-to-work initiative under the Infrastructure Works Agreement. Mr. Speaker, this budget invests $1.85 billion in health initiatives for Manitobans. There is a consistent emphasis on redirection of resources to community-based care and illness prevention. While my colleague the Minister of Health (Mr. McCrae) will be providing full details during the Estimates review, I would like to highlight a few items: Home care receives an additional $2.6 million and includes service improvements through expansion of self-managed home care in rural and northern Manitoba, and establishment of an appeal panel and an advisory committee. Support services for seniors will be enhanced through a special $500,000 allocation from the Healthy Communities Development budget. Regulated midwifery will be introduced as an important component in a comprehensive obstetrical services plan. Breast cancer and cervical cancer screening programs will be enhanced. Funding for dialysis treatment will be increased by $2.4 million, bringing the service closer to patients. Increased funding of $1.3 million will be available for bone marrow transplants. Establishment of Manitoba's first lung transplant pilot program means Manitobans no longer need to leave the province for this vital service. Pharmacare receives an additional $5.6 million, and the new Drug Program Information Network (DPIN) system will help avoid adverse drug reactions and overprescribing. The new DPIN will also process Phamacare benefits automatically for Manitobans at the same time as prescriptions are filled. Community-based mental health services receive an additional $4.3 million. Adult day care spaces will be increased throughout Manitoba. The new five-year agreement with the Manitoba Medical Association provides a framework for co-operatively managing overall doctors' fees and improving access to services in rural areas. Our continuing objective is to modernize government so that it provides the services Manitobans want and need on a basis that is sustainable and affordable to taxpayers. Since our election to office in 1988, our government has worked to bring the cost of government, that is taxes, within reasonable levels for Manitobans. We have brought new thinking to government decision making, putting the concerns of Manitobans front and centre. We have emphasized internal reform, affordability and realistic expectations in public sector compensation. The results are becoming very evident. This year, Dominion Bond Rating Service cited Manitoba as being "the most fiscally responsible province in Canada 1987 to present." Much of the credit should go to my predecessor, the honourable member for Morris (Mr. Manness). On behalf of my colleagues and all Manitobans, I would like to formally and publicly thank him for his excellent leadership, foresight and dedication. When our government took office in 1988, Manitoba was facing a serious challenge-the burden created by a long period of high deficits, high taxes, unchecked government spending and almost $4 billion of new debt piled up from fiscal 1982 through fiscal 1988. Manitobans know there are going to be deficits during and just after recessions due to sharp revenue declines. But they are critical of past governments which, despite periods of strong economic growth in the last 20 years, ran deficits anyway. By far, the bulk of our current debt problem is attributable to the series of huge deficits accumulated between 1982 and 1988. In that period, Manitoba's general purpose government debt increased by an average of 24 percent per year. Think of it. Imagine your own debts rising by 24 percent each year. Manitobans are still paying for those excesses through higher debt and higher interest payments. In 1981, Manitoba's interest costs were about equal to the combined spending of just two medium-sized departments: Natural Resources and Northern Affairs. Last year, interest costs exceeded the combined spending of the departments of Natural Resources, Northern Affairs, Agriculture, Highways and Transportation, Industry, Trade and Tourism, Energy and Mines, Environment, Labour, and Consumer and Corporate Affairs. The problem is obvious. We are spending large sums of money each year on interest costs, $500 for every man, woman and child in Manitoba, and this money provides no current program benefits or services to Manitobans. Without the inherited debt, every tax dollar would provide current services to Manitobans, and we would have both a balanced budget and lower taxes. The Dominion Bond Rating Service put it succinctly, stating: "High cumulative deficits in the 1981 to 1988 period are the main reason interest costs are so high today." In our homes, each of us knows that one disadvantage of borrowing is that we must repay both the original debt and the interest payments on the borrowed money. For government, there is a further disadvantage. People, especially those people who make investment decisions, know that if government is borrowing heavily today, it is going to have to raise taxes sooner or later to pay the accumulated debt and associated interest. And when taxes are too high, people think about living and investing elsewhere. That is why putting the province's fiscal house in order is the foundation of Manitoba's economic progress. By controlling government spending and keeping taxes down, we have been able to create the kind of positive climate that attracts investment, encourages expansion and creates jobs. Mr. Speaker, important actions have been taken to reduce the cost of government. An increased emphasis on innovation and entrepreneurship is playing a key role. Our government bas instituted a service and management improvement initiative, building on the capabilities and dedication of our public service. This initiative, employing the ideas of civil servants themselves, will enhance service and reduce the costs. of government. Our government bas had success in bringing greater pride and performance to specific services through the introduction of special operating agencies. The Fleet Vehicles agency and the Materials Distribution agency in the Department of Government Services were the first two such agencies created at the provincial level in Canada. As a result, transportation needs are being met with 500 fewer vehicles than in 1987 and annual savings of close to $3 million. Based on our experience to date, we are establishing another two new agencies this year: the organization and staff development branch of the Civil Service Commission and the Vital Statistics branch of Consumer and Corporate Affairs. Both agencies are expected to operate utilizing their own revenue sources without government subsidy. Manitoba has become recognized as an innovator in this area, and other provinces are following our success with interest. Overlap and duplication among government departments is being reduced. Every department used to have its own personnel and payroll branch. This year, sharing of personnel functions is being implemented with savings expected to exceed $1 million. Administration and finance functions in the Housing and Urban Affairs departments have been consolidated. Internal audit resources have been merged to better serve all of government. As part of its mandate, "value for money" audits will be performed to help measure the effectiveness of government programs. The environmental chemistry services currently provided by Ward Laboratory in the Department of Environment and Cadham Laboratory in the Department of Health are being consolidated as the Environmental Sciences Centre in the Economic Innovation and Technology Council. Management has been de-layered, unnecessary functions reduced and eliminated In this budget, further streamlining will reduce the staff complement by 393 positions. We have worked hard to provide job openings for displaced employees through incentives for voluntary separations and aggressive redeployment efforts. As a result, we have held the number of individuals receiving layoff notices to 41, and we are confident the number of people actually displaced at the end of April will be further reduced. The introduction of the reduced workweek program saved nearly $20 million in 1993-94 and approximately 500 jobs. The spirit of dedication exhibited by our employees has been a tribute to their commitment to public service. The program is being extended for 1994-95 with similar positive results anticipated. Government's overtime bill for 1993-94 has been reduced by nearly $3 million or 35 percent from the year previous. We have divested ourselves of operations which need not be part of government. These include Manfor, ManOil, Manitoba Data Services, soil testing and feed analysis labs, veterinary drug and semen centres, an agricultural extension centre and the highways sign shop. The Queen's Printer in-house printing operations were closed when it became clear that private printers could meet government's need at a lower cost. Full-cost recovery has been implemented for services and costs such as occupancy, postal services and internal legal services which are provided by one government department to another. This provides an incentive for more careful use of such services. Rational decision making requires that the full costs of government activity be recognized in each department's own budget. This year, for the first time, employee benefit costs will be allocated to each department's budget. Our managers found they could save $2.2 million over the last two years by reducing the amount of rented space they were using. Manitoba Hydro and Manitoba Telephone System will begin paying capital tax. The change will put these utilities on a level playing field with their competitors, which have always been liable for this tax, and move Manitoba's practice more in line with other provinces which levy a capital tax. Particular problem areas have been turned around. The Workers Compensation Board is a good example. Despite average assessment increases of 20 percent annually from 1983 to 1988, the board accumulated unfunded liabilities of $232 million. Since then, the liabilities have been reduced to $76 million, while the average assessment rates have been held constant, and service has been improved significantly. Manitoba will host the 1994 Western Premier Conference in mid-May in Gimli. One of the most important priorities for that conference will be the extension of co-operative initiatives by the western and territorial governments. For example, we are looking at opportunities with Saskatchewan to co-operatively manage forest fire suppression and related operations. Mr. Speaker, we welcome the new federal government's commitment to co-operation with the provinces and to predictability and adequacy in federal transfer arrangements. Clearly, there is much work to do. Federal decisions since 1982 now cost Manitoba in excess of $300 million annually in transfers and a further $200 million in provincial program costs through offloading of other federal program responsibilities. Federal transfers designated for the critical areas of health and higher education have fallen from 52 percent to 35 percent of program costs. Had the provincial government restricted its commitment to health and higher education in line with these federal transfers, hospitals, health care, universities and colleges today would face a $700 million, or 30 percent, reduction in their budgets. It is through provincial cushioning of the federal offloading that commitments have been maintained at higher levels. While we are pleased that equalization arrangements have been renewed for a further five years, we have specific concerns in some important areas. Despite our strenuous objections, the federal government has reduced the ceiling on equalization to a record low share of Canada's gross national product. The old ceiling bas already cost Manitoba $300 million, and the potential impacts of the new ceiling remain a serious concern. We are enthusiastic participants in the work now proceeding on eliminating unnecessary overlap and duplication between federal and provincial governments. Successes in this area can ensure better public services at lower cost to taxpayers. The objective must be to lower our combined debt and deficits, not merely to shift the problem from one jurisdiction to another. The federal government has responded to provincial calls for joint efforts to refocus Canada's social security system. Governments must work together to rationalize the myriad of existing programs and meet the needs of Canadians more effectively and at lower cost. However, we remain concerned that provinces may be left unfairly at risk if the program savings are not realized and Ottawa proceeds with more unilateral reductions in transfers. A parliamentary committee on the GST is currently receiving submissions from Canadians on ideas to deal with the sales tax. Manitoba is looking forward to the committee's report and to the commencement of ministerial discussions on ways to improve Canada's tax structure. Manitoba's objectives in the discussions will include fairness for consumers and businesses. Western Premiers and Finance ministers have suggested that the idea of an independent tax revenue agency for all federal and provincial taxes warrants careful attention. Such an agency could make revenue collection more effective and reduce duplication of administrative and compliance requirements. I would also reaffirm Manitoba's support for the development of aboriginal self-government to the extent possible within the current Canadian Constitution. Too often in the past, along with the aboriginal community, we have witnessed the abrogation of many federal responsibilities both on and off Indian reserves in Manitoba. For aboriginal government to succeed, Ottawa must live up to its responsibilities to aboriginal peoples while co-operatively developing viable options for the future. This must be the paramount objective of the recently announced federal initiative. I have outlined a number of areas which hold promise for major benefits but in which Manitoba also bas major concerns. If these concerns can be addressed in a meaningful way, federal-provincial relations can begin a new era of co-operation and greater harmony. Mr. Speaker, this year we will be dedicating $124 million of lotteries revenue to support program expenditure. This includes $24 million for first-year costs of the province's one-third contribution under the Infrastructure Works Agreement. Also included is the financial support provided to rural communities and the City of Winnipeg from the operation of video lottery terminals (VLTs). Ten percent of VLT revenue will be granted unconditionally to both rural communities and Winnipeg. A further 25 percent of VLT revenue will be used for economic development initiatives in Winnipeg and rural Manitoba. For rural Manitoba, this means that $4 million will be paid in unconditional grants to rural communities, and $10 million will be used to fund the already established rural economic development programs. As well, $4 million of VLT revenue will be paid unconditionally to the City of Winnipeg. A further $10 million will be allocated for economic development initiatives in Winnipeg. Some of the projects that have already been identified include provincial contributions toward a portion of the operating costs of the Winnipeg Convention Centre, Winnipeg 2000 and Tourism Winnipeg. The province will consider other initiatives as the year progresses. Mr. Speaker, we will direct $90 million of lotteries revenue toward deficit reduction to protect priority social programs. This is part of our fiscal plan and contributes to the stability of funding for health, education and family services. Mr. Speaker, our government has worked hard to ensure that priority public programs remain affordable and accessible to Manitobans and their families. That is why with this budget we have held taxes steady for seven years while working continuously to make government serve the people at lower cost. For 1993-94 the forecast deficit is $461 million, $94 million higher than originally budgeted The main factors in the projected deficit increase were unexpected reductions in federal transfer payments resulting from weaker economic performance especially in central Canada, and higher debt service costs as a result of a weaker Canadian dollar. An additional $50 million draw from lotteries will help cushion the impact of these two unforeseen events. Program spending in 1993-94 was kept on track despite unanticipated pressures related to summer flooding and social assistance caseloads. In 1994-95 we will follow the fiscal plan presented last year which called for a further reduction of 1 percent in overall program spending. I am pleased that this has been achieved without jeopardizing priority social programs. By bringing government spending under control, we have positioned ourselves to achieve a fully balanced budget quickly, as the economic recovery strengthens, and revenue growth returns to more normal levels. In 1994-95 we will secure an $18 million operating surplus. This is the measure many governments use to describe a balanced budget. The operating surplus means that Manitoba has sufficient revenue to pay for its current program expenditure and its public debt costs. Only capital expenditure, permanent infrastructure such as highways and other lasting assets, are being financed from the budgetary deficit this year. The budgetary deficit, including capital expenditure, will be $296 million. A further measure of our progress toward eliminating the deficit is the $165 million or 35.8 percent decline in the budgetary deficit for 1994-95. This comes on top of the $105 million decline in 1993-94 compared to 1992-93. Over the past six years the deficit has averaged $320 million annually, or about 1.3 percent of provincial gross domestic product. This percentage is the lowest in Canada. By this measure, Manitoba has the best record of fiscal management among the provinces. Mr. Speaker, eliminating the deficit is one of the most significant tasks our government has ever undertaken. I am pleased that we are on track to a balanced budget. Evidence of that progress is contained in this budget's achievement of an operating surplus for the current fiscal year. The government has charted its way forward from 1994-95 based on modest annual revenue growth of about 3 percent. The deficit will be eliminated and a balanced budget will be achieved on target in 1996-97 without any tax increases or any further reductions in overall program spending. The rewards of this fiscal strategy are before us: lower taxes; more income left in the pockets of Manitoba families; more jobs and a stronger economy; affordable and accessible public programs; and a balanced budget. In 1997-98, a projected surplus of $150 million will be available. This means much greater flexibility. Manitobans will have the leeway to choose to pay down the debt or reduce taxes. While we continue to follow our fiscal plan into the future, I believe it is also important that all Manitobans realize how much they have accomplished to date. Conclusion Mr. Speaker, seven years ago we began the task of modernizing government to put the concerns of our citizens first. Fortunately, Manitobans were on the leading edge in Canada in realizing that new approaches emphasizing controlled spending and lower taxes were necessary to allow our province to grow and to prosper. Today Manitobans are reaping the benefits of having started on the path to fiscal responsibility before any other senior government in Canada. Our competitive taxes and positive business climate are creating thousands of jobs by allowing home-grown businesses to flourish and by attracting exciting new investments from other Canadian and international firms. Decisions to invest and grow in Manitoba can now be invade solely on the basis of our many advantages: qualified and industrious people; central location and time zone; high-quality transportation and communication networks; and bountiful resources including abundant low-cost energy. We are employing open processes which rely on direct public input to modernize and improve our key social programs. And we have achieved a balanced operating budget and are on track to a fully balanced budget two years from now. These are important assets for any province to possess. However, the most significant benefit to be won is the sense of stability and renewed confidence Manitobans are now experiencing. Manitobans are, indeed, the greatest strength our province has. The future will be defined by their hopes and dreams. It will be built on their talent and determination. Mr. Speaker, for that reason more than any other, I approach the future with confidence, enthusiasm and great anticipation. Together, we will build a stronger Manitoba. Thank you, Mr. Speaker.