Province Législature Session Type de discours Date du discours Locuteur Fonction du locuteur Parti politique Manitoba 35e 1ère Discours sur le Budget 24 octobre 1990 Clayton Manness Ministre des Finances Progressive Conservative Party of Manitoba Mr. Manness: Mr. Speaker, it is an honour for me to present our Government's third budget to the Legislative Assembly and the people of Manitoba. Today is United Nations Day. Recently we celebrated Thanksgiving. These occasions remind us of good fortune to reside in a country which is prosperous and free, and a land with vast natural resources and with people who seek opportunity and then have the will and the skills to take advantage of opportunity as it arises. In today's budget, I will report on the current state of the economic and fiscal affairs of the province. I will outline our plans to help Manitoba meet the challenges of the 1990s and to create a positive climate for investment and jobs. Our country is experiencing recession. Production of goods and services declined in the second quarter of 1990. Signs of a further decline abound for the third quarter. Virtually no growth is expected until m id-1991. A major cause is the federal policy of high interest rates to combat inflation. Inflation impacts in so many different ways, eating away at the value of incomes and savings, reducing our competitive position and necessitating difficult adjustments for individuals, organizations and Governments alike causing disharmony and fear. However, there must be an appropriate balance between fighting inflation and maintaining a healthy economy. High interest rates have retarded consumption and investment. The costs are being felt by homeowners and prospective home buyers who cannot afford higher mortgage payments. They are being felt by businesses and farmers squeezed by higher borrowing costs. High interest rates have driven up the value of the Canadian dollar and made our export industries less competitive. They have also exacerbated the federal Government's own deficit problems. The situation is especially critical in the farm community. In 1990, Manitoba farmers recorded one of the best crops ever, yet they will receive less cash income for this crop and they continue to face severe interest costs. In my first budget, I stated our main objective as Government, and I quote: Our goal is a competitive and diversified economy which will provide increased investment and job opportunities for our citizens, and pay for quality health, education and social programs. Mr. Speaker, this is still our top priority. Manitoba is a province with great potential. We have abundant land, pure water and clean air, assets we take for granted, but which are scarce in much of the world. We have industrious and hard-working people. We have vast renewable energy resources, resources which are even more highly valued in times like these. Manitobans will feel the consequences of the economic shocks caused by domestic and world events. However, Manitoba can expect to weather any downturn relatively well. Indeed, some forecasters suggest that Manitoba will be at or near the lead in economic growth in Canada this year. For our province: Overall growth is projected at double the national average. Employment grew 1.5 percent in the first nine months, outpacing the 1.1 percent growth nationally. The number of people unemployed in Manitoba actually declined 3 percent, in contrast to a 4.2 percent increase nationally. Capital investment intentions are up 10.5 percent in Manitoba versus 6.4 percent nationally. Construction work is expected to increase 10.3 percent in Manitoba, more than double the 4.7 percent national increase. Retail sales are up 4.5 percent, double the national increase of 2.2. I could spend more time talking about Manitoba's economic achievements relative to other provinces, but I believe the future is more important than the past. And, our job is to build for that future by managing equitably, creatively and reasonably. We must provide the quality public services so essential to meet the needs and aspirations of Manitobans, but these must be placed on a secure financial footing that will ensure they are available not just for us, but for our children as well. Short-sighted efforts to maintain services on the basis of excessive spending, rising public debt costs and escalating taxes will not work. These policies destroy Manitoba's opportunities for development as high taxes choke off investment, and the job opportunities investment brings. They squeeze the budgets available for the programs Manitobans want. In short, they result in a vicious spiral of weakening our economic prospects, and eroding our ability to preserve vital programs in the future. We have the legacy of those policies of the past. Annual interest costs on the province's debt are over a half billion dollars annually. That obligation alone takes 85 percent of our sales tax revenue. It is close to one-third of our health budget, or 10 percent of our program spending. Imagine what $500 million each year would add to our ability to provide programs, and to offset lower income growth through further tax reductions. A true spirit of co-operation and partnership will be essential, as Manitoba moves through this difficult period ahead. All of us must pull together. Businesses must be especially prudent and reasonable in all their decisions. Labour must be more farsighted in its demands. Governments must learn to provide needed services more efficiently. It is simply not realistic to add to the tax burdens facing Manitobans, individuals and businesses alike. In our first two budgets, we acted decisively to make Manitoba's taxes competitive. Manitoba's personal income taxes, especially for families with children, were reduced. The payroll tax exemption was increased six-fold, eliminating this tax for 70 percent of Manitoba's taxable employers. To encourage the formation of new businesses, the Vision Capital Fund was established, and a tax holiday for new small businesses was introduced. These measures, along with tax increases in other provinces, have tangibly improved our competitive position on taxes. More competitive taxes build on other significant advantages which make Manitoba an attractive place to do business. Energy costs are among the lowest on the continent. Business costs, both for office rents and serviced industrial land, are among the lowest of major Canadian cities. The province boasts a talented and stable work force, with one of the best records of labour peace in the country. Living costs are well below average in housing, owned or rented, and in transportation. Agriculture Canada reports that Winnipeg's food costs are the lowest among major cities in the country. In line with these low costs, average wages and salaries in Manitoba are the third lowest among the provinces, a significant cost advantage for employers. But, with lower living costs in Manitoba, those wages help provide a quality of life unmatched elsewhere. These advantages are key to attracting the business investment which is so critical to the creation of permanent, productive and challenging jobs. We face many challenges and our task is made more difficult by a federal Government which by its actions, especially in equalization and health and higher education funding, undercuts our efforts. Restrictions on equalization payments are particularly troublesome. They result in the burden of federal restraint falling most severely on recipient provinces. I have written the federal Finance Minister to underscore the important role of equalization in strengthening our nation, to meet the forces and challenges that lie ahead. We will continue to oppose federal actions where they conflict with the province's interest, but we will also prepare our fiscal plans on the basis of the burden federal actions impose on Manitobans. We cannot turn, Mr. Speaker, to hard-pressed taxpayers to make up for the shortfalls in federal transfers. Instead, we must become more creative and efficient. We must make the hard choices of reducing programs in some areas to ensure the essential programs can be protected, and we must learn to deliver essential programs in the most cost-effective manner. It has been 16 months since the last Manitoba budget, and we are now more than halfway through the fiscal year. Minority Government, the excessive length of the last Session, the Meech lake dilemma and the election have contributed to the delay, but that kind of delay is incompatible with good budgeting principles. Budgets need to be planned before the start of a fiscal year. Decisions on resource allocations should be made and communicated to managers and those reliant on the programs while there is still time to adjust. It is our intention to present the next Manitoba budget early next spring. We are determined to put Manitoba's budget planning back on track. We are depending on co-operation from the Opposition to achieve this goal. Mr. Speaker, I am pleased to report that substantial progress has been made in establishing a sound framework for the province's finances, but more remains to be accomplished. The deficit had averaged $500 million in the four years following the 1982 recession. It has been held to less than $150 million in each of the last two fiscal years. Overall spending growth has been reduced to 4.7 percent, on average, since 1987-88, a sharp contrast with the near 1 0 percent average annual growth recorded under the previous administration. Within these overall limits, larger increases have been allocated to priority areas such as health and education. Our Government also moved to establish a savings account for Manitobans, the Fiscal Stabilization Fund. Some $200 million of the exceptional revenue growth in 1988-89-1argely mining revenue and equalization adjustments--were deposited to that fund to ensure that in periods of exceptionally slow revenue growth, some resources would be available to help cushion the shortfalls. The fund has grown with interest revenue and deposits of proceeds from divestiture of Manfor and Manitoba Data Services. In my last budget, I predicted a decline in net general purpose debt in 1989-90, the first such decline in over 20 years. I am happy to report that such a decline was achieved. Our Government's fiscal plans for 1990-91 reflect a continuation of fiscal prudence, and a strong commitment to initiatives to improve our social and economic well-being. Competitive taxes are essential to help achieve the enormous economic and financial potential of our province, and to provide a durable basis to finance essential programs. Our first two budgets took action to make Manitoba's taxes more competitive. We will continue to build on the gains made in Manitoba over the last two years, and lay the foundation for a brighter future. Mr. Speaker, there will be no general increase in personal taxes in this budget. Similarly, Mr. Speaker, there will be no increase in business taxes in this budget. There is one selective tax increase-a one-half cent per cigarette increase in the tobacco tax. In addition, pending resolution of problems in the allocation of provincial income tax in the mining sector, the special 1.5 percent mining tax introduced in the 1989 budget will be extended until December 31 1991. We have worked hard to bring Manitoba's taxes more in line with those in other provinces. This budget continues that process. Mr. Speaker, our administration shares the concerns of Manitobans regarding the federal Goods and Services Tax. We have brought our concerns to the federal Government on several occasions. There is still some uncertainty as to the future of the GST. Should it come into force, our Government will apply the provincial retail sales tax alongside the GST. We will end the current practice of applying provincial sales tax to selling prices which include federal sales tax. We will not put tax on tax. As a result, Manitoba's retail sales tax will be cut by approximately $30 million annually, or $1 00 for a family of four. While this relief is modest, in relation to the added federal tax burdens imposed under the GST, it should provide a measure of well-timed assistance to Manitoba consumers. Applying the retail sales tax alongside the GST will help ensure maximum visibility for the new federal tax in Manitoba. Visibility is critical if governments are to be held accountable for the money they raise and spend. If the GST proceeds, Canada will become the only industrialized nation to have two significantly different kinds of general sales taxes operating at the retail level. Our Government has always been sensitive to the needless complication and expenses such as duplication in administration means for Manitoba businesses and consumers. The application of the retail sales tax alongside the GST will help simplify compliance. Manitoba will undertake to explore all avenues to further reduce complexity and compliance costs. Mr. Speaker, in conjunction with the major sales tax reduction associated with applying the retail sales tax alongside the GST, I am pleased to announce three targeted tax reductions to help generate new investment and jobs. First, a payroll tax credit will be provided for employee training. Employers taking full advantage of the new credit will have their effective payroll taxes reduced to 1.95 percent, the same level as in Ontario. Secondly, Manitoba trucking firms will receive full payroll tax relief for international and interprovincial trucking. We are also establishing a Government Industry Task Force to examine the tax and regulatory treatment of this important industry. Finally, the New Small Business Tax Holiday Program will be extended for an additional year. Mr. Speaker, revenue growth in 1990-91 is limited. While income tax revenue is showing strong growth, anticipated mining revenue is down $72 million, to one-third of last year's level. The Gulf crisis has increased oil prices dramatically. As a result, consumption tax revenue has been scaled back from earlier estimates, and now shows growth of about 1 percent. In all, revenue from Manitoba's taxes and fees, including the initiatives announced today, is expected to grow $85 million, or 2.8 percent. Estimated federal transfer payments drop $28 million or 1.7 percent in 1990-91. In the absence of federal restrictions on equalization, and the federal freeze on health and higher education funding, transfers would have been at least $100 million higher. To help cushion the shortfalls in federal support, we are withdrawing $100 million from the Fiscal Stabilization Fund to augment revenue for 1990-91 . This will bring total budgetary revenue growth in this year to 3 percent. The spending plans tabled with this budget reflect our continuing determination to find resources to protect vital services within a difficult fiscal environment. Total budgetary spending, after allowance for unspent funds at year end, is up $279 million, or 5.8 percent over last year's preliminary results. Our priorities are clear. We remain committed to more balanced development of the Manitoba economy. This budget contains a number of initiatives to help sustain and strengthen rural development. Agriculture commands the largest increase within Economic Development, with $23 million for the new Manitoba Interest Rate Assistance Program for Farmers, and a further $16 million for crop insurance cost sharing, to continue full protection for Manitoba farmers in the face of federal funding withdrawals. The recently announced $90 million Southern Development Initiative will assist key centres in southern Manitoba to strengthen their opportunities for sustainable economic development. Last week's announcement of a $30 million project by Dow Corning in East Selkirk is supported with a $2.2 million commitment in this budget. In addition, the budget includes resources to proceed with our departmental decentralization initiatives. The budget also reconfirms our commitment to measures to protect the environment. The Estimates include: $800,000 as a Provincial commitment for the International Institute for Sustainable Development; a six-fold increase in the Environmental Innovations Fund; and a $1.4 million increase in the budget for the Environment Department. Mr. Speaker, the budget includes provision for a major increase in resources for priority social programs. This includes: a $148 million increase for Health; a $48 million increase for Family Services; and a $37 million increase for Education and Training. The social program increase is substantial relative to inflation and represents over two times our revenue growth. It is not my intention to outline all the initiatives in the 1990-91 Estimates-all the programs which have been sustained or improved; the areas where savings have been achieved through more efficient or effective spending; the special circumstances requiring one-time or ongoing new expenditure commitments. These will be discussed during the debates on the Expenditure Estimates. In my last budget, I projected a 5 percent increase in expenditure to cover, to over $5 billion, a 2.5 percent increase in revenue to near $4.75 billion, and a deficit in the range of $250 million to $290 million. Total expenditure is now budgeted at $5.08 billion, up 5.8 percent. While program expenditure growth has been held to 5.3 percent, public debt costs are projected to rise by more than 1 0 percent over last year's level. On the revenue side, growth prior to the draw on the Fiscal Stabilization Fund was only 1.2 percent, less than half the preliminary forecast from last year. Mining revenue is projected to fall more significantly, federal transfer payments have been cut again in the 1990 federal budget, and the weakening economy is affecting provincial revenue. To summarize, total budgetary spending is up 5.8 percent to $5.1 billion. Total revenue, including the withdrawal from the Fiscal Stabilization Fund, is $4.8 billion. The deficit is $283 million. We believe a deficit of this magnitude is appropriate in current circumstances. Part of the slowdown in revenue has been accommodated with the Fiscal Stabilization Fund draw, and part with the increased deficit. Mr. Speaker, in last year's budget, I started the process of providing information on the province's fiscal circumstances beyond the current budget year. We are using that process internally. It ensures that the implications of today's decisions on Manitobans are evaluated in terms of their effect on our future, as well as on the present. Had that process been in place during the NDP years, it is just possible that decisions would have been made not to live beyond our means from 1982 to '88. It is just possible that Manitobans would not be burdened by annual public debt borrowing costs of $537 million, more than $450 million higher than a decade ago. Manitobans today are paying for those decisions. Our Government is determined not to repeat those mistakes. We will not succumb to the temptation to borrow excessively now, and leave future Manitobans to pay. For 1991-92 anticipated revenue from Manitoba taxes and fees is somewhat below the more moderate growth expected for our economy. We anticipate growth of about 4 percent. The outlook for federal transfers is sombre. With the continued declines in health and higher education transfers, and the GNP override on equalization, cash transfers are expected to be virtually flat. Even with a further $100 million draw on the Fiscal Stabilization Fund, total revenue growth would be limited to under 3 percent and, like all Manitobans, the province also faces unavoidable cost increases, including the impacts of higher oil prices. In such circumstances, the need for moderation in demands on Government is self-evident. If overall spending in 1991-92 were to match this year's increase at 5.8 percent, the deficit would increase dramatically to close to $450 million, after the Fiscal Stabilization Fund withdrawal. For 1992-93, revenue growth should improve somewhat. While revenue from our taxes and fees will roughly match economic growth, federal transfers are expected to grow more slowly. At this stage, overall revenue growth of about 5 percent appears possible. If spending growth were to continue at this year's rate, the deficit would expand further, to $500 million annually. In two short years, our general purpose debt would increase by close to a billion dollars. This would add $100 million to our annual interest bill, and further squeeze our collective ability to protect vital programs and maintain a tax regime supportive of economic development. This is a serious challenge to Manitobans. Spending growth next year will have to be reduced if we are to hold the deficit at this year's level, and this would not allow any progress toward our longer-term goal of eliminating the deficit. The restrained revenue outlook means difficult choices will be required to protect vital services. We will have to trim internal Government spending and cut overhead and administration costs. We will have to reduce funding in less essential areas. We will have to become more efficient in the delivery of important programs in health and education and family services, and in protecting the environment. It is important to protect our competitive position in this difficult period as well. We must hold the line on taxes, or we will impede economic development and job creation. The limited revenue growth and importance we attach to priority programs also limits our capacity to pay for increased costs, including wage settlements, higher oil prices and federal offloading. Wage settlements are particularly important, inasmuch as labour costs represent 80 percent, on average, of all program costs. We are, therefore, asking that all those involved in public sector negotiations recognize this fiscal reality. Any settlements above our revenue growth can only be financed by reductions in staffing or programs. All those reliant on Government funding should pay close attention to this outlook. It means that major recipients, both inside and outside Government, simply cannot be guaranteed increased support at the rate of inflation. With this budget, Government serves notice that it will be examining its internal spending with even greater focus than it has in the last two years. Similarly, groups and institutions outside of Government are advised to examine their internal spending very closely. Government will not have the capacity to provide significant increases in 1991-92 or 1992-93. With in these constraints, health care remains our first priority.