Province Législature Session Type de discours Date du discours Locuteur Fonction du locuteur Parti politique Nouveau-Brunswick 52e 4e Discours sur le Budget 21 février 1995 M. Allan E. Maher Ministre des Finances PL Madam Speaker, it is indeed a pleasure to once again rise in this House to present the budget of this government. First of all, if I may have a few moments, I would like to say that over the years New Brunswick has been blessed with many distinguished individuals occupying the responsibility of Lieutenant Governor. Each in their own way has been unique and have left their own lasting mark on their term as Her Majesty's Representative in New Brunswick. Already their Honours, Lieutenant-Governor Margaret Norrie McCain and Wallace McCain have commenced putting their unique stamp on this high office. The dignified, yet relaxed manner in which Her Honour approaches their responsibilities will endear them to New Brunswickers as they continue their travels about the province and meet their fellow citizens throughout this great province. Madam Speaker, to you I want to extend my congratulations on being the first ever elected Speaker of the Legislative Assembly of New Brunswick. It is obvious that the fairness and the calmness in which you discharge your duties in overseeing this important democratic institution has attracted the respect of all who are privileged to sit in this Legislative Assembly. I want to avail myself of this opportunity, as some others in this House have done, to express my congratulations and best wishes to Their Excellencies Governor General Romeo LeBlanc and Mrs. Diana Fowler LeBlanc. Governor General LeBlanc has indeed had a distinguished career, which makes him uniquely fitted to fulf111 this particular role. It has been my privilege to have known and to have worked somewhat with Romeo LeBlanc over a period of many years. During that time, I have always admired his fairness, his humility, and above all, his love of Canada-all traits that I think we can agree will serve him well as he assumes this new challenge in his life. The fact that he is the first New Brunswicker and the first Acadian to assume the highest office in the land, I believe is testimony to the harmony and respect between our founding peoples that we in New Brunswick have been able to nurture, not only within our province, but as well to transmit to the rest of Canada. There probably is no one more prepared and respected to assume the Governor General's role at this time in Canada's history. Madam Speaker, today New Brunswick enjoys a very positive image across this great land and beyond. It is not an image that we have always been able to transmit. However, due to the honesty, dedication and tenacity of our Premier, Hon. Frank McKenna, we are the envy of the nation. Thanks to his leadership, we New Brunswickers now feel proud and confident in ourselves and in our ability to compete with the rest of the world. Madam Speaker, it does one's morale a tremendous amount of good to travel about this province and hear so many New Brunswickers speaking in such positive terms about themselves and about their future. It is even more satisfying to hear people from other parts of Canada singing the praises of the province of New Brunswick. Mr. Premier, it is a real pleasure, and I guess I would have to say, a real challenge to be part of your team. Your leadership qualities and your enthusiastic approach to your office are indeed infectious, and this province has already started to reap many benefits from the efforts of your work. I have no doubt that with your continued leadership New Brunswick will remain at the forefront of social and economic development in this country. Madam Speaker, today I have the honour of bringing before this house the eighth budget of this government. The 1995-96 budget clearly demonstrates this government's continued commitment to prudent and responsible management of New Brunswick's public finances. The 1995-96 budget meets the requirements of the three-year balanced budget legislation introduced in 1993-94. The 1995-96 budget will produce not just a surplus on ordinary account, but an overall budgetary surplus. The 1995-96 budget will produce a significant payment against the provincial debt-the first planned reduction in recent memory. The 1995-96 budget contains no new taxes or tax increases. The 1995-96 budget, like the 1994-95 budget, will introduce modest tax reductions. The 1995-96 budget will fortify New Brunswick's reputation as the best place in Canada to create jobs. The 1995-96 budget clearly demonstrates this government's continued commitment to prudent and responsible management of New Brunswick's public finances. The 1995-96 budget meets the requirements of the three-year balanced budget legislation introduced in 1993-94. The 1995-96 budget will produce not just a surplus on ordinary account, but an overall budgetary surplus. The 1995-96 budget will produce a significant payment against the provincial debt-the first planned reduction in recent memory. The 1995-96 budget contains no new taxes or tax increases. The 1995-96 budget, like the 1994-95 budget, will introduce modest tax reductions. The 1995-96 budget will fortify New Brunswick's reputation as the best place in Canada to create jobs. Madam Speaker, I think it is important that we take a moment to thank the people of New Brunswick for their support, for their understanding and for this very signification achievement. I certainly want to take the opportunity, as well, to invite all members of this Legislative Assembly to rejoice in this achievement, which is very remarkable when one considers the point we started from seven years ago. This is a watershed budget. It incorporates Ii bold and achievable vision of the future-a future where New Brunswick becomes a pay-as-you-go province and a future where the province's debt does not grow. I am Madam Speaker, perhaps only once in a generation does finance minister have the opportunity to present a financial plan such as the one I will outline today proud to be the Minister of Finance who has that historic privilege. In keeping with this government's strong and aggressive promotion of the information highway, I am pleased to announce that, for the second year in a row, the rest of the world can access this speech and be informed of our fiscal plans through the Internet. Madam Speaker, when this government came to power in 1987, the deficit and debt were at levels that threatened the survival of key programs. The economy faced potentially destructive tax increases if New Brunswick's fiscal problems were not addressed. Madam Speaker, I am pleased to announce that, with this budget, the problem of the ordinary deficit has been addressed. In addition, for the first time since 1979-80, this budget will enable a New Brunswick finance minister to make a payment against the Province's debt. For 1995-96, the overall budgetary balance of the province will show a surplus. Madam Speaker, this means that New Brunswick's total public expenditures, including day-to-day spending, capital spending and special purpose spending, will be lower than the revenues of the province. When the province's overall spending is less than its revenues, the net debt of the province is reduced. Even though there was a reduction in net debt in 1979-80, this will be the first planned reduction in the net debt in recent memory. Furthermore, the 1995-96 budget will provide for an ordinary account surplus of $ I 50.8 million. This means that New Brunswick has succeeded in achieving the target of cumulatively balancing the ordinary account of the province over the 1993-94 to 1995-96 period as called for in An Act Respecting the Balancing of the Ordinary Expenditures and Ordinary Revenues of the Province. This budget also paves the way for focusing the province's fiscal policy toward balancing the overall budgetary accounts of the province over the 1996-97 to 1999-2000 period. While this new goal is much more ambitious than balancing the Ordinary Account over three years, it is a necessary precondition for the province to bring the debt down to a more manageable level. This, in turn, will set the stage for potential future tax reductions so that the economy has the capacity to expand even more. Madam Speaker, the 1995-96 budget represents a new direction for New Brunswick. It guarantees a solid financial future as well as a secure environment where compassion, service and fairness are the trademarks of social programs. The goals of progressive social development and debt management can be compatible. We can, we are, and we will continue, to achieve both. Madam Speaker, the 1995-96 budget represents a new direction for New Brunswick. It guarantees a solid financial future as well as a secure environment where compassion, service and fairness are the trademarks of social programs. The goals of progressive social development and debt management can be compatible. We can-and will-achieve both. Madam Speaker, since our economy is so dependent on external markets, I believe it is important to reflect briefly on developments outside this province. If we are to remain competitive, we must constantly be aware of possible changes in our major markets. Madam Speaker, New Brunswick's economy performed well during 1994, as the world economy gained momentum. Most of the major market areas enjoyed improved economic conditions-in excess of the levels predicted last year. This worldwide development in 1994 had a considerable impact on the rapid pace of export growth in New Brunswick and in Canada. Even more importantly, the United States-our largest market area-saw a significant improvement in its economy. Industrial capacity utilization was set at the highest point in 15 years, while capital investment was the strongest in 5 years. The Canadian economy also benefited from this worldwide expansion, with real GDP estimated to have grown by 4.2%, a rate faster than any of the other G-7 nations. In New Brunswick, the strongest component of the economy in 1994 was the export sector. Shipments abroad increased by 19.1 % to the end of November. This translated into an unprecedented employment performance, with 320 000 New Brunswickers employed in December 1994-an all-time high in the province. Even more impressive are the long-term employment gains the province has recorded; only New Brunswick and British Columbia have recorded annual increases in employment for each of the last three years. Madam Speaker, New Brunswick's economy has been outperforming the country as a whole for some time. In addition to the gains in employment, our overall output levels and personal income have increased faster than the country as a whole. Since 1987, the average increase in nominal GDP was 4.4% in New Brunswick, compared to 4.0% for Canada. Personal income per person in New Brunswick grew an average of 4.7%, compared to 4.1 % for the country as a whole. Madam Speaker, these differences may only be fractions; however, when they compound over a six- or seven-year period, they represent a major improvement in the New Brunswick economy, compared to Canada as a whole. We are closing the gap and we are becoming self-sufficient. This should be ample proof, Madam Speaker, that our approach to fiscal and economic development is paying large dividends. By investing in our province, companies are confirming that the fiscal and economic environment in New Brunswick is conducive to their growth and development. Good fiscal management is the best job creation strategy possible. Job creation should continue to be strong in 1995-96. A study by the Canadian Federation of Independent Business shows 22% of its New Brunswick members expect to hire more people next year. This is the highest percentage in the Atlantic Region. The Canadian Federation of Independent Business credits the provincial government for creating the right economic climate for such gains. Furthermore, the Atlantic Provinces Economic Council says our economy "should chug along at a good clip in 1995." Its research shows all indicators look good-from export sales to employment rates, from a strong resource sector to tourism. Madam Speaker, in 1995 the economy is expected to grow by 4.1 % in nominal terms and 2.7% in real terms. Major factors underlying this growth are significant increases in labour income and the strength of the business sector. I expect the unemployment rate will continue to fall, and consumer prices will increase at a modest 2%. Madam Speaker, it is no coincidence that New Brunswick has enjoyed an enviable economic track record. There is a direct correlation between well managed public finances and a dynamic economy. Anyone who looks at any of the indicators over the last seven years will see irrefutable evidence that New Brunswick has been a leader in responsible fiscal management in this country. This province is the only one to have received an upgrade in its credit rating in the 90s. This is perhaps the most compelling evidence of our progress in managing our finances. People around the world make investment decisions based on such assessments-assessments that are carefully researched by experts in the financial field. Our improved credit rating affords the province lower financing costs than would otherwise apply, and it confirms New Brunswick as a responsibly run jurisdiction and a good place in which to invest and in which to do business. New Brunswick's success in dealing with difficult financial circumstances has been recognized outside the province. In addition to credit rating agencies, several major investment banking firms have offered high praise for our fiscal management. CS First Boston issued a report last fall recommending the province of New Brunswick to investors based on the "province's improving fiscal and economic conditions." In December 1994, the investment firm of Nesbitt Burns said New Brunswick "deserves high marks for its fiscal restraint measures. . . only a few other provinces have managed to cut outlays in back-to-back years." In a comprehensive credit review of New Brunswick, a report by Salomon Brothers in July 1994 concluded: "We are confident that the government will be able to meet its projections because revenue and expenditure growth assumptions seem realistic, given that nominal growth forecasts appear conservative." The report continues, "If it appears that New Brunswick can adapt to possibly lower Federal transfer payments and remain on track with its deficit-reduction plan, as outlined in the latest budget, then this could result in a positive outlook for the province's credit standing." In April of last year, the Dominion Bond Rating Service said about New Brunswick: "The Province has been one of the most fiscally responsible provinces in Canada and has contained its deficits mainly by restricting expenditure since 1990." The record on managing expenditures is likewise unequalled. Except for one year, in every year since 1987, actual spending at year end has come in below budgeted levels on the ordinary account. Furthermore, the growth in overall spending since 1987 was one of the lowest in the country. Objective opinions of influential and expert analysts confirm the improved fiscal conditions that exist in this province. The Canadian Federation of Independent Business, Statistics Canada, Standard & Poor's, Dominion Bond Rating Service, CS First Boston, Salomon Brothers, Nesbitt Burns and many other reputable financial organizations have extensively reviewed New Brunswick's situation. Their work clearly confirms that our efforts are deserving of high praise. The fiscal progress of this government is clearly demonstrated in the results of the balanced budget plan for the 1993-94 to 1995-96 period. I will detail this shortly for the benefit of members of this House. Part of the reason for our success is an effective debt and investment management strategy. Madam Speaker, as I have pointed out, this province is a leader in the management of its financial affairs. This is also true of the management of our investments and the management of the costs of our debt. An important feature of the province's overall financial position is the existence of a sinking fund to provide for orderly retirement of provincial debt. This is not true in every province. The sinking fund provides investors with the assurance that their investment in New Brunswick securities is safe. They can be confident of full payment of the province's obligation at maturity. In addition, sinking fund operations provide an additional market in the province's debentures. This market assists in maintaining demand for provincial bonds and helps lower our borrowing costs. The earnings on the fund provide the additional benefit that the province's overall interest burden is reduced by the amount of the earnings. Madam Speaker, the Province is ahead of schedule in eliminating the unfunded pension liabilities. New Brunswick's financial position has also been strengthened by the decision to deal with the unfunded pension liabilities. Members of the House will remember that during the 1991-92 fiscal year, a funding strategy was implemented to eliminate the liabilities over a 25-year period. This was a credible approach to a difficult problem. The government would not allow New Brunswick's financial position to be jeopardized by deferring a decision to the future, when the problem would only have been more difficult to address. The primary reason for the progress toward fully funded pensions is superior investment returns. Over the four most recent fiscal years, the rates of return earned by the public service superannuation and teachers' pension funds have ranked among the top 5% of Canadian pension funds. Rates of return for most Canadian pension funds have deteriorated elsewhere lately, but New Brunswick continues to be ahead of schedule in eliminating its unfunded liabilities. To date we have reduced our unfunded liability by $600 million. These very substantial gains are being amortized over a period of 15 years. During the last legislative session, the house approved legislation to establish the New Brunswick Crown Investment Management Corporation. This corporation will act as trustee for a number of major public sector pension funds. It will manage these assets together with other public sector trust funds. The creation of the corporation will ensure prudent trusteeship of assets, will assist in the development of the provincial financial services industry, and will allow for cost effective management of the Province's financial assets. Along with the government's previous commitment to making payments into the funds to eliminate the unfunded liabilities in the public service superannuation and teachers' pension plans, the establishment of the New Brunswick Crown Investment Management Corporation will provide the utmost financial security for the recipients of public service pensions and for the taxpayers of this province. Before detailing the budget plan for 1995-96, I would now like to briefly review the results of the past fiscal year. Madam Speaker, in light of significant reductions in federal transfer payments in 1993-94, the government was faced with a significant task entering the 1994-95 fiscal year-to get back on track to achieve its balanced budget legislation. Nonetheless, by planning carefully and managing expenditures, the budget for 1994-95 forecasts an ordinary surplus of $4.8 million. I am pleased to report that by the time the year is over, the actual surplus for 1994-95 will be closer to $76 million. Madam Speaker, you will recall that in December, I announced that the financial reporting for government as a whole would be expanded to include government enterprises. At the time, members on both sides of the House agreed that including Crown corporations and agencies in the accounts of the province was a positive move toward providing a comprehensive picture of the province's financial status beginning in 1994-95. This is consistent with recommendations of the Public Sector Accounting and Auditing Board of the CICA. At the outset, only enterprises with a significant deficit or surplus ($1 million or more) are included. For 1994-95 and 1995-96, this includes the surpluses of the Workplace Health Safety and Compensation Commission and the New Brunswick Power Corporation. As a consequence of this initiative, in 1994-95, return on investment will increase by $39 million over the original budget estimate. Other revenues that will come in over budget include equalization which is $40.1 million above the budget estimate. Income tax estimates are now anticipated to be $2].2 million lower than budgeted, while the Social Services and Education Tax estimate will probably be about $8.5 million lower. On balance, ordinary revenues are now estimated to be up from budget by $83.6 million. Madam Speaker, the low value of the Canadian dollar and the recent rise in interest rates were totally unforeseen last February, both here in New Brunswick and in other parts of the country. These factors have added an estimated $30 million to total debt service costs for the year. If it were not for such uncontrollable costs, expenditures would be less than the amount budgeted. Madam Speaker, I would again like to thank all New Brunswickers for exercising restraint this past year. It is clear to me - and I believe to a majority of New Brunswickers - that exercising restraint does not mean giving up necessary services. Madam Speaker, I would now like to turn to federal-provincial relations. During 1994-95, there were intense discussions on issues such as potential reform of income and sales taxes, national highway financing, fiscal arrangements and social security reform. These discussions have served to identify a number of issues of importance to New Brunswick, the provinces generally and the federal government. At the federal level, a major government-wide program review was undertaken, and a National Forum on Health was established. I anticipate that the coming year will see difficult negotiations between the provinces and the federal government on a number of matters, in particular federal restraint and social security reform. The federal Minister of Finance has consulted widely on his options for the 1995-96 federal budget. Clearly, there is little support for tax increases, and a strong current of opinion suggests that the federal government should meet its deficit targets solely on the expenditure side of its budget. This will no doubt translate into reductions in federal service delivery, and further restraint on federal transfer programs, both transfers to individuals and transfers to other levels of government. Madam Speaker, I am pleased to report that last year, provinces were given assurances that the current equalization program would remain stable and predictable for a five-year period. I am concerned, however, that funding arrangements for Established Programs Financing (EPF) which support provincial health care and postsecondary education programs, and the Canada Assistance Plan (CAP) which helps to fund provincial income support programs, remain uncertain beyond 1995-96. Our government has strongly advanced its concerns to the federal government, with respect to treatment of seasonal workers under federal unemployment insurance proposals. Madam Speaker, this government will continue to seek arrangements that will not penalize the Atlantic Region. The province is committed to reform programs that put New Brunswickers to work, because a job and dignity go hand-in-hand. We are concerned there are apt to be reductions and withdrawals in the direct delivery of some federal services. If so, an additional burden will be placed on New Brunswickers. We are also understandably concerned that such measures will place expenditure pressures on provincial governments that may be difficult, if not impossible, to meet. On the other hand, confidence in Canada's commitment to deficit management should lead to lower interest rates and an accelerated pace of economic activity. This may compensate for some of the anticipated cuts. We will press the federal government for a well-managed implementation process, a reasonable period of transition, and for appropriate compensation if there are instances where the province must assume some of the off-loaded program responsibilities. I am concerned about potential changes at the federal level because of the turbulence it causes in our own fiscal environment. This presents us with difficulties in forecasting certain revenues and expenditures. In the face of this uncertainty, we develop our fiscal plans accordingly. We must be ready for change, be nimble in our responses and, above all, continue to be responsible in our stewardship of public finances. Our bottom line in fiscal relations with the government of Canada is that the constitutional commitment to equalization must be respected. If there are unavoidable reductions in other transfers and in federally-delivered services, all provinces must be treated equitably. As the federal government responds to its severe fiscal circumstances, first and foremost, it must reduce its own overhead and operating costs, and make every effort to preserve those programs that support job creation and economic growth. Madam Speaker, I would now like to outline the budget plan for 1995-96. It is with great pride that I can announce today that New Brunswick will achieve the multi-year objectives set out in balanced budget legislation. New Brunswick will balance its Ordinary Account over the three-year period ending in 1995-96. As members will know, the balanced budget legislation requires that day-to-day ordinary spending does not exceed ordinary revenues over the 1993-94 to 1995-96 period. With the budgeted ordinary surplus of $150.8 million in 1995-96 and a revised ordinary surplus of $76.2 million for 1994-95, the ordinary deficit of $137.7 million for 1993-94 will be more than covered. Even excluding Crown agencies, this target will be met. Madam Speaker, meeting the conditions in the balanced budget legislation has been difficult, given the setback in revenues that occurred in 1993-94 when the province was notified of overpayments of federal transfers and taxes for years prior to 1993-94. This was a large block of revenue that had to be covered, even though technically it represented a recovery by the federal government of revenue in 1993-94 for years prior to the period in the three-year plan. Madam Speaker, in 1995-96 ordinary revenues are forecast to grow by 2.5%. This is in keeping with anticipated economic performance which, in nominal terms, is increasing by 4.1 %, and with anticipated levels of transfer payments from Canada which are forecast to fall in 1995-96 over 1994-95. Ordinary expenditures have been held to a growth rate of 0.7%, which is below the anticipated level of inflation for the year ahead. This is very close to the anticipated growth in spending that was outlined at this time last year. With total ordinary revenues increasing by 2.5% and total ordinary expenditures growing by 0.7%, the ordinary surplus will be $150.8 million. When this is combined with net capital spending of$249.5 million, net spending in special purpose accounts of $1.1 million and sinking fund earnings of $167.7 million, the overall budgetary surplus will be $67.9 million. This will make a significant contribution toward reducing our net debt. Madam Speaker, I want to emphasize that the ordinary account surplus in 1995-96 will be achieved without major spending cuts and without tax increases. Indeed, the budget calls for some modest tax reductions, which I will outline shortly. Madam Speaker, while the 1995-96 budget will lead to meeting the terms of the balanced budget legislation on the Ordinary Account, an equally important milestone is the reduction in our net debt by $67.9 million. This will occur in the coming year. This is the first time in recent memory that a reduction in net debt has actually been planned and anticipated in a provincial budget. Stabilizing growth in the province's net debt is very important to New Brunswick. In the future, this will become the focus for our fiscal planning. Madam Speaker, I would now like to outline a more comprehensive balanced budget plan for the four-year period after the 1995-96 fiscal year. As I have outlined, Madam Speaker, we will meet the terms of the current legislation that requires the government to balance the ordinary account over a period of three years. This government has determined, however, that it must move on to a new fiscal challenge. Given the level of debt that has been built up over the years, it is apparent that simply balancing the ordinary account is not enough. New Brunswick must strive to balance its overall budget so that the province's debt can be kept from growing. Therefore, it is the government's intention to introduce amendments to the current balanced budget legislation requiring an overall budgetary balance over the four-year period 1996-97 to 1999-2000. This means, Madam Speaker, that in the years following 1995-96 total revenues must exceed all spending, including capital and special purpose account. This will ensure that provincial debt levels will be further reduced during the remainder of the decade and beyond. Madam Speaker, in order to achieve this goal, our options are quite limited: Tax increases are out of the question. It is clear that taxes should be reduced as soon as possible, as it is important that New Brunswick's tax structure remain competitive. Increased payments from Ottawa are most certainly out of the question. The federal deficit will most likely create, rather than help solve, fiscal problems for the provinces Continued spending restraint is the only reasonable way to achieve an overall budgetary balance in the years ahead. This means we must continue to increase efficiencies, to re-engineer services, to restructure lower priority programs and to reduce costs. Quite frankly, Madam Speaker, these are actions the government should continue to take even if achieving an overall budgetary balance were not a target. The taxpayers rightfully expect that all possible steps be taken to ensure their tax dollars are used effectively and efficiently. This does not mean that the level or quality of essential services must suffer. In fact, every effort will be made by this government to ensure improvements in key programs and services will continue well into the future. Madam Speaker, while we are still more than a year away from the start of the next fiscal period, it is important for the government to define the financial framework of a new and more comprehensive fiscal plan. Accordingly, I am providing a table showing the overall spending and revenue targets for the years ahead. At this time, the plan for the 1996-97 to 1999-2000 period calls for a surplus on an overall basis for each of the four years. While the current projections suggest that this target can be met by the application of current management practices and continued efficiency gains, we are aware that a number of unknowns could create a need to take further and more aggressive action to achieve an overall budgetary balance. Madam Speaker, while five years in the future is a long time span for projections, the basis for the forecast is solid. In these projections, we are being cautious by forecasting revenues to grow by less than half the anticipated nominal growth rate in GDP. Total spending will grow on average by 1.7%, as a result of a limit on capital spending and growth in ordinary spending which is close to inflation. Of course, if there are opportunities to increase cost-shared projects, both revenues and expenditures may change over the forecast period. Madam Speaker, it is impossible to overstate the fiscal significance of this plan. This is the first time in the history of this province that detailed, long-term targets for balancing the overall budget have been tabled in this House. This is the first time that a long-term plan has been put forward that will keep net debt from increasing over a four-year term. I am proud to say that the plan to balance the overall budget of the province will go hand-in-hand with a commitment to effectively deliver those services that are essential for the well-being of the social and economic fabric of this province. I am proud to say the plan to balance the overall budget of the Province will go hand-in-hand with a commitment to effectively deliver those services that are essential for the well-being of the social and economic fabric of this province. Madam Speaker, I would like to provide some highlights of our expenditure plan for 1995-96. Madam Speaker, as in past budgets, the government remains committed to providing good quality essential services. Therefore, continuing with our multi-year program of planned expenditure management, the 1995-96 fiscal year will reflect an increase in ordinary expenditure of 0.7%. This growth rate corresponds closely to New Brunswick's inflation rate. It is a realistic growth rate for the current fiscal environment and within the context of the objectives of the balanced budget legislation. Madam Speaker, I want to strongly emphasize that the 1995-96 budget protects and enhances the quality of our most essential programs and activities. This will soon be demonstrated by my colleagues when they present their departmental estimates. Madam Speaker, as a key management initiative, departments are given their next year's expenditure budget well in advance of its implementation. This provides departments and, in turn, governments with a planning horizon of more than one year to carry out in-depth program reviews and to objectively consider such important questions as: Does the government wish to continue all or some of the activities in this program area? Is this an essential program or activity to the public? If the program is considered to be essential, how can its efficiency be improved? It has also allowed the province to achieve substantial reductions in staff with very few layoffs. When line managers receive this budget target a year in advance, they can properly plan to meet their targets with minimal impact on employees. Madam Speaker, having used this approach for a number of years, the government has achieved significant reductions in non-essential programs and administrative services. It has improved the effectiveness and efficiency of essential programs and services. To complement expenditure management, we have also been able to privatize activities and services that can be delivered more effectively and more efficiently by the private sector. Over the years, we have studied and made significant changes to our financial management systems. We have adopted the concept of "let the manager manage." This allows departments, within specified limits, to adjust their budgets between programs to address evolving priorities and in-year budgetary pressures. Madam Speaker, empowering managers leads to effective programming. We have completed our major reviews of commissions, agencies and boards, and we have evaluated all grants provided to interest groups. We have introduced client-oriented Service New Brunswick centres to give New Brunswickers one-stop shopping convenience when dealing with government information and transactions. We have also been innovative by entering into public-private partnership projects to ensure efficient and effective program delivery and infrastructure development. As announced in the throne speech, Madam Speaker, we are now embarking on another innovative effort. The spotlight in the future will be on more and better quality of service. All departments and agencies will review their mandate, organizational structure, programs and work processes to ensure that: first and foremost, *all services are customer-driven; *all services are delivered in a cost-effective manner; and *all services contribute to the objectives of self-sufficiency and affordability. A number of initiatives along these lines are currently under way in a number of departments with positive results. The Department of Human Resources Development has initiated a major re- engineering of its operations. A major initiative is being undertaken for an integrated justice information system by the Department of the Solicitor General and the Department of Justice, and my own department is re-engineering its cash management system. Madam Speaker, in keeping with our long-term strategy and as a key to achieving an overall budgetary balance in the years ahead, I am pleased to announce today that all departments and agencies of government will be given multi-year expenditure targets within one week. These targets have been established within the context of the overall expenditure projections outlined in the fiscal plan for 1996-97 to 1999-2000. This means that all departments and agencies will receive preliminary budget targets for the fiscal years 1996-97, 1997 -98 and 1998-99 before the end of February 1995. These preliminary budget targets will reflect planned reductions from departmental program spending of 1.5%, 1.0% and 0.5%, respectively. Madam Speaker, while restraint and efficiency measures and responsible fiscal management are central to this budget, the estimates for 1995-96 provide the necessary funding to ensure essential programs are delivered. The emphasis is on high quality and accessibility for everyone. In that regard, Madam Speaker, I would point out that the budget contains $1.240 billion for health care and $906 million for education. As well, funds are provided for all other key services and programs. Now, Madam Speaker, I would now like to briefly review some matters of importance concerning our human resources. Madam Speaker, in the spring 1994 session, I announced a program of voluntary work time flexibility. It provides new options for employees who want to balance work and family responsibilities. Program implementation has entailed significant changes to our human resource, pension, and benefit policies to remove the traditional barriers to employees considering temporary or permanent work time reductions. Madam Speaker, this program represents an innovative and positive response to changes in the nature of work and the dynamics of the labour force. It has not been introduced to save money, but to create more jobs and more flexibility. It is currently being promoted to employees in Part I of the public service and will be expanded throughout the public service in the coming year. As well, Madam Speaker, during the past year, performance management systems have been implemented for all Part I departments and agencies. The process requires everyone to understand the strategic goals of the organization. Each employee sees how individual efforts, work decisions and behaviour can support the attainment of these goals. In this context, we have also implemented the first stage of change in our public service pay systems. In Part I of the public service, pay increases for management and non-union staff are now more closely linked to the level of the employee's contribution and development, as measured by the performance management system. These revised pay policies will gradually be expanded to other groups in Part I, and to Parts II and III of the public service. In 1995-96, attendance management programs now being developed will be implemented to encourage the responsible use of leave benefits available to public servants in Parts I, II and III. These programs will emphasize a positive approach and will be aimed at curbing the productivity losses that are directly related to paid leaves. We believe considerable savings are available by increasing employee awareness and by training managers in the appropriate methods for dealing with paid absence requests. Employee representatives will be encouraged to become partners with government in the development and delivery of various facets of these programs. Madam Speaker, I would now like to turn to the tax measures in the 1995-96 budget. For the second year in a row, I am pleased to announce there are no new taxes and no tax increases in this budget. For the second year in a row, I am pleased to announce there are no new taxes and no tax increases in this budget. As I have said several times during the last year, now is not the time for tax increases. Now is the time for a stable tax structure and, where possible, tax decreases. Today, I am pleased to announce several tax decreases designed to lower the tax burden on New Brunswickers with modest and middle incomes, and to improve the competitiveness of the province's tax structure. A competitive tax system is important since it allows us to attract new businesses and keep existing ones in the province, which translates into job security and new jobs for New Brunswickers. In part, New Brunswick owes its competitiveness to the fact that it does not levy either a payroll tax or a broadly based capital tax. In our efforts to enhance competitiveness, this government has taken several important initiatives within Private sector studies have confirmed the overall competitiveness of the Province's tax system in comparison with most provinces the past three years. For example, with regard to attracting new business, the province eliminated the sales tax on 1-800 toll charges in 1992-93; it has reduced the cost of conducting research and development by providing an exemption from sales tax for RD ~ expenditures in 1992-93 and by introducing a 10% ; corporate income tax credit for RD in 1993-94; it provided for a rebate of the tax paid on aviation fuel used in international flights since 1992-93; and since 1993 it has provided an income tax credit for investment in prescribed labour-sponsored venture capital funds. Madam Speaker, these measures have not only made the province's tax system more competitive, they have sent a strong signal to the private sector that we want businesses to locate here and to provide jobs for New Brunswickers. Madam Speaker, while the tax reductions I am announcing today are modest, they build on those reductions announced in my previous budgets. They are also solid evidence that this government is committed to holding the line on taxes and to reducing the deficit by controlling expenditures, not by increasing taxes. Madam Speaker, in the 1993-94 budget I announced that the low-income property tax allowance would be enhanced. The 1993-94 budget set the income thresholds at$12 000 for an individual and at $20 000 for a couple with neither spouse having income of more than $12 000. Subsequently, there have been a number of concerns raised regarding the income thresholds, particularly as they relate to couples. As I have stated, the government has reviewed this issue, and for the 1995 property tax year, I am pleased to announce that the income threshold for the $200 allowance will be set at $20 000 in taxable family incomes. The definition of taxable family income will be as defined for income tax purposes. It will include all taxable income of the individual and his or her spouse. Madam Speaker, the changes to this program will address the major deficiencies of the current low- income property tax allowance and will significantly improve the fairness of this measure. The main concern expressed about the low-income property tax allowance has been that an individual with income of $12 001 would not qualify for the allowance of up to $200, while a couple with each earning $9 999, for a total of $19 998, could qualify. The measure I am introducing today will eliminate this problem and represents a significant improvement in the fairness of the low-income property tax allowance program. Madam Speaker, this measure will extend the program to somewhere in the area of 15 000 to 20 000 people who previously did not qualify. It will cost approximately $4 million to do so. The result of this initiative, combined with the changes announced in 1993, is that the property tax allowance remains a truly income-tested program, and not one based on the age of the property owner. Madam Speaker, as I have indicated earlier, a key priority of the government is a competitive tax system, and investments in our province have confirmed that New Brunswick must remain competitive to attract business and to retain the businesses that are already here. In past budgets, changes have been made to enhance our ability to promote firms in the new economy. Today I am announcing a sales tax exemption to improve our competitiveness in respect to one of our traditional Maritime industries. Effective at midnight tonight, there will be a sales tax exemption for tug boats in New Brunswick. This measure restores an exemption that existed prior to 1991, and makes the tax treatment of tug oats competitive with the other Atlantic Provinces. The cost of this exemption is relatively small, but it provides another example of our commitment to ensuring that the tax system supports our job creation initiatives. Madam Speaker, our small businesses are an integral part of our comprehensive program to create jobs. Small In this regard, I am announcing that effective January 1, 1995, the small business corporate income tax rate which applies to the first $200 000 of active business income for Canadian controlled private corporations will be reduced from 9% to 7%. This measure will result in a revenue loss of $5 million in fiscal 1995-96 and will improve the competitiveness of the small business sector. It is my hope that these small businesses will translate their tax savings into new investment to provide additional job opportunities for New Brunswickers. Madam Speaker, it would be extremely tempting to offer even larger tax cuts to New Brunswickers this year. However seductive such an option, it would be irresponsible to slash taxes dramatically until we are certain we can meet the commitment to maintain quality services while paying as we go. However, we feel confident that the present careful and disciplined approach to financial management will provide the opportunity for substantial reductions in the tax burden of ordinary New Brunswickers. I believe that the dividend for sacrifice and shared contribution on the part of New Brunswickers will be even lower taxes in future years. Madam Speaker, it would be extremely tempting to offer even larger tax cuts to New Brunswickers this year. However seductive such an option, it would be irresponsible to slash taxes dramatically until we are certain we can meet the commitment to maintain quality services while paying as we go. Madam Speaker, in conclusion, I am grateful for all the assistance and input I have received from the many organizations and individuals who have contributed to this budget. I have received many good ideas, whether :tram presentations to Cabinet, letters that cross my desk or from conversations with New Brunswickers from around the province. Where possible, these suggestions have been incorporated in developing this year's budget and will be part of the fiscal policy that this government intends to follow in the years ahead. Madam Speaker, the 1995-96 budget provides for ordinary spending of $3 957.1 million and budgetary spending of $4 301.5 million. With ordinary revenues of $4,107.9 million and budgetary revenues of $4,369.4 million, it will result in an ordinary surplus of $150.8 million and an overall budgetary surplus of $67.9 million. It has not been easy getting this far. It has meant hard work, determination and decisiveness. It has taken patience, courage and, yes, it has meant some sacrifices. But, Madam Speaker, this government has shown that it can be done. New Brunswickers have helped us take control of our finances, diversify the provincial economy, and emerge as a national leader in economic growth and responsible fiscal management. Madam Speaker, we are not yet a "have" province but we have come a very long way. The job is not finished but the future holds promise. The future holds promise of self-sufficiency, it holds promise of a vigorous economy and it holds promise of a financially stable provincial government, with a renewed commitment and determination to create jobs and dignity for all New Brunswickers. Thank you.