Province	Législature	Session	Type de discours	Date du discours	Locuteur	Fonction du locuteur	Parti politique
Manitoba	30e	4e	Discours sur le Budget	22 avril 1977	Saul Miller	Ministre des Finances	New Democratic Party of Manitoba

Thank you, Mr. Speaker. Mr. Speaker, today's Budget is the first that I have had the privilege of presenting to this Assembly. Although this year's Budget is a "first" for me, it is, in fact, the Ninth Budget which our New Democratic Government has put forward since we were first elected to office in 1969. During that time, the Finance Portfolio in Manitoba has been held by two other members who have served ably and with great competence. I am referring, of course, to the First Minister and to the Member for St. Johns. The sound financial footing on which our province finds itself today is a tribute to both of them.

Mr. Speaker, before I launch into my remarks I also wish to express my thanks and appreciation to the Deputy Minister of Finance, the Assistant Deputies and to the entire staff who have unstintingly given of their time in the evenings and over weekends to assist me in the preparation of today's Budget. The years since 1969 have been marked by major changes across the country - and by serious and divisive problems that could not fail to have an impact on every part of Canada. But, despite the difficulties we have faced, our government's budgets over the last eight years have presented a record of achievement which we believe is unequalled in the history of Manitoba. It is a record of which our government is extremely proud, it is a record on which we will continue to build.

Statistics show that under our New Democratic administration, the Manitoba economy has developed at a pace which has outstripped even the boldest forecasts of only a few years ago. And they also prove that the citizens of our province are sharing in the benefits of this new development in a way which has significantly enriched their daily lives. From the start, our government dedicated itself to new goals - people's goals - which will forever change the standards by which administrations in Manitoba are judged. We have sought growth - and we have attained it - but not at the kind of cost previous governments were prepared to accept. We have refused to sacrifice basic principles of equity and social justice, and we have refused to sacrifice the birthright of the people of this province.
 
The results show clearly that our stand has been right: Our natural resources are now being developed in the interests of Manitobans - not in the interests of a few, large, multi-national companies. They are no longer being sold out or given away, with almost no return to the citizens of this province who are the rightful owners.

	After years of decline, our vitally-important rural communities are being strengthened once again; they are no longer being told that they are redundant.
Our elderly people and others on low and fixed incomes can now look forward to a future in which their basic needs will be met - with dignity and much-deserved respect. They are no longer being ignored and shut out of the mainstream of life in our province.

After decades of neglect, our northern and native residents are finally being given a real voice in managing their own affairs, and they are being offered the support and the training necessary to assist them. They are no longer being denied even the most basic services other citizens of Manitoba have come to expect.

And across the province, the vast majority of people and their families now know that their needs and their priorities do count with a government which doesn't just say it represents them, but proves that it does represent them - in every policy and in every program. No longer can any government in this province argue that what is good for the privileged few and for the big corporations is, by definition, automatically good for all the people of Manitoba. It might have worked once, Mr. Speaker, but it won't work anymore.

As I said, Manitoba changed a great deal since 1969, and it has changed for the better. Under our government the total output of the provincial economy has more than doubled; the same is true of per capita personal income, before and after taxes. Total investment and private sector investment have increased by close to 100 percent; over 65,000 new jobs have been created - about 90 percent more than during an equivalent period under the former government; agricultural and mineral production values stand at near record levels, roughly twice as high as in 1969; manufacturing and retail sales have also increased by more than 100 percent; about 80,000 new housing units have been built or are under construction - nearly twice as many as under the previous government in its last years in office; and there are countless other examples.

Many members, Mr. Speaker, of the Assembly will recall a report called Targets for Economic Development. I believe it was 1968 or early 1969. While the TED Report was criticized on several grounds, it was nonetheless an interesting document - particularly when considered from our own perspective today. The fact is that the TED Report set a number of economic targets for Manitoba targets which it said were challenging but realistic. And I'm quoting, "To reach them, Manitoba's resources would have to be utilized with ambition, vigour and imagination." Well, I can advise the House that the important TED targets for the mid-1970's have been achieved. And some, including the target for per capita personal income, which the TED Report said was the most important of all, that has been exceeded by a substantial margin. And we are clearly "on target" for 1980 as well.

I will table the specific figures at the end of my address, Mr. Speaker, and commend them particularly to the members opposite who, when they were in government, set those targets as standards by which they wanted their performance to be judged.

But, Mr. Speaker, traditional economic indicators, while useful and necessary, don't tell the whole story about how well a government has served its citizens. We have not been content to look simply at growth statistics and broad averages and to conclude from them that all is well. Our mandate - the reason the people of Manitoba elected us to this office, was to bring a new approach to government. Our goal has been to serve the people of Manitoba - all the people not just a few. Our goal, Mr. Speaker, has been to ensure that every Manitoba family can look forward to a secure and fulfilling life in a province which enjoys all the advantages our country is capable of providing.

And we have gone a long way towards achieving these goals. In less than eight years, Mr. Speaker, we have been able to implement such things as premium-free health insurance; universal nursing home care; extensive children's day care services; a broad home care program; universal Pharmacare; a newly-launched dental care plan for children; the Office of Ombudsman; Legal Aid; far-reaching consumer protection legislation; criminal injuries compensation; a massive program of rental housing for elderly and lower-income people; new human rights measures; a guaranteed income for the elderly; a large-scale home repair assistance program; a substantial expansion of elementary, secondary, and higher education services; major new training and employment programs, particularly for northern and native residents; construction of vitally-needed infrastructure such as roads and sewage systems in rural and remote areas; public automobile insurance -I'm sure members will remember that.

MR. Miller: You remember it. I notice you've now bought it lock, stock and barrel. Reorganization of urban government in the City of Winnipeg and a large-scale increase in urban assistance through such measures as tax sharing and transit grants.

	MR. Miller: Yes, Bill 36. And all that flows with it. As I've said, a massive infusion of moneys to assist the urban areas; special job creation assistance for Manitoba's municipalities - that's through the Special Municipal Loan Fund; the expansion of cultural and recreational facilities throughout the province; and reform of our tax system, Mr. Speaker, making it, we believe, the most equitable in any Canadian province. And we have achieved all this - and more - within the spending limits which have kept our province's expenditures among the lowest in the country.

I want to deal with this point specifically. Comparable figures from Statistics Canada prove that of the ten provincial governments, Manitoba's per capita expenditures were the third lowest last year, and that our revenues were the third lowest as well. They also show that since 1969, when our government took office, Manitoba's expenditures have increased significantly less in percentage terms, than the average for all ten provinces. And the preliminary figures for this year appear just as favourable. Since 1969, our government has raised income taxes only once. That was over seven years ago - when the increase took the form of a tax shift designed to offset a major reduction in Medicare premiums, that old flat tax that they were so proud of on the other side. During the years which followed, we have implemented various types of personal tax reduction measures nearly every year, and we have maintained these reductions. They have not been one-time gimmicks. The basic sales tax remains unchanged at 5 percent - the same as it was when we came into office. Of the nine provinces, Mr. Speaker, which have sales taxes, our rate equals the lowest. One province has a 10 percent rate; several have 8 percent rates, and even two of the so-called "have" provinces, Ontario and British Columbia, have 7 percent sales tax rates. And both these provinces collect health insurance premiums as well.
These facts are often conveniently ignored by those who attempt to compare taxes from one province to another. A fair and complete comparison clearly shows that tax levels in Manitoba are in line with those of other provinces, and in many cases are appreciably lower. In fact, no province in Canada not a single province - has lower net personal taxes for average and moderate income families than Manitoba. Mr. Speaker, this has been demonstrated by independent tax studies, and our government is proud of it. By combining a fair taxation system with a responsible and sound system of overall financial management, our administration has been able to maintain public services in our province at a level which we believe is second to none in this country. And despite apparent attempts by some to discount our efforts, our government's record continues to be recognized internationally with the highest credit rating Manitoba has ever enjoyed under any administration in our history.

Having said this, however, I want to make it clear that we are under no illusion about the difficulties our province faces in the years ahead. Much of what we have achieved in the areas of equitable taxation and the expansion of vital public services could be wiped out at the stroke of a pen or be allowed to wither away under a government which may profess to support our programs but is not really committed to the principles of equity and social justice. And many of our economic development gains could also be lost through inaction under an administration which believed that even when people's livelihoods are being threatened, the only appropriate role for a provincial government is to grant tax concessions to the large corporations and then to stand aside and to do as little as possible, leaving it to the so-called market forces to do what they will.

Manitobans want a government which believes in the future of our province and in the fundamental right of every citizen to share the benefits which that future promises. And Manitoba must also have a government which is prepared to take direct and decisive action when it is required to overcome major economic problems - both to preserve the substantial gains our province has already made, and to guarantee the base that we have built will be strengthened and expanded.
Our record proves that we have been that kind of government. By whatever standards we may be judged - by those of the previous government, by those of other provinces, by those of the international investment community, by those which we have set for ourselves under the mandate entrusted to us by the people of Manitoba - we know we have accomplished a great deal. But despite the underlying strength of our economy, the year ahead promises to be a difficult one both here in Manitoba and across the nation, and as a matter of fact throughout the industrialized world. The problems confronting Canada will severely test every government, at every level. The challenges are extremely serious, particularly on the economic side, with growing unemployment and the continued threat of inflation. Unfortunately, the options available to any provincial government for dealing with these problems are quite limited.

	Mr. Speaker, before I proceed to outline the details of our 1977 Budget, I want to review briefly the context in which the Budget was prepared. In 1976, the Canadian economy recovered somewhat from the virtually "no growth" situation of the previous year of 1975. But as was expected, the recovery was sluggish and very uneven. And although inflation eased towards the end of the year, unemployment began to worsen dramatically.

Inevitably, the economic situation in Manitoba reflected the national trend. However, a number of favourable developments were recorded in our province and should be noted at this time. Our gross provincial product increased by about 14 percent to reach slightly over $7.9 billion. As I noted earlier, this is more than double the total output of the Manitoba economy in the year our government took office. Real growth in 1976 was approximately 4 percent a significant increase over the 1.4 percent estimated for the previous year.

Despite some difficulties in the agricultural and mining industries due to world market conditions, the annual value of primary resource production in Manitoba continued to exceed $1.5 billion in 1976 0 again, a level twice as high as was ever achieved before our government took office. Total investment last year reached $2 billion for the first time in our history, and the private sector component grew by 16 percent, exceeding the $1 billion mark, also for the first time in our history. The value of building permits issued in 1976 increased dramatically - by 46 percent over the previous year, to a total of around $433 million. Even with the influence of the anti-inflation program, total personal income increased by 13.6 percent last year, reaching approximately $6.5 billion.
On an after-tax basis, Mr. Speaker, that is, after all taxes have been taken into account, per capita incomes in Manitoba remained above the national average and, in fact, the differential widened in our favour. Before 1975, per capita after-tax income in Manitoba had not matched the Canadian average for fifteen years. We have now exceeded it two years in a row. Mr. Speaker, claims that Manitoba's taxes are out of line with those of other provinces are totally false.

Although inflation remained high by historic standards in 1976, the rate of increase in the Consumer Price Index declined substantially over the course of the year. By year-end, the rate stood at 6.2 percent, about half the rate of the peak months in 1976 and this, of course, reflected the national situation. Recent inter-city comparisons show that, despite the rapid increases of the last few years which have occurred both here and elsewhere, price levels in Winnipeg, and in the rest of the province, remained relatively low compared to those in many other parts of Canada.

Finally, turning to unemployment, Manitoba's average rate for 1976 - around 4.7 percent continued to be well below the national average of 7.1 percent. We retained our comparatively favourable position as the province with the third lowest level of unemployment in the country, and we continue to do so today. However, as the national unemployment rate began to increase in the latter part of last year, Manitoba's inevitably followed. We have been very disturbed by this trend, and by the failure of the Federal Government to adopt policies to deal adequately with it. And, Mr. Speaker, I will have more to say about this later.

A full set of economic statistics for 1976 and previous years will be included in the background material which will be distributed at the conclusion of my remarks.

Mr. Speaker, I now want to turn now to the outlook for the current year. We are already into the second quarter of 1977, and the severity of Canada's current economic problems is becoming increasingly obvious. Most forecasters are predicting a reduced rate of real growth for the national economy in 1977. Consumer prices across the nation are increasing once again, apparently in large part because of rising costs of imported food. The future of Canada's anti-inflation program remains uncertain. The Federal Government is proposing a major increase in oil and natural gas prices which, if implemented, will have a negative effect on virtually all sectors of the Canadian economy. And, most disturbing of all, unemployment across the country is at its highest level in recent history, and many forecasters have predicted that it will worsen in the months ahead if the government of Canada does not take action on a massive scale to create jobs.

Everyone of these national problems will have a direct bearing on Manitoba's own economic performance in 1977 and their impact could be compounded if weather conditions do not improve for our agricultural producers. In these circumstances, we had hoped that the recent Federal Budget the one in early April I think it was - would announce far-reaching new measures to deal with at least some of these problems - and especially with unemployment. But, along with most Canadians, we were extremely disappointed.

Instead of announcing large-scale direct employment programs, the Federal Government chose to rely instead on increasing tax incentives to large corporations and major investors - tax concessions whose job-creating value has never been proven, and isn't likely to be this time either. In light of that kind of negative federal policy response, our government has had to make some very difficult policy choices of our own. We had hoped to be able to consider measures to complement federal in initiatives designed to stimulate the economy. Now we are faced with what is essentially a "go it alone" situation. Ottawa is obviously not going to help. In fact, as I announced a few weeks ago, the Federal Budget has actually lessened the limited budgetary options available to us. We expect to lose close to $10 million in revenue as a result of some of the federal tax changes - a loss that will not be offset by the revenue guarantee arrangements which, very conveniently for the Federal Government, term inmate at the end of 1976.

Given this, it was small comfort for us to hear that the Federal Minister of Finance has apparently given assurances that if the current situation does not show signs of improving by the fall, the Federal Government may introduce some new measures to deal with it. Canada is losing billions of dollars in potential output and income as a result of unemployment. We simply cannot afford to wait for another five or six months for something to be done.

I intend to emphasize our government's concern about federal inaction in the strongest possible terms at a conference of Finance Ministers which is to be held in May. The primary purpose of that conference will be to discuss the future of the anti-inflation program and decontrol, but these subjects cannot be dealt with in isolation from other economic factors. There is a growing concern that at least a portion of our unemployment is a direct result of Ottawa's over-emphasis on the anti-inflation campaign. This did not have to happen. It should not be allowed to continue, Mr. Speaker. At the Finance Ministers' meeting, I will certainly press for a clear statement of federal intentions with respect to the future of the AIB, and I will advise the Federal Government that we believe the optimum deadline for an end to controls is no later than October.

On the subject of oil and gas pricing, Manitoba's position has been made very clear. We believe there is no justification whatsoever for a price increase at the present time. On the contrary, what is required now is a broad expansion of federal assistance to promote energy conservation programs along the lines of those programs now in place in two of the Atlantic Provinces. I am hopeful that we may see some progress in this regard after the next meeting of Energy Ministers in a few weeks. I know that some discussions have already taken place. In the interim, I will be announcing some measures today which, though limited, will serve to affirm our government's commitment to conservation and our willingness to work together with the Federal Government in a national effort to reduce our dependence on non-renewable energy resources.

Mr. Speaker, before describing our budgetary plans in detail, I want to review an extremely important aspect of our relations with the Government of Canada.
As most members of the Assembly are aware, a number of Federal, Provincial and Inter-provincial conferences were held throughout 1976 for the purpose of renegotiating the financial arrangements which support many of our key public services. These discussions have now concluded, and although certain technical issues remain to be resolved, I am in a position to provide a fairly specific report on their outcome and their implications for our province. Because of the complexity of some of the various arrangements, I have had a detailed paper prepared on the subject which will be distributed at the conclusion of my remarks.

It is sufficient to say here that the new "Established Programs Financing Arrangements" will involve the termination of the Income Tax Revenue Guarantee which had been in effect since 1972; the continuation of the provincial tax equalization formula, but with a number of modifications, including new limits on the equalization of natural resource revenues, as well as a change in the way school property taxes are equalized across the country; and the elimination of traditional cost sharing for Hospital Insurance, Medicare and post-secondary education and their replacement with a transfer of per capita cash payments and additional income tax responsibility. There will no longer be a direct relationship between provincial program costs and the amount of federal support.
Quite clearly, the Federal Government will no longer be an equal partner with the provinces in sharing of cost escalation associated with some of our most important national programs, or in sharing the expenditures required to make them more efficient over the long term.

Mr. Speaker, overall, we estimate that the new arrangements will mean a revenue shortfall to Manitoba of from $34 million to $70 million in the 1977-78 fiscal year. The lower figure of $34 million represents the certain, the certain shortfall relative to last year's Estimates caused by the termination of the revenue guarantee. The higher figure - $70 million - represents a loss of potential revenue which would have been received had the Federal Government not rescinded an earlier promise of full sharing for lower cost alternative health services such as nursing homes, had it not changed the way equalization is calculated for school property taxes, and had it not decided to effect a recovery of what it alleged were payment "overlaps" occasioned by the introduction of these new arrangements. A negative revenue impact of this magnitude, Mr. Speaker, cannot be overcome easily, and it has had a major influence on our budgetary planning for the 1977-78 fiscal year.

Members will recall that our Budget last year forecast a 1976-1977 current account deficit at that time of approximately $12.8 million. At the time, however, it was also noted that the deficit could be larger if the Government of Canada refused to agree to a fair compromise in respect of a plan it had just put forward at that time for a retroactive change in the way it calculated Income Tax Revenue Guarantee payments for the last three years of the program - that is 1974, 1975 and 1976. Unfortunately, the Federal Government refused to compromise, and the result for Manitoba was a further shortfall of $9.8 million from the amount shown in our Estimates last year.

On the expenditure side, Mr. Speaker, although additional amounts in excess of the Estimates were required for such unforeseen things as forest fires and flood costs last spring - perhaps we could do with some floods this year but that's not the case - and there were other unforeseen increases, growth in most departments was held down through special mid-year restraint measures.
The 1976 restraint reductions totalled approximately $20 million. They affected virtually all departments and lessened substantially the need for additional expenditure authority through special warrants. Because the province's books have just been closed for two days, I believe it was Wednesday, precise figures on our year-end position are not yet available, but it appears that the 1976-1977 deficit has been held to about $19 million, somewhat lower than we had anticipated in the absence of a fair compromise by the Federal Government on the revenue guarantee.

Mr. Speaker, several weeks ago, I tabled our government's Main Estimates of Current Expenditures for the fiscal year ending March 31st, 1978. As I pointed out at that time, our Main Estimates for 1977-1978 reflected a number of factors, including our continuing restraint efforts and the serious negative impact that the new Federal-Provincial financial arrangements were expected to have on our revenue position.

The rate of increase in the Main Estimates of 7.75 percent over last year's voted totals, was the second lowest of the provinces which have tabled their spending plans up to now. Of course, not all provinces have tabled their Estimates or have introduced their Budgets. Despite this relatively low growth rate, the Estimates provided for significant increases in support for a number of priority programs. During the year, our government will be monitoring departmental expenditures and trends very carefully, and if unforeseen pressures develop in some program areas, we are prepared to deal with the problem by reassigning staff and reallocating funds wherever practicable.

I have already referred, Mr. Speaker, to two major reductions in our available revenues for 19771978 arising out of the decision by the Federal Government. In addition, of course, there's the continuing system of income tax indexing which will cut the growth of our revenues from that source by a further $20 million this year.

These factors, coupled with the need to apply extreme caution in estimating other tax revenues in light of the possible drought conditions which I just mentioned, obviously this has placed major restrictions on our budget options for this fiscal year. These problems are not unique to Manitoba, of course. Most provinces are experiencing similar difficulties and this has been reflected in the budgetary decisions their governments have announced to date. A number of tax increases of one kind or another have been implemented in some provinces and, even in one of the wealthiest provinces, Mr. Speaker, Medicare premiums were raised effective April 1st.

I am happy to announce, however, today that there is no provision for a tax increase in my Budget. In fact, because of careful planning and restraint that was applied in preparing our Expenditure Estimates, it will be possible to implement a number of tax adjustments.

The first of these adjustments, Mr. Speaker, has already been announced - an increase in both the maximum and general minimum benefits under our Property Tax Credit Program. The maximum property tax credit for 1977 will be $375, up $25.00from the $350 available for 1976. A similar increase will bring the general minimum credit to $225.00. Eligible homeowners will have their realty tax bills reduced by this amount this spring or summer, depending on when they get their tax bill. About 210,000 homeowners will qualify for tax credits this year, and by far the majority of them - around 145,000 or 70 percent - will receive more than the minimum amount, qualifying for the benefits of up to $375 maximum when they file their 1977 income tax returns next spring.

Approximately 170,000 tenants will also qualify to receive the expanded tax credits when they file their 1977 income tax returns. This expansion of benefits, Mr. Speaker, will provide total school and general property tax relief of $98 million for the current year. This is more than then tire amount the former government spent on assistance to school divisions and municipalities in its last full year in office.

Now I know members opposite are on record as favouring the abolition of tax credits, but I also note that they have been silent on this question in very recent months. Our tax credit system is the fairest possible method available for providing property tax relief. It is the only system which takes income and family size into account, not only for homeowners, but also for tenants. No other form of property tax relief is more equitable, as long as this government is in office, we will maintain tax credits as one of the primary features of our budgetary structure. Despite the major property tax reductions which have been achieved through our tax credit program, some concerns continue to be expressed about particular pressures on some ratepayers.

Some senior citizens have indicated that even with the assistance through tax credits, their limited and often fixed incomes have not kept pace with living costs and realty taxes and have made it increasingly difficult for them to maintain their homes. Fortunately, this problem is far less widespread than it was before our tax credit plan was introduced, and according to the latest statistics, about 37 percent of pensioners have their property taxes entirely offset by the credits, while an additional 34 percent receive the maximum benefits available, which now stand at $375.00. But, to provide greater security, and to lessen the worries some of our senior citizens might face, our government proposes to introduce a new plan which will guarantee that no pensioner is required to give up his or her home because of rising realty taxes. The program will involve an optional system under which property tax payments can be deferred until such time as the residence ceases to be occupied by its owner or owners.

We are hopeful that municipal governments will co-operate with the province by administering this program at the local level. The Provincial Government will, of course, reimburse municipalities for the revenues which are not collected as a result of deferrals. Mr. Speaker, full details of the new plan will be announced in the very near future.

Every effort will be made, Mr. Speaker, every effort will be made to implement it in time for pensioners wishing to take advantage of it for their 1977 property taxes.

Mr. Speaker, I want to make it very clear, that I for one, do not believe that the problem is widespread, but where difficulties are being encountered, then this measure will help. Any who choose to enter a deferral plan will have their deferred taxes credited with the same reductions they would have received if they were paying taxes on a normal schedule, so that they will not be worse off, they will be far better off, and if indeed, they are concerned, if they are worried, whether those worries are real or imagined, they now know that there is an opportunity to take advantage of a program now available for the first time in Manitoba.

Mr. Speaker, earlier, I referred to the need for a national effort with federal support, to encourage conservation of scarce non-renewable energy resources. As an initial step and to indicate our government's readiness to co-operate in a national energy conservation program, and to dovetail with any program that they may, we hope that they will come into Manitoba with it, we propose to eliminate the provincial sales tax on insulation materials for use in residential construction of a non commercial nature. It is our hope, Mr. Speaker, that insulation dealers and contractors will not absorb the benefit of this exemption by raising their prices, but will pass it on in its entirety to their customers. I will be asking my colleague, the Minister responsible for Consumer Affairs, to monitor insulation prices in the next several months, and to advise me of his findings. The sales tax exemption for insulation materials will take effect at midnight tonight.

In addition, Mr. Speaker, a system will be introduced to eliminate property tax increases which might arise from the installation of equipment to utilize solar energy for home heating purposes. Although relatively few such installations have been made up to now, it is hoped that such equipment may become more common in the future. Despite the fact that a solar heating system can add to property assessment, at least it may add, we believe there should be no property tax charge imposed for what is essentially a conservation measure. For this reason, we will ask municipalities to keep the necessary records, and the province will reimburse them for not applying their mill rates against assessment increases in such cases. It is estimated that the combined cost of the sales tax exemption for insulation materials and the elimination of property tax for solar heating equipment will be approximately $300,000 in 1977-78.
To supplement these tax measure, Mr. Speaker, and to assist homeowners who would like to upgrade the insulation in their homes, but who have not done so because they lack the funds to finance the initial insulation costs, we are introducing a special provincial loan program under which up to $1,000 will be made available to those homeowners who wish to improve the insulation. The loan could be repayable over a 20 year period at a favourable interest rate which should keep the maximum monthly payments under $10.00 per month. The modest monthly costs mean, Mr. Speaker, that every homeowner in the province, regardless of financial position, will be able to upgrade insulation and to realize substantial savings on heating costs as he's doing it, at the same time. The program will be administered through Manitoba Hydro and, initially, will be offered to its customers as an expansion of a smaller-scale plan along the same line which it has been operating for some time. Winnipeg Hydro will also be offered the chance to set up a similar plan for its customers.

Mr. Speaker, in the Speech from the Throne at the start of this Session, reference was made to a detailed review of Succession Duty legislation. That review has now been completed, and it has confirmed, to our satisfaction, that the Succession Duty and Gift Tax Acts are equitable and consistent with original objectives. Members, I am sure will recall that Manitoba entered the succession duty field in 1972 after the Federal Government eliminated its estate tax. In that year, nine of the ten provinces were in the field, but, as is well known, a number subsequently withdrew – in some cases because the Federal Government decided to cease administering the provincial Succession Duty and Gift Tax legislation after 1974. Today, three provinces remain in the field, but two of the three, Ontario and Quebec, are Canada's largest provinces. So overall, about two-thirds of Canadians reside in provinces which still apply what we regard as one of the essential elements of an equitable tax structure. As was pointed out when succession duties were first introduced in Manitoba, various forms of inheritance taxes are common throughout virtually all western democracies. In fact, the Canadian Government is one of the few national governments which has abrogated its responsibility for ensuring that large-scale transfers of wealth do not take place without some form of fair contribution to the public as a whole.

The principle behind the tax is not difficult to explain. Why should people who do not earn but just inherit large sums pay no tax, while at the same time people who earn income, pay taxes at normal rates? But, of course, we will hear counter arguments. Some have suggested that the tax affects many people, others have argued that succession duties lead to a flight of capital. But statistics show that of those adults who die each year, only 2 percent, one out of fifty, leave estates which are subject to any succession duty. In fact, since 1972, the number of taxable estates has averaged well under 200 a year in Manitoba. Mr. Speaker, the statistics also show that by far the largest proportion of revenue is derived from the largest estates. The vast majorities of smaller estates are exempt or generate a minimal tax liability. Insofar as the "flight of capital" is concerned, it is true that some wealthy people have sought tax havens elsewhere, and that has always been the case. Retirement on a tropical island or the Bahamas, or the Cayman Islands, with no taxes, has always been an option for the few people who can afford it, and setting up complicated legal arrangements has sometimes worked in the past too - but not always.

The simple fact is that to get involved in the kind of tax competition which has been suggested to stop such manoeuvrings is really self-defeating. Even the former Premier of Manitoba, Walter Weir, acknowledged this in 1969 when he stated in a debate on estate tax rebates, and I quote: "I am not a believer in what I believe is almost false incentive for the location of capital in different jurisdictions in Canada as it exists now. . ."

	MR. Miller: I thought we were out of Question Period, Mr. Speaker. Our government fully agrees with this sentiment. We believe the Federal Government belongs in the estate tax field, we are prepared to vacate it if and when Ottawa recognizes its responsibility. In the interim, we believe the provincial Succession Duty Act should be maintained. At the same time, as we indicated when the review was started, the review has indicated that some changes should be made. The Succession Duty Act will be amended this session to recognize the partnership of spouses in the marriage relationship in line with changes to be reflected in forthcoming legislation dealing with family law. In order to achieve this, the share of the marital assets of the surviving spouse will be exempt from succession duty. This is in addition to the $250,000 exemption available in all such cases after tonight's budget.

Over and above this very substantial change in the inter-spousal transfer, we propose additional amendments to recognize the impact of inflation on both the value of assets and purchasing power. The preferred exemption which was previously increased in 1974 from $150,000 to $200,000, will be further increased to $250,000 This exemption will also be expanded to include additional exemptions for under-age dependent children. The floor below which no estate is taxable will be increased from the present $50,000 to $75,000. The collateral exemption will be increased from $25,000 to $35,000. At present the collateral category includes brothers and sisters of the deceased, as well as uncles, aunts and cousins.

But because of the closeness between many brothers and sisters the government feels that this special bond should be ' recognized. Therefore, a new exemption is being added as an extension of the collateral exemption. It increases the present exemption to $100,000 for siblings - brothers and sisters of the deceased. Siblings. Didn't I say siblings?

Mr. Speaker, further changes will also be made in the present exemptions for infirm dependants. Other details will be made known when the Bill is introduced. Although we have not found any evidence of people being forced to sell farms or businesses to pay the tax, we intend to extend the basic allowable deferral period substantially. As well, we continue to be prepared to review any situations where difficulties arise under the "hardship" provisions in the existing legislation which permit indefinite deferrals at interest not to exceed 5 percent. I might point out, such an application, to my knowledge, has never been received.

There will also be an increase in the exemptions under The Gift Tax Act. Exemptions for individual gifts for preferred beneficiaries other than spouses will be raised from $2,000 to $5,000. For spouses, it will become $6,000, after the family law changes are taken into account. The maximum total exemptions will be increased to $25,000. All the succession duty changes will be effective in respect of deaths occurring since midnight last night. In total, it is estimated that because tax is payable starting six months after death, these changes will reduce our revenues by approximately $2.5 million this year, and $4 million in the following year. This loss represents more than half our annual revenues from succession duties to date.

Earlier in my address, Mr. Speaker, I referred briefly to the fact that the new Federal Established Programs Financing Arrangement legislation provides for a transfer of greater income tax responsibility to the Provincial Governments. That's all provincial governments. In describing the transfer to the House of Commons, the Federal Minister of Finance stated: "This will come about through a reduction of federal tax in the expectation that the provinces will increase their taxes by an equivalent amount. The result is that the position of the taxpayer will be unchanged. . ."

On the surface, Mr. Speaker, the mechanics of this transfer seem complicated, but in fact, the arithmetic is quite straightforward. The provincial income tax rate is expressed as a percentage of basic federal tax. For Manitobans up to now, this has involved 142.5 percentage points of tax: 100 federal points and 42.5 provincial and municipal points. The transfer will involve 9.143 of federal points, but this figure is not just subtracted from one total and added to the other. The Federal Government requires, under the Federal-Provincial Tax Collection Agreements, that provincial rates must be expressed as percentages of the federal rate and that they be expressed in rounded percentages. In other words, not a percentage of taxable income, but a percentage of the federal basic rate.

By "rounding down," our converted rate will become 56 percentage points, which is equivalent to a rate of about 41.7 percentage points under the old system, compared to the present 42.5 points. This change is retroactive to January 1 and will mean a small amelioration in basic income tax for Manitoba taxpayers.
The official Opposition, which, for most of the years it was in government, applied the highest provincial personal income tax rate outside Quebec, have often claimed that our government's rate was the highest in Canada. I believe that after this year's conversion, and when other Budgets are known, that the figures will show that perhaps we rank about the third or fourth amongst the provinces, even though we don't have hundreds of millions of dollars in oil royalties, or medicare premiums, or the high sales tax rate that some other provinces use to buoy up their revenues.

In addition to this technical rate conversion, we also propose another income tax adjustment. For the last few years, a number of taxpayers have expressed concern about the fact that according to Revenue Canada tables used to calculate their income taxes, there are instances at very low levels of taxable income where there is zero federal tax, but some provincial tax payable. It has been explained in the House that this apparently anomalous situation arises because of a special federal reduction which does not affect the "basic" federal tax against which the province has to apply its rate under the tax collection agreement, the one I just referred to. For 1977, a new problem would arise because of the rate conversion I have just described. Without some adjustment, taxpayers with zero federal tax would have experienced an actual tax increase as a result of the transfer, and additional people would have faced this situation. We have decided to deal with this problem by eliminating the provincial income tax for those tax filers who pay no federal tax. Our Estimates indicate that this change will remove about 75,000 taxpayers from the provincial tax rolls in Manitoba. This measure is expected to reduce revenues by perhaps $2.7 million in income tax 1977-78. Neither of the adjustments I have announced tonight will affect the benefits payable under our two tax credit plans.

I have already referred to an increase in property tax credits for 1977, and of course, I am happy to say that the Cost of Living Tax Credit benefits will also increase this year because they are tied to the personal exemption levels which grow in line with the Consumer Price Index. For 1977, the maximum Cost of Living Tax Credit benefits for a family of four - the typical family of four I always refer to, the married tax filer claiming a spouse and two dependent children under sixteen - for that typical family the benefits would be $154.00, up from $142.00 for 1976. At a gross income level of $10,000, the benefits for this family will total $108.00 as compared with $91.00 last year. With this increase, Mr. Speaker, some 78 percent of all such families - all those with incomes totalling under $21 ,OOO-will be eligible for benefits, with the largest amounts, of course, accruing to lower and moderate income earners. Mr. speaker, this latest increase brings total Cost of Living Tax Credit benefits for 1977 to $28 million. This is an increase of $5 million or 21.7 percent over the estimated $23 million benefits in 1976. Over 400,000 Manitoba tax filers are expected to benefit this year. In total, the direct tax relief provided by our two tax credit plans for 1977, will be $126 million, an increase of $15.5 million or 14 percent over 1976. As a result of this budget, and combining all the measures, including tax credits and indexing of the provincial income tax base, Manitoba tax filers can expect to pay about $44 million less in provincial income taxes for 1977. Average savings for the typical family of four will amount to about $120.00, with the largest savings - approximately $215.00 over 1976 - available at the gross income level of $7,500 per year. Other typical savings are $154.00 at $20,000, $132.00 at $15,000 and $118.00 at $12,000.00.
In addition to providing tax relief, these measures should also have a positive impact on the economy as early as this summer. The property tax credit advances will, of course, be received through this year's municipal and school property tax statements, and the income tax adjustments should be reflected in payroll deductions starting in July.

Before leaving the subject of taxation, Mr. Speaker, I should advise members that the rate conversion I described earlier will require a similar conversion of the share of provincial personal income tax which is assigned to municipalities. As members are aware, in Manitoba, a certain number of points were assigned to municipalities, I believe in 1975. Up to now, the municipal share has been two points of personal income tax. In order to reflect this conversion, it will now become 2.2 points. Otherwise, they would be getting less. The municipal share of corporation income tax will remain unchanged at the one percentage point. For 1977, the unconditional parents to municipalities will total $21.4 million. This is roughly 22 percent higher than the $17.6 million provided for in last year's Eyvates, and close to 600 percent more than the unconditional grants paid to municipalities under the former government in its last full year in office. Mr. Speaker, because the final 1976 census count of municipal population is still unknown, the 1977 payments are preliminary and may be subject to some adjustment later, but as a general guideline, we will ensure that no municipality's mid-1977 payment is lower than its entitlement of a year ago.

Mr. Speaker, at the time I tabled the Main Estimates of Current Expenditures for the 1977-78 fiscal year, I indicated that certain items decided upon after the deadline, it was early in January, for inclusion in the main expenditure total would be covered by Supplementary Estimates.

	At the conclusion of my address today, I will be tabling Supplementary Estimates totalling $12.9 million. This amount breaks down as follows:

	About $7.5 million - I won't give you the dollars and cents - for additional education support announced earlier by my colleague, the Minister of Education. The Province's contributions toward public school financing for 1977 will therefore total $184 million, exclusive of property tax credits. This represents an increase of about $23 million over the 1976 contributions, and is one of the major reasons for property taxes being held down this year.
$3,650,000 for the Farm Income Assurance Plan in the Department of Agriculture; approximately $365,100 for the Department of Labour to finance the establishment of a Workplace and Safety Health Branch; and $,392,700 for additional projects under our cost-sharing arrangements with the Department of Regional Economic Expansion.

When these $12.9 million in supplementary expenditures are added to the $1,153.7 million Main Estimates that were tabled earlier in the Session, the total current account expenditures requirements for 1977/78 now become $1,166.6 million, an increase of about 8.9 percent over the total amounts voted for 1976-77. This percentage still leaves our expenditure growth, I believe, probably amongst the lowest - I believe this is the lowest in Canada, but certainly amongst the lowest which have presented their Estimates so far this year. On the revenue side, Mr. Speaker, the Estimates I will table indicate that the government is anticipating receipts of $1.158.0 million in 1977-78. So, if there were no further changes and nothing else anticipated there would be a current account deficit of $8.6 million at tend of the year. In effect, we would be close to a balanced Budget on Current Account.

Mr. Speaker, turning to capital, there is no question that the government's capital spending program will continue to play an important positive role in creating and maintaining employment in Manitoba in the coming months.
At the conclusion of address today, I will table Estimates of the capital requirements totalling $522.2million for 1977-78. This total is about $125 million more than the capital authority for 1976-77 fiscal year, but it is somewhat lower than the total for 1975-76.

A portion of our requirements, as usual, will come from Central Mortgage and Housing Corporation and other federal and shared-cost programs. This will result in public market borrowings of approximately $350 million. This year's Capital Estimates provide an allowance of: $421.2 million in "Schedule A" for such self-sustaining programs, including $278.8 million for Hydro, $64.1 million for the Manitoba Housing and Renewal Corporation, $42.5 million for the Manitoba Telephone System along with $100.9 million in "Schedule B" for direct government programs. I want to draw particular attention, Mr. Speaker, to two items in "Schedule B" which are somewhat different than usual. There is $3.5 million for University Centennial Projects and $4 3 million for major remedial structure repairs at Red River Community College.

Despite the uncertainties in international financial markets, Mr. Speaker, we anticipate no undue difficulty in securing the funds we require for our capital program. Our credit rating remains at "Double A," the best in our history. And if there was any doubt, Mr. Speaker, in this regard, I just this morning received a telex from the Union Bank of Switzerland congratulating us for the fact that the 80 million Swiss francs loan which was floated in Switzerland sold as well as it did, at5 V2 percent, fifteen year term at par. -(Interjection)- No, that was not Dr. Kasser's money. Mind you, not that I will turn his down. -(Interjections)

Our net direct debt - at about $424 per capita at March 31, 1976, the last time it was calculated formally - is not out of line with that of other provinces. Our debt charges are no larger, as a percent of current expenditures, than they were under the former government in the mid-1960s. And our net direct debt continues to represent a relatively small portion of our gross provincial product.

Mr. Speaker, in 1961, in one of his first Budget speeches, the then Premier and Provincial Treasurer, the Honourable Duff Roblin stated, and I quote: "We have been criticized that we have allowed the public debt to increase. After the circumstances of the past I regard this as a completely necessary development. It has become both popular in some circles to argue that a balanced budget on both Capital and Current Account is the sine qua non of government finance, the best of all possible worlds. For a mature economy, that view might have weight. But Manitoba's is not a mature economy. The public debt, or indeed investment, as it really is, has grown. I can only wish that it had grown sooner so that our people might have enjoyed sooner the fruits of that investment." Mr. Speaker, I commend this statement particularly to the members opposite. They seem to have forgotten - I am not talking to the Member for Sturgeon Creek, I know he wasn't here-I am talking particularly to those members who were here. They seem to have forgotten some important facts they once apparently understood very well.
Now, Mr. Speaker, at this point I could have sat down. Our government could have left the Budget just as it is, just as it stands, and we could have claimed credit for having produced virtually a balanced budget on Current Account for fiscal 1977-78, without raising taxes - and in spite of cutbacks in federal assistance. But with a national jobless total of well over 900,000 for March, and with the Federal Government refusing to take immediate action to deal with what is quite clearly, a national emergency, we feel it would be the height of irresponsibility not to do everything we can, within the limited capacity of our Provincial Government, to protect the Manitoba economy from the worst effects of unemployment.

Enormous human and economic costs are involved. Unemployment is cruel and demeaning to able-bodied men and women who want to work, who seek work, and of course to their families. The massive unemployment we have in Canada today also means a drastic loss of output and income to the entire economy including every person who has a job, he too is affected. The effects of unemployment may not be as visible to people as inflation, but they are every bit as threatening and every bit as damaging to real incomes, to everyone's real income. Unlike some other governments, we do not feel unemployment is a secondary problem or a secondary priority. And unlike some other governments, we do not feel efforts to create jobs should be set aside as being potentially inflationary. There is nothing inflationary about putting people to work especially with the national economy operating at 20 percent under capacity.

Our government believes immediate action is essential. For this reason, Mr. Speaker, we have decided to introduce a large and wide-ranging, multi-pronged program of new direct job creation measures which will take effect within a matter of weeks. Mr. Speaker, full details of the program will be announced in about ten days when further supplementary estimates will be tabled. Mr. Speaker, by the end of the summer, we expect that the Federal Government will have realized the urgency of implementing special national programs similar to ours. That is why the target time frame for special new job creation program is a relatively short one - from mid-May through mid-September. And at that time, in the late summer or early fall, and in the light of whatever action Ottawa has announced by then, we will reassess the situation in Manitoba to determine the kind of follow-up steps that may be required for the winter months. 
	
Mr. Speaker, you know the Member for Fort Garry likes to be very cynical and I suppose if he were in office, that is what he would be, very cynical. But I have come to expect this.

Mr. Speaker, in many ways the process of formulating a Budget is one of the most critical tests confronting any government. A budget requires hard decisions, backed up by direct action. Its results can be seen and measured. Rhetoric, no matter how forceful, will not cover up its failings.
In preparing this Budget for 1977, Mr. Speaker, our government has been put to just such a test, and our response is now before the House. It is a reasonable budget which will make it possible for us to ensure and to introduce a large-scale special program to create jobs.
	
We looked to Ottawa for leadership and assistance, but it was not forthcoming. In fact, the Federal Government cut down its support to the provinces and turned its back on the unemployed.

So, Mr. Speaker, with limited options and limited resources, we have had to go it alone. By putting Manitobans to work, this Budget, and the measures which will follow, will bring benefit, directly and indirectly, to individuals and businesses in every region. It will increase incomes and output and help secure our economic base for future gains.

Mr. Speaker, this is a people's budget, by a people's government. It is an honest budget, without gimmicks or giveaways. It will get the job done, Mr. Speaker.