Province	Législature	Session	Type de discours	Date du discours	Locuteur	Fonction du locuteur	Parti politique
Manitoba	31e	4e	Discours sur le Budget	13 mai 1980	Donald Craik	Ministre des Finances	Progressive Conservative Party of Manitoba


Mr Speaker, before addressing this Motion I want to first of all pay tribute and thanks to the great numbers of people who have spent a large portion of their time and their efforts to the preparation of the remarks and the policy development, which I want to talk about tonight.

Mr. Speaker, some six months ago at a special First Ministers' Conference on energy policy, the Premier of our province concluded his opening remarks with a statement about the future of Canada which was timely then - on the eve of a new decade - but which is perhaps even more timely now. He stated and I quote:
Our nation is unique in the industrialized western world - we have the potential to be self-sufficient in energy. But, we sometimes lose sight of this and become preoccupied with our problems, forgetting the potential that is ours.

We have the time to develop long-term solutions to serious problems. We have the chance to realize at least the opportunities that were predicted for our country a century ago, and I believe we have the spirit and the will. But, we can succeed only if we face up to reality now, and take the hard decisions, and make the adjustments which are imperative to ensure our self-sufficiency and our economic well-being.

Mr. Speaker, that statement was made in the context of a discussion of national energy matters, but it was and remains an accurate and forthright assessment, both of our country's overall development prospects, and of our here in Manitoba, for there is no province in Canada, none, that offers its citizens more solid, long-term opportunities than we enjoy in Manitoba today.

We are on the threshold of a period of potentially unparalleled achievement, and unlike certain other jurisdictions, we have already made some of the most critical adjustments necessary to ensure it.

After two years of consolidation and transition, we can once again take pride in an economic and budgetary base, which is sound and secure and which will support the kind of concentrated, cooperative effort all sectors of our economy must make to ensure success in realizing the prosperity our heritage offers to us and to future generations of Manitobans.

This Budget, the third it has been my privilege to present on behalf of our Progressive Conservative Government, will sustain our recovery and the important economic and fiscal gains of the last two years, and it will address the major immediate and longer-term challenges facing our economy in a realistic and positive way.

In my last Budget a year ago I stressed our government's determination to do all we can to make the 1980s a decade of recovery and stability, a decade of opportunity and of promise for the people of Manitoba. This year's Budget will play an important part in the attainment of these goals.

It will prove the value of fiscal responsibility and accountability by making possible far-reaching improvements in social and economic programs; improvements which simply could not have been made if the runaway deficit we inherited from our predecessors had not been dealt with in a decisive way.

Second, it will provide welcome new protection against inflation, particularly for families with children and for the elderly - those who are most in need of additional assistance.
It will carryon the process of tax reduction and tax reform we initiated in our first days in office, and

It will continue the sound financial management policies and procedures which are so essential for ensuring confidence in our economy, and thereby for expanding further the wide range of productive new investments and permanent job opportunities which have highlighted the rebuilding process of the last two years, and ultimately for ensuring a steady rate of growth in the standard of living of our citizens.

Finally, it will show that this is a government which is acutely sensitive to Manitoba's underlying economic and demographic trends, a government that is building not only for this year, but for the decades to come.

Mr. Speaker, at the same time it is important to acknowledge what all of us in this House recognize to be true, that this Budget is being presented against a background of political and economic circumstances, which may well be the most ominous yet to confront Canada and the rest of the free world in the second half of this century. In the coming months we will be witness to watershed events in the histories of our Confederation and of the community of nations - events whose outcomes will far outweigh in significance this or any other Budget. We
can only hope the benefits we so often take for granted, but for which out forefathers sacrificed so much to pass on to us and to our children, will not be lost to the blind ambitions of demagogues.

But important as they are we cannot allow ourselves to become unduly preoccupied with events over which we have virtually no control. We have major responsibilities here and it is essential that we get on with the job.

On the economic side, the job of revitalizing our economic base is under way.
Over the past two year the Manitoba economy, with relatively few exceptions, has demonstrated renewed strength across the broad spectrum of our most important industries with the private sector reassuming its traditional leadership role, a role which, in cooperation with government, is imperative for the optimum effectiveness of our economic system and for the long-term growth of this province. No where has the rekindling of private sector confidence been more apparent or more important than in mining and manufacturing, two of our strongest growing sectors in 1979.

As the Minister responsible for mineral resource development, I am gratified by the resurgence in virtually all aspects of mining activity in the province during the last year. Although world market conditions have played a significant part, industry leaders themselves have emphasized repeatedly that the new investment climate in our province, including the taxation reforms introduced in our last Budget, have been key determinants of their decisions to make Manitoba once again a focal point for mineral exploration and development, instead of a jurisdiction to be avoided.

The members are no doubt familiar with the key statistics of the performance of the mining industry in 1979, but for the record I will repeat them here:
Following a year of decline in 1978, the value of mineral output recovered last year by over 28 percent to a total of 600 million, the largest in Manitoba's history.

Some 14 million were expended on new exploration and development and a substantially higher total is planned for 1980. Mr. Speaker, I think perhaps the most important comment that can be made in this regard is the following one:
Exploration investment now stands in constant dollars at the highest level in Manitoba's history.

Major new long-term investment commitments were made by Inco, Hudson Bay Mining and Smelting Co., and Tantalum Mining Corporation of Canada during the year.
As members will see when our preliminary 1979-80 year-end statement is completed in a few weeks, a significant increase was also recorded in the direct contribution by the mining sector to the costs of public services in our province.

In recent weeks, attention has also been drawn to a number of promising new prospects - first, involving a potential major potash development, and secondly, in a joint venture agreement further securing the future of the mining industry in the Flin Flon area, and developments in our largest sector, manufacturing, have been no less encouraging.

Following a period of serious slack which culminated in 1977, with only 3 percent growth in the value of shipments and a drop-off of some 6,000 or 10 percent in manufacturing employment, there has been a dramatic rebound. Shipments have increased 39 percent in the two years since 1977, with 20.2 percent growth last year alone, well above the national average. Manufacturing employment also recovered to an average of 63,000 jobs in 1979, up 9,000 over the 1977 low point.

Perhaps most encouraging of all, given current interest rates, is the fact that manufacturing investment estimates for 1979 and 1980, in aggregate, indicate an increase of nearly 60 percent in 2 years, again well above the national average, and the expansion of productive capacity is taking place in a reasonably balanced way across the entire sector, it is not confined to a few firms or a few industries.

A few days ago the Minister of Economic Development outlined the government's strategy for insuring continued expansion of the manufacturing sector throughout the 1980s, a strategy which was worked out in close consultation with industry, and which has their endorsement. An important part of the province's efforts will be focused through the Enterprise Manitoba Program.

But as I said earlier, manufacturing and mining are just two examples of the success Manitobans have achieved in rebuilding our economic base. At the conclusion of this Address I will table a review of recent major economic statistics which will provide further evidence of the breadth of the recovery which has taken place since 1977, and I can run down through these, Mr. Speaker:
24,000 new jobs in two years, including 13,000 last year alone, all of them in the private sector and so on.

A drop of over a full percentage point in the unemployment rate between 1978 and 1979, from 6.5 to 5.4. Renewed and steady expansion in total output from near zero real growth in 1977 to just under 3 percent in 1978 and close to 2 percent in 1979.

The latest estimate of the value of our gross provincial product in current dollars for 1979 is 10.5 billion, an increase of some 11.6 percent over 1978, the best performance, Mr. Speaker, for three years.

Personal income growth was about 10 percent to 8.5 billion. Continued strength in agriculture despite a number of weather, marketing and transportation problems, and so on, Mr. Speaker.

In 1979 the tourist industry had its best growth year in the 1970s, recording total expenditures of approximately 374 million, up 9 percent over 1978 and to repeat again, the best increase of all of the 1970s.

Following the largest percentage increase of any province in 1978, private investment continued to grow last year to over 1.4 billion, for a two-year increase of about 25 percent, and preliminary intentions for 1980 indicate that Manitoba will be one of only a few provinces where the percentage increase in private investment this year is expected to be larger than last year.

Mr. Speaker, for some time we have been forecasting that real growth in the Manitoba economy this year will be in the 2 percent range, close to our estimate for 1979.

Mr. Speaker, during the recent Federal Election campaign I heard the now Prime Minister refer to Canada's real growth rate as being 12 percent. It told a lot about the hands by which our country is controlled, Mr. Speaker, when that was stated, that for all these years you were expecting somebody to know the difference between real growth rate and inflationary growth rate, we suddenly discovered that there was something wanting. In contrast to the decline to near zero growth expected in the national average, we are now looking at a roughly 2 percent in 1980, which it was roughly in 1979.

Recent private forecasts support our projection and suggest that Manitoba's real growth in 1980 will be not only above the national average, but also the third highest in the country, ahead of all provinces, Mr. Speaker, with the exception of Alberta and Saskatchewan. In that regard I'd refer you to the economic tables, to one table in particular that tells it all at a glance. This is encouraging news, I am sure, for all members of this House and for every Manitoban. Mr. Speaker, it reflects the diversity and renewed strength of our economy and demonstrates the plain fact that despite the doom and gloom
predictions of the members opposite, primarily the Member for Brandon East, and given a fair chance, Manitoba and Manitobans will thrive and develop and over time Manitobans will enjoy a standard quality of living above the rest of this continent.

However, the fact that our economy is expected to show greater strength than those of most other provinces in 1980 should not be any cause for complacency. A protracted slowdown in the national economy would inevitably affect Manitoba in a major way and undercut our recovery efforts.

Unfortunately, in the face of some bleak forecasts for the international and national economies for the balance of this year, as well as some increasingly pessimistic signs for 1981, the newly-elected federal government has shown little apparent interest in addressing our most fundamental problems including excessive government expenditure growth and the unacceptably high federal deficit.

It's been over two years since Canada has had a Budget which has received the approval of Parliament. We believe it's essential that a full-scale Budget be introduced at the earliest opportunity in the interests of Canada. We believe it is also essential for the government of Canada to reaffirm its commitment to the process of federal/provincial consultation on economic and fiscal policy.

At the Conference in Lethbridge in April, the four western Premiers set out six major proposals as a basis for joint federal/provincial action to develop an effective national economic strategy, a strategy whose key objectives would include the reduction of current unacceptable interest rates.

I am sure that two of the recommendations must have been particularly interesting to the likes of the members opposite.

First, the Premiers agreed unanimously that A realistic energy pricing policy is a key to achieving Canadian energy self-sufficiency. And more specifically, their communique stated: Canadian energy prices must rise to reduce the disparity between domestic and international prices. Now that is not a self-interest western position. Self-sufficiency is an essential requirement in the national interest. Those who would argue that a price increase can be avoided are deluding only themselves and furthermore, selling Canada and Canadians short of an obtainable target of self-sufficiency.

It is interesting to note that from the heartland of industrial Ontario, the organization best representing the manufacturing sector has stated unequivocally that the best interests of the economy would be served by a self-sufficiency Canadian oil pricing policy.

As far as the position of our government is concerned, actions speak louder than words. We can and will point with satisfaction to the Hydro rate freeze as a clear demonstration of what this government stands for on energy pricing issues in which it has full domain. Mr. Speaker, that decision taken last year was also based on the principle of energy self-sufficiency as applied to electrical energy.

Mr. Speaker, we would be less than honest if we tried to tell the people of Manitoba that we thought Canada could be self-sufficient in oil and Manitoba secure in supplies at present domestic pricing levels. We still have to absorb price increases, but we remain confident self-sufficiency can be attained at prices below world levels.

At the Lethbridge Conference, the Premiers of all four provinces also stated, and again I quote: An essential part of developing a national economic strategy requires the federal government to reduce the size of its budgetary deficit and ultimately to balance its budget over the economic cycle.

Their statement went on to note that large-scale, viable capital projects could help offset any short-term adverse effects caused by reduction of the federal deficit.

Our government stands ready to co-operate fully with the federal government in implementing a medium-term national strategy which would encompass the recommendations of the four western provinces and which would address itself to other key challenges for the years ahead.

Mr. Speaker, I want to speak to the fiscal period through 1979-80. My colleagues and I take pride in the resurgence in economic activity which has occurred in our province in the last two years, but I believe it is fair to say that our greatest sense of accomplishment results from our success in restoring the principles of fiscal responsibility and accountability in the government of Manitoba.

In my first budget I set out four specific fiscal policy objectives:

First - A reduction in the public sector's share of gross provincial product over time to lessen the government's demands on the economy;

Second - Greater efficiency in government programming to insure that improved and expanded services can be provided for those who require them;

Third - rationalization of taxation measures to simplify our tax structure and make it more competitive, and

Fourth - improved financial reporting to insure that the citizens of Manitoba have up-to-date factual and understandable information about the government's budgetary position.

Mr. Speaker, every one of these objectives has been achieved. Despite the increased expenditures associated with such measures as the new Hydro Rate Stablization Program, the major reduction in the provincial government's share of our total output, which I announced last year, has been largely maintained. Provincial expenditures as a percent of gross provincial product remain close to 17-1/2 percent in 1979-80, compared to record high percentage of 19 percent only two years ago.

Provincial government employment has been reduced significantly without perceptible disruption in government services. This has been made possible by two primary factors: First, improved management, guided by accountability principle and, second, and equally important, a significant boost in morale. The natural result of a sense of direction and purpose, and the understanding that merit, not political philosophy, has been restored as the basis for advancement in our civil service.

MR. CRAIK: Mr. Speaker, I was going to repeat that but we hold it for a later date.

These figures also reflect our efforts to update and streamline programming and our recognition that there are limits on what provincial governments, indeed governments at all levels, can do effectively, and should attempt to do with the hard-earned tax dollars entrusted to them.

The improvements in our financial reporting system are already well known, and it is gratifying that a number of the innovations we have introduced in Manitoba are now being considered for adoption in other jurisdictions. We have regular training courses, Mr. Speaker, for the legions that are coming through from other jurisdictions at the present time, to now consult with us on this turn around.

It is interesting that over the last two years, our system of issuing quarterly financial statements has now become accepted routine and it's almost taken for granted. I should remind members that before this government took office, this Assembly sometimes had to wait as much as a year after the close of a fiscal year, and two years after the initial estimates were tabled to get even a partial accounting of the province's financial position for that year. An accounting, Mr. Speaker, which I must add, the Provincial Auditor, on occasion, refused to endorse.

Now, however, the people of Manitoba are receiving up-to-date and accurate information at three-month intervals during the year, and as we become more experienced with the new system, we intend to make further improvements.
I am pleased to note that up to now, our new financial information system has had a great deal of good news to report. Members will recall that when we took office, the initial projections we received indicated a potential 1977-78 deficit of at least 225.1 million and 110 million more if uncommitted projects happened to be included. By the end of the year the situation had improved somewhat, but the deficit still stood at an unacceptable record level of 191.3 million, excluding sinking fund payments and the improvement only occurred because we invoked very severe measures of control, which first stopped the huge 'hemorrhage of taxpayers' dollars, and secondly, gradually reversed the worst plunge into financial imprudence ever witnessed in this province. That legacy of financial irresponsibility has been reversed in two and-a-half-years, but it remains a clarion example, Mr. Speaker, a clarion example to taxpayers here and elsewhere of the damage that can be inflicted on a province and its people by a government unrestrained by accountability and uninstructed in the constant need for prudence in the use of its taxpayers' dollars.

By the end of 1978-79, our first full year in office, the deficit had been reduced by approximately 56 percent to 84.3 million.

I wish to announce this evening that in 1979-80, the deficit has been cut by almost half once again, to just under 45 million, according to the preliminary unaudited figures that are now available.

The primary reason for the reduction during the year was a series of revenue improvements, particularly equalization adjustments. Details of the year-end results for 1979-80 will become available when the preliminary unaudited statement is completed in a few weeks' time.

Mr. Speaker, the unaudited statements always come out early and the audited ones are always out six months ahead of the time they were ever out before.

Mr. Speaker, for the cost of the Hydro rate freeze, which cost in the last fiscal year 37 million, the Budget of the last fiscal year would be virtually balanced, even on the new combined accounts basis. Under the old accounting system which was followed in this province until we took office, our Budget has been in balance for the last two years.

Mr. Speaker, the deficit which shows in our books is in fact entirely for capital investment, for acquisition and construction of physical assets, and fortuitously we have been able to avoid borrowing in the high interest rate bond markets for the last year.

In summary, in our first two full years in office, the deficit we inherited from the previous government has been reduced by more than three-quarters, to be exact, 76.5 percent.

The lifting of a burden of this magnitude from the shoulders of the taxpayers of our province may well be the single most important contribution any government could hope to make to the economic development of Manitoba in this decade or beyond.

Mr. Speaker, our government's first priority, our most urgent priority, has now been met and the budgetary Improvements we are able to introduce this year, and those which will follow in years to come, will be a direct result of our government's determination over the last two years to restore a secure financial base in this province.

Mr. Speaker, I want to refer to the Main Expenditures Estimates of 1980-81, current year.

Early in this Session, the government presented its Main Estimates of Expenditure for the 1980-81 fiscal year. Those estimates totalled approximately 1.99 billion, or an increase of 9.86 percent over the estimates for the previous year. Since those Estimates were tabled, members have been advised that the total will be increased to provide for a major expansion of property tax credit benefits this summer. Later in my address, I will discuss further tax credit reforms and additional supplementary expenditure requirements.

I can state, however, that even with the supplementary authority being requested as of tonight, our province's actual expenditure growth by the end of the current year is expected to remain in the 9 to 10 percent range.

We feel this is an appropriate rate of growth at this time. It permits the dedication of additional financial resources to key priorities without placing unduly heavy pressures on our bottom line position. At the same time, it is consistent with the general spending growth guidelines which the federal government and all ten provinces agreed to at the First Ministers' Conferences in February and November of 1978. We believe that it is essential for all governments at all levels to continue to observe those guidelines, particularly when the economy is facing growing inflationary pressures.

We remain convinced and we feel the Main Estimates offer plenty of evidence that sound financial management and responsible fiscal policy are keys to genuine program improvement.

I will just touch on some of the highlights tonight, Mr. Speaker. They are contained in detail in the Budget Address which is being distributed.

First of all, there was 65 million or a 12.5 percent increase in the Health field. There were significant improvements in economic development programming in support for municipal services, and there was a 29.5 million addition for the Department of Education. In total, the main estimate provisions, and new measures to be announced tonight, will increase public school finance assistance by 18 percent on a per pupil basis this year.

On the revenue side, I want to turn now to those estimates for 1980-81.
Throughout the past year, our government has continued to examine ways and means for improving the overall revenue-raising system in place in the province. A process of continual review is essential to make our tax structure more competitive with those of other provinces and also to ensure that it is fully consistent with our budgetary objectives.

Since taking office, we have been able to implement a number of changes to assure Manitoba taxpayers significant continuing reductions in their taxation levels, while preserving a satisfactory base for financing program improvements.

Among our more important permanent initiatives have been, first of all:

The 2-point reduction in the personal income tax and termination of the personal income tax surtax imposed by the members opposite. These measures have returned the personal income tax rate borne by individual Manitobans closer to the mainstream among the provinces.

Then the elimination of succession duties and gift taxes. A measure which as been of particular benefit to farmers and small business operators.
Reductions for small business in the corporation income tax rate and in the corporate capital tax through increased exemptions measures which have improved the overall competitive position of these important contributors to the Manitoba economy.

Major reforms in resource taxation which are proving to be extremely effective in encouraging rather than inhibiting new activity in this vital sector.
A wide range of new exemptions under the provincial sales tax for insulation materials, children's clothing and so on.

The elimination of a number of nuisance taxes including the Mineral Acreage Tax and the Mining Royalty and Tax Act applicable to small quarry operators and so on.
It is estimated that in 1980-81, the value of the potential revenue foregone through these measures amounts to at least 36 million. And, Mr. Speaker, if you take the cumulative tax revenues over the last three Budgets that have been foregone in this regard to leave the tax money in the taxpayers pocket including the sales tax reduction in 1978, this total would come now to roughly 160 million.

This year, we are proposing a number of additional modifications to provincial taxes, both to supplement revenues and to continue the process of needed reform. First of all, gasoline and motive fuel taxes.

Traditionally, provinces have applied volumetric tax rates to liquid fuels of a certain number of cents per gallon or, more recently, per litre. As a result, unlike the provincial sales tax, the yield in these taxes, in real terms, deteriorates markedly over time. For example, the Manitoba gasoline tax in 1972 represented a rate of approximately 48 percent of the average sale price prior to the application of the tax. However, today, as a result of petroleum price increases and other factors, the tax represents about 20 percent of the retail selling price of gasoline before the tax is applied.

Unfortunately, however, as members recognize, the province is faced with the task of finding revenues sufficient to meet increased costs related in part to these petroleum price increases. These increased costs are reflected in the price not only of gasoline itself, but also of certain petroleum-related products, including asphalt, as well as in general transportation costs and ultimately in the costs of, government purchases.

While there has never been an attempt by governments in Manitoba to equate fuel taxes precisely to the costs of operating our highway system, it is noteworthy that at the present time, these taxes would cover less than half the budget of the Department of Highways and Transportation.

Earlier this year, the governments of Prince Edward Island and Quebec decided to take action to protect the real value of their fuel taxes by converting their taxes to percentage or ad valorem rates. As well, in the federal government's April 21 policy announcements, the regular federal sales taxes on gasoline and motive fuels were converted from literage rates to a general 9 percent rate on the sale value of products.

In our view, it is essential to deal with the erosion of the provincial share of these taxes at this time.
We therefore intend to convert both our gasoline and motive fuel taxes to a 20 percent rate. The preferential rates applicable to off-highway use and railways will be converted to 15 percent. The rates applicable to aviation gas and turbo gas will be converted to 10 percent and the present rate of tax on heating fuels used for purposes other than a domestic dwelling will be converted from the present 1/2 cent per litre to 5 percent of the purchase price. This latter change also assures that the taxation on heating fuels other than for domestic dwellings will be subject to the same 5 percent tax rate as is applied to electricity, natural gas and coal, etc., under The Revenue Act of 1964. These changes will not impact in any way the heating costs for domestic dwellings. All residential accommodation will continue free of any tax on heating.

To protect current provincial gasoline and motive fuel tax revenues, the literage rates currently in effect will be maintained as a floor until the percentage levies require them to be increased.

To facilitate retention of the current tax collection procedures and to assure equitable application, the percentage rate of tax will be assessed on a uniform basis across the province. More specifically, it will be based on the average price of gasoline and diesel fuels in Winnipeg. The resulting tax will be converted to cents per litre and those rates will be applied uniformly throughout the province. The litre rates of gasoline and motive fuel tax will be the same, for instance, in northern Manitoba as in the south, since the rates of tax will be based on the prices as determined in the Winnipeg area.

To complement our general energy conservation efforts, the government has decided to encourage the use of gasohol as a fuel for automobiles. Members will be pleased to know that interest has been expressed in converting existing facilities for the production of gasohol, and certain gasoline distributors have expressed interest in marketing this product. However, at existing gasohol production costs the resultant gasohol blend of at least 10 percent alcohol is not competitive with gasoline. In our view, the production of gasohol can make a significant contribution to reducing Canada's overall reliance on non-renewable energy resources and more particularly, reducing our imported oil requirements and improving the national balance of payments in the long run.

Accordingly, in recognition of the currently higher costs entailed in producing gasohol and to provide an incentive for its production, our government proposes to exempt gasohol produced from Canadian-made alcohol from all gasoline taxation. This is intended as an immediate incentive to encourage gasohol production. This incentive will of course be reviewed in subsequent years as gasoline prices rise and production of gasohol becomes more cost competitive with gasoline.

In proposing this measure, it is our intention to ask the Federal Government to re-examine its sales tax on gasohol to complement the Manitoba incentive. As well, in light of the fact that the Federal Government is providing a direct subsidy on imported oil supplies and non-conventional petroleum production to bring the retail price of such products down to a level competitive with the administered domestic price, we will be pursuing discussions with the Federal Energy Minister with a view to having those important national benefits extended to the production of domestic gasohol.

Mr. Speaker, I don't want to under-rate the potential on this, out of the whole western region, west central region of Canada, the best potential area for production of gasohol is Manitoba, and I am sure that if we can see other provinces making moves such as this, we can see an industry based here and in the long-run presenting a very viable economic undertaking for this part of central Western Canada.

All these changes under The Gasoline and Motive Fuel Tax Acts are effective midnight, May 31st.

Members will be interested to know the full Implications of these important changes in provincial gasoline and motive fuel tax policy. At the outset, Manitoba's fuel tax rate will remain at levels below those In effect in Ontario and our revenue will not be affected significantly. However, as national non renewable energy prices rise, the province will retain its percentage share of revenues from that source.

Of course, if increased prices have a positive conservation effect, we could, over time, realize reduced revenues from fuel consumption taxes. In many ways, this would be desirable. Canada's per capita energy consumption is virtually the highest of all the OECD countries and our use of petroleum products continues to escalate at a rate which is completely inconsistent with a rational energy policy.

Mr. Speaker, I should also mention at this time that one other province has at this time moved to place a differential sales tax rate on automobiles, having a higher rate on the higher gas consumption automobiles and a lower rate on those with a lower gas consumption rate. That sort of differential tax rate is a very effective incentive to encouraging people to go to more efficient automobiles, but given the current problems in the Canadian automotive industry, it is not a very good time to be looking at that sort of a differential tax rate or a tax incentive, but It is one that ought to be looked at in another year when conditions stabilize.

Mr. Speaker, on tobacco taxes - at present, Manitoba's tobacco tax of 25 cents per package of 25 cigarettes is 5 cents per package lower than the rates applied in Saskatchewan, Ontario and Quebec. Our government proposes to align the Manitoba tax with those provinces by increasing the rate by 1/5th of 1 cent per cigarette. That takes the rate from 1 cent to 1-1/5th cents per cigarette, and that is for the Member for Seven Oaks. This change, which will be effective midnight, May 31st, will produce revenues of approximately 4.4 million in 1980-81 and 5.3 million annually. -(Interjection)- You can smoke until May 31st.

Resource Taxation - Last year the government implemented changes in The Mineral Taxation Act to equate returns from production of freehold land with the returns from Crown land and to provide freehold mineral operators with incentives for increased exploration efforts.

Since that time major increases in oil exploration activity have taken place in our province.

However, the process of adjusting The Mineral Taxation Act levies to provide equal returns on freehold land with those on similar Crown land was not completed last year, and it was completed today, not quite completed, almost completed. The Resolution that was passed in the House today was a large measure towards the culmination of this undertaking and that move will provide roughly 200,000 a year from freehold title holders to the Crown over the 1980-81 year.

Water Power Rentals - Currently, Manitoba's water power rental rates are the greater of 50 cents per installed horsepower and 1.25 per horsepower year of output. These rates have been in effect since 1952.
While at least one other jurisdiction has arbitrarily related its water power rates to the Consumer Price Index, we submit that they should be related to the increased market values of the electrical output. Accordingly, it is out intention to increase water power rental rates effective June 1, 1980, from 1.25 to 3.25 per horsepower year of output. The base rate of 50 cents per horsepower year of installed output will be increased to 1.30. Under our freeze on domestic Hydro rates, these changes will not impact on Manitoba consumers. These changes will yield an additional 7 million annually to the province for the use of our water resources.

Political Contributions Tax Credit - Currently, British Columbia, Alberta and Ontario provide specific incentives in the form of political contributions tax credits to encourage increased public participation in the electoral process.

Manitoba is now in the final stages of a review of issues involved in election financing in this province and will be introducing Legislative changes this Session.

In line with those election financing reforms, we are proposing to implement a Manitoba Political Contributions Tax Credit administered through the National Income Tax System. Under this program, taxpayers will be permitted to deduct from Manitoba personal income taxes otherwise payable a portion of their contributions to recognized Manitoba political parties, recognized Manitoba constituency associations and candidates for election to the Manitoba Legislature.

The Political Contribution Tax Credit will be the same as the Federal Credit and involve a deduction of:
75 percent of the first 100 of total contributions; 50 percent of the next 450 in total contributions;
33-1/3 of total contributions exceeding 550 and the maximum allowable credit will be set at 500.00. It is estimated that in an average year the effect of this plan will be a reduction to provincial revenues of 200,000.00. Mr. Speaker, I trust that most of that will not go to the NDP.

Corporation Capital Tax - Small Businesses – In 1978, our government provided a major increase in the corporation capital tax exemption for small businesses from the punitive 100,000 imposed by the NDP on taxable capital up to 500,000.00. In the interests of providing a further degree of assistance or relief to small Manitoba business operations, effective July 1st, the exemption will be increased by 50 percent from the current 500,000 to 750,000 of taxable capital.

This measure will reduce the corporation capital tax borne by small business by approximately 375,000 in 1980-81 and about 500,000 in a full year.

This assistance is being reinforced by the reintroduction of two national measures to assist small businesses proposed by the former federal government and announced once again by the new government on April 21, the deductibility of salaries paid to spouses by unincorporated businesses and the introduction of small business development bonds. Honourable members may not be aware that these measures also affect Manitoba's income tax system. We estimate that in combination with these two measures, that these two measures will provide our small businesses with a reduction in Manitoba taxes otherwise payable of in the order of 5 million this year. Mr. Speaker, that's why I mention at this time that there is a 5 million implication for Manitoba in 1980-81 by the federal move in this regard. On the other hand, the small businesses will also be subject to the new temporary 5 percent federal surtax but that measure only affects federal revenues.

Sales Tax - In our first two Budgets, our government introduced some important sales tax improvements. Tonight I am pleased to announce a number of additional selective sales tax reductions effective at midnight.

First, a series of exemptions will be provided to encourage safety both at home and in the workplace. An across the board exemption will be provided for safety items of special design worn by workers to prevent bodily injury. This exemption will cover a broad range of items from specially designed safety devices and apparel worn by production workers, to police helmets, ear defenders worn by airport workers, and so on. This extension of the current restricted exemption reflects our government's continuing concern for the safety of working people in all industries throughout the province. Children’s safety seats, which are designed and approved for use in motor vehicles, will be exempted. A full exemption will be provided for first aid kits, bandages, dressings and fever thermometers, etc. This exemption complements the exemption in the current legislation for drugs, orthopaedic appliances and equipment for the physically handicapped.

The sales tax also will no longer apply to self-contained household smoke alarms.
A complete exemption will be provided for ambulances and related equipment which is carried in ambulances.

Second, consistent with our increasing emphasis on energy conservation, we are proposing major additional exemptions to encourage greater energy efficiency. More specifically, the current sales tax exemption on energy saving devices will be extended to include: Storm windows and storm doors, Heat pumps, Heat recovery units, Solar cells, solar furnaces and related equipment, Windmills and wind-powered generators and related equipment, Timer-controlled thermostats, similar automatic controls for electrical lighting systems, Wood burning stoves and furnaces, and Wind deflectors for trucks.

Third, to assist in our farm community, the sales tax will no longer apply to farm water systems, drainage tile, ventilation fans for farm buildings, and in addition, on May 31st, the current exemption for domestic heating under The Revenue Act, 1964 and Motive Fuel Tax Act will be extended to include the heating of all farm buildings.

Fourth, to assist fur trappers, the sales tax as it now applies to fishermen, farmers, and so on, will no longer apply to items used directly by licensed fur trappers for commercial trapping of fur-bearing animals. This exemption will parallel, as I said, those now in place for farmers and fishermen. It will not apply to items such as canoes, paddles, outboard motors, snowmobiles, which are used for general transportation, it will not apply as they have in the past on those items.

In addition, a number of other minor changes will be made. The refund qualifying period allowed between the purchase and sale of aircraft will be extended from 30 days to six months, patterns for sewing clothing at home will be exempted and the sales tax exemption for diplomatic corps offices will be provided directly rather than through the current refund procedures.

Last year, our government simplified the sales tax collection remittance procedures which face small retailers throughout the province. To complement those measures and to acknowledge the invaluable services small retailers carry out in collecting taxes on our behalf, we propose to increase vendors' commission from the present 5 percent of the first 200 in monthly collections to 10 percent effective June 1st. There will be no change on the 1 percent amount allowed on collections in excess of 200.00. This doubling of the low volume commission rate is the first adjustment in the commission structure since 1974.

In total, we estimate that the net effect of the provision of these exemptions will be a sales tax revenue reduction of approximately 2.7 million in 1980-81 and 3 million in a full year.

Mr. Speaker, in total the taxation measures I have announced tonight will increase revenues by approximately 8.5 million in the current fiscal year and 8.9 million in a full year, that is the net. Our overall estimates of revenues for 1980-81 total 1,882.6 million, an increase of 193 million or 11.4 percent over the initial estimates for 1979-80. However, because actual revenues exceeded original estimates last year, the final 1980-81 revenue growth rate is expected to be considerably less than the print-over-print that I have given you here.

I should add that members will note a change in the Revenues Estimates format this year, which you will see shortly. We have adopted a system of presentation which is closer to that used by other provinces. It provides a simpler and more easily understood split between the province's revenues from its own sources and federal transfer of payments that is to facilitate the Member for St. Boniface. -(Interjection)- Mr. Speaker, I am sure that anybody except those members across the way will be able to understand it.

In my 1978 Budget Address, I announced our intention to conduct a full and complete review of Manitoba's Property and Cost of Living Tax Credits and related programs.

Completion of that review was deferred last year so that possible federal property and mortgage interest tax credits could be taken into account. On maturity, those federal measures were to deliver up to 250 in annual property tax assistance and 1,250 in annual mortgage interest assistance to all eligible homeowners. Unfortunately, the election of the new federal government has meant the abandonment of those significant measures, and thanks to the friends of the people opposite, these were for one in their non-confidence motion, which they so judiciously moved at the federal level.

I would like to stress that in initiating our general review on tax credit and related programs, our intention was and continues to be to improve provincial programming. Ultimately, our objective is to ensure that these programs make the most meaningful contribution possible to the overall security and opportunity of all Manitobans and direct assistance to those genuinely in need.

Full details of the review and the reasons for the proposed changes are included In a White Paper on Tax Credit Reform, which will be tabled at the conclusion of the Address here tonight. However, I would like to take this opportunity to highlight the most important changes for the members of the Legislature.

First of all the general maximum Property Tax Credit will be increased by 100 to 475.00. This major increase in maximum assistance will complement the 100 increase in the minimum to 325, announced by the First Minister on April 9th.

Second, the maximum Property Tax Credit for senior citizens will be increased by 150 from 375 to 525. In addition, as announced by the Premier on April 9th, the Pensioners' School Tax Assistance Program will be expanded from 100 to 175. The enhanced levels of assistance under that program will apply on top of the new basic Property Tax Credit of 325. In this manner, we are responding to the concerns expressed by pensioner homeowners about their school taxes and about the method of application for the rebates. Effective this year, all pensioner homeowners in Manitoba with school taxes under 500 will have their full school tax obligations offset by provincial assistance, delivered at the time they are required to pay their property taxes. The Property Tax Credit increase means that senior citizen homeowners will also be eligible for an additional 200 in assistance through the income tax system In relation to their needs and incomes, bringing the total assistance available to 700.00. Tenants who are senior citizens currently do not receive assistance under the Pensioner's School Tax Assistance Program, which is restricted to homeowners only. Accordingly, we propose to extend similar assistance to senior citizen tenants. This new measure will provide them with direct provincial payments of up to 175 to cover 10 percent of their rent over 1,625 annually - the rent level at which the basic 325 Property Tax Credit applies. Combined with the 525 maximum Property Tax Credit for senior citizens, this measure will provide senior citizen tenants also with up to 700 in property tax assistance.

Third, the more comprehensive combined family income measure used for federal Child Tax Credit calculations will replace the current measure taxable income of the higher income spouse. In our view, this combined family income measure provides a better standard for relating supplemental assistance to needs.

Fourth, the Cost of living Tax Credit will be retained at three percent of personal exemptions reduced by one percent of the new combined family income measure. This redefined income will reduce the incidence of Cost of living Tax Credit payments to higher income Manitobans generally, and also to secondary and tertiary income earners in higher income families, and direct a higher proportion of benefits toward those with a genuine need.

I should point out, Mr. Speaker, that ail of these are now in discussion and arrangement with the federal government which will require their agreement with regards to the federal tax forms.

Fifth, a new Manitoba Supplement for Pensioners will replace the Manitoba Supplement to the Elderly. Existing maximum payments will be doubled and benefits will be extended to pensioners over 55 rather than 65.

Sixth, the Manitoba Shelter Allowance for Elderly Renters, which we implemented effective January 1st this year, is making a real contribution to the security of our senior citizen community. We are proposing to enrich the benefits available under SAFER and to extend SAFER benefits to pensioners over the age of 55.

Seventh, SAFER benefits will be extended to low income families with children. This will involve the delivery of substantial rental assistance to a broader range of Manitobans than is possible under the current program.

Eighth, funding for Day Care services will be augmented to permit an expansion in the number of facilities providing care for pre-school children. The additional funding will also be used to extend Day Care to meet the needs of families with children of school age. More specifically, funds will be allotted to noon and after school care, as well as to a general augmentation in the numbers of pre-school Day Care services. Current Day Care charges, including provincial subsidies on a needs-related basis will be retained. These are already among the best available in Canada.

MR. CRAIK: Ninth, Mr. Speaker, the provincial social allowance system will be adjusted to include all forms of support regardless of source, in the assessment of an applicant's resources and needs. Specifically, Property Tax Credits, Cost of Living Tax Credits, SAFER payments, Family Allowances, federal Child Tax Credits and other forms of assistance will be included in the calculation of the resources available to the individual.

But, Mr. Speaker, social allowance rates will be increased at the same time to ensure that the current levels of support paid to Manitobans in receipt of social allowances will be maintained.

We believe this integration of existing support payments in the resources of the individual, and similar adjustments in current social assistance levels will make it possible to target subsequent increases in provincial social allowances where there is most need.

Mr. Speaker, I should give the Leader of the Opposition a chance to cool off his pen before I announce Number Ten.

Tenth and finally and most importantly, in further recognition of the pressing needs facing low income families with children and more particularly the needs of single parent families, a new Child-Related Income Support Program (CRISP) will be implemented in 1981. Under this program families with annual incomes under 7,500 will qualify for maximum provincial support at a rate of 30 per month, or 360 per year, per child and to ensure that benefits available under this program more accurately reflect the costs and obligations involved in child-raising, a 500 deduction from total income will be permitted for each child. Maximum payments will be reduced by 25 cents for each dollar of additional income above the threshold levels.

Members will recognize that this more selective and targeted approach will guarantee much more substantial support to families, and more particularly single-parent families with children, than those possible up to now under the scattered approach of the Cost of Living Tax Credit Program.

For example, Mr. Speaker, for a family with four children, the new program will provide up to 120 in provincial support payments monthly or 1,440 per year. Taking into account the 500 per child exemption, this full level of support will be available to all such families with total incomes of 9,500 or less. In addition, as noted earlier, as total incomes exceed this level, the provincial payments will be phased out at 25 cents for each dollar of additional income. Thus, for a family with four children, Mr. Speaker, to give you the illustration, they would receive, at a family income of 9,500, the full 120 per month, and then it would scale down after that threshold, until at 15,000 in family income - at 15,260 it would phase out, so they would get the full amount of the 30 per month for child at the 9,500 threshold and from thereon in it would scale down.

Throughout the process leading up to the White Paper, our government paid close attention to the actual benefit delivery mechanisms and to the administrative requirements facing Manitobans in need. The review showed clearly that the procedures for obtaining benefits should be kept as simple as humanly possible.
Therefore, in line with the general integration of benefits principle, our government proposes to coordinate information on the new provincial programs and related assistance measures through a single province-wide information system. This will ensure that all Manitobans will have simple access to all necessary information. Some program details and administrative procedures have not yet been established, but will be worked out between now and the commencement of the new programs on January 1st, 1981.

In a full year we estimate that these reforms to the existing Property Tax Credit, Cost of Living Tax Credit and related programs, together with the implementation of new programs, will deliver an additional 29.6 million in provincial shelter and needs-related support to Manitobans. That is the net new amount of cash flow that will be going into these programs. Moreover, the proposed changes involve a significant reorientation in the existing benefit structure towards those in most need. The Supplementary Estimates include 28.6 million to meet the costs of these White Paper initiatives in 1980-81.

In summary, it would be safe to say that the reforms announced tonight represent our best estimate of where real needs for these kinds of programs currently exist, and how these needs can be best met under combined federal, provincial and municipal programming. Of course, changes at any of these three levels would change the emphasis of the needs, and adjustments may be required as time goes by, as well as extensive monitoring during the initial period of the implementation.

Our review pursuant to preparing the White Paper on tax credits led to two important general conclusions: The first was that the original intent of the Cost of Living Tax Credit Program was not being met. It had become essentially a shotgun program and a program that was leaking like a sieve. It was not providing target-directed financial relief to those in real need. While no system can be devised which is ideal, we believe that our new proposals will improve the situation dramatically and also address real needs in a new and better way.

To give you an example, Mr. Speaker, of what was happening under that program, you would find, I am sure, that a number of people in this room, in this Chamber, would be in receipt of a Cost of Living Tax Credit, and I don't think it would be the intention of any members in this Chamber to have that happen. You would find, Mr. Speaker, I am sure, that if you got beyond that investigation that there were even a greater number of the spouses of the people in this Chamber who were receiving that credit, and that I don't think was intended either, and that is the sort of problem we encountered in examining this program. When I say it was leaking like a sieve, it was a shotgun program and it was not doing what it was intended to do.

The second conclusion was that the Property Tax Credit method can only partially accommodate the financing of the public school system, but it is an important program to retain as a counter-balance to total provincial control of education, which would necessarily come with total direct provincial financing. It is recognized, however, that all the methods of public school financing by the provincial government must now be addressed comprehensively to overhaul a system which has not been fundamentally changed for fifteen years.

Mr. Speaker, regarding Education Financing, although enrolments have been falling while per pupil assistance has been increasing substantially, we recognize that the public school system is in a difficult period of transition and the problems which accompany the process of a contraction can be very different from those which accompanied the expansion pressures of the 1950s and the 1960s.

Our government remains committed to upgrading direct provincial support for public schools in the coming years. The major focus of that support will be
to ensure that high quality education continues to be available to all our children, without undue burdens on local ratepayers. We recognize that special transitional assistance will be required to meet the problems of adjustment and to ensure more effective programming over the long term.

The Property Tax Credit increases contained in this Budget reflect those concerns, as does the general review of property tax assessment issues and procedures which is already under way. By the end of this fiscal year, we hope to be in a position to complement these initiatives with proposals for improvements in direct support through mechanisms such as the Foundation Program.

While a number of options are under consideration; lean say that a key objective of our education finances reform proposals will be the maintenance of a significant degree of local control over the operations of local schools, with continuing local tax support. We believe that the local autonomy principle would be jeopardized if the province were to provide all or nearly all of the financing for education on a direct basis.

As I said before, we also recognize the importance of ensuring that improvements in direct provincial support for education reflect the new challenges facing school divisions, including declining enrolments and emerging excess capacity as a result of the changing age distribution of the population.

These challenges will increase even more the importance of school boards throughout our province and, of course, throughout much of Canada where exactly the same trend is occurring. It has been, and will largely continue to be the responsibility of locally elected officials to rationalize the public school system in light of reduced enrolments. In some cases, class sizes are becoming too small. In other more serious situations, the total school enrolment is declining to a level where it is difficult to provide the curriculum with the teachers and other resources which have been assigned. In these circumstances, school boards will have to face unavoidable decisions to close some schools and amalgamate classes in others, not only to achieve greater efficiency in the delivery of education services, but also, and more importantly, to assure the continued availability of the best possible educational environment for our children.

In recent months the school divisions have faced some major uncontrollable interest costs, which have been aggravated by high rates. These interest costs have occurred in part because the provincial government's payments of Foundation Grants to school divisions have not flowed in relation to school division requirements, and in part because municipalities have been permitted to retain special levies collected on behalf of the divisions and to lag the actual transfer of those collections.

These factors led the Provincial Auditor to express concern in a number of his reports. In his 1978 Report, for example, he observed, and I quote: The method of financing school divisions resulted in the divisions' working capital requirement being financed substantially by way of bank loan and overdrafts, thereby creating an excessive interest expense. The cash flow in accordance with the present regulation improperly increases the cost of education in order to improve the financing expenditure amounts of the province and the municipal corporations.

That's from the Provincial Auditor. Our government proposes to deal with this problem by accelerating the payment of Foundation Grants to school divisions. We intend also to ensure greater equitability in the cash flow between municipalities and school divisions after discussions with both levels of local government.

On the provincial side, the present schedule involves the payment of 20 percent of the estimated spring term grant in each of the four months from April to July, with a final 20 percent balancing payment in September, and the payment of 20 percent of the estimated fall term grant in each of: October, November, December and January, with a final balancing payment in March. Under our cash flow acceleration proposal, 40 percent of the school divisions' Foundation Grant entitlements will be paid in April, followed by equal 10 percent payments in each month of the academic year. This measure is expected to reduce the uncontrollable interest expenses facing school divisions by approximately 4 million in a full year. Since provision for interest costs under the old schedule is included in school division budgets for 1980, this change may enable divisions to achieve modest surpluses this year.

In considering a more equitable flow-through of the school taxes collected by municipalities, our government is mindful of the fact that the municipalities are also faced with significant borrowing costs from time to time to provide general local government services prior to actual payment of municipal taxes by property taxpayers. However, under the current payment schedule, 20 percent of Special Education Levy Funds are transferred to school divisions in each of the months of July, September and November, and the remaining 40 percent are retained by municipalities until the following January. In many cases this means that school taxes have been paid by the ratepayer to support school services, but are being retained by municipalities until the payment schedule requires them to be transferred. At the same time school divisions are faced with the necessity of borrowing to meet their expenditure obligations. However, as noted earlier, budgets on both the municipal and school sides are already set for this year. Accordingly, it is our intention to initiate early consultations with municipalities and school divisions so that revised payment schedules can be affected.

The Member for Elmwood, Mr. Speaker, says it's overdue and he's dead right. Mr. Speaker, the members opposite would not know it, but it was a problem during their eight years of tenure.

The Supplementary Estimates I'll table at the conclusion of my address total approximately 31.3 million. In addition to the 28.6 million provision for tax credit reform, the largest item in the Supplementary Estimates is an allowance of 2 million for additional forest fire suppression costs.

Members will note that there is also provision for an increase in statutory indemnities and allowances, as well as salary and representation allowances in line with the recommendations made by Justice Hall earlier this year.

The Supplementary Estimates in combination with the Main Estimates tabled earlier in the Session, result in a total expenditure authority request of 2,022,200,000.00. This amount is approximately 139.6 million greater than the estimates of total revenue for the year. We believe a deficit of this size is manageable and acceptable for a number of reasons.

Mr. Speaker, the dramatic improvement in our year-end positions over the last two years has given us a great deal more flexibility, and a great deal more breathing room in assessing our budgetary options.

While the estimated deficit is larger than the actual year-end figures in 1978-79 or 1979-80, it is in line with the earlier estimates for those years, both as a percent of the gross provincial product and as a percent of total provincial expenditures, and of course is still well below the 1977-78 record.

In addition, the deficit continues to be entirely for capital purposes as opposed to current operations.

Mr. Speaker, nobody in this province will ever equal their record for a deficit unless they ever end up back in office. Mr. Speaker, by the time they end up back in office, there'll be a one percent deficit.

Having said this, however, I want to emphasize, as I did in my Budget last year, that our long-term objective will continue to be a balanced Budget on a combined basis, as and when economic conditions permit and, Mr. Speaker, I guarantee we'll get to it.

Mr. Speaker, re Capital Financing - as I indicated in my Budget Speech last year it is the intention of our government to reduce the need to borrow in the capital market as much as possible, but, when necessary to borrow in the Canadian markets or as a second choice, to borrow in US dollars if it appears to be in our favour to do so.

During the past year one issue payable in a European currency was repaid. When the borrowing took place in 1970, the proceeds of that European units of account issue were 12.5 million in Canadian funds, and the nominal interest rate was 9 percent, but the principal repayment in March of this year cost 27.1 million and the effective interest rate turned out to be 29.6 percent. Mr. Speaker, it would be interesting to read the press release that went out at that time, which I've done.

In June of this year, an issue payable in Swiss Francs will come due and again I anticipate repaying the issue using Canadian dollars borrowed in Canada. When the initial borrowing took place in 1970, again, the nominal interest rate was 8-1/8 percent and the proceeds were some 40 million. Now, the principal amount repayable	is approximately 72 million. The difference plus regular interest costs has transformed an illusory interest advantage ten years ago into an effective rate of 24.7 percent today. These two examples illustrate why we believe it is essential to reduce our exposure on off-shore currencies at this time, and a comparison, included with the financial statistics I will table later, will demonstrate the complete debt picture. At exchange rates in effect on May 1, our outstanding debt was 592.5 million higher in Canadian dollars than in the amounts that were initially borrowed. Mr. Speaker, they even make the Hydro mistakes look small.

Later this evening I will be tabling 1980-81 capital authority requirements from Crown agencies totalling 24 million. I should add that the amounts requested do not reflect the total capital programs of the two large utilities, Manitoba Hydro and Manitoba Telephones, since both utilities have available capital authority already voted by the Legislature in past years and since both will use internally generated funds to finance a portion of their programs. Hydro's capital expenditure programs total 124 million, and those of the Telephone System, 90 million. Combined provincial public sector capital expenditures for 1980-81, including those of Crown agencies and departments, are estimated, in aggregate, at around 534 million.

Overall, we estimate our budgetary and non-budgetary borrowing requirements at about 310 million this year. Mr. Speaker, that's with a capital program of 534 million. Since off-market sources, such as the Canada Pension Plan, are expected to provide around 110 million, our total public market requirements in 1980-81 for direct provincial and guaranteed self-sustaining purposes will be approximately 200 million.

At the conclusion I will table updated information on the province's overall debt position. It will show that during the last year the rapid acceleration of total debt in our province caused by the former government's capital program has levelled off. The outstanding debt at the end of 1979-80 fiscal year was marginally above 4 billion, up only 1-1/2 percent over the previous year, and the provisions in our 1980-81 Estimates for debt charges, including Hydro Rate Stabilization, are down from a preliminary-final of 118.6 million for 1979-80 to 93.8 million, primarily because of the decrease in the rate stabilization costs this year.

But while these improvements are welcome, they don't change the fact that Manitoba is still burdened with a high total debt load and will continue to be for some time.

Our outstanding debt, now close to 4,000 for every man, woman, and child in this province, is still the second highest on a per capita basis in Canada. Mr. Speaker, I hear a lot of noise across the way, but if they really want to make noise, they can stand up and explain the 600 million that isn't even included here that they borrowed in their off-shore markets. Nobody has talked to the boys across the way about that yet. They can answer for that when they're answering about some of the other nonsense mistakes that they carried on with.

The average Manitoban, Mr. Speaker, will never really know how expensive those fellows were, and they didn't know themselves and they still don't know. They were a ship out of control.

In these circumstances it is essential that the province and its agencies guard against unnecessary over-extension. Some would argue, and we hear it from across the way, roll over the debt, as if there were some magic in that procedure, but there isn't. It just postpones the inevitable. Eventually the debt has to be repaid or an even larger and more difficult burden will be left for the next generation to add to the other legacies they will inherit from a society which only now is beginning to recognize the need to look further ahead than the next year and to appreciate the absolute necessity of prudent use of our resources now and in the future.

That, of course, was the kind of advice our predecessors ignored when they embarked on the sequence of irresponsible and near-disastrous decisions which were documented in the report of the Commission of Inquiry into Manitoba Hydro, decisions which will cost the province dearly for many years.

The Tritschler Report showed how short-term expediency and political influence came close to jeopardizing much of the future development of Manitoba and how our prospects have been set back and the returns to the people of Manitoba permanently reduced.

Now, however, the situation is beginning to turn around. The foreign exchange element has been removed from Hydro's debt load and we have frozen Hydro rates. Market prospects are improving as well and we are confident that following the completion of other negotiations and studies now underway, that further development of Hydro resources, development stalled by the actions of the former government, will proceed in a fashion that is in the best interests of Manitoba Hydro ratepayers and thus the taxpayers of Manitoba.

Our renewable energy heritage gives Manitoba a development advantage which is matched in few other regions of the country or the world. This government recognizes that fact and is determined to make that advantage work for the people of Manitoba and for all Canadians.

Let there be no mistake. We believe our Hydro resources belong to the people of Manitoba in the same way as non-renewable resources under the Canadian Constitution, and it follows that we will resist any effort by the federal government to divert revenues from Hydro exports away from Manitoba. But, as I said earlier, we are prepared and indeed committed to share the long-term benefits of our resources with all Canadians in the national interest. In fact, it is the long-term national interest which has caused us to pursue actively the possible sale of firm power through a western Canadian grid, in preference to North-South firm power agreements of a similar type.

Mr. Speaker, I want to say in conclusion on that, we have made an attempt to have a long-term national, rational and provincial plan with regards to our Hydro resources, and it is the first time such has ever been proclaimed.

Mr. Speaker, finally in conclusion. Two years ago I concluded by first Budget Address with at attempt to summarize, as clearly as I could, the principal challenge facing our new government.

It stated that our challenge was not to restrict essential government services for the people of Manitoba, but rather to help build and maintain the economic base, which would make those services possible. I am proud to say that our government has met that challenge.

The citizens of Manitoba are already realizing the benefits, the dividends if you like, of the restoration of fiscal responsibility, and this Budget adds a broad range of further improvements: First, major direct tax reductions for homeowners, renters, and small business operators across the province,
Increased and more effective program benefits, particularly for our elderly citizens and families with children, who are most in need of assistance, and
Substantial and long-needed program reforms, designed not only to improve the quality of our public services, but also to ensure effectiveness and genuine value for the tax dollars which support them.

This could not have been possible if our government had not acted in a decisive way to restore a secure financial and economic base.

In future years this foundation will permit us to undertake major new commitments and it will guarantee that we can deliver on those commitments, without subjecting our taxpayers and our economy to onerous direct tax burdens or massive, hidden future obligations.

In many respects, Mr. Speaker, our government is very much where we hoped to be in the first year of the 1980s.

The initial transitional adjustment period is behind us; our economy is back on track, and we have blue sky ahead of us, Mr. Speaker. The task now is to maintain and where possible to accelerate the rebuilding process.

Although this is our government's third Budget, in some ways it is really our first. It marks the start of a new stage in our development process and it opens a decade of new opportunities in our province with a set of policies and program reforms, which recognize those opportunities and respond to them with responsibility and realism.

Some have argued that it is not possible to have both humane government and responsible government. That is totally false and this Budget proves it. What it does show very clearly is what good government, competent, dedicated, effective and honest government can do, and it also shows what a moderate, common-sense government, but a government with an aggressive commitment to the development of our province can do to provide a receptive environment for the widest possible range of people, institutions and enterprises.

That is the kind of government, Mr. Speaker that we must have to realize the opportunities now before us, and that is the kind of government we intend to keep on providing for the citizens of Manitoba in the years ahead.