Province Législature Session Type de discours Date du discours Locuteur Fonction du locuteur Parti politique Manitoba 30e 2e Discours sur le Budget 24 avril 1975 Edward Schreyer Ministre des Finances New Democratic Party of Manitoba Mr. Speaker, I trust it will be well received by all honourable gentlemen in the House if I were to depart from tradition for just one minute to refer to the great continuity we have in the Province of Manitoba with respect to the care and custody and deliberation of our financial concerns. I refer to the fact that this year, 1975, is the 25th year in which our Deputy Minister of Finance, Mr. Stuart Anderson has been Deputy Minister. Mr. Speaker, 1950-1975, and in the period of 25 years or a quarter of a century spanning three different administrations and at a time when there has been great change taking place with respect to the dimensions of our expenditures and our Budgets, I think we have been privileged to be served by such an honourable gentleman and I take some comfort from the fact, as I think we all do, that he is the Dean among Deputy Ministers of Finance in Canada. In 1973, Mr. Speaker, in trying to capture the substance and the spirit of the budgetary objectives and goals, I concluded our Government's Budget Address for that year with a quotation from the late President Franklin Roosevelt as follows: "The test of our progress as a society is not in whether we add to the abundance of those who already have much, but in whether we provide more for those who have little. I have repeated those words tonight because I feel strongly that the philosophy they reflect has never been more important than it is right now - nor has it been more sorely tested than in the current cacophony of salary demands and professional fee demands, following in the wake of increases in prices and profits in the last 18 months. Ever since our New Democratic Government was electcd to office nearly six years ago, we have stood by that philosophy - and we will continue to uphold it, for as long as we are privileged to serve the people of this province. In the face of serious national and international inflationary pressures in recent years, our government's dedication to the principles of equality and social justice has helped, I like to think, to some significant degree our citizens achieve what we believe has been considerable progress - a degree of progress which I would say has been unmatched during the past 50 years but if which might be regarded as an exaggeration, I would say certainly unmatched during the present generation. And I will be tabling documents Jater this evening to illustrate this assertion in graphic form. In many cases this progress can be measured in terms of indisputable, objective statistics. In other cases, it has to be judged admittedly in somewhat subjective terms, in terms of the changing human values we see around us - values such as more equality of opportunity and more equality of the human condition itself and in the growing confidence among growing numbers of Manitobans, because of that greater equality, that their hopes and a spirations can and will be fulfilled - regardless of family background, regardless of family wealth. Despite jurisdictional and fiscal constraints, we have been able as a Provincial Government of a province of one million people to introduce I think rather new and innovative services, while increasing employment, and providing significant tax reductions, especially at lower income levels. Tables which will be distributed Jater will demonstrate those reductions at every, level of income. And here, sir, I pause for effect and emphasis to say that equal levels of income as between 1969 and 1975 show significantly lower taxation today than 5 or 6 years ago. For example a$10, 000 a year family with 2 children under age 16 would have paid, did pay, $714 in provincial income tax and health taxes in that year. Someone who was earning $10,000 in 1973 or '74 would have paid, same family 2 children, $388 in the same taxes, and after the Budget tonight, sir, that same family, not that same family but a family at $10,000 - man, wife, two children under 16 - will pay not $714, not $318, but $123 in provincial income tax and health taxes. This, Mr. Speaker, goes some of the way to offset the impact of inflation. I should think quite some distance indeed towards offsetting the impact of inflation and it goes a long way to destroying some of the myth that government necessarily will have higher revenues during a time of inflation because it will not do anything about it. An argument which by the way conveniently forgets that governments like anyone else have to shoulder higher costs during a period of inflation. I think honourable members would be interested if I were to refer to the fact that in one of our sister provinces they published a chart showing a cross-section of goods and services bought by Government which have sharply increased in price to government. The price of food bought for institutions of government, sugar - 300 percent increase; skim milk - 60 percent increase; flour product, biscuits - 40 percent increase; medical drugs, Butone capsules 118 percent increase; penicillin - 72 percent increase in one year; calcium chloride for highways, I presume - 22 percent increase; fuel oil - 100 percent increase in one year; asphalt105 percent increase; data processing cards - 105 percent increase. And all of these things which have been measured as to increase in the Province of Ontario apply to any sister province in Canada as being more or less the magnitude of the increase of costs that government have to face during times of inflation. But, sir, I don't want to dwell on that. I would like to say that our sense of achievement should not be mistaken, and we do have, my colleagues and I am considerable sense of achievement but that should not be mistaken for complacency. We have not we admit been able to shield our citizens adequately from the effects of major national and indeed international economic disruptions resulting from inflation and the effects, the cumulative effects, of a continuation of simplistic percentage increases in salary adjustments across our country over many years. Therefore, our efforts in dealing with these problems, and in reducing social and economic disparities) will become difficult enough. The budgetary proposals I will place before the House tonight will make it clear that we are prepared to meet that challenge directly. We intend to take deliberate action to safeguard the benefits the people of Manitoba have gained in recent years and to make certain that the pattern of progress which has been established during those years will be maintained in 1975. Before I deal in detail with the economic situation which confronts Manitoba in the year ahead, I want to review briefly some of the more important statistics which are now available to us after fiscal year end. As has already been announced, our Gross Provincial Product, which stood at about $2 billion in 1960, and at $3.5 billion at the end of the decade of the 1960s, 10 years later in 1974 exceeded the $6 billion mark. And I invite honourable members to do some mental calculation to net out the effect of inflation so as to get a constant dollar value, because even with that, sir, the progress has been dramatic and impressive enough. It is now estimated that the increase was some 18.2 percent over the previous year's record level. Once again, Manitoba's Gross Provincial Product grew faster than the Gross National Product for Canada as a whole even though our inflation rate remained marginally lower - no point in bragging about it, sir, but it did remain marginally lower than the 1974 inflation rate for Canada as a whole. This means then that the "real growth" with inflation squeezed out in our calculation that the real growth after the effects of inflation are netted out continued to outpace the Canadian average in 1974. The substantial growth in our gross provincial wealth or product in the past year was paralleled by increases of approximately 18 percent in total personal income, 19 percent in labour income, and over 30 percent in farm cash income, even with a levelling off in the value of agricultural output during 1974. So netting out for inflation, the respective rates of increase are approximately 6-1/2 percent, 7-1/2 percent and 17-3/4 percent. Every year since 1971, the per capita incomes of Manitoba after taxes have increased more quickly than the national average for all ten provinces. And mark, sir, in 1974, for the first time in many years, our province's average disposable per capita income after taxes, our province's average after tax income, etc. actually exceeded the Canadian national average. We believe that this indicator proves rather conclusively that Manitobans are not, by any means, overtaxed relative to the citizens elsewhere in Canada with respect to one or two provinces, well one province, sir, perhaps, but not taken as a national whole. And I might add that the results are the same both before and after the effects of inflation are netted out. As was noted earlier, the total value of agricultural output levelled off during 1974, but, at around $1.2 billion, it remained more than two and a half times as high as the year in which our government took office. The value of manufacturing shipments increased by over 23 percent last year and retail trade expended close to 16 percent. Total investment in the private sector grew by about 25 percent last year and reached a level which was, once again, almost double the total in the year before we were elected. In the public and private sectors combined, the overall increase in investment was more than 22 percent. Although housing starts - and we hear something about this, Mr. Speaker, from implied criticism - but nevertheless the fact is that although housing starts declined in 1974 in Manitoba, as they did everywhere else in Canada, housing completions increased to a new record of 12,164 units. And total construction activity also increased to a new record level. Manitoba's average unemployment in 1974, 3.1 percent, was down from the 3.9 percent figure recorded in 1973. Indeed, as we all know, our province's jobless rate or unemployment rate was among the lowest in the country and was more than two full percentage points below the national average of 5.4 percent unemployment. By the end of December, 1974, it can be said that 60,000 additional jobs had been created in Manitoba in the past five years. Inflation, of course, without be adoring the point, was the most obvious economic problem throughout Canada last year. Although the consumer price index for Winnipeg increased somewhat less quickly than the national index, the people of our province experienced substantial price escalation in nearly all essential goods and services. We believe, however, that several measures our government introduced last year, including higher tax credits, the special supplement for the elderly, the indexation of social allowance benefits, universal medical drug assistance, along with new programs and tax reductions which were implemented in previous years, helped provide a significant degree of real income protection for our citizens, especially :hose with low and fixed incomes who have historically and traditionally been hurt worst during periods of rapid inflation. The relatively favourable after-tax income figures to which I referred earlier seem to support this conclusion. Looking ahead, sir, insofar as the year 1975 now appears, it would seem that Canadians He likely to face a continuation of double-digit inflation, coupled with unfortunately growing unemployment particularly in a pattern from east to west. At the First Ministers' Conference in Ottawa earlier this month, I pointed out that if present national forecasts turn out to be correct, then Canada's overall economic performance in 1975 may well be one of the worst in this generation's memory. In these circumstances, it is inevitable that our own provincial economy will be subjected to increasing pressure. The specific budgetary proposals to be presented later this evening have been formulated in anticipation of just such pressures. However, it is clear that a single provincial administration on its own, cannot reasonably expect to overcome problems as serious as those which most Canadians will face in the months ahead. This is particularly true in the case of inflation, but it is also true with respect to unemployment. The origins of both these problems arc primarily international and national, I would say rather, to transpose that, primarily national and international, and solutions have to be found through action at the federal level which is closely co-ordinated with that of the provinces. For this reason, our government is encouraged to put it in a positive vein, the Province of Manitoba is encouraged to learn that the Government of Canada has decided to introduce a new budget later this spring. It is now quite evident that its budgetary proposals of last November were inadequate to deal with the present economic situation, as it is rapidly unfolding much less was it able to anticipate or deal with the worsening trend in unemployment which is predicted for the latter half of 1975. During discussions of the state of the economy at the First Ministers' Conference on April 9 and 10, I outlined some of the measures which our government believes should be considered for the New Federal Budget. These measures include: I Special job creation programs, but of a selective kind; Substantially-increased financial support - there can be no question of this, sir, in the area of housing; and the immediate introduction of an income supplementation program for low income people, particularly the working poor. In addition, we believe steps should be taken immediately to safeguard the income of agricultural producers against possible declines, and this becomes very critical, sir, because although we now accept that agricultural income is much better than it was a few years ago, the cost of production, or the cost of inputs to our farmers, has increased just incredibly and the sharp increases in farm commodity values, rather surprising as it may seem, cannot stand much of a decline because of the escalation and the cost of inputs or production. And, sir, we would also suggest to the Government of Canada to seek to improve and enforce competition legislation so as to restrict monopolistic prices, profiteering, and price gouging. We have already indicated that our government will co-operate, and let there be no mistake about that, sir, the Province of Manitoba will co-operate with the Government of Canada I in its efforts to seek a national consensus on how to deal with the problem of inflation. However, much as we support this national desire, it's more of a desire than an effort to date. We are concerned that the proposed voluntary "targets" for restraint in prices, salaries and profits, may not be particularly effective. Clearly they must not be one-sided in their application. In particular, such guidelines must take into account the need for alternatives to percentage increase s in salaries which have, during our lifetime, only succeeded in widening disparities and do nothing to help offset the impact of inflation on average-income households. It is our government's view that current economic problems require far more than voluntary measures. The recurrence of damaging eye local swings in the Canadian economy can only be offset effectively through a strong national planning mechanism and through policies designed to control profits, to regulate the prices of essential goods and services, to limit incomes from interest, professional fees and other similar sources, and to guarantee, perhaps that's putting it too strongly, sir, to give some better indication than up to now with respect to average working families that their purchasing power will not be eroded over time. Co-ordinated national guideline planning is also necessary to ensure that our scarce resources are not squandered on projects whose economic and social value may be questionable. We believe that a comprehensive national investment policy is required to meet our long-term needs for new sources of energy, and I can only say that that is critical, expanded housing supplies, and increased health and educational facilities. Now, it is said, Mr. Speaker, that the major oil companies are attempting to lay claim to a larger share of our nation's financial resources in order to extend their exploration and development activities. Our government does not dispute the need for expanded oil supplies, but we believe that these supplies should be developed through a system which will cause the least possible disruption to our economy and the least possible burden to the people of our country. Such a system would involve the application of some system as opposed to a non system, the application of some system of pricing principles to oil product, just as they are already applied for electric utilities, natural gas utilities, and the like. We do not believe that significantly higher prices for "old" oil, from existing sources, are justifiable at this time merely because opportunity seems to suggest it. Opportunity in itself is not a justification for changes in price for a vital commodity and can there be any doubt but that oil has become the industrial life's blood upon which our economy on this continent has become almost I would say, over-dependent, sir - the word might be better put as "addicted." And we will. Mr. Speaker, I would not mind a rational discussion on oil pricing at any time. I understand that there is some considerable view shared across the way that the price of oil ought not to be allowed to increase significantly or substantially at this time, or is their leader, sir, speaking only for himself ? I thought we had consensus on that one issue alone, as between the two sides of the House, but if I'm mistaken we should be advised because the issue is too important upon which to be unclear. We will continue to emphasize this view in discussions with federal representatives in the coming months. And, sir, we really believe that there is a very real distinction to be made between increasing the price of oil with respect to those uses of oil that can be substituted for by other forms of energy, even with present-day technology, where it's possible already to substitute for oil, as opposed to those uses of oil today for which there is no foreseeable substitute form of energy. And by that we mean that urban transit, urban transit consumption of oil, thermal generation of electricity by oil, and space heating by the turning up of oil are examples of uses where an increase if justified at all is far more justified than would be an increase in the price of oil for uses which there is no conceivable substitute such as in tractors, in combines, in civil aviation and in similar uses where, to repeat and it cannot be repeated enough, there is no realistic serious possibility of substitution of energy form at this time. So if the Federal Government wishes to refine its rationale for increasing the price of oil as between differentiating uses and non-substitutable uses, then there we believe can be a much more serious possibility of coming to some agreement as to price and price changes. But on the other hand, sir, there is far less, if any, justification, as I say, for a major increase of the price of oil for those uses for which there is no realistic alternative whatsoever. The subject of oil pricing is only one of the major issues in the field of federal-provincial relations which will have to be dealt with in the near future. Several major shared-cost and unconditional grant programs are now being renegotiated as between all the provinces and Ottawa. The outcome of these negotiations will play an important part in determining the degree to which our government can continue to improve and expand the services we provide for the citizens of the province, and the assistance we can make available to municipal government and school divisions. Among the documents or material which will be appended to the text of this Budget Address later this evening will be a brief paper on federal-provincial financial matters. It is an important area of concern, sir. All honourable members of this House should want to have that material but it is too lengthy to include in the Budget Address itself, so accordingly it will be distributed for their convenience and perusal. This paper will outline recent developments with respect to the negotiations concerning the equalization formula, the income tax revenue guarantee arrangements, the post-secondary education financing program, hospital insurance, Medicare, the Canadian Assistance Plan, joint economic development programming, and the recently, I think roughly 18 months ago, start-up of the national tri-level discussions of public finance, revenue-sharing - federal, provincial, municipal. Well, Mr. Speaker; one of the most often-repeated concerns of municipal governments in recent years has been the inadequacy of their most important revenue source - the Real Property Tax. It has been argued that the Property Tax is deficient for two principal reasons: First - it has been suggested that property tax revenues tend to grow more slowly over time than revenues from certain other forms of taxation. Well, Mr. Speaker, candidly, there is only a limited degree of validity of that argument. It is true to a degree; it is certainly not valid in its entirety, simply because assessments and property values also bear a relationship to economic buoyancy and inflation, and so adjustments take place in property value. Whether it is unbeknownst to many people or not, it is simply a fact. And maybe that degree of adjustment - there's too much of a time lag. Perhaps that's one of the problems. But there is a second argument and that is that it has been pointed out that the impact of the tax on real property tends to be regressive; that is, that the burden of the Property Tax bears more heavily on low and middle income groups than it does on higher income groups and on revenue-bearing commercial property. That may be true, sir, and there is a way to offset some of that effect, as I will try to elaborate on in just a few moments. Our government has responded to these arguments and concerns in several ways: For example, in 1973, we instituted the first provincial-municipal income tax revenue-sharing system in Canada. Under this system, the province transferred to the municipalities, on a "no-strings-attached" basis, an amount equal to 5 percent of total annual revenues from provincial, personal and corporation income taxes. Because the income taxes are based on progressive rates and have a relatively high "income elasticity", the revenues they yield tend to grow more quickly than revenues from any other sources. Under this revenue-sharing system, the municipalities have received the full benefit of this yearly revenue growth rate, and their relative reliance on the Property Tax is by degree that much less than it would otherwise have been. A s a result of this formula, per capita grants to municipalities have risen close to 60 percent in the past five years - from $8.00 per capita in 1972 to $12.66 per capita preliminary figures which were announced for this year. I shall add - now that the 1975 grant will increase as a result of a fiscal year-end adjustment I will explain later. The Province has also withdrawn from the amusement tax field and has introduced legislation under which municipalities can apply this amusement tax or non-property tax source for their own purposes, and some have chosen to do so starting as of January 1. In 1972, our government introduced a Property Tax Credit Program designed to reduce school property tax burdens on an equitable basis for homeowners, farmers, and renters. For 1973, benefits under this plan were increased from a $140 maximum and $50 general minimum up to a $200 maximum and $100 general minimum. In addition, the base was broadened to include all property taxes. Benefits were again increased for 1974 - to $250 maximum and $150 general minimum. For last year alone, the Property Tax Credit Plan reduced total property levies by about $63 million. In other words, the net municipal tax payable by Manitobans last year would have been $63 million higher had there been no tax credit plan. In addition to the tax credits and unconditional grants, the Province has also increased each year its assistance to municipal governments and school divisions under numerous shared cost program arrangements, such as the Public Transit grant, public school financial assistance through the Education Foundation Program, and so on. I wish to indicate, sir, that transit grants will increase this year again under a revised cost-sharing formula, whereby the Province will pay for the lesser of 50 percent of the previous year's deficit, or 50 percent of gross passenger revenues. The previous formula was the same in respect of the 50 percent share of the deficit, but the alternative was lower - that is 40 percent of gross passenger revenues was the other limitation. Grants under the revised formula for assistance to urban municipal public transit, Winnipeg, Brandon, will total some $4.7 million in 1975. A new cost-sharing plan will also be introduced shortly to encourage the introduction on a broad scale of any variation of electrically-propelled transit systems. This program will also cover major associated costs and will be linked to proposed new federal urban transit financing arrangements. Overall, it should result in senior governments financing up to 75 percent of the capital costs of purchase of urban transit vehicles that are under any variation of electrical propulsion. Our government will also be proposing a plan for cost-sharing up to 50 percent - on an experimental basis with municipalities in the purchase of smaller electrically-powered vehicles required for general municipal purposes - any municipal purpose whatsoever. Annual provincial expenditures under the Education Foundation Program are now roughly $74 million higher than they were five years ago. So if anyone asks, where is the province spending all that money, one of the answers is right here with respect to public school education costs at the local level, $74 million more in that one respect alone. Another $16 million this year will go by way of addition to our public school financing plan - much of it in the form of equalization payments to provide extra help for taxpayers in school divisions which have a lower than-average assessment base. Overall, it has been estimated that over half, well over half of the entire provincial budget now goes for direct and indirect assistance to local government and local property taxpayers. This assistance - which is funded through general provincial revenues - has made it possible for local government to rely less on property tax than would otherwise have been necessary to finance their operations. Of course, any further large-scale extension of unconditional revenue transfers to municipalities, by definition would necessarily have to subtract further from provincial revenue sources. In other words, the funds would come from the same taxpayers - the people of Manitoba - but they would be paid through provincial income taxes, provincial sales taxes, and other provincial revenues, rather than through taxes levied by the municipalities. There a number of problems associated with this particular approach. As the estimates of revenue and expenditure for 1975 -76 will show, sir, the Province could not allocate any substantially greater amount of extra revenues to municipalities on an unconditional basis this year unless we were to raise our own tax rates substantially. Then ironically the greatest advocates of more transfer, always more transfer to municipalities, would be the same ones to say that we were having high provincial taxes. So that kind of nonsense, sir, has to be stopped in its tracks, and we have a proposal tonight that I believe will do just that. For example, to raise, say, $50 million more to have it available for transfer to municipalities would require a personal income tax increase of about 9 percentage points - over 20 percent more than the current 42.5 percent rate - or a sales tax increase of close to 2 percentage points, or, to put it another way, to increase the sales tax in Manitoba two points, from five up to seven, would be a 40 percent increase. And that's how most people would characterize it. Now, we have been able to avoid increasing the sales tax in Manitoba to 7 percentage points, although they did so in Ontario. They have reduced it in Ontario now back to five, but announced that it will go up to seven again next year. Alberta, sir, is the only province in Canada that is quite comparable in oil production with. . . Mr. Speaker, there is another jurisdiction in this world that ha s no problem in balancing its budget and that's Saudi Arabia. So, Mr. Speaker, it is significant to know, sir I often think, Mr. Speaker, that it would be indeed very pleasant to be a Minister of Finance in a jurisdiction such as Alberta or Algeria, or even one of the Emirates. Well, Mr. Speaker, that may be entirely true that it is not a problem in the U.S.S.R, It is, however, somewhat of a problem in the United States, in Ontario, and in Manitoba. I readily admit that. We share more of our problems with Ontario than I would think with either Alberta or any of these other places that my honourable friend mentioned. In any case, sir, an alternative which has been suggested would be for the province to make all these extra funds available to the municipalities over and above the extra funds already made available, by means of the Province cutting its own services to the people of Manitoba. Some have argued that this could be accomplished by eliminating the Property Tax Credit Plan and transferring that entire amount directly to municipal government. Our government has rejected this suggestion because it would mean an end to property tax relief that is based on the ability-to-pay principle. In addition, it would mean that tenants - who pay property taxes indirectly through their rents - would no longer receive direct benefits. But most important, sir, it would mean an end to the countervailing application of property tax relief that is calibrated to income, and that, sir, we are just not prepared to do. Not now, not ever. And it should be remembered as well that because the extra funds for any new large-scale unconditional transfer would be raised by the Provincial Government, the municipalities would be relieved of a significant additional measure of responsibility for their own financial operations. In this connection, it is worth noting, not so ironically, that many municipalities have expressed concern about loss of autonomy through increased provincial grants, while the Province has expressed the view that, so far as is practicable, the jurisdiction which spends certain funds should have the responsibility for raising those funds. Now we don't say this in any dogmatic, ironclad fashion, sir, but we do say that for the most part that should be the case. That should be the reality for the most part, not in a minor way. However, the Province does not oppose the general concept of a self-regulating or adjusting formula for "growth tax" sharing with municipalities. Indeed, why do we oppose it since it was here in Manitoba in 1973 that that concept was initiated in Canadian federal, provincial, municipal finance? But, in the light of the considerations I have outlined, our government believes that any "growth tax" sharing concept, in order to provide a satisfactory long-term solution to municipal finance problems, (1) must be gradual in the extent of further changes in the formula; and (2) must be visible in its connection with the level of government that spends the funds. In line with the principles of fiscal responsibility and accountability, the Province of Manitoba has made it clear in discussions with municipal representatives that, with the concurrence in principle of our government, we would be prepared to consider introducing enabling legislation under which the municipalities would share directly in growth taxes by levying such taxes themselves, under authority transferred from the provincial crown. Because it is obvious that any new provincial/municipal revenue-sharing plan should apply to all municipalities in Manitoba, our government has decided to extend this offer of growth tax sharing to all municipal governments in a formal way at this time. Starting in 1976, and until further notice, the Provincial Government will be prepared to consider entering into arrangements with municipal governments under which the Province would act as an agent to collect special municipal growth taxes throughout Manitoba, if requested to do so by a major number of municipalities. Under this system, municipally-set tax rates would be applied on top of existing provincial tax rates, and the entire amount of extra revenue would be returned to the municipalities, obviously with "no strings attached." This proposed system of growth tax sharing would be unique and it would represent a further major development for municipalities which have argued for greater access in the growth tax field in order to help them reduce the rate of increase in their dependency on property tax. (Interjection)--Further details. . . I can tell by that observation by the honourable member that he has not yet quite comprehended the method by which this will work. There will not be a fragmentation, sir, of rates of sales tax in this province. That is not how it will work. So my honourable friend will have to be patient for another two minutes while this un- I folds. Further details concerning the administration of the new growth tax sharing arrangement will be included as an appendix to this address. Our government believes that this growth tax sharing proposal represents the basis for major and fundamental reform of local government financing if the municipalities wish to pursue that route. It will provide Manitoba municipalities with a means of introducing greater equity into their own tax structures, if they really wish to, while at the same time maintaining their autonomy and ensuring their accountability to their taxpayers. As a start towards this new tax-sharing plan, and unless a majority of municipalities request a larger amount, our government proposes to abate the provincial personal income tax rate by two full percentage points, and the corporation income tax rate by one percentage point, and to transfer these tax points and revenues directly to the municipal governments, to be paid to them on the partially-equalized basis that the per capita formula inherently is. This new provincial-municipal income tax-sharing plan will be reflected on the 1975 tax returns, to be filed by taxpayers next winter and spring, and the revenues yielded by the municipal tax points would replace the existing unconditional grant formula beginning January 1, 1976. Under this plan, the effective provincial personal income tax rate will be 40.5 percent of "basic federal tax" and the effective general provincial corporation income tax rate would become 12 percent of taxable corporate income. On the basis of current estimates, the tax room which we propose to vacate to the municipalities should produce next year about $16.8 million, or close to $17.00 per capita for their use in 1976. We will not know the exact amount to the penny of course, until next year, when the revenue will be turned over to them. If the municipalities wished to raise their income tax rates in 1976 or in future years, or if they wished to levy other taxes, they would, of course, be free to do so under the consensus arrangements I have already referred to. Giving the municipalities direct access to the growth tax fields in this way would make it possible for them - if they choose - to change their property tax trend projections and to assure themselves of revenues which are likely to grow at a faster rate. But the decision making, discretionary judgment is with them, the connection is with them, the accountability is with them. They have the flexibility and they will have the accountability, and that is how it should be in the best of all democratic arrangements. We will bear responsibility for those programs which we have to carry out, for which we have to ask for the supplying of ways and means to Her Majesty. Of course, the province will continue to supplement the municipalities' tax revenues with substantial direct conditional grants and indirect assistance from our own general revenues, just as we have done in the past over many years and increasingly each year, over many years, but this would continue to be of a programmatic nature, Mr. Speaker. We are prepared to make a firm commitment to municipalities and school divisions that, in future years, the sum total of our direct and indirect assistance to them, and to local ratepayers in that sense will grow at a rate which is commensurate with the average rate of growth of provincial current account expenditures as calculated on a ten-year averaging basis. We are also prepared to consider sharing equally with local government and school divisions the proceeds of any increased general unconditional income tax abatements from the Federal Government which may take place in the future, provided, of course, that such abatements are not transferred to the provinces to replace revenues under some federal program that is being transferred to provincial shoulders so with that caveat, the general principle applies. While the measures I have announced tonight will go a long way towards permitting fundamental reform in provincial-local financing in Manitoba, it is quite clear that the pace of this reform will depend, to quite a degree, on the willingness of the Federal Government to provide increased support for our efforts. For this reason, I am hopeful that municipal representatives will work closely with members of our government in the continuing efforts of all provinces in Canada to achieve a more equitable national revenue sharing through our current tri -level consultative machinery in Ottawa. In addition, our government would welcome representations from individual municipalities, from municipal groups for their advice, or from other interested parties on proposals for improving the property tax or any other possible source of local revenue. Of course, major change, sir, in the property tax structure cannot be implemented in an overnight way. Our tax credit plan remains the best - and the fairest - mechanism for providing immediate property tax relief. For this reason, our government will be proposing a further increase in benefits under the Manitoba Property Tax Credit Plan for 1975. Our accounts for the fiscal year that just ended 24 days ago have only been closed formally for four days and, for this reason, it is not possible as yet to provide precise information, with respect to our year- end position. However, the "preliminary final" figures which are available indicate that a surplus of $45 million from the year just closed can be carried forward into the present fiscal year under the authority of the Financial Administration Act, thereby reducing new revenue requirements for the current year. The surplus in 1974/75 resulted primarily from increases in payments to the provinces under the Federal-Provincial Fiscal Arrangements Act and from the overall buoyancy of the provincial economy last year which did generate more in corporation tax and income tax than was estimated some 15 months ago. As Members may be aware, our revenues under the Fiscal Arrangements Act are estimated for us around the beginning of each year by the Government of Canada who are the collecting agents in this respect. Last year, as in the past few years, indeed, the Federal Government raised certain of its estimates after our budget had been presented to the House and increased our payments accordingly. Revenues in excess of estimates were received from other sources as well, but there were also a number of offsets, including some considerably less revenue than was expected in mining royalties because of a sharp down-turn in the latter part of 1974 in metal prices in the world markets. If any residual surplus revenues should remain after the accounts for 1974/75 are finalized, they will, as in the past, be set aside as a contingency reserve, in accordance with the Special Municipal and General Emergency Fund Act. This would be for possible use in implementing job-creation programs later this year should counter-cyclical stimulation of the economy be needed. With respect to Main Expenditures, Mr. Speaker, some weeks ago we tabled in the House' our government's Main Estimates of Current Expenditures for the 1975/76 fiscal year. As I noted at the time, these estimates, which total $1.009 billion, represent the results of a rigorous and intensive evaluation of priorities and program effectiveness. During our internal estimates review, initial departmental spending requests were cut substantially and relatively few increases beyond the obvious salary and material cost escalations were permitted. Of course, these cost escalation factors also require higher levels of financing for existing health and education programs and for local governments support. Despite general cost increases, however, careful planning has made it possible to concentrate available resources on such measures as: additional property tax relief through the Tax Credit, through unconditional municipal grants; increased assistance to school divisions under the Foundation Program and to the universities through the Universities Grants Commission. Mr. Speaker, I might say in that connection that the increase in G rants to the Universities Grants Commission is increased by something in the order of $16 or $17 million dollars in one year and constitutes an increase which is greater than that of the provincial budget as a whole. That does not mean that there are no problems, but let there be no mistake as to the level of funding, Mr. Speaker. I should also mention, Mr. Speaker, financing has had to be increased for improved health and social development services, including expanded funding for our government's initiatives in the area of nursing home care, medical drug assistance, day care, and the special supplement for the elderly. Detailed information on the Main Estimates is being provided by the Ministers responsible in Committee of Supply, which has been going on for some few weeks now and will be going on in the weeks ahead. One additional point should probably be mentioned here. As members are aware, the Main Estimates contained an amount of $23 million in respect of general salary and cost of living increases. This figure is, of course, subject to change naturally, depending on the outcome of current contract negotiations. I do not want to comment on the negotiations other than to emphasize my concern about the need for general responsibility in all sectors of the economy, and the desirability, in the case of wage negotiations, of considering more equitable forms of adjustment than a simplistic, uniform percentage settlement applicable to people at different income levels. At the conclusion of the address tonight, I will table our Government's Estimate of Revenues for the 1975/76 fiscal year. I am happy, yes indeed, happy to announce that, despite increasing expenditures and anticipated declines in some revenues, there will be no increase in the major personal income tax rate or the sales tax rate in Manitoba in 1975. Mr. Speaker, everything is relative. What is good news is not necessarily good news to my honourable friends opposite. But in any case, as I indicated earlier, our government proposes to reduce its general income tax rates so that the municipalities can have direct access to these growth taxes to that extent, as they have apparently requested. Last year, when it appeared that provincial revenues from oil were likely to increase as a result of higher prices and a new oil royalty system, which we introduced here a year ago, the Provincial Government undertook to pass on all of these added revenues to consumers of gasoline and motive fuel in the province. And at that time, accordingly, since we had some $6 million dollars or so in extra revenue as a result of a higher royalty on oil because of a price increase on oil that we didn't ask for nor want, we passed all of that money on back to the general motorists in the province, through a 2 cent reduction in the gas tax. Well, Mr. Speaker my noisy friend obviously is not aware of the fact that outside of the two oil producing provinces of Alberta and Saskatchewan, that we have the lowest gasoline and motive fuel tax rate in Canada. Newfoundland, New Brunswick, Nova Scotia, Prince Edward Island, Quebec, Ontario, we had a lower motive fuel and gasoline tax than any of those, and I wonder if my honourable friends remember the fact that our gasoline and motive fuel tax in Manitoba has not been increased by this government in six years, that in fact it was 2 cents less per gallon in the past twelve months than ten years ago when they were in office? What was their excuse, because everything was less inflationary then, what were they doing with those funds? What did they need it for? In any case, Mr. Speaker, may I be allowed to indicate the numbers involved. So what we have proposed to do/sir, given the fact that we reduced the gasoline and diesel fuel tax by two cents last year from 17 cents a gallon where it had been for many years down to 15 cents a gallon, and the same thing, 2 cents reduction from 20 cents a gallon down to 18 cents a gallon on diesel fuel last year. Since that time, a number of the smaller oil producers in our province have encountered problems due to Federal disallowance of royalties or economic rent as a legitimate deductible expense, as well as they have experienced other cost increases, and some oil producers, who are producing at only a few barrels a day, are facing the prospect of very marginal operations. In these circumstances, our Government has decided that it would be appropriate to make certain adjustments in our oil royalty schedule so as to permit small well operators to retain more of their earnings to meet these problems. These adjustments may result in a reduction in our oil royalty collections of approximately $2 million this year. The result of this drop in oil royalties is a reduction in the amount of extra funds available to pass on to gasoline and motive fuel users. This will necessitate a withdrawal of one cent per gallon of last year's reduction for each of these fuels effective May 19th, Mr. Speaker. This amount, Mr. Speaker, we didn't intend to make money on that increase in oil but we don't intend it to cost us any money either. I suppose a government could have taken the extra royalties and taken it into general revenue or we could have taken those extra royalties and put them back by way of a reduction in the gasoline and motive fuel tax. We chose to do the latter. I repeat, we didn't ask for those price increases, but we were not about to let that entire windfall price increase go on in some unaccountable way to somebody else's coffer. Our course of action is very rational. Now that we are decreasing some of the royalty, the loss in revenue resulting therefore necessitates withdrawal of one cent, you can't very well withdraw half a cent, of one cent per gallon in the tax. And that is effective May 19th. And I will be very candid, Mr. Speaker, this amount which is about one-third cent per gallon more than our expected revenue loss will go into consolidated revenue of the province. Some of that one-third cent, sir, will be applied to further increases in support for public transit, beyond the increased support for public transit we have already brought into being in recent years. We do not apologize for taking steps to give greater support for public transit, Mr. Speaker, something for which my honourable friends had no sympathy, they were callously disregarding, and I think to the disadvantage of the good husbandry of non-renewable resources in our country for this and future generations. As has been announced last January by my colleague the Minister responsible for the Public Insurance Corporation, the additional charge of two cents per gallon on gas and motive fuel tax rates will also take effect May 19th. This amount will be transferred to the Manitoba Public Insurance Corporation in proportion to those revenues derived from two cents which are attributable to the highway use of motor vehicles. The amount which is related to off highway consumption of gasoline and motive fuel, that amount which is admittedly minor, but that amount nevertheless will go, not to Autopac, but to the consolidated revenues of the province. MR. ENNS: How much next year? MR. SCHREYER: It is estimated - well, Mr. Speaker, my friend says "how much next year" and I say to him that I invite him now, I invite him now to keep his eyes open, not next year, two months from now, two months from now when the insurance industry of Canada will be increasing their rates in order to recoup a quarter billion dollar loss by the private Mr. Speaker, with the way in which the private auto insurance industry is operating in the other provinces of Canada, the way in which the private insurance companies are operating in Canada. Mr. Speaker, sir, in order to make it easier for you to maintain decorum in the Chamber, I will desist from any further comment about the private automobile insurance industry in Canada. I would only say that I am looking forward to see what happens in June 1975 when the quarter billion dollar deficit in Canadian private automobile insurance will have to be accounted for somehow, some way. In any case, Mr. Speaker, it is estimated that the funds transferred for the remainder of the current year for purposes that I have just mentioned will be some $4. 7 million and that in a full annualized 12-month period, the amount will be around 6.2 million. Our government believes that these adjustments represent a fair and logical method of apportioning some of the costs of public automobile insurance among those who are covered by that insurance. Similar adjustments have been made in Saskatchewan and British Columbia, both of which also operate public automobile insurance programs. It is, we feel, a partial substitute for the previous dependency on arbitrary ratings such as "all purpose," "preferred," and so on, in adjusting premiums to take account of frequency of driving and therefore as some measure of accident exposure. Since persons who drive more than an average amount each year have a greater chance, statistically speaking, of being involved in an accident, it seems just as reasonable to have the categorization of "preferred," and "all purpose, " as traditionally existed to have that now replaced at least in part by some reliance on motive fuel consumption as a measure of amount of driving for insurance purposes. As a result of these changes, in any case, Mr. Speaker, the Manitoba gas tax rate, combined with the two cent insurance charge, will be 18 cents a gallon - one cent more than it was for many many years before last year's reduction, and one cent less than the current rate in Ontario. The combined rate on motive fuel or diesel fuel, as we would say, will be 21 cents also one cent more than it was for many many years before last year's reduction, and four cents less per gallon than the present rate in Ontario. For persons who use their cars for business purposes, and for commercial motor vehicle operators, such as truckers, the added fuel taxes involved in these adjustments would be income tax deductible, in any case, in the normal way. In conjunction with the adjustments to the general gasoline tax rate, an amendment will also be proposed, at the appropriate time following the Budget Address, to increase by one cent per gallon the rate of tax on aviation fuel from two cents per gallon to three cents per gallon. This change, which is expected to result in a revenue increase of about $400.000 or 4/10ths of one million, will bring our aviation fuel rate into line with the rates now applied by our neighbouring provinces. The effective date of this adjustment will also be May 19th. A further change will be made with respect to the use of purple diesel fuel in farm trucks. And I invite my honourable friend from Woodland s, I should say Lakeside, to take note that it will be possible as of May 19th to use tax-free purple fuel in farm trucks which have a two-axle configuration, and which possess a manufacturers' "GBW" (Gross Body Weight) rating of L800 or equivalent of up to 34,000 pounds maximum. (Interjection)-- This increase in the exemption. . . No, Mr. Speaker, in truth this is intended to clarify that the exemption which we introduced last year, for the first time last year to provide an exemption on farm trucks with respect to tax-free purple fuel which was supposed to be to a maximum of 28,000 pounds, we are now increasing that exemption to 34,000 pounds but, sir, that is clarified and that is the basis upon which it will be administered. Another measure designed to assist farmers and fishermen as well will be an exemption under which - I should say as an aside to the Honourable Member for Lakeside that there was some confusion or misunderstanding that this tax-free farm truck, tax-free fuel treatment applied to tandems,' it never applied to tandems, never, and it was not intended to apply to tandems last year, so it really ought not to be regarded as some impingement on the operations of the licensed franchise operators, truckers in this province. Another measure designed to assist farmers and fishermen as well, will be an exemption under the Retail Sales Tax Act for returnable containers purchased by farmers and fishermen and by co-operative associations thereof or by similar organizations used for transporting agricultural food products, agricultural products and fish directly from the producer. The effective date of this exemption will be June 1, or Royal Assent, whichever is earlier. --(Interjection)-- Well this applies, Mr. Speaker, to honey containers, to milk cans, it applies to food containers. My honourable friend should have no difficulty in understanding what a returnable container used in food production is. But if they would like) we will send them the detailed regulations. Less than two weeks ago, my colleague, the Minister of Mines, Resources and Environmental Management, tabled our government's new Mining Royalty legislation in the House. We believe that the new royalty system - by recognizing the need for a reasonable return on investment, and the fluctuations that can occur from time to time in the financial positions of the mining companies, will be fairer to the companies involved, while at the same time, insuring that Manitobans will continue to receive more equitable returns from their mineral resources than was the case before our Government initiated its reform of mineral taxation in the first place. Of course, the general situation with respect to resource taxation in Canada still remains somewhat uncertain in view of the continuing disagreement over general resource revenue sharing issues, the pricing of oil and natural gas, disagreement on that, and on the Federal Government's decision to disallow the deductibility as an expense of provincial royalties in calculating mining and oil company income tax liabilities. In his November 18, 1974 budget, the Federal Minister, Mr. Turner said and I quote: "We have chosen to disallow the deduction of all these levies to make room for the provinces by giving additional tax abatement points to the province. In this way, provincial taxes and charges and the federal taxes will each be discreet and visible decisions which each can make in light of what they know the other is doing, giving full recognition to the needs of the industries. "Our government, as indeed all or almost all provincial governments in Canada, was strongly opposed to this federal non-deductibility move. There are we admit, many aspects of tax allowable deductions which ought not to be deductible but the charge of economic rent or royalty is not one of them, and that has been the basis upon which the disagreement has been so strongly expressed. And in any case the fact remains the legislation is formally in effect, as of last month, when it finally passed through parliament, in the month of March. As the Federal Minister noted in his November budget that legislation provides for an additional corporation income tax abatement to the provinces in respect to the production profits of mining and oil companies. Our government will therefore propose an amendment to reflect this abatement in our province's corporation income tax legislation effective January 1, 1975. Effective on the same date, we propose to implement a system for compensating or remitting to oil and mining companies the additional provincial income tax that they will be required to pay as a result of the disallowance of provincial royalties as deductible expenses by the Government of Canada. If it becomes a little confused, Mr. Speaker, it really isn't. For a mining company, the compensation formula will be applied by quantifying for compensation or remission purposes those extra funds that are collected, that are generated by the additional provincial income tax payable as a result of non-deductibility, even non-deductible as against the provincial points themselves, up to a limit determined in relation to the total provincial tax payable by that company under the 15 additional abatement points. With respect to oil production, since many producers are individuals rather than corporations, and since the provincial oil royalties and taxes do not take costs directly into account as our new refined mining royalties schedule does, a somewhat different compensation formula is required, Accordingly, for an oil producer, while the compensation formula will also be applied in respect of the entire amount of additional provincial income tax payable as a result of non deductibility, the limit of compensation or remission will be the amount of the extra yield on the entire 25 points that is due to non-deductibility. Steps are now under way to establish a system for administering this compensation system in co-operation with the federal Department of National Revenue. Legislation to authorize remissions to mining and oil companies under these compensation and remission arrangements will be introduced in the near future. A number of resource extraction companies in Manitoba have not paid income tax for quite some number of years as a result of historic tax provisions in our national income tax laws that allow for exploration and depletion deductions that are actually greater than the actual costs incurred. If such companies still do not have any income tax to pay as a result of the federal non-deductibility provisions, then, of course, there is no need, nor should there be any compensation or remission to such companies. But for companies, mining companies or oil companies that do pay income tax then these federal measures will have an impact and our Manitoba compensation plan should help to offset the unintended impact of extra provincial income taxes which result and which we didn't ask for. On the assumption that the revenues foregone through our compensation plan will, in most cases, be more or less equal in aggregate to the revenues that we collect under this somewhat complex arrangement, we are not making any special allowance in our revenue estimates for 1975/76. The net impact of this compensation system on most resource operators will allow for the complete deductibility of royalties and other provincial resource taxes from taxable income for purposes of provincial corporate income tax calculation purposes. It should be noted here that if the Federal Government were, in the future - and I am not trying to start any rumours, Mr. Speaker, but if it should happen and I believe there is some possibility that it will happen to some extent, that the Federal Government may allow some deductibility of resource royalties up to a certain level - then obviously we and any other province would have to review our plan and make commensurate or sub-sequential alterations. The same would be true, of course, in all those other provinces where compensation plans have been introduced in the past 12 months. Our government will also propose some further changes with respect to the taxation of oil companies this year. As I referred quickly some time back, a reduced but graduated or progressive royalty schedule will be introduced, very soon now, after this budget, with respect to oil companies so as to bring about lower mill rates applicable to small wells with low daily output of oil. I see the Member for Virden is not here but I'm sure he will be interested. We believe, sir, that a somewhat lower rate schedule at levels of output of 20 barrels per day or less is desirable and justifiable, and in large part necessitated for reasons I have already gone into with respect to double impact of taxation because of federal non-deductibility, etc., etc. For a number of years, questions have been raised as to the adequacy of certain of the exemptions permitted under our province's succession duty legislation. At the time that this legislation was introduced in 1972, our government believed that the $150,000 exemption for "preferred beneficiaries" or children, and the supplementary exemption of $50,000 extra for a total of $200,000 for surviving spouses, in respect of property passing to them, was sufficient to ensure that only persons in receipt of relatively large bequests or estates would be subject to tax. Of course, it is to be repeated that this taxation starts only at the point where all debts and mortgages are cleared off first and the tax applies only to the next clear value of property that passes in estate or on succession. Still, since the 1972 legislation, inflation has affected the value of many assets. To take these changes into account, we propose, effective at midnight tonight, to raise the exemption for preferred beneficiaries to $ 200,000. This change means that the property passing to a spouse will be exempt up to $250,000. And I know, Mr. Speaker, that there will be those who say that that is not enough, but I say, sir, indeed I believe every single one of my colleagues believes, that a quarter of a million dollars of assets passing untaxed before the first penny of tax starts on the 300,000 and 350,000 is indeed providing, in my opinion, more than enough to those who come behind. It is estimated that this measure will reduce succession duty revenues by approximately $800, 000 over the full year. Overall, it is estimated that provincial revenues for 1975/76 fiscal year, which I will table immediately at the end of this address this evening, will be $1,020,996,000. As I pointed out earlier, this total includes an amount of $45 million in respect of surplus funds being carried forward from last year into this upcoming fiscal year. At the conclusion tonight, I will also table Supplementary Estimates of spending for the 1975/76 fiscal year. Most of these expenditures, sir, are in the nature of transfer payments to individuals or municipalities or to the relieving of program costs to municipalities. The estimates include an amount of $292,000 for the Department that is charged with the responsibility of the Wild Fur Program for purposes of carrying out a new cost- sharing agreement with the Government of Canada signed only a matter of several days ago. The Supplementary Estimates also include an amount of $490, 000 for the Department of Health and Social Development to cover increased payments to the City of Winnipeg in respect of the province's share of its health unit or health department costs. This amount is intended to place the province's contribution to the City of Winnipeg's health programming on a basis which is directly comparable to that of any other municipal health unit operation in Manitoba. As of this year, the province will no longer require the old one-third cost sharing by most municipalities in the cost of public health unit operations. This may not be a large item, sir, but it should be noted in passing that historically for years, some municipalities were expected to shoulder one-third of the cost of health units and many municipalities would not take that on their shoulders, and this unsatisfactory state of affairs went on year after year. So in order to get rid of that unfairness, if you like, the province is accordingly assuming the cost of all public health unit operations throughout rural Manitoba as well as most of the city. The province will also be proceeding with plans to eliminate payments by municipalities to the provincial life-saving and diabetic medicines program and will no longer require owner's equity and municipal payments with respect to future hospital construction and personal care homes. Mr. Speaker, after consideration of the public library situation and needs in our province and following a review of our financial support to libraries which I say somewhat in a blushing or embarrassed way, has remained substantially unchanged for the past 20 years, our Government has decided to increase the grant program to help meet increasing costs of improved library services for more Manitobans. The new assistance will be provided under a formula which will make available $2.00 per capita for annual operating costs for libraries serving 10,000 or more people, up to 50rX of the costs of operating those libraries. The 10,000 population figure can be for a municipality or Local Government District with that number of residents, or a group of municipalities, whose total population exceed or reach this number. Regulations and detail for this formula are now being developed by the Department of Tourism and Cultural Affairs, which is responsible for this service. For those municipalities or Local Government Districts engaged already in library services under the old formula, the option is open to them to remain on the old formula if their local circumstance and population shows them that it is of advantage to stay with the old formula as an option. An amount of $1 million has been included in the Supplementary Estimates to cover one half of the annual cost of this plan, which will take effect on July 1, and with respect to the Parkland Regional Library Service, arrangements have been made to continue that service until the end of this calendar year, following which the Parkland region will come under the same formula as any other region of Manitoba. The Supplementary Estimates also provide for an amount of $330, 000 for the Department of Education to cover special grants to northern school divisions related to the distance factor costs of food and lodging for teachers in the North. The extra grants will be set at $400 per authorized teacher for school divisions and districts between the 53rd and 56th parallels, and at $900 per authorized teacher for school divisions north of latitude 560. This additional assistance will help offset a portion of the school tax increases in these divisions in 1975. New income tax revenue information for 1974/75 which has become available to us in recent months, indicates that an adjustment payment can be made to municipalities in respect of the unconditional grant formula for this calendar year, so provision has been made in the Supplementary Estimates for an amount of $1 million to cover this adjustment or interim progress payment. The $1 million adjustment will update the 1975 grants under the present formula in anticipation of the proposed transfer of personal and corporation income tax points to the municipalities next year. As a result of all this, unconditional grants to municipalities this year will be approximately $13. 66 per capita, and with this adjustment it is possible to say that grants to municipalities will be 30 percent higher than last year. This should enable all municipalities in the province to reduce, by commensurate degree, their property tax requirements for this year. Mr. Speaker, we have good historians on this side of the House and I am advised that the per capita unconditional grants paid by the province to help municipalities stood at a grand total of $ 3.00 per capita for the decade of the 1960's. In 1969, as it were, as a kind of death bed repentance, they increased it to eight and they never passed it through this Legislature. Mr. Speaker, earlier tonight I indicated that our government plans to increase benefits under our property tax credit plan for 1975. I am pleased to announce that maximum property tax credit benefits for the current year will now be raised to $300. The new general minimum benefit will be raised to $175. What this means, sir, is that for an average home assessed at $6, 000, and indeed the average home in the municipality of Winnipeg is around $6,600, so say for round and easier figuring, for an average home assessed at $6,000 or $7,000, the $300 maximum property tax credit will be equivalent to a property tax reduction of 45 to 50 mills. The $175 general minimum credit will be reflected on the municipal property tax bills of eligible resident homeowners this summer. Homeowners of average or lower income are entitled to further benefits up to the new $300 maximum and will receive this through the income tax return in the spring of 1976. The same will apply, naturally, insofar as tenants are concerned. Renters who are eligible for property tax credits for 1975 will, as in past years, be able to claim the entire amount of their entitlement up to the new $300 maximum by filing income tax returns in the spring of 1976 as well. These increased benefits will bring the total annual cost. . . Mr. Speaker, I must interrupt in mid- sentence because I hear the Member for Fort Garry say that we are doing this because of some elections. But you see, Mr. Speaker, history proves that my honourable friends waited eight years at $3. 00 per capita, and then two months before the election of 1969 they brought in legislation to change it all at once. And they never passed it. They never got to pass it, sir. These increased benefits will bring the total annual cost of our Property Tax Credit Plan - and I think it's worth pausing to reflect - the total benefits of the Property Tax Credit Plan calibrated to income, and that's really the most important point, but the second most importan1 point is that it will aggregate $75.5 million in municipal tax relief, an increase of $13 million over last year alone. An extra $4.5 million will be required through the Supplementary Estimates which we are tabling this evening to cover the resident homeowner advance under the program for this year, and the balance will not be required until our next year financial accounts. As I said earlier, our government believes that the Property Tax Credit Plan is the most effective system open to us under the National Tax Collection Agreement for providing municipal and school property tax relief directly to homeowners, renters and farmers. Perhaps I should apologize for repeating that, sir, but that is really its cardinal virtue. It is so important that repetition should not be apologized for. The old Jesuit saying goes that "repetition is the mother of learning" and that is certainly true so far as my honourable friends opposite are concerned. Even more important, it is the most equitable system for providing this relief. It guarantees that those families who have relatively lower incomes, including pensioners on fixed incomes and the "working poor, " will get the larger benefits. It also guarantees substantial tax relief to all other eligible property taxpayers and renters as well, with maximum benefits up to $50 more than last year. Well, sir, last year our government introduced a second tax credit, or tax reduction program - it's referred to as the Cost of Living Tax Credit Plan. It really is intended to relate to changes in living costs and what happens in the sales tax collection is the result of inflation. Unlike the Property Tax Credit system, which relates benefits to property tax and taxable income, the Cost of Living Tax Credit Plan provides for benefits which are determined by family size and taxable income. Of course, the Cost of Living Tax Credit Plan is designed to provide tax relief as well, including specifically sales tax relief. The formula takes family size into account because that plays a large part in determining how much sales tax is paid during the course of the year. It is worth pointing out that this tax credit in its very design should now help to minimize complaints, which I know this government has received and the past government I know received, which have existed since the introduction of the sales tax in 1966 or '67, that the sales tax exemption for children's clothing was just unfair because it didn't take into account different children's size. Well, we believe that with the Cost of Living Tax Credit, the more children, the higher the tax credit, which is as it should be, because there's more clothing and articles purchased of essential kind for the family, that this goes a long way to offset and minimize the root source or cause of that complaint. For 1975, our government proposes to increase total benefits available under this Cost of Living Tax Credit Plan by almost 65%, from $14 million to $23 million. Under last year's plan, the formula for calculating Cost of Living Tax Credit was 2%, the formula was two percent of personal exemptions minus one percent of taxable income. This year, the formula will be, for each calibration as we require under the federal-provincial Income Tax Collection Agreement, 3'!r, of personal exemptions minus one percent of taxable income. As a result of this change in formula, the maximum Cost of Living Tax Credit available to a family of four will be about $127. For a married couple under age 65, it will be approximately $106. For a pensioner it will be about $141. And all of this we believe is in accordance with what is needed to take account of some of the impact of inflation. These increased benefits will bring the government's total annual commitment to the Cost of Living Tax Credit Plan up to $23 million and will extend the credits or benefits to higher up in the income range. In future years, as personal exemptions are indexed to grow at the same rate as the Consumer Price Index, so then automatically the Cost of Living Tax Credits will grow with that and be of benefit in offsetting the impact of inflation at middle and lower income brackets. To ensure that the new Cost of Living Tax Credit has maximum impact in terms of immediate tax savings and thus help to provide some stimuli to the economy this summer and fall, we anticipate making arrangements with the Government of Canada - there have been discussions already - so that the 1975 Tax Credit can be taken into account in the payroll deduction system starting this summer. If these arrangements are agreed to, then many wage and salary earners will start to get higher take-home pay as a result of the new system by July or August. So, Mr. Speaker, to summarize in this respect, our province's two tax credit plans will provide something very close to $100 million in direct tax relief to Manitoba citizens for 1975. Just to give some exemplification, Mr. Speaker, when the maximum benefits under the two plans are added together, a family of four can now be eligible for up to $427 in tax credit; a married couple can receive up to $406; a single person under 65 up to $356; and a single pensioner up to $44l. Mr. Speaker, we hear the words "Welfare. Welfare." I know what my honourable friend opposite would do. He would certainly abolish this welfare, as he calls it, all $441, and he would take that $98 million that he would therefore save, and he would bestow that on those who are in the 10, 15, 30, 40, 50, 60 thousand dollars per year range. And I say to him that if that is the basis upon which he wants to take us on, then I say to him he's on. You're on. Not to mention the social and economic justification that lies behind it, but if he wants to ignore that too and take us on, I say to him he's on. We'll take you on. And I think that perhaps is one of the problems of my honourable friend, that none of us on this side had enough time to take him on adequately in 1973, but I think that perhaps that should be done. Well, Mr. Speaker, one can't do very much in two and a half hours. I wish that there had been more time. Mr. Speaker, I say that to my honourable friend. In total the Supplementary Estimates for 1975-76 come to $18 million, and of this amount $2.8 million will go to municipalities and school divisions, and $15 million toward direct tax reduction to individuals. Mr. Speaker, it should be remembered that over 20 percent of our total current expenditure will continue to go directly toward provincial and municipal tax relief measures in 1975-76. It is now estimated, as I indicated, that our revenues for the year coming up will be $ 1.020, 996, 000. With main and supplementary estimates at $1,027,269,800, we are budgeting therefore for a deficit on current accounts of $6.4 million for 1975-76. This deficit, which represents about one half of one percent of our budgetary revenue, could have been eliminated through a small tax measure of one kind or another. That much is obvious. However, our government preferred not to propose doing so. We believe that a current account deficit represents an appropriate fiscal policy response to the present economic situation, which is admittedly in a fast-swinging circumstance. A year ago, the last thing our economy needed was stimulus. In 1975, still it does not seem that there is need for stimulus beyond that which is already under way, but we cannot be completely sure and so we are keeping on the alert in the event that a rapid response capability is necessary it will be there. And in any case, in addition to this deficit on current accounts, the estimates of Capital Supply requirements, which will be tabled here very soon, will also have to be regarded in the light of countercyclical policy as well. At the conclusion of my address tonight, I will be tabling estimates of capital requirements for the 1975 -76 fiscal year, totalling $ 544 million. Our capital estimates for 1975 -76 are clearly substantial. They are approximately $155 million less than the authority granted last year. As usual, the largest capital requirements are for self-sustaining programming including new developments being undertaken by our utilities. Manitoba Hydro will require about $ 335.8 million for 1975-76 in order to continue its efforts to expand the supply of renewable energy at comparatively low prices. The Manitoba Telephone System will require capital authority of about $40.6 million, and the Manitoba Housing and Renewal Corporation about $ 46 million. Approximately $ 62 million will be requested for direct government programs including $40.3 million for general purposes and $14 million for developments in agriculture and other areas under agreement with the federal Department of Regional Economic Expansion. And of this amount, for my honourable friend's information, I believe they will be interested in knowing this allocation, of this amount about $ 350 million of the total capital requirements will be obtained through public financial markets and the remainder off market such as through the Canada Pension Plan and other off-market sources. So Mr. Speaker, sir, when I began my budget statement, I suggested that growing national economic pressures in 1975 may well present our province with the most serious challenge it has faced in the years since our government took office. I also indicated that we were determined to meet that challenge directly, to the limits of the resources available to us. The budgetary plans I have outlined tonight clearly reflect this determination. Through careful planning and deliberate restraint, we have been able to keep down the overall growth in our budget, and I know those that make the superficial analysis will say, "oh my, it's a billion dollars, " but I would invite them to look at this in the perspective of history and in the perspective of the component parts of Canadian confederation, in other words, all the other provinces. Mr. Speaker, insofar as the debt on our future is concerned, which my honourable friend just referred to, he would be interested to know that the public debt as a percentage, the direct provincial debt as a percentage of gross provincial product or wealth, as a percentage of the provincial budget, whichever of the two measurements he wants to use, that the proportion of percentage is as low today as it was ten years ago. So what is my honourable friend complaining about. I have to admit, sir, that the direct provincial debt is much much higher than it was in 1899, or even in 1961, but on the other hand, so is the output of goods and services in this province much much higher today than in those years. But in any case, we believe, we are confident that the impact of this budget on our economy will be positive and pervasive. MR. SCHREYER: My honourable friend asked me "what about the hydro debt." I would certainly be very tempted to reply right now, at the expense of taking another five minutes because Mr. Speaker, the fact of the matter is, that Manitoba has succeeded in per suing an optimum pace of construction and development of a renewable energy resource. There are those who may question whether or not it was advisable to proceed with the development of the Nelson River but that was a decision which was taken some time ago and which I have never poor-mouthed or second-guessed. I believe that it is the best of prudent public policy to continue the development of renewable hydro-electric energy despite all of those who would like to throw sand into the gears. Be that as it may, Mr. Speaker there are those who would like to follow some easier course, something that would not tie up capital funds and if we had followed that course, and we had lots of advice back in 1969 or 70 to forget about hydro development and put in oil burning steam turbines. Wouldn't we have been a bunch of fools if we had followed that advice. Mr. Speaker, there is something more important than just price or hydro debt here. And that is that for some reason, which I frankly admit I don't yet quite understand, there are some who occupy positions of responsibility in our parliaments and legislatures in Canada who seem to be unaware of the fact that in one generation, that this generation is the one generation that has succeeded in consuming about a third of the world's depleting non-renewable oil reserves, and if one generation can burn up one-third of those scientifically estimated reserves, how many generations need there be in order to burn it all up? In which case this world has become so over-dependent on oil that it might as won be called the black blood of our industry. And in other words, it has become something to which our whole way of life and industry has become over-dependent to the point of addiction. And yet there are those who occupy positions of responsibility who are not, who are not somehow shaken who maintain a face of equanimity in the fact that one generation of humanity has burned up forever and a day one-third of the world's never to be replaced, stock of liquid hydrocarbons, Now in the face of that, can any rational man question the advisability and efficacy of preceding just as quickly as we can with optimum construction schedules towards harnessing of precious renewable energy so that the even more precious non -renewable fossil fuels need not be burned up with callous disregard to the generations that come only 20, 30, 40 years from now, not to mention beyond that. So I say in conclusion Mr. Speaker, that the year ahead will be difficult for every provincial in Canada, we believe our budget will ensure well my honourable friends are you know, indeed nit-pickers. I remember some ten years ago, I remember some years ago sitting on that side with the Honourable Member for Portage la Prairie, sitting close to each other, yes, over there, and having someone on this side, it was a Conservative at that time saying that he'd sooner be a story telling Tory than a nit-picking Grit. And this of course incensed my honourable friend the Member for Portage a great deal, and I felt rather sorry for him. Because I don't believe that the Grits are nit-picking; I believe that the nit-pickers are those who in the face of the kind of impending crisis we face with fossil fuels and liquid hydrocarbons want to nit-pick about whether should have come ahead of South Indian Lake or vice-versa. Mr. Speaker, and the nit that they are picking for is so small that they will never pick that nit. So I say, sir, in conclusion that the year ahead will be difficult no doubt for every province in Canada. We believe that our budget represents a reasonable effort to respond and to be ready, an effort to be ready with an optional response capability depending on how the economy swings in western Canada and on the prairies later this year. Result of our efforts, there will be more redistribution of purchasing power, more just redistribution still of our wealth in a way which I have already referred to, my colleagues have referred to on many occasions in the past. All of this will guarantee a more equal distribution of the benefits of our economic wealth in the future and even further progress toward real social and economic equality. I once heard someone say that what we would wish for ourselves we desire for all Manitobans, in every part of our province. Those, Mr. Speaker, are in essence the words of the late J. S. Woodsworth, Manitoban, Winnipegger, Parliamentarian, Idealist, Humanitarian, all of these things, but also a man who gave us more understanding as to what civilization should ultimately strive to be, if it was worthy of the name civilization. You know, sir, mundane tax measures that redistribute wealth are about one tangible means of keeping that faith with those who taught us but who were ahead of their time. And probably scorned a little because ~hey were ahead of their time. These tax redistribution measures, the tax credits, a hundred million dollars worth, to take more account of the desire for more equality in the human condition are also a means of keeping faith with the present generation, in that there are practical ways of working toward a better world, a better world not because necessarily it is richer, that's not the test of betterment, but because we slowly develop more decent attitudes in material economic terms to keep pace with the lip service that we talk about in terms of spiritual equality, resulting ultimat3ly we hope in the elimination - not overnight, but every year a little more, relentlessly but steadily towards elimination of gross and therefore offensive inequality amongst ourselves. Thank you, Sir.