Province Législature Session Type de discours Date du discours Locuteur Fonction du locuteur Parti politique Nouveau-Brunswick 52e 2e Discours sur le Budget 31-03-1993 M. Allan Maher Ministre des Finances PL New Brunswick: Budget speech, March 31, 1993. Hon. Mr. MAHER: Madam Speaker, let me first of all commend, once again, His Honour the Lieutenant-Govemor and Madame Finn for the excellent job they do in representing Her Majesty in this province, and wish them well in the future. As well, Madam Speaker, I want to extend to you my own personal respect and congratulations for the manner in which you control this unruly crowd from time to time. I know it is not an easy task and you do it very well. Madam Speaker, it is indeed an honour to table the 1993-94 budget. This is the sixth budget of this government and it is certainly one of the more important ones in our history. It reflects the positive impact and the benefits of the policies we have implemented in our five previous budgets, and as well, this budget provides for new and responsible policies and actions to ensure a brighter financial future for all New Brunswickers. Last year, I indicated that New Brunswick, like the rest of the country, was beginning to emerge from a recession into an environment markedly different from a few years ago. That has happened. This new environment we face today is one where competition is the key, where change and efficiency are essential for survival, and where learning and knowledge have become the keys to long-term economic success. It is also an environment where all governments in ~ada face the dilemma of increasing public expectations which cannot be supported by the capacity of the economy. Madam Speaker, in New Brunswick, we are prepared to deal with the new economy and the new fiscal challenges which face all governments in Canada. We have exercised leadership in developing new and creative approaches to dealing with the growing demand for government services. We have made significant investments in developing our people and our economy, and we have managed our financial situation in a responsible manner. In short, Madam Speaker, we have stimulated our economy and we have practiced sound fiscal management. We have not wavered, and as a result, we are better able to meet our financial obligations. And this budget, Madam Speaker, does not waver from the responsible approach we have used in the past. In fact, this budget takes another giant step towards our goal of achieving financial and economic self-sufficiency for New Brunswick. Madam Speaker, I am firmly convinced that if we are-to realize our abundant potential, New Brunswickers must make a strong commitment to the future of this province; not just a commitment by government, but a shared commitment from business, labour, associations, interest groups, municipalities, elected and nonelected New Brunswickers. We are at a crossroads where, collectively, we must achieve the proper balance between preserving those programs and services which are most essential to New Brunswickers, and controlling government spending to ensure a prosperous future for our children. Madam Speaker, today I am asking everyone in this House, and everyone in the province, to join with me in a partnership to achieve that proper balance. The 1993-94 budget will require sacrifice and commitment, but it is a step down the road to a better tomorrow for all New Brunswickers. Madam Speaker, every province is suffering from the effects of the recent recession and subsequent slow growth period. Deficits have increased, debt has risen to unprecedented levels and the national economy has suffered. The solution to the dilemma of deficits and debt will not come from quick fixes. It will not be accomplished through massive additional amounts of overspending. It will not be accomplished by crippling the economy with oppressive tax increases. No, Madam Speaker, the solution comes from a responsible balance between economic stimulation and fiscal responsibility. Madam Speaker, this budget includes a number of key elements with respect to the province's commitment to fiscal and financial responsibility: 1. It limits growth in Ordinary Account spending to 1.7%, the lowest growth in decades. 2. It keeps New Brunswick's tax burden below the average of all provinces. 3. It keeps the Ordinary Account deficit at only $41.5 million, down $95.8 million from the year just ended. 4. It addresses the province's fiscal problem on doth the spending and revenue sides, in a fair and balanced manner, in order to minimize the impact on those most in need. 5. Most importantly, Madam Speaker, it establishes the conditions necessary to balance ordinary revenues and expenditures in the next 12 months. In addition, this budget provides major funding allocations for education, including the excellence in education initiative. It provides funding for highway development and infrastructure improvements, key building blocks in making our transportation system safer and more productive. Furthermore, it includes important investments in economic development, job creation and training, while reorienting funding away from lower priority areas. This approach will help to ensure that the most valuable and necessary government services can be maintained into the future. Madam Speaker, before I outline the details of the budget plan for the 1993-94 fiscal year, I would first like to review developments for 1992-93, because they are important in terms of their impact on the 1993-94 fiscal year and beyond. 1992-93 IN REVIEW Economy in 1992 Madam Speaker, the world and North American economies have been going through a difficult period. Throughout 1990, 1991 and most of 1992, the major industrialized countries struggled with declining industrial output levels and rising unemployment. By the latter half of 1992, the United States and Canada began showing more consistent and widespread signs of an upturn. Here in New Brunswick, we saw considerable improvement in employment levels. Our employment levels in 1992 matched or exceeded those of the previous year over the March to December period. In fact, Madam Speaker, New Brunswick was one of only two provinces' to report employment increases during 1992. As well, New Brunswick's unemployment rate rose only slightly from 12.7% in 1991 to 12.8% in 1992. This represented the smallest increase in any province in Canada. Inflation rates, manufacturing shipments, retail sales and housing starts in New Brunswick were all better than the national average. During 1992, retail sales in New Brunswick increased at nearly twice the average for Canada. The combined effects of more aggressive pricing and sales techniques, a decline in cross- border travel, and Sunday shopping in the last four months of the year, all helped generate increased sales for most provincial retailers. Consumer prices in the province increased at less than one half the national rate in 1992. Manufacturing shipments rose sharply in the July to December period and were up 6 % for the full year, compared to a 1 % increase for Canada. Madam Speaker, all these achievements are important because they place New Brunswick at the forefront of future economic development. While the New Brunswick economy began to improve markedly over the past year, the New Brunswick government also managed to continue to make progress in confronting the serious fiscal challenges facing all governments in Canada. 1992-93 Fiscal Situation Madam Speaker, today I am including with the budget documents, the Third Quarter Report on the province's finances for the 1992-93 fiscal year. I am very pleased to report that based on improved results at the end of the third quarter, spending will be very close to the 4 % target established in the 1992-93 budget. The government's expenditure targets have been met, because of the successful initiatives in last year's budget and the management skills of those involved in delivering programs and services to the people of New Brunswick. Recent adjustments in federal transfer payments have increased estimated revenues for the past fiscal year above the second quarter estimate, and have helped us to bring the Ordinary Account deficit in 1992-93 in line with budgeted levels. We have recently received notice that the province was significantly underpaid by Ottawa for prior years for both Equalization and Established Programs Financing. Since these additional revenues will be accounted for in 1992-93, the payments for prior years offset increased costs for income assistance benefits as well as losses in income and consumption taxes which occurred not only in New Brunswick but across the country in 1992-93. The Ordinary Account deficit will be $137.3 million for 1992-93, down $61.4 million from second quarter and essentially on target with the budget forecast. In general, from a revenue perspective, governments as a whole have had to cope with declining revenues in 1992-93. A slow-growing economy left income taxes and consumption tax revenues across the country markedly below budgeted levels. As a result, a number of governments announced in-year restraint programs and even major tax increases to contain the deterioration in their budgets. It is clear the recession has left a scar across the financial landscape in this country, and it is also clear that it will take some time for it to be completely healed. The financial situation for 1993-94 in all parts of Canada will be affected by these recent developments. And now, Madam Speaker, I would like to briefly outline the economic and budgetary challenges we face in the coming year. ECONOMIC AND FISCAL OUTLOOK Economy Madam Speaker, as I pointed out earlier, the economy of this Province performed rather well in the national context during 1991 and 1992. For 1993, I expect this to continue. New Brunswick’s growth in a real Gross Domestic Product will be about 2.6%. Many forecasters, including the Atlantic Provinces Economic Council and the Conference Board of Canada, are predicting that this province’s economy will outperform the rest of Atlantic Canada and much of the rest of the country this year. Economic growth this year, Madam Speaker, will be much more balanced than in recent years. The logging, manufacturing, transportation, communications, trade, community, business and personal services industries are all projected to experience better performances during 1993. Furthermore, I expect our recent successes in attracting many new high technology and telecommunications businesses to the province will continue to provide a major boost to the economy. Revenues and Federal-Provincial Relations Madam Speaker, while the economy will improve and grow in 1993, our revenues will not keep pace. In fact, there are some revenues which are unlikely to grow very quickly for some time to come.Tobacco tax revenues, gasoline tax revenues, liquor trading profits, and revenues from licenses and permits will not grow as fast as the economy. Transfer payments from Canada remain a persistent problem and are not expected to keep up with the province's expenditure needs in some of its largest and most important programs. Madam Speaker, a number of important developments affecting the province's transfer payments from Canada are worth noting. The Equalization Program was renewed last year for a two-year term to March 31, 1994. Although there has been no ceiling on equalization payments for the 1992- 93 fiscal year, I regret that the provinces have not been successful in convincing the federal government to eliminate this arbitrary ceiling provision from the Equalization Program. The equalization ceiling has already deprived New Brunswick of millions of dollars in fiscal equalization payments and once again threatens to undermine the basic principle of equalization over the coming year. Together with the current freeze on our total Established Programs Financing entitlements, which help pay for our health care and postsecondary education programs, federal fiscal restraint places a severe restriction on New Brunswick's ability to meet the increasing costs of providing public services. The most recent data suggests that federal restraint in these two programs alone will cost New Brunswick in excess of $180 million in the coming year. A recent study by the C. D. Howe Institute concluded that: "... health care related offloading, which varies in extent from province to province, now amounts to about $1.7 billion per year. " Federal and provincial Ministers of Finance are currently involved in an in-depth review of the three major federal transfer programs-Equalization, Established Programs Financing and the Canada Assistance Plan. This review will involve intense consultation and negotiations over the coming months. In these negotiations, New Brunswick will continue to press to ensure that federal transfers satisfy the constitutional commitment to enable provinces to provide their citizens with reasonably comparable public services at comparable levels of taxation. Our negotiations will focus on improvements to the Equalization Program and removal of the ceiling. Furthermore, New Brunswick will refuse to accept any structural changes in the Equalization Program, Established Programs Financing or the Canada Assistance Plan that could jeopardize this province's ability to meet current or future national program standards or objectives. Madam Speaker, under the Federal-Provincial Fiscal Arrangements Act, the federal government has a Fiscal Stabilization Program, which provides financial support to provinces suffering an absolute year-over-year decline in revenues as a result of a sudden economic downturn. Interim payments were recently made under this program to the provinces of Ontario, Saskatchewan and Prince Edward Island. Our Department of Finance is currently assessing the province's eligibility for a fiscal stabilization payment for 1991-92. Madam Speaker, economic growth and an expanding economy lead to increased revenues, and there is every indication that will happen in 1993-94. However, for reasons outlined earlier, economic growth will not by itself be sufficient to eliminate New Brunswick's deficit. The only way to come to terms with the imbalance between revenues and expenditures is to reduce the spending growth rate permanently and bring revenues more in line with spending requirements. Expenditure Challenge The 1993-94 budget provides $3.94 billion for ordinary spending in the coming year. At least 30.7% of that, or $1.21 billion, will be spent on health care; 22.7%, or $895 million, on education; 7.9%, or $311 million, on income assistance; 3.3%, or $128 million, on transportation. For a population of 729,300, these are large sums of money. In order to illustrate how large these costs are in terms of the average citizen, Madam Speaker, there are some startling numbers to consider. For example, one year for a resident in a nursing home costs the province $36 500; a two-week stay in a hospital costs $7000; a year in the school system represents $4400 per child; a year in university costs the taxpayer $7000 per student. The problem in New Brunswick and across the country is that some of the largest programs are also among the fastest growing, and at rates above the growth in revenues. As a result, to meet these expenditures, it is necessary each year to reduce or eliminate other programs or raise taxes to make up the shortfall. It is clear that administrative cuts, overhead reductions and similar other actions are only part of the solution to dealing with expenditure pressures. Unless long-term growth rates of the largest and most expensive programs are controlled, the deficit problem will not go away. Clearly, this country and this province must aggressively control costs in these areas, or we stand in danger of losing some of the most important programs and services which New Brunswickers have every right to expect. Debt and Deficit – Structural Challenge Madam Speaker, over the last five years, controlling costs has been a primary goal of New Brunswick's budgets. More than $250 million in overhead and administrative costs have been removed and further reductions are to be realized this year. There has been a net decrease of 1300 full-time equivalent positions. The Cabinet has been reduced by 25 %, and many other measures to cut costs have been successfully implemented. I only wish I could report that these measures were enough to deal with our deficit problem, but I cannot. The problem with deficits is that they accumulate and become part of our debt. For the year ending March 31, 1992, net debt as a percent of Gross Domestic Product, which is a measure of our ability to pay, was about 31 %, compared to a level of 27.6% in 1989-90. But if we do not take further action on both the expenditure and revenue fronts in the coming year, this ratio could reach 36 % in a matter of three years. In comparing the debt positions of provinces, it is difficult to come to a common definition; therefore, comparisons are not easily made. However, some agencies attempt to calculate a standard applesto-apples measure. One example is Standard & Poor's, one of the world's major credit rating agencies. Its data places New Brunswick's debt position at fourth best in the country as a percentage of Gross Domestic Product. While this is definitely positive for this province, it is clear that the country as a whole is facing a difficult fiscal problem, with deficits increasing at every level of government. Clearly, this cannot continue. In fact, Madam Speaker, economic .recovery and job creation will become imperilled if governments in Canada do not eliminate deficits and reduce public debt. Madam Speaker, in the 1992-93 Budget Speech, I outlined the factors which have led to a "structural" problem in New Brunswick's financial position. Developments over the past year have clearly borne out this assessment. The natural annual growth in demand for the largest and most costly programs continues to be greater than growth in the economy and revenues. Furthermore, as I mentioned earlier, some revenues, and in particular revenues from Canada, are not as large in relation to our needs as they once were. This creates a structural imbalance between revenues and expenditures that, together with interest costs on the past buildup of debt, could very quickly put the next generation of New Brunswickers at serious risk. We cannot in all conscience allow this to happen. All governments, including our own, must change the basic nature of programs and services in order to keep costs in line with government's ability to pay. Consulting with the Public For the third consecutive year, the Province of New Brunswick has undertaken pre-budget consultations with New Brunswickers across the Province. Meetings were carried out in 11 cities and towns during the month of February. During the four days scheduled, ministers and officials received thirty-five (35) presentations, eleven (11) of which were from individuals, twenty-one (21) from associations and three (3) from municipalities. Consultations sessions were also held with public sector unions and health and income assistance stakeholders. A 1993-94 fiscal outlook document for New Brunswick was mailed to over 600 organizations, associations and individuals, including all mayors of our cities, towns and villages. We received over 100 briefs and letters with comments and suggestions on the provincial budget. Madam Speaker, the government is very serious about the budget consultation process, and all groups, organizations and individuals that took time to participate are to be congratulated for their input into the budgetary process. A great many positive suggestions were made during this process, and I would like to briefly outline a couple at this time: ? Based on submissions from the Victorian Order of Nurses and other interested groups that deal with the most cost-effective method of delivering home care sessions, the government will undertake a study to identify the appropriate levels of service and associated costs for different types of home care visits. The Office of the Comptroller will be responsible for this review. ? A business person in Moncton put forward an idea to privatize the government's seedling production. In order to have a more precise idea of its cost-saving potential, the Department of Natural Resources and Energy will carry out a review of this interesting idea. ? Again this year, many New Brunswickers suggested that the government should not start expensive new programs if it has trouble financing existing programs and services. ? And once again, New Brunswickers indicated that they want the government to protect key programs and services, control the debt and protect the financial integrity of the province. Fiscal Plan Madam Speaker, in last year's budget speech, I indicated that this government would introduce legislation to balance the Ordinary Account over a fixed term. That legislation received first reading last fall and has gone to the Law Amendments Committee for a full hearing on the details to be contained in the final version. When I announced the legislation a year ago, it was in part a response to a projected ordinary deficit at that time of $300 million for 1992-93, rising to $578 million by 1995-96. I am confident that with the approaches we took last year, as well as the initiatives contained in this budget, we will have turned that around and will be able to achieve an overall balance in the foreseeable future. In order to proceed with a responsible and planned approach to managing our finances and continue the necessary actions to achieve a balanced Ordinary Account, we have developed a five- point strategy: 1. New Brunswick will enact the balanced budget legislation which will require an overall balance in the Ordinary Account over a fixed time period. 2. We will continue last year's measures to improve efficiency in government, by building on the more than $250 million in savings to date. Increased government efficiency will result in another $70 million being saved in the budget I am tabling today. 3. We will make structural adjustments to some of the essential but fastest growing programs, while providing support to those who need it most. 4. A number of progressive tax changes are being introduced, and care has been taken to ensure equity and fairness. 5. A moratorium will be implemented on the construction of new capital facilities. Net capital spending will be limited to $275 million beginning in 1994-95, and reduced to $250 million in 1995-96. The basic assumptions in our plan are that the economy will grow at an annual average rate of 4.7 % in nominal terms between 1993 and 1995. The management controls on Ordinary Account spending will limit spending increases to 2.5% per annum after 1993-94. In addition, limits on net capital spending will ease the pressure on debt service costs. Within the context of the fiscal environment we now foresee, I anticipate the Ordinary Account deficit turning into a surplus of $68.4 million by 1994-95; and by 1995-96 it will be $99.6 million, or more than enough to cover the relatively small deficit in the year ahead. With this strategy and fiscal plan, Madam Speaker, in addition to balancing the Ordinary Account, the budgetary deficit will fall to $349.1 million in 1993-94, or almost $150 million less than the third quarter in 1992-93. By 1995-96, the budgetary deficit will be less than one third the level of 1992-93. Furthermore, I anticipate that by 1995-96 we will actually be able to make modest reductions in the net debt. Madam Speaker, I would now like to provide details on the major budget initiatives. EXPENDITURE PLAN Background Madam Speaker, this budget is difficult and will require sacrifice from all New Brunswickers. In order to achieve a target of 1.7% in spending growth for 1993-94, the government bas bad to continue its expenditure restraint program. We are aggressively dealing with the structural problem we face. All departments have worked diligently to find measures to eliminate nonessential activities and to provide essential services at reasonable costs. In order to meet the expenditure challenge in the coming year, savings have been realized in areas such as commissions, boards, health care, transfers to municipalities, universities and government grants. Madam Speaker, you will find as we proceed through this budget and the estimates of departments that the measures the government is taking in New Brunswick are less onerous than measures that are being taken in other parts of Canada. Nevertheless, I cannot overemphasize the challenge of keeping the expenditure growth rate below 1.7% for the 1993-94 fiscal year. This is less than half the growth rate of the previous two years, and about one quarter of the growth rate two years before that. To stay within this spending target, the government must restrain growth in a number of departments. Eight departments will be growing less than the 2.4% projected rate of inflation and nine departments will have an absolute cut in their budgets in the coming year. Funding for the Department of Health and Community Services will increase as a result of this budget by 2.7%. This compares favourably with allocations to health care in other provinces. However, we do recognize that this increased growth figure in the Department of Health and Community Services will still represent a significant management challenge for health care providers in New Brunswick. Madam Speaker, in recent years, we have seen many changes take place, in a very short period of time, in both Canada and other countries. I believe there will continue to be many changes in the years ahead. For example: 1. Health care providers and users will become more aware of costs and must become more accountable for the provision and consumption of health care services. 2. Students in postsecondary institutions will have to be responsible for a greater share of their educational costs. Universities must become more efficient in program delivery. 3. Governments will continue to rationalize and downsize, and more government programs and activities will be privatized. 4. Inflation and negotiated wage settlements will remain low during the 1990s. 5. Governments must deal with the problem of deficits. They will become self-sufficient and collect sufficient revenues to pay for services provided. Expenditures Initiatives for 1993-94 Madam Speaker, governments must make very difficult decisions to identify and protect the most essential services to be provided to the public. Governments must decide how to best pay for essential services and move toward the provision of services on the basis of need. It should be clear that the crisis in public finances across Canada will restrict the ability of governments to introduce major new expensive programs for years to come. Madam Speaker, I will now provide highlights of some of the expenditure measures that the government plans to undertake in 1993-94. My colleagues will provide more details during discussion of their estimates. ? Because of the overriding need to deal with the deficit, there will be limited additional funding for new or enhanced program initiatives after 1993-94, except for those already announced, such as funding of the excellence in education program. ? For a number of years, New Brunswick has been amongst the highest provinces in terms of per capita spending on capital facilities. We have used the capital budget in the last two years to stimulate the economy during the recession and period of slow growth. Madam Speaker, it is critical that we control spending on the Capital Account, because the capital deficit is the largest contributor to the growth in debt. ? The government will limit the net capital budget to $275 million in 1994-95 and $250 million for 1995-96. As of today, there will be a moratorium on new capital projects other than those already announced and approved. This net capital budget will provide funding for a national highway agreement and will reflect an increasing emphasis on the maintenance of existing government buildings, schools and hospitals as opposed to the construction of new facilities. ? Local government structure and financing arrangements in New Brunswick have remained essentially unchanged for more than two decades. It is appropriate, therefore, at this time to reconsider certain elements of the system. One focus of the government is the question of local governance. Local governance in urban areas has recently been the basis for extensive consultations with New Brunswick mayors and councillors. The question of local governance in rural areas is being addressed by the Commission on Land Use and the Rural Environment, in the context of allowing local decisions to influence land use. In each of these instances, government's intent is to facilitate local decision making, enhance local accountability and provide means for local governments to deliver quality services at reasonable costs. Government will be considering recommendations from both of these exercises in the very near future. It is clear that measures must be taken to contain costs at the local level. Indeed, a compelling reason for the local government restructuring exercise is to position local government to best contend with fiscal challenges. New Brunswick's system of provincial-municipal fiscal arrangements, particularly the unconditional grant, has historically been one of the most generous in Canada. In an era of reduced fiscal capacity of the province, this area of provincial expenditure must be included in government's fiscal restraint measures. Accordingly, I am announcing today that the provincial-municipal fiscal transfers envelope will be reduced by $8 million in the 1994 municipal fiscal year. Since municipalities budget on a calendar year basis, one quarter of the reduction, or $2 million, will accrue to the 1993-94 fiscal year. I anticipate further reductions of the same magnitude will be required in future years. Recommendations on how these reductions may be achieved will be made by a Provincial Municipal Review Committee. This approach will ensure that municipal concerns are considered in the process. The committee will consider, and make recommendations on, the composition of the transfer envelope, how the transfers should be made and tax implications. I trust that in dealing with this reduction in transfers to municipalities, councils will make every effort to reduce current expenditures and contain future expenditure growth. In the context of the financial problem facing New Brunswick, and in view of the fact that municipalities do not have the pressures of debt and the major expenditure responsibilities of the province, what is being asked of municipal governments represents a relatively modest share of the overall restraint burden. Madam Speaker, the Prescription Drug Program will be reviewed in the coming year. The program will continue to be payer of last resort, but further measures will be introduced to reduce the cost of this program by $11 million, while still providing coverage to those most in need. I fully expect that most provinces will be targeting their expenditure decisions to direct programs to those most in need. In fact, one province recently announced in its budget that it will also constrain growth in its prescription drug program. Again, Madam Speaker, senior citizens' groups, both provincially and nationally, have lobbied governments with respect to the overutilization and overprescribing that takes place in various drug programs. In an environment where resources are more scarce than ever, it is appropriate that this program be targeted on the basis of need. Improving economic conditions will provide for a rationalization and refocusing of our employment development programs and will assist the Department of Income Assistance to live within its 1993-94 budget. Madam Speaker, the throne speech identified several areas in which progress will be made in 1993-94 on recommendations made in the second report of the Commission on Excellence in Education. I am pleased to say that this budget does provide important progress to be made this year in these areas. There will be increased access to community college places, as a result of this budget. Priorities such as New Brunswick Works and the Community Academic Services Program will continue to help New Brunswick and New Brunswickers become more self-sufficient. My colleague, the Minister of Advanced Education and Labour, will announce a redesigned student aid program later in this session, based on a loan/bursary mix, one which is both affordable and improves access for students. The estimates for the Maritime Provinces Higher Education Commission show that for 1993-94 its recommendation of 1.7% increase in university operating grant funding will be met. In addition, during the presentation of his estimates, the Minister of Advanced Education and Labour will be addressing the issue of limiting fee increases for university tuition over the next two years. Madam Speaker, because of financial circumstances, our government believes it is critically important to lead by example. Therefore, the salaries of the Premier, Cabinet ministers and MLAs will be frozen for a third consecutive year. This builds on what has been accomplished in the area of wage restraint for politicians' salaries in the past, including a rollback of 2 % for Cabinet ministers last year. Other than this, unlike in many other jurisdictions, there are no additional provisions for wage freezes or wage rollbacks in this budget. In keeping with the need to reduce costs, efforts to reduce the size of the public sector will continue to be a high priority for the government. Although over 1300 full-time equivalent positions have already been eliminated from the public sector in the past couple of years, the government has established a target to remove an additional 500 full-time equivalent positions from the system in 1993-94. The government will continue to make every effort to reduce the number of full-time equivalent positions through attrition, redeployment, reorganization and rationalization of government services. In addition, the government will seek cooperation from unions and all employees to expand existing voluntary time-off arrangements. Changing the Way We Do Things Madam Speaker, I believe that we are well along the road to more modem approaches for delivery of government programs and services. Not only does this render the programs and services more cost-efficient, it had the added advantage of improving government services to New Brunswickers. Let me give you some examples. Enhanced Regional Services In last year's budget speech, Madam Speaker, I announced that we would be testing a new initiative to consolidate a number of existing government services in a community into one location in order to provide better, more accessible services at less cost. This initiative was designed in response to the public's desire for us to provide better services while practicing financial restraint. I said then, and remain convinced, that a more integrated, customer-focused approach to serving the public can improve service delivery and also help keep costs down, thereby providing better value for tax dollars. I am pleased to report, Madam Speaker, that two New Brunswick service centres were recently opened in Woodstock and Caraquet to test the concept of providing "one-stop" shopping for the public. The centres provide up to 50 services, representative of 16 government departments, under one roof and behind a single counter. The public can obtain various licenses, permits and products, pay a number of taxes and fees, process documents and obtain information on many government programs, all in one location. Staff are cross-trained to deliver all the centres' services, from a fishing license to information on the testing of water samples. As well, a number of services, not previously available in the two communities, are now available through these centres. Privatization The key to economic recovery is the growth and prosperity of the private sector. We are committed to establishing the environment to facilitate this growth, namely by stabilizing and reducing the cost of government and by stimulating economic development, competitiveness and investment by the private sector. We have formulated an objective process for the identification and transfer of some service delivery from the public sector to the private sector. On an ongoing basis, we will review various government services to determine the viability and advantages of these services being delivered by the private sector. Special Operating Agencies Madam Speaker, in 1993-94, we will be examining new mechanisms for more effective administration and delivery of public services. Central to this examination is our desire to develop, in selected areas of government, nontraditional organizations which operate under principles which promote self-sufficiency, simplified and flexible management processes and accountability based on performance. The concept of special operating agencies is an example of a service delivery mechanism which exemplifies this direction. These agencies are self-contained service units carved out of regular departmental structures. They will be capable of rapidly responding to the needs of the public and will be accountable to government through approved and regularly reviewed business plans. Boards, Commissions, Tribunals and Agencies Madam Speaker, one of the many excellent suggestions that the government received from the budget consultation meetings held last year was an extensive review of boards, commissions, tribunals and agencies funded in whole or in part by the government. I announced this review in last year's budget speech. Well over 120 such agencies have been examined and several areas of duplication of service, redundancies and inefficiencies have been identified. The government will act immediately on this review. There are many opportunities to reduce the number and size of these agencies without significantly affecting levels of service to the public and interest groups. We will proceed to eliminate 23 agencies; a further 23 will be reduced to 6 agencies through amalgamation; and the review on 10 others will be finalized within the first few months of this fiscal year. This initiative will save the public $750 000 and I anticipate additional savings of $500 000 over the next year. As suggested again in this year's budget consultation process, we will continue to examine and aggressively review the future expenditures associated with those commissions, boards and agencies which remain. Madam Speaker, this represents another example of the excellent suggestions advanced to government through our prebudget consultations. As with many of the other suggestions received, the government will be taking immediate action to reduce the layers of government and improve the overall efficiency of government. Grants A central message in many budget briefs was that the government should carefully examine its grants program. Over the past several months, .a review of grants to organizations and individuals was carried out to identify which were considered discretionary and could therefore be reduced or eliminated. As a result of this review, departments have been requested to reduce grants by $2.8 million in 1993-94. REVENUE MEASURES Madam Speaker, it is never easy to ask the citizens of New Brunswick to make an additional contribution for services they receive from government. I realize that tax increases are difficult for individuals to accept; however, given the current fiscal situation in New Brunswick, as elsewhere in Canada, we must make progressive adjustments in various levels of taxation. I firmly believe that the revenue measures that I will announce represent a sound balance with the overall reductions in the cost of government programs provided for in this budget. In fact, in dealing with the structural deficit, for every $1 in tax increases, we have reduced the costs of providing government services by over $3. The revenue measures contained in this Budget have been carefully chosen to ensure that increased taxes are borne fairly and equitably. For the most part, tax changes are progressive in nature. The revenue measures I am announcing will reduce the deficit by $75 million in 1993-94. We must pay a larger share of the costs of programs and services to ensure we can continue to provide these necessary services next year and into the future. Without the revenue measures that I am announcing today, the province would have well over $100 million less in 1994-95 to provide valuable and much-needed services to New Brunswickers. For the fiscal year ending March 31, 1992, New Brunswick's tax burden, as measured by the percentage. of Gross Domestic Product going to provincial and local taxes, places the province as the third lowest in the country. With the modest revenue measures I am announcing today, New Brunswick's relative tax burden will remain well below the average of all provinces. Tax Measures to Improve Competitiveness Research and Development Tax Exemption It is clear, Madam Speaker, that in general New Brunswick's tax structure is relatively competitive when compared to other provinces. In an effort to improve the competitiveness of the province's tax system, last year I announced a sales tax exemption for 1-800 telephone service. This measure has been particularly successful in helping us to attract several new businesses and several hundred new jobs for New Brunswickers. In a similar vein, today I am announcing that effective January 1, 1993, there is an exemption under the Social Services and Education Tax Act for machinery and equipment, and parts thereof, which are used in research and development. This exemption is intended for scientific or technical research and not for market research or product testing. This measure will support the province's overall development strategy of attracting leading edge, knowledge-based industry to New Brunswick. It will be particularly useful to the university community. Venture Capital Tax Credit Madam Speaker, over the last several years, both national and provincial labour organizations such as the Canadian Federation of Labour and the New Brunswick Federation of Labour have requested that the province provide a personal income tax credit for investments in labour- sponsored venture capital funds. It is widely recognized that the small business sector in New Brunswick makes a major contribution to employment growth in our province. However, as everyone in this House is aware, small and mediumsized firms often have difficulty accessing equity financing. Therefore, Madam Speaker, as announced in the throne speech, the province will offer a 20 % tax credit against personal income tax otherwise payable, for eligible contributions to prescribed labour-sponsored venture capital funds, effective for the 1993 taxation year. Social Services and Education Tax Collecting Provincial Taxes at the Border As an initial means of reducing cross-border shopping, Madam Speaker, I announced in last year's budget that the province would enter into an agreement to have the federal government collect New Brunswick's tobacco tax and alcohol markups at the border. The province and the federal government reached an agreement whereby Revenue Canada began collecting New Brunswick's tobacco tax and alcohol markups at the border on July 1, 1992. This measure has been particularly successful in reducing the volume of tobacco and alcohol purchased across the border by New Brunswickers. Madam Speaker, despite the recent drop in crossborder shopping, leveling the playing field for the New Brunswick retail sector remains a priority of this government. In this regard, New Brunswick will be entering into an agreement to have the federal government collect provincial sales tax at international borders as soon as possible in the 1993-94 fiscal year. It is our intention to have an agreement in place by the summer. In order to have the federal government collect the province's sales tax at the border, New Brunswick is required to adjust its sales tax to cover a wider variety of items. Effective midnight tonight, the sales tax will apply to fertilizer, lime, shrubs and plants sold to nonfarmers; wood stoves; patterns and fabrics; and, as is currently the case with magazines, single copy purchases of newspapers. The exemption for school supplies will be limited to textbooks. The SOC exemption for candies and confections will be removed, and all snack foods will become taxable. Tax Simplification There are a number of other adjustments which simplify the administration of the provincial sales tax. In this respect, effective midnight tonight, the $1 prepared meal exemption, the sales tax exemption for meals purchased in hospital cafeterias, and the small sales exemption of 25C or less will be eliminated. In addition, the province's definition of basic groceries will be amended to bring it in line with the federal treatment of basic groceries. In 1993-94 these measures, including the revenue collected at the border, will generate $21.5 million. Clothing and Footwear Exemption New Brunswick has been the only province to have a complete exemption for clothing and footwear. Given New Brunswick's current fiscal circumstances, this cannot be sustained. Therefore, in order to generate additional revenue and to remove inequities in the tax system and make it fairer for all New Brunswickers, effective midnight tonight, the exemption for clothing and footwear will be limited to purchases of $100 or less per item. This will bring New Brunswick's treatment of clothing and footwear in line with Nova Scotia and will provide treatment similar to that given by Prince Edward Island. In addition, effective midnight tonight, special purpose sports clothing and footwear such as martial arts clothing, hockey pants and sports uniforms, including sweaters, shirts and socks, golf shoes, ski boots, curling shoes, bowling shoes and skates, as well as baseball, softball and soccer cleats, will be subject to tax regardless of price. These changes to the taxation of clothing and footwear will generate $14 million in fiscal 1993-94. Madam Speaker, today I am also extending the sales tax to selected recreational services. Effective midnight tonight, sales tax will apply to both single use charges and membership fees for golf, curling skiing, bowling, racquet sports, and private gymnasiums. This measure will generate approximated $2 million in fiscal 1993-94. Recreational Services Madam Speaker, today I am also extending the sales tax to selected recreational services. Effective midnight tonight, sales tax will apply to both single use charges and membership for golf, curling, skiing, bowling, racquet sports, and private gymnasiums. This measure will generate approximately $2 million in fiscal 1993-94. Status Indians Currently, Madam Speaker, the province provides a very broad sales tax exemption for purchases made by status Indians which goes beyond the provision of Section 87 of the Indian Act. To remove anomalies, and to comply with Section 87 of the Indian Act, effective midnight tonight, the sales tax exemption for purchases by status Indians will be limited to sales that occur on reserve land. With respect to the Tobacco Tax Act and the Gasoline and Motive Fuel Tax Act, the government is prepared to meet with Native leaders in an effort to negotiate agreements, and consider amendments to provide an exemption consistent with Section 87 of the Indian Act. Personal Income Tax Madam Speaker, effective January 1, 1993, the personal income tax rate will be increased from 60 % to 62 % of basic federal tax, and effective January 1, 1994, the rate will increase from 62% to 64%. This measure will yield approximately $30 million in 1993-94. As a result of this measure, New Brunswickers will see a modest increase in their provincial income tax obligations in 1993. However, because of recent changes in the federal surtax, the vast majority of New Brunswickers earning less than $100 000 will see only a marginal increase in their combined federal/provincial income tax liabilities for the 1993 taxation year. Property Tax Madam Speaker, there are a number of minor property tax changes I am announcing today. The property tax on freehold timber and farm woodlots has not been increased since 1983. The current deemed value for freehold timber is $80 per hectare. Effective for the 1994 property tax year, the deemed value for freehold timber will be increased to $100 per hectare. Property classified as a farm woodlot is currently assessed at a value which results in a tax of 80C per hectare in combined provincial and municipal taxes. Effective for the 1994 property tax year, the new combined tax for this class of property will be set at a value which will result in a combined tax of $1 per hectare. Madam Speaker, the province currently offers two property tax allowance programs which provide a reduction of up to $200 in an individual's property tax bill. The first allowance program is income-tested, while the second is provided to any property owner who is 65 years of age or older. The $200 low-income property tax allowance is available for individuals with not more than $9500 in total income and for couples where neither spouse has more than $9500 in income. Therefore, for couples, the effective income threshold can be as high as $19 000 in combined income. I am pleased to announce that the income thresholds for the lowincome property tax allowance program will be increased for the 1994 property tax bills. The income threshold for an individual will be increased to $12000, and the income threshold for couples will be increased to $20 000 with neither spouse having income of more than $12 000. This program is open to all property owners with incomes under the thresholds, regardless of age. As is the case with expenditure programs, the province can no longer afford to provide tax concessions to individuals simply on the basis of age. In this regard, New Brunswickers ability to pay must be given more weight. Therefore, effective for the 1994 property tax year, the $200 senior citizen property tax allowance will be eliminated. Seniors with limited means will continue to be eligible to receive the $200 property tax allowance under the enhanced low-income property tax allowance program. While these property tax measures will have only a minor revenue impact in fiscal 1993-94, they will be worth approximately $6 million in fiscal 1994-95. Video Lottery Madam Speaker, in addition to the other revenue measures I have announced, effective midnight tonight, I will be instructing the Atlantic Lottery Corporation to increase the province's share of net video lottery earnings. This change does not affect the payouts of video lottery games, only the distribution of net revenues. This measure is expected to generate $7 million in fiscal 1993-94. The details of this change have been conveyed to the Atlantic Lottery Corporation and other affected parties. CONCLUSION Madam Speaker, in this budget we opted for a responsible balance between cutting the growth in government expenditures and increasing revenues. The measures contained in this budget will keep the ordinary deficit relatively low, and the decisions taken this year, will lead to balanced ordinary accounts in future years. Madam Speaker, the budget places New Brunswick clearly at the forefront of responsible and progressive social, financial and economic policy in this country. It is a budget that sends a signal to New Brunswickers and others that we are responsibly investing in the future of New Brunswick, and are prepared to face the financial challenge before us. In the years to come, it will become clear that this was a pivotal budget, one that helped set the direction for New Brunswick to emerge from the recession stronger and better prepared to meet the challenges of a more dynamic, competitive and rapidly changing economic and fiscal environment. With Ordinary Account revenues of $3,900.3 million and Ordinary Account expenditures of $3,941.8 million, the Ordinary Account is budgeted to have a deficit of $41.5 million in 1993-94. Combining the deficit on the Ordinary Account with net capital spending, and the special purpose account, the budgetary deficit is budgeted at $349.1 million for 1993-94. With net loans and advances of $23.7 million and adjustments for provision for loan losses, financial requirements will be $445.4 million. With sinking fund earnings of $148.1 million, net debt is budgeted to increase by $201 million. In closing, Madam Speaker, I know some will say that our approach should have been different. That we should spend more, spend less, tax more or tax less. Madam Speaker, I respect those views. However, I believe that upon thoughtful assessment of our plans, our overall approach will be categorized as being fair. It represents an honest and genuine effort to invest in New Brunswickers and not mortgage our future. It represents the courage to deal responsibly with our problems today, in order that we may enjoy a better tomorrow. Thank you, Madam Speaker.