Province Législature Session Type de discours Date du discours Locuteur Fonction du locuteur Parti politique Nouveau-Brunswick 49e 3e Discours sur le Budget 7 avril 1981 M. Fernand G. Dubé Ministre des Finances PC Mr. Speaker, I would like to begin my address on the 1981-82 budget by congratulating you on your appointment as Speaker of this Legislative Assemb1y. I am honoured to present this, my fourth budget to you, the members of this Legislative Assembly and the people of New Brunswick. During my time as Minister of Finance, I have witnessed periods when our economy grew more quickly than Canada's and when revenue growth exceeded expectations. I have encountered years when our economy performed below expectations and our revenues were less than budgeted. Largely, such changes are due to external events over which we have no influence. Such year to year fluctuations emphasize the importance of always maintaining a longer term perspective on budget planning rather than reacting to the changing circumstances of just one year. That is why our emphasis is on longer term economic trends and why our financial planning is designed to accommodate swings in our revenue base. I shall be presenting up-to-date information on the 1980-81 budget plan, which should be of particular interest to the Financial Critic. Mr. Speaker, I would like to out1ine the budget resu1ts for fiscal 1980-81. I shall first briefly high1ight the performance of the New Brunswick economy last year. The current estimate of growth in GDP for 1980 is 11.5%, about the same as I expected 1ast March. However, the inflation rate was higher than earlier forecast and as a result the real growth in GDP is about 1%, somewhat less than expected; nevertheless, Mr. Speaker, this was superior to performance in the country as a whole. The main strength in our economy during 1980 was in exports. Foreign demand for our products remained quite strong throughout 1980. The largest gains in foreign sales were in the paper products, wood pulp, fertilizer, electricity, fish, and food and beverage categories of export. Mr. Speaker, our employment creation record was better than expected. The number employed increased by 3.2%, which compared favourably to the national growth of 2.8%. The New Brunswick unemployment rate was 11.1%, unchanged from 1979. However, there was unexpected weakness in two sectors: retail trade and investment. Total retai1 trade is now estimated to have grown by only 7.4% compared to last March's projected rate of about 10%. Investment declined by 8%, compared to a forecast increase of 3% to 4% last March. Total ordinary revenue from our own sources is now expected to be higher than budget by about $10 million. This is in large part due to growth in the corporate income tax, which is estimated by the federal government to be $32 million higher than budget. Other major changes between current estimates of own source ordinary revenue and the budget for 1980-81 are as follows: the personal income tax is $9.8 million higher due to prior year adjustments; social services and education tax is $15.3 million lower due to lower retail sales; the mining income tax is $11 million lower largely due to the strike at Brunswick Mining and Smelting; the provincial property tax is $6.3 million lower due to overestimated assessments and increased property taxes paid by the province to municipalities; the gasoline and motive fuel tax is down $3.2 million due to lower consumption. The higher than expected revenues from our own sources are now anticipated to be more than offset by lower revenues from Canada. This is because of the nature of the equalization formula, most of the gain from higher than forecast corporate income tax will be lost from our equalization revenues. This, plus other factors such as lower revenues to be equalized in other provinces will result in revenues from Canada being down by $48 million or 6.8% below budget estimates. This, once again, Mr. Speaker, indicates how extremely vulnerable provincial finances are to changes in transfers from Canada. As a result, I now expect that ordinary revenue will fall short of budget estimates by $38.1 million. On the expenditure side, spending for 1980-81 is estimated to be below budget. I though spending on health, social assistance payments and student aid were well above the budget estimates, under-expenditures, largely in the service of the public debt, more than offset these increases. The net result of these ordinary account changes is a surplus of $18.3 million instead of $54.7 million which was forecast in my last budget speech. Capital expenditures are now anticipated to be $7.8 million less than budget estimates, mainly due to lower expenditures under the General' Development Agreement partly because of this, capital recoveries are $9.7 million less than expected, resulting in a capital deficit of $1.9 million more than forecast in the budget. The overa11 budgetary deficit is now estimated at $162.6 million, or $38.3 million higher than in the budget of last March. After taking into account sinking fund earnings, the indicated increase in the net debt for 1980-81 is $129.6 million. Net loans and advance share up by $ 3 million and sinking fund instalments and serial redemptions are down by $ 1 million from budget. As a result of these changes, Mr. Speaker, financial requirements for 1980- 81 are now estimated to be $235.1 million or $40.3 million higher than budget. Mr. Speaker, I shall now reV1ew the capital financing program of the province and the New Brunswick Electric Power Commission in 1980-81. The turbulence in North American financial markets, to which I referred in my budget speech of a year ago, persisted throughout the past fiscal year. The Bank of Canada rate which stood at 16.2% at the beginning of the year reached a low point in July of 10.18% and has since increased again to its present level of approximately 17%. Provincial bond yields declined by 2 percentage points in the early part of the fiscal year but have since returned to their previous levels. During fiscal 1980-81, the province issued bonds in the total amount of $128 million comprised of: $53 million to the Canada Pension Plan Investment Fund at interest rates ranging from 11.61% to 13.39%, and $75 million to the Alberta Heritage Savings Trust Fund with 'an interest rate of 11- 7/8%. The average interest rate on these issues was 12.17%. An additional offering of $50 million of 13-3/4% bond was made on the Canadian pub1ic market in March, but these bonds will not be issued until the 1981-82 fiscal year. The province also guaranteed $110 million of bonds issued by the New Brunswick Electric Power Commission, inc1uding $75 million sold on the Canadian bond market with interest rates of 13-3/4% and $35 million sold to the Alberta Heritage Savings Trust Fund with an interest rate of 11-7/8%. I am pleased to report to hon. members that investors continue to be impressed with the financial management practices of the government. This was reaffirmed last fall when the two New York- based rating agencies, Standard and Poor's Corporation and Moody's Investors Services, conducted a review of their ratings on bonds issued by the province of New Brunswick and the New Brunswick Electric Power Commission. The statements released by the agencies as a result of this review were complimentary and our credit ratings were maintained at A+ and Al respectively. The agencies were favourably impressed with our economic development program and our record of financial management. I would like to quote directly from the report of Standard and Poor's Corporation: Despite its continued participation in a wide range of economic development activities, the provincial governments own financial position has strengthened recently. Expenditures have been contained over the last three years within the provincial target, growing at an average rate which is less than the nominal growth of gross provincial product. The economic downturn's impact upon revenues did produce an operating deficit in the fiscal year ended March 1978, but the speed and size of the provincial government's austerity measures during that period helped considerably to minimize the size of that deficit. This demonstrably effective system of budgetary and financial control has and should continue to be an important factor in containing the province's susceptibility to the cyclicality of its revenue base. Mr. Speaker, I shall now review federal-provincial fiscal relations. There were two federal provincial meetings of finance ministers and treasurers in 1980. The most important matter discussed was the renegotiation of the Federal Provincial Fiscal Arrangements and Established Programs Financing Act. Honourable members are aware that 1981-82 is the last year in which transfers from the government of Canada will be authorized by the 1977 Fiscal Arrangements and Established Programs Financing Act. A new Fiscal Arrangements Act for the 1982-87 period is expected to be negotiated in 1981. Because of the significance of these negotiations, honourable members will find a paper in the budget documents, which describes the current fiscal arrangements and outlines their significance to New Brunswick. Past negotiations on fiscal arrangements have been difficult and time consuming. Renegotiations of the current fiscal arrangements are expected to be no easier for several reasons. First, parallel discussions continue on the Constitution and energy pricing. The outcome of these deliberations will have a significant impact on the country and on the financial arrangements between the federal and provincial governments. Secondly, current economic and fiscal problems are expected to limit federal options in these negotiations. The federal government is clearly in a financial squeeze, which is apparent from its $14 billion deficit. New Brunswick was confronted with several examples of federal expenditure cutting efforts, including a proposed RCMP contract that is unacceptably costly to us and the sudden cancellation of the Community Services Contribution Program. The federal government gave an indication of its intentions regarding fiscal arrangements in both its October 1980 budget speech and its recently tabled estimates. According to these documents, transfers to the provinces for social programs will be reduced. Mr. Speaker, these programs include the Canada Assistance Plan under which several of our social programs are cost-shared with Ottawa, and Established Programs Financing which provides block funding for hospital- insurance, extended health care, Medicare and post-secondary education. Although the se programs are the responsibility of the provinces, many of them were sponsored or encouraged by the government of Canada in the late 1960's and the early 1970's. Their continued commitment is a necessity to ensure the perpetuation of these programs and the preservation of national standards. Mr. Speaker, I shall now turn to the Budget Plan for 1981-82. The main objective of the plan is to accommodate service demands and economic conditions within the constraints imposed by good financial management practices. One of our major concerns in developing this budget was to ensure that services provided by this government are reasonably, comparable to services enjoyed by Canadians in other provinces. Over the past decade this government has significantly improved the quality of services available to the people of New Brunswick. Mr. Speaker, the issue of public services and the expectations of people concerning what their government can or shou1d do is national in scope. We are also part of the Canadian community which has experienced improvements in the quantity and quality of government services. While we have made considerable progress in catching up to the rest of Canada, citizens of this province quite legitimately expect their government to provide services comparable to other jurisdictions. We cannot lag too far behind and still maintain an Before leaving the subject of federal-provincial fiscal relations, I shall refer briefly to the report by Mr. Justice Emmett Hall entitled "Canada’s National-Provincial Health Programs for the 1980's". Released in early September of last year, the Hall report confirmed the position that this government has been taking for over two years. To the allegation that provinces have been diverting federal health dollars to other programs, Mr. Justice Hall concluded that the case "is not established" acceptable quality of life and level of economic opportunity for New Brunswick citizens. That is why we attach such importance to the federal-provincial fiscal arrangements which were established to ensure such comparability of service without burdensome levels of taxation. It is clear that most governments in this country are having increasing' difficulty in accommodating these public expectations, and it is an inescapable fact that many services, particularly in the health care field, are becoming more and more expensive. The financial implications of meeting these expectations are likely to be felt first in the poorer provinces where, it appears, the current fiscal arrangements are not adequate to ensure the financial resources to provide services comparable to the richer provinces providing these services in 1981-82, Mr. Speaker, requires ordinary spending of $1 752 000 000, a substantial increase of 16.3% over the 1980-81 budget. In previous budgets we have been able to offset part of the increased cost of improved services by efficiency gains. Examples of such gains within my own department include savings of over $2 million by better cash management and improvements in accounts receivable. All ministers have realized such savings, but they are becoming increasingly difficult to realize on a substantial scale. The economic outlook for 1981 suggests an expansive fiscal policy. A general slowdown in international economic activity is reflected in the New Brunswick economic forecast for 1981, which foresees real GDP growth of about 1% and a slight rise in the unemployment rate to 11.5%. We view this as a short-run cyc1ical phenomenon and anticipate that the New Brunswick economy will pick up again in 1982. In this environment the budget must be designed to bolster the economy through a year of slow growth. Responding to demands for services as well as to economic conditions without compromising our financial position has proven challenging for 1981-82, particularly in the face of various constraints on our revenues. Mr. Speaker, the government has three sources of funds available to it: (1) revenues from our own tax base, (2) revenues from the federal government, and (3) borrowed funds. I would like to make some comments on these sources. Firstly, the slowdown in economic activity, which I described earlier, has depressed the growth in our own tax revenues. Secondly, the growth in revenues from Canada is also expected to be slower than in the earlier phase of the current fiscal arrangements. The fiscal problems of Canada have resulted in decreased financial assistance from the federal government in several areas and strong indications that further reductions are likely. Because our equalization revenue varies directly with revenue growth in other provinces, the national slowdown in economic activity has created a slowing growth in equalization revenues. Furthermore, the full phasing in of Established Programs Financing has also resulted in reduced growth in this other major source of federal funding. The third avenue open to us is borrowing. Our policy of making prudent use of this alternative will be maintained in spite of these factors' dampening growth in revenue from bath our own taxes and from Canada. Borrowing is a source of funds that the government has safeguarded by maintaining a reputation for financial responsibility throughout its term in office. During the last decade we have significantly improved the province's financial position while, at the same time, reducing taxes and expanding services. When necessary we have cut expenditures. The high priority which we have placed on economic development has resulted in unprecedented economic growth and a much stronger economic base than existed a decade ago. The combination of a stronger economy and careful expenditure management has resulted in debt levels which, as a percent of gross domestic product, personal in care and government expenditure, are significantly below the levels experienced 10 years ago. Mr. Speaker, it is essential that our reputation for good financial management be retained. It will save significant sums of money in the troubled financial markets that 1 foresee. The financial environment has been very unsettled during 1980 and further instability is forecast for this year. Borrowers are seeking record amounts while lenders are becoming increasingly cautious. Preliminary estimates indicate that provincial governments and their utilities will require some $8 billion from public market sources in 1981-82. In addition, the federal government will require more than $13 billion and substantial requirements are expected from Canadian corporations. Even under the most receptive bond market conditions, such massive amounts of financing will be difficult to absorb. Interest rates are expected to remain very high and possibly increase beyond their present levels. The market for long-term bond issues, which is the traditional market for government borrowers, is shrinking as investors attempt to protect themselves against inflation by investing in shorter term instruments. This is a market environment which favours the lender rather than the borrower. So that we will be able to take advantage of borrowing opportunities as and when they appear, I shall be requesting the Legislature to give early consent to the 1981 Loan Act. Mr. Speaker, governments in Canada will find it more and more difficult to borrow on the scale contemplated for 1981. Inflation, higher interest rates, further disruptions in financial markets and crowding out of corporate borrowers will be the likely result. Such an outcome would obviously not be conducive to strong private investment which is a prerequisite to a rapidly growing economy. While it is incumbent upon us as a responsible government to curb our borrowing level, we look to the government of Canada to maintain a balance among regions in terms of economic opportunity and government service. As well as the national responsibility, it has the power to develop the necessary economic policies and system of fiscal transfers to achieve that end. Mr. Speaker, the case for an expensive fiscal policy in our response to the economic circumstances forecast for 1981 must be tempered by the requirements of prudent financial management and an acknowledgment of difficult financial markets. In striking a balance, we have concluded that an Ordinary Account deficit of $10 million would be acceptable. With a capital budget of $211.3 million and capital recoveries of $29 million, net loans and advances of $30.1 million and sinking fund instalments and serial redemptions of $37.8 million, financial requirements wi11 be $260.3 million in 1981-82. Mr. Speaker, such borrowing is well within the bounds of good financial management. If adequate services are to be provided and if we are to avoid burdening the economy's recovery from recession by imposing an onerous tax increase, this is the only option available to us. Although a significant increase in borrowing is manageable in 1981-82, it is not an option which can continue year after year. Mr. Speaker, I shall now outline the highlights of the expenditure program for 1981-82. The Expenditure Program The 1981-82 budget provides for ordinary account spending of 1,088.2 million de dollars in social departments, a substantial increase of 16.2% over budget estimates for 1980 81. Capital expenditures and gross loans and advances are budgeted at 67.7 million de dollars and 16.9 million, respectively. The departments of Health Education and Social Services again account for the bulk of social policy expenditures. These three departments, whose programs and services are central to the achievement of the government's social objectives, make up approximately 83% of total social policy spending. Ministers on the Cabinet Committee on Social Development have been able to protect basic service levels in key social programs through some reordering of priorities, while at the same time providing for new initiatives in several areas. I shall now out line some of the highlights of social development expenditures planned for 1981-82. Funds will be provided to the Department of Health for a pilot project to test a new approach to health care called the extra-Mural Hospital Program". This approach to health care provides for medical, nursing, rehabilitation and other services in the patient's own home. If the pilot project proves successful, it will gradually become a functional part of the health care system. This pilot project is in keeping with our policy for continually searching for new ways to improve service while reducing costs. The main purpose of the program is to reduce the need for expensive institutional beds, while effectively caring for patients. A medical residency program will be established at the Georges I. Dumont Hospital in order that doctors in francophone medical schools may intern in their first language. We are hopeful that a number of these doctors will eventually establish practices in New Brunswick. An optometric services program will be introduced to provide for one free examination annually by an optometrist or ophthalmologist for all residents of the province aged 18 or younger. The government attaches particular importance to providing such care to our youth because of the advantages of identifying sight problems early in life. It is also this age group which makes the greatest utilization of optometrical and ophthalmological services. In education, a number of improvements will be made to language training programs. Three new school districts will be added to the French First Language Program. The French Immersion Program will be offered in those school districts where sufficient student interest warrants the establishment of immersion classes. The "1200 hour program", which provides second language training from Grade 3 through to Grade 12, will be expanded to four additional school districts. The Department of Education will also receive funds to purchase safety equipment for school laboratories and to further expand the teaching of physical education in elementary schools. Mr. Speaker, the New Brunswick Housing Corporation will receive funds to operate a $500 energy conservation grant program for the construction of new single-detached housing units. This program will replace the existing $500 grant program on new construction. A second rehabilitation unit comprising fifteen additional beds will be opened by the Alcoholism and Drug Dependency Commission at the Ridgewood Treatment and Rehabilitation Center. Mr. Speaker, I am also pleased to announce that a women's treatment facility will be opened in Campbellton in fiscal 1981-82. A civil legal aid program will be introduced in 1981-82 and the Unified Family Court will be expanded. The budget provides for continued enrichment of the Student Aid Program. The maximum bursary now available to a New Brunswick university student has been increased by $700 to $1700. The budget of the Department of Continuing Education includes $1 million for further planning and development of three Community Colleges. These campuses will be located in Woodstock, the Miramichi and the southeast sector of the Province. Mr. Speaker, I turn now to spending by economic development departments. In order to provide citizens of New Brunswick with services reasonably comparable to those in other provinces, we must sustain our efforts to develop the province's economy. Implementation of the province’s economic development strategy requires continuing emphasis on sectoral development programs, as well as special initiatives in response to specific development opportunities. These basic principles underlie the economic development thrust of this budget. Ordinary expenditures by economic development departments are budgeted at $401.9 million in the 1981-82 fiscal years, an increase of 15.9% over budget estimates. Capital expenditures and gross loans and advances are budgeted at $138.3 million and $36.3 million, respectively. Ministers will be providing details on initiatives within their departments. However, 1 shall touch briefly on a few of them, particularly as they relate to development of the province's resource sectors. In agriculture, there is a special emphasis on potato development, production and marketing. This will capitalize upon, and develop, our proven strength in this commodity. There is also provision for an additional $250 000 contribution towards the Moncton Agrena. Mr. Speaker, New Brunswick's forests traditionally have been one of our most important assets. This budget allow for the continuation of provincial efforts to ensure the viability of the forest sector. To provides for measures necessary to implement the new Crown Lands and Forests Act which comes into effect on April I, 1982 and for an expanded budworm spray program. As I shall note shortly, forestry-related C.D.A. sub-agreements also constitute an important element of our efforts in this sector. In fisheries, further progress in implementation of the Fisheries Development Plan is provided through increased funding to the Fisheries Development Board for vessel construction and aquaculture. In addition, money will be available for training both fishermen and fish plant employees. Measures are also provided to encourage upgrading of vessels necessary to maintain fish quality while bringing it to shore. Efforts to develop the province's mining sector have paid off handsomely in recent years as evidenced by the development of potash deposits in the Sussex area and the Mount Pleasant tungsten-molybdenum deposits. We are continuing to press for construct ion of a zinc smelter and negotiations with Brunswick Mining and Smelting are proceeding. In tourism, capital funds are provided for further upgrading in provincial parks and for tourist information centers in Chatham and Saint John. Mr. Speaker, we shall also continue our efforts to diversify our manufacturing base and to increase the degree of resource processing. Funds are provided in the Department of Commerce and Development for increased emphasis on science and technology, and the food sector. Funds are also provided for provincial representation in Houston, Texas, and for several major development projects. Mr. Speaker, 1 should also note the proposed eastern extension of the natural gas pipeline which, including the internal distribution system of natural gas in the province, will be one of the largest projects ever carried out in New Brunswick. This budget provides for additional funding to ensure that New Brunswick's interests are well-served. The budget also provides for continuing participation in federal-provincial energy agreements and for continuing efforts aimed at energy conservation. The General Development Agreement continues to be an essential complement to provincial economic development policies and programs. The 1981-82 budget provides for expenditures of $64.7 million under this agreement through the Community Improvement Corporation. The forestry-related agreements, inc1uding the recently signed Forestry Sub-agreement and the Pulp and Paper Sub-agreement, constitute positive joint efforts to enhance the viability of this important resource base. The $37.5 million Forestry Sub-agreement focuses on forest management and continues to provide measures to ensure an adequate soft wood supply to me et industry requirements. The $42.3 million Pulp and Paper Sub-agreement provides incentives for companies to invest in pollution abatement equipment and to modernize production processes. It also encourages the industry to increase value added in production and make efficient use 'of energy resources. This agreement will bring about a total investment of $500 million in the modernization of the industry. Mr. Speaker, there is provision in the budget for work on the first phase of the Market Square project in Saint John. A $10.1 million sub-agreement, signed during the past year, provides financial assistance for the trade center and hotel. The province has budgeted an additional $2.1 million in 1981-82 towards the library, parking and other urban renewal related aspects of the complex. Mr. Speaker, while the province has been successfully having three sub-agreements signed by the federal government during the past year, it has been held up by Canada's apparent reluctance to proceed with signing sub-agreements negotiated by DREE and the province. The Industrial Development Subsidiary Agreement, approved by the province and negotiated with DREE over a year ago, has yet to receive final federal approval. Programs in this agreement such as the Regional Economic Development Commissions and the cost-shared Small Business Financial Assistance Program are integral components of the province's economic development efforts. The province wi11 continue to fund these programs in anticipation of early federal approval. In keeping with previous practice, the main economic emphasis of this budget is on longer-term job creation. However, because unemployment is not forecast to decrease, our short-term job creation efforts will continue in 1981-82. Mr. Speaker, the job creation strategy had created more than one thousand jobs by the end of February, 1981. It is noteworthy that close to one-half of the employees hired by the private sector have been retained by their employers on a full-time basis even though government funding had ended. Mr. Speaker, 1 shall now deal with the revenue changes that are incorporated into the Budget Plan for 1981-82. In keeping with our past policy of adjusting the tax system in response to changing circumstances, as well as in response to citizens' representations, this budget provides for several reductions in taxes - 1 repeat, Mr. Speaker, several reductions in taxes. 1. Effective midnight tonight, wood stoves and wood furnaces will no longer be subject to the provincial social services and education tax. In the case of combination furnaces that burn wood, one-half of the cost of the unit will be subject to the tax. This measure is being introduced to reduce the cost of switching to wood from other increasingly costly sources of heat. The estimated revenue loss to the provincial treasury will be about $300 000 in 1981-82. 2. Effective midnight tonight, used mobile homes will no longer be subject to provincial sales tax. Mr. Speaker, this government agrees with representations that it is unfair to tax sales of used mobile homes, while permanent residences are not subject to such tax. The estimated revenue loss is about $400 000. 3. Effective midnight tonight, purchases of prepared meals valued at $3 or les s will be exempt from the social services and education tax. This is in recognition of the fact that many people have no choice but to purchase prepared meal sand that inflation has eroded the real value of the current $2 exemption. Candy bars costing less than 514 will also be exempt from social services and education tax, as of midnight tonight. The revenue loss as a result of these measures is estimated to be $1 million. 4. Mr. Speaker, the provincial property tax credit for owner occupied residences has substantially reduced the tax burden on the home owners of this province; however, we have received numerous representations concerning the application of this measure to vacant property. I refer to the situation where a residential property was vacant on January 1 and the owner on that date, or subsequent owners during the year, did not receive the credit. Effective midnight tonight, a person who acquires or inhabits a property as his or her principal place of residence may apply for a tax credit for that portion of the year for which he or she has occupied the property. I should inform members that by the end of 1980-81, the estimated value of all the taxes removed by this government exceeds the value of its tax increases by over $300 million. Mr. Speaker, our accomplishments in this regard are reflected in research into taxes borne by citizens in this province compared to other jurisdictions. These studies indicate that taxation levels here compare very favourably with other provinces and, by some measures, we are among the lowest in Canada. Mr. Speaker, there are only two tax increases in this budget, reflecting our concern not to burden the economy’s recovery from recession. The tax increases are as follows: 1. Effective January I, 1981, the standard corporate income tax rate increases from 12% to 14%. The rate for small corporations eligible for the federal small business rate remains at 9%. This increase will yield $9.9 million additional revenue in 1981-82, while leaving us with competitive tax rates. 2. Effective midnight tonight, the tax on tobacco will be 34% of selling price. On a package of 25 cigarettes, the tax will increase by 9. The increase on other tobacco products will vary, depending on the current rate of tax. This will add $8.8 million to revenue in 1981-82. There is one further tax adjustment. Our gasoline and motive fuel tax is based on the quantity of fuel sold rather than on its value. Because the amount of fuel consumed has been increasing s lowly, our revenue from this source has not kept pace with the growth in other revenues or the cost of government services. To correct this situation, I shall be introducing legislation to make this tax a set percentage of selling price rather than a fixed charge per litre. This will be accomplished simply by converting the charge per litre to a percentage of selling price on the basis of prices charged on February 1, 1981. Thus the tax will become 16% of selling price for gasoline, 23% of selling price for diesel fuel, 10% of selling price for locomotive fuel and 3% of selling price for aviation fuel. The tax per litre charged at the pump will be adjusted quarterly on the basis of the above rates applied to selling price. The first adjustment at the pump will occur on July 1, 1981. We estimate that this will add $3.8 million to revenue in 1981-82. Mr. Speaker, the province's economy is strong. In the last decade New Brunswick recorded the fourth highest rate of growth of a 11 Canadian provinces, and the province's basic transportation, municipal and industrial infrastructure underwent significant improvement. We have the most diversified energy sources in the region. The prospects for growth and development of the economy during the 1980's are excellent. The forest processing industries are in the process of modernizing their facilities and a new plan for management of the forest resource has been adopted. The mining industry is about to enter a new phase of growth with the expansion of the Brunswick Mining and Smelting facilities, the development of potash in the Sussex region, and the opening of a new mine to produce molybdenum and tungsten at Mount Pleasant later this year. The outlook for fishing is excellent and agriculture is experiencing a turnaround. Mr. Speaker, personal income per capita has grown from 70% of the national level in 1969 to 72% in 1980. Our population has grown from 628 000 in 1969 to about 709 000 today and our rate of employment growth has kept pace with the national average. We have a great deal to be proud of and to look forward to, even though the present worldwide economic climate appears threatening. Mr. Speaker, the budget which I have presented provides for an ordinary account spending level of $1.752 million and ordinary account revenues of $1.742 million, yielding a deficit of $10 million. In order to keep the deficit within reasonable bounds and sti11 provide a level of government service comparable to the rest of Canada, a small tax increase of $22.5 mill ion has been necessary. With a capital budget of $211 million, in addition to the non budgetary expenditure items, financial requirements will be $260 million. Mr. Speaker, there are many uncertainties ahead as we approach a set of new fiscal arrangements with Canada and as the Canadian economy encounters continuing difficulties. This is not a time to either slash levels of service or to drastically increase taxes. It is a time for a careful response to current conditions and a sober assessment of the future as it unfolds. This budget provides such a response to events for 1981-82. Furthermore, the record of this government is clear proof of our ability to influence and respond effectively to future events as they unfold.