Introduction of Guests

Mr. Speaker: Order, please. I would like to draw the attention of all members to the loge to my right, where we have with us this afternoon Mr. J. Frank Johnston, the former MLA for Sturgeon Creek, and also Mr. Sam Uskiw, the former MLA for Lac du Bonnet.

On behalf of all members, I would like to welcome you gentlemen here this afternoon.

Also with us this afternoon, I would like to draw the attention of all members to the gallery to my left, where we have with us this afternoon His Worship Mayor Rick Borotsik for the City of Brandon, and his Clerk, Earl Backman. On behalf of all members, I would like to welcome you gentlemen here this afternoon.

House Business

Hon. Jim Ernst (Government House Leader): Mr. Speaker, it is my understanding that the Minister of Finance (Mr. Stefanson) will deliver his Budget Address today at 2:30 p.m. In accordance with the traditions of this House, might I suggest we recess for a period of 12 minutes or so until 2:30 p.m., at which time the Minister of Finance would address the Assembly.

Mr. Speaker: Is it the pleasure of the House to recess until 2:30? [agreed]

At 2:30 you will get a one-minute warning bell. That will also give the gallery attendants an opportunity to clear out the galleries. Only individuals with a gallery pass stamped "budget" will have an opportunity to come back into the Chamber. This House is now recessed until 2:30 p.m.

The House recessed at 2:17 p.m.

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After Recess

The House resumed at 2:32 p.m.

Hon. Eric Stefanson (Minister of Finance): Mr. Speaker, I move, seconded by the Minister of Industry, Trade and Tourism (Mr. Downey), that this House approve in general the budgetary policy of the government.

Motion presented.

BUDGET ADDRESS

Hon. Eric Stefanson (Minister of Finance): Mr. Speaker, I am pleased to present our government's eighth budget to the Legislature and the people of Manitoba.

Manitoba is poised on the threshold of a period of unparalleled prosperity and opportunity. These are very exciting times for our province. We have a dynamic and growing economy, with abundant investment and job opportunities which ensure our children can grow, learn and fulfill their dreams right here at home.

Mr. Speaker, there is a positive momentum building in Manitoba. Our province is bursting with good ideas, alive with vital energy and ready to take on the world. As I talk with people from all parts of the province, I am impressed with their growing enthusiasm and sense of optimism.

You can feel it on every main street from Emerson to Churchill, from Gimli to Melita, from Swan River to Pine Falls--Manitobans are ready to open a new chapter in an already impressive history. They are ready to record their achievements in capital letters from coast to coast to coast in Canada and around the world.

Mr. Speaker, my colleagues and I share that enthusiasm because we recognize the tremendous wealth of knowledge and ability Manitobans put into action every day. We recognize the dedication and strong work ethic that sets Manitobans ahead of the rest, and we recognize how fortunate we are to live in Manitoba-—a province with an impressive and valuable array of natural resources.

Most of all, we are proud of Manitobans' ability to work together to achieve a common goal. The challenges facing Manitoba have been among the most significant ever encountered. Those obstacles were met head on by communities, by families and by individual Manitobans standing strong for a better way of life.

We salute their hard work and determination. We celebrate their achievements. And we look forward with pride, confidence and eager anticipation.

Balanced Budget

Mr. Speaker, I am very pleased to present Manitobans with a very important reward for all their dedication and determination-- the first balanced budget in Manitoba in over 20 years. In addition, this budget contains the largest budgeted surplus in Manitoba's history.

Our province is finally living within our means, paying for our own programs and services without borrowing from our children's future and mortgaging their dreams. This is an outstanding achievement and the best present Manitobans can give to the next generation on this our 125th provincial birthday.

Under the leadership of Premier Filmon and my predecessor in this portfolio, the member for Morris (Mr. Manness), Manitoba was the first senior government to recognize that to protect our vital social programs and revitalize our economy, we had to get spending under control and not increase taxes. By acting earlier and with a multiyear plan, we now have the lowest-cost government in Canada and the highest commitment to health care.

Today, there is not a government in Canada-—of any political stripe—-that does not know what needs to be done.

Mr. Speaker, Manitobans have known for some time that overspending, big deficits and rising interest costs had to be stopped. Over 97 percent of the people who participated in prebudget consultations told me that eliminating the deficit is important. At the annual convention of the Union of Manitoba Municipalities, an overwhelming majority said the same thing.

I would like to thank our employees for their dedication and commitment to deficit and expenditure control. With their support, Manitoba has led the nation in working toward this day.

I would also like to thank Manitobans for their understanding and for their support.

In 1993, we promised we would achieve a balanced budget by 1996-97, and we would do it without placing a greater burden on Manitoba taxpayers. We are delivering on that promise one full year ahead of schedule.

Balanced Budget Legislation

Mr. Speaker, to ensure that future generations of Manitobans continue to benefit from the advantages and opportunities made possible by deficit-free government, we will bring forward the strongest balanced budget legislation in the nation.

The balanced budget, debt repayment and taxpayer protection legislation will strongly bind the province to continue achieving balanced budgets, and will also impose a realistic and sustainable plan to repay the debt without increasing taxes.

The legislation requires the province to keep its financial house in order by achieving balanced budgets commencing with the 1995-96 fiscal year. Unlike some other jurisdictions which do not count capital spending in balancing their budgets, the Manitoba legislation takes all spending into account. Unlike some U.S. legislation which simply requires that balanced budgets be presented, our legislation requires that balanced budgets actually be achieved.

The legislation includes important provisions to keep the lid on taxes in Manitoba. The legislation expressly prohibits any increases in income taxes, sales taxes, and payroll taxes unless Manitobans give their approval in a province-wide referendum. We believe, as do most Manitobans, that these taxes need not and should not be increased.

The legislation contains a manageable plan to pay down the province's $7 billion debt within 30 years. The plan imposes on government a requirement to make annual instalments. Manitoba's debt can be retired even more quickly with additional discretionary payments.

Mr. Speaker, when the debt is retired, the benefits are exciting indeed. Eliminating Manitoba's debt would release the $648 million currently needed to pay interest costs. Our children could realistically consider removing the provincial sales tax or cutting personal income taxes in half.

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The balanced budget legislation includes significant provisions to ensure compliance. First, in the event a deficit is incurred, the legislation requires a fully offsetting surplus in the ensuing fiscal year. Secondly, all ministers and the Premier will be subject to a penalty of 20 percent of their ministerial compensation. Should a second deficit be incurred, the penalty will increase to 40 percent. My hope and our intention is that the penalties will never be applied.

There are carefully defined exceptions to the balanced budget requirement, including natural disasters, the threat of war, or a revenue decline of more than 5 percent.

In all other circumstances, budgets must be balanced.

Full details of the balanced budget and debt repayment and taxpayer protection requirements, including draft legislation, are included in a special budget paper appended to this address. The actual legislation will be presented to the Legislature next week.

The Manitoba Advantage

Mr. Speaker, many Manitobans already enjoy the direct benefits of a significant tax advantage.

Since 1987, Manitoba's income tax rates have moved from among the highest in Canada to among the lowest.

Manitoba senior citizens enjoy the most favourable income tax treatment in Canada. For a single senior citizen with $15,000 in income, Manitoba's income taxes after tax credits are $297 lower today than in 1987. For a family of four earning $40,000, Manitoba's income taxes after tax credits are $425 lower today than in 1987. Today, that same Manitoba family enjoys the lowest overall personal costs and taxes in the country.

Lower personal taxes mean more disposable income for Manitobans. Personal disposable income per capita in Manitoba increased at twice the national rate, and is second best in the country in 1994. For 1995, the Conference Board of Canada predicts that personal disposable income will rise a further $637 per person, again bettering the national growth rate.

1995 Tax Measures

Mr. Speaker, our tax measures for 1995 are continuing to build on the best record of any province in Canada.

There is no increase in personal income taxes.

There is no increase in sales tax.

There is no increase in business taxes.

There is no increase in gasoline tax.

We are extending our freeze on major tax rates for an unprecedented eighth straight budget.

For the upcoming year, we will provide some strategic tax reductions to help bolster investment and job creation and to help improve the overall fairness of our tax system.

New housing starts increased 32 percent last year, the first year of Manitoba's sales tax rebate for first-time homebuyers. This important initiative will be extended to December 31, 1995, to continue helping young families acquire their first homes.

The Home Renovation Program, introduced in last year's budget, has helped families undertake needed renovations in older homes. The program has helped sustain Manitoba's booming home renovation sector. Older homes across the province are being upgraded, adding value to Manitoba's housing stock, creating jobs and incomes at the same time. To date, the program has triggered $25 million in home renovation work. Therefore, the Home Renovation Program will also be extended to the end of December 1995.

Small business has asked that they not be required to remit sales tax on sales to customers who subsequently do not or cannot pay their bills. Our government agrees. Amendments will be introduced to remove sales tax on accounts that prove uncollectible.

Manitoba is a mining province. The growth in mining depends on aggressive exploration. Our policies, under the leadership of my colleague, the Minister of Energy and Mines (Mr. Orchard), have been very successful, with Manitoba's mineral exploration claims jumping 500 percent in the last two years alone.

To further enhance the success of our mining industry, Manitoba's sales tax will also be aligned with other jurisdictions, by eliminating tax on drill bits and explosives used in mining exploration.

Manitoba's highly successful manufacturing investment tax credit is an important factor in Manitoba's outstanding record of investment in manufacturing plant and equipment. Since this program was introduced in 1992, it has triggered over $300 million in new manufacturing investment. I am pleased to announce that the program will be extended for an additional year. New investment in plant and equipment prior to June 30, 1996, will qualify for this innovative credit.

Winnipeg Airport Authority

Cargo movement between North America and Asia and Europe, and the associated distribution and packaging activities, have the potential to create thousands of new jobs, and hundreds of millions of dollars in economic activity. We are, therefore, actively supporting efforts to establish Winnipeg as an international intermodal air cargo centre. This budget expands the aviation fuel tax exemption for cargo flights to the cargo component of intercontinental passenger flights. We are also supporting the creation of a local airport authority to manage the Winnipeg International Airport for the benefit of all Manitobans. Local control will help ensure that the full potential of this valuable asset is achieved.

Supporting Local Governments

Our government recognizes the very important role local governments fulfill in the province. We are pleased to be able to provide increased support again this year. Unconditional grants have been increased $2 million. In addition, provincial-municipal tax-sharing payments are up 6 percent. Winnipeg will receive $30.5 million, with a further $21.8 million allocated to other local governments. Since 1987-88, our government has increased provincial support to local governments by $70 million or 56 percent.

Jobs and Economic Development

Since 1989, economic growth in Manitoba has exceeded the nation. We are now leading the country in key areas such as investment, housing starts and exports. And while employment declined during the recession, 15,000 jobs have been created in the last year alone. Employment stands well above the level when we first assumed office, and Mr. Speaker, Manitoba is one of only four provinces to have a lower unemployment rate today than in April 1988.

The significant improvements in Manitoba's business environment are a major factor in these increases. Our advantages are being recognized increasingly both at home and internationally. This means more investment, more incomes and more jobs for Manitoba.

For example, a typical small manufacturing firm pays almost a third less provincial tax as a result of changes introduced since 1987. That is part of the reason why there are so many more manufacturing operations in Manitoba today.

The Canadian Federation of Independent Business recently stated that Manitoba is "one of the most small business friendly governments in Canada."

For a second consecutive year, Winnipeg has been recognized by the Globe and Mail's Report on Business as one of the best cities in Canada to do business.

The Boyd Co. of New Jersey ranked Winnipeg as the second least-expensive city in North America for manufacturing activity.

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Building a Stronger Manitoba

Our focus on jobs and enhanced economic activity has been especially evident in specific initiatives led by the Minister of Industry Trade and Tourism and the Minister of Rural Development.

Moving from grants to loan-based programs for assisting business development and job creation has reduced costs to the taxpayer and maximized benefits for our province.

Over 4,000 new jobs have been generated, and another 2,000 are guaranteed under existing contractual commitments. I would like to cite a few examples of businesses assisted under these loan-based programs.

A $30 million loan to the Pine Falls Paper Company helped management and employees purchase the former Abitibi Price mill at Pine Falls.

As a result, Manitobans have achieved: local ownership of a multimillion dollar company where profits remain in Manitoba; continuation of some 1,100 full-time and seasonal jobs; and capital expenditure in excess of $60 million to occur in the Pine Falls area over the next two years.

We applaud the initiative and foresight of the employees and management of the company. Their determination underscores the success Manitobans can achieve in a highly competitive business climate. And now it appears that the full loan will not be required and taxpayers will be repaid much faster than anticipated.

In July 1991, the province entered into an agreement with Motor Coach Industries Ltd. to design and establish a Product Development Centre in Winnipeg. Since the inception of this program, Motor Coach has consolidated all of its North American engineering and manufacturing capabilities in Winnipeg. Total company employment has increased more than 300, or 25 percent, to over 1,500.

Loewen Windows in Steinbach, the largest manufacturer of windows and doors in Western Canada, is undertaking a major expansion to supply export markets and create 236 jobs.

D.W. Friesen & Sons Ltd. in Altona, one of the largest book printers in Canada, has undertaken a $5.2 million expansion which will create 50 new jobs.

Palliser Furniture is undertaking a major expansion and consolidation of its Winnipeg facilities in order to meet demands of U.S. and international export markets. This expansion will lead to the creation of more than 400 additional jobs. Palliser currently has a workforce of approximately 1,600 employees in Winnipeg.

In further recognition of the importance of trade to Manitoba, additional resources are allocated to trade promotion and development.

Grow Bonds, introduced in 1992, are helping direct capital raised from rural Manitobans back into local enterprises. This innovative program has helped local entrepreneurs and community investors create 430 new jobs. More than $6 million has been raised through Grow Bonds, generating total investment of $20 million.

Business Start has assisted 400 Manitoba entrepreneurs create over 1,100 new jobs. The program provides advice and loan guarantees of up to $10,000 to launch new ventures. Over $3.4 million in loan guarantees has leveraged more than $7 million in total investment.

Our government is actively pursuing a number of recommendations of the Manitoba Task Force on Capital Markets, working in partnership with industry to provide additional capital for small business in Manitoba, to expand their operations and create jobs. The task force indicated that there is approximately $5 billion in public pension fund assets and billions more in private pension funds in the province. While recognizing that fiscal prudence must be the main objective of all pension funds, the task force recommended that local pension funds be encouraged to invest a larger portion of their assets in Manitoba.

The Rural Economic Development Initiative (REDI) has brought new investments and new jobs to rural Manitoba. To date, REDI has helped over 165 rural business projects with $19.6 million in lottery funds, triggering $160 million in new capital investment, and creating over 1,000 jobs.

The youth components of REDI have generated 2,100 part-time positions for rural youth since 1992-93, and a further 1,100 are planned for 1995.

Information and Telecommunications

In 1993, the information and telecommunications industry was targeted as an area of emerging opportunity in Manitoba in The Framework for Economic Growth. Since the establishment of the Manitoba Call Centre Team, Manitoba has experienced significant growth in this sector. The establishment and expansion of call centres in Manitoba resulted in the creation of 1,253 new jobs in 1994, with an additional 1,600 projected in coming years. For the second year in a row, Manitoba recorded the second-highest growth in this industry of any Canadian province.

Agriculture

Manitoba grain farmers were dealt a heavy blow in the federal budget. While we cannot compensate for the federal withdrawals, we will, under the leadership of my colleague, the Minister of Agriculture (Mr. Enns), continue to work with Manitoba's agri-food industry.

As part of the "whole farm" approach to farm income stabilization, coverage under the Net Income Stabilization Account (NISA) will be broadened. We are working to meet the needs of Manitoba producers while maintaining our obligations under international trade agreements. The NISA budget is up $3 million to $16 million.

We are also reinforcing efforts to help the agri-food sector capitalize on value-added and diversification opportunities and export markets. An innovative Agri-Ventures initiative will assist producers, processors and rural entrepreneurs considering the establishment of new, unique or value-added production ventures. The Agri-Ventures initiative will also help position Manitobans to take advantage of the opportunities identified in the livestock industry.

Welcoming the World

Thanks to the hard work of many community leaders, including our Premier (Mr. Filmon), Winnipeg and Manitoba are hosting the Pan-Am Games in 1999. The economic spin-offs are estimated at $200 million, and include 2,000 person-years of employment. The government has committed $23 million over the next five years to help cover facility development and operating costs.

In April of this year, Brandon will host the men's and women's World Curling Championships. These events will draw thousands of curling enthusiasts and, hence, millions of dollars of economic activity to Brandon. Our government was pleased to provide support for this event.

In 1997, Brandon will also host Canada's Summer Games. In addition to major benefits from tourism during the games, Brandon will be left with a legacy of improved and expanded facilities. Our government has committed over $3 million to this major sporting event. The estimated economic impact is $60 million.

Mr. Speaker, this is just a sample of the building momentum and growing energy sweeping the province. Manitobans are building their communities, their regions and their province. They are creating jobs for today, and developing opportunities for a strong tomorrow.

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The Manitoba Economy is Moving Ahead

The Manitoba economy is clearly moving ahead.

Economic growth in 1994 was the strongest in a decade.

Retail sales growth hit a nine-year high.

Foreign exports surged 29 percent last year-—the best performance in the country.

Housing starts increased 32 percent and exceeded the national increase for the third consecutive year.

Some 15,000 jobs were created in the last 12 months, including more than 10,000 full-time jobs.

The number of unemployed in Manitoba dropped 28 percent.

At 7.7 percent, Manitoba has the second-lowest unemployment rate among the provinces.

Manitoba farmers recorded another excellent year.

And this growth is continuing into 1995.

Capital investment is forecast to rise 11.8 percent in 1995--almost four times the national increase, and the best record among the provinces.

Manufacturing investment is expected to rise 48 percent to a record high in 1995. This impressive growth comes on top of a very strong performance in the last six years. After discounting for inflation, since 1989, manufacturing investment averaged 63 percent higher than the preceding six years.

As the Investment Dealers Association of Canada said of Manitoba just last week, "Stepped-up capital formation reflects a competitive and growing manufacturing sector, open access to booming export markets in the United States and a high level of business confidence in the province."

Improving Manitoba's Infrastructure

Mr. Speaker, to ensure Manitobans continue to have a solid foundation to build on, this budget dedicates a record $342.8 million to capital investments designed to improve our basic infrastructure and provide jobs for Manitobans.

I would like to draw members' attention to some of the more important projects.

The Canada-Manitoba Infrastructure Works Program has been a major success. More than 3,320 jobs are being created by projects announced during the first year. Over $188 million in agreement funding has been allocated to 370 projects-—ranging from road, sewer and water projects to several initiatives aimed at renewing the province's social and cultural infrastructure.

Recently, I was pleased to join my colleague, the Minister of Urban Affairs, in approving the new Winnipeg Development Agreement (WDA). Under the new five-year agreement, Canada, Manitoba and Winnipeg will each contribute $25 million toward the economic, physical and social renewal of our capital city.

We have allocated $4.5 million in 1994-95, and a further $7.1 million in lottery funding this year, to support the construction of the new downtown education and health research centre.

In addition, $2 million has been earmarked to expand the sewer and water program in rural Manitoba. A further $1 million has been allocated to the Community Places Program to fund additional projects.

On the recommendation of my colleague, the Minister of Highways and Transportation (Mr. Findlay), I am pleased to announce that Manitoba will increase its capital investment in highways construction and upgrading to $96.9 million, an increase of $3 million. However, due to a $9 million decline in federal funding under the Strategic Highway Initiative Program, the overall total is down $6 million.

My colleague, the Minister of Education and Training (Mr. Manness), will soon be outlining details of a $23.7 million capital program for public schools-—an increase of $5.4 million from 1994-/95. This program features the construction of two new schools, Greenway and Oak Bluff, as well as several major renovation projects.

Next week, the Minister of Health (Mr. McCrae) will be announcing a $679 million capital program in support of Manitoba hospitals and personal care homes. The program includes redevelopment of the Riverview Health Centre in Winnipeg, the Westman Regional Laboratory in Brandon, and personal care home projects in Fisher Branch, The Pas and Donwood Manor in Winnipeg. This program demonstrates our commitment to maintaining and improving the health care system.

In addition, Crown corporations and other entities will spend a further $680 million in capital works in 1995-96. This includes Manitoba Hydro's capital investments for construction of the North Central Transmission Line, and the major upgrading of the Brandon and Selkirk Thermal Generating Stations.

In total, this represents an impressive commitment toward capital investment, particularly when it appears that other jurisdictions are cutting back. Our government believes that a strong capital program is important, not only for the jobs created during planning or construction phases, but also for the long-term benefit to the economy.

Therefore, we are hopeful that the federal government will agree to a renewal of the Southern Development Initiative, which has meant so much to rural communities in southern Manitoba, and a new Northern Development Agreement, as well as a partnership approach to following up the recommendations of the Churchill Task Force.

Entrepreneurship at Work

Over the past seven years, we have sold a number of government operations that do not belong in the public sector. We have saved taxpayers a substantial sum of money, while creating additional productive private sector jobs not dependent on government subsidy.

We have pioneered the use of Special Operating Agencies to reshape government operations and reduce costs. These entrepreneurial organizations are expected to be self-sustaining and to embrace a management culture dedicated to service, quality, innovation and results.

For example, the Fleet Vehicle Special Operating Agency is currently meeting the government's transportation needs with 729 fewer vehicles than in 1987.

Four new agencies will be established in this budget, including the Manitoba Educational Research and Learning Information Networks (MERLIN) in the Department of Education and Training. MERLIN will use the "information highway" to improve Manitobans' access to employment-oriented education right in their own communities.

Other governments are now following Manitoba's lead and introducing the Special Operating Agency approach to their operations.

Renewing and rethinking the way government does its business is of concern to all Manitobans. In this connection, I am pleased to report that our Service and Management Improvement Initiative remains on course in its efforts to develop cost-effective, customer-oriented public services.

Federal Funding Reductions: Health, Education and Family Services

Over the years, the historical federal-provincial partnership played a crucial role in assuring quality social services throughout Canada. Since 1981, however, federal transfers to Manitoba for health and higher education have fallen from 52 percent of program costs in 1980 to approximately 35 percent today. That has made it more difficult for provinces to maintain these services.

The difficulty was increased with the plan in last year's federal budget to freeze transfers for higher education and family services for 1995-96, and to cut $1.5 billion in 1996-97 by rolling back the federal support to 1993-94 levels. The decisions we have taken over the past year and in this budget reflect reductions in federal support of $24 million in 1995-96 and $60 million annually thereafter.

The 1995 federal budget outlines further major cuts in its funding-—to $2 billion below the 1993-94 level in 1996-97, and an additional $1.8 billion cut in 1997/98. Thus, by 1997-98, their intention is to withdraw $5.3 billion nationally from federal support to health, education and social assistance programs.

The combined effect of these two budgets on federal funding for Manitoba programs in these vital areas is a reduction of $24 million in 1995-96, $147 million in 1996-97, and $220 million in 1997-98.

We had hoped that in setting its priorities the federal government would recognize the importance Canadians attach to health, education and family services. The federal budget provides little evidence of any priority emphasis on these vital services.

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In Manitoba, by contrast, we have increased the share of each program dollar devoted to health care, education and family services from 66 cents in 1987 to 72 cents today. We are continuing to build on that record.

Meanwhile, under the proposals in the 1994 and 1995 federal budgets, the share of federal program spending allocated to these nationally important provincial services will decline from 14 percent to 10 percent by 1997-98. That is not what Manitobans envisioned as the fulfillment of the red book promise-—to provide greater predictability and stability in the federal support for these programs.

We will wait with interest to hear the federal government's specific views as to how the reductions can be accommodated, without impairing what Canadians consider to be the most critical public services. We want to hear what the federal government has in mind for dealing with these crucial programs.

We are prepared to work with the federal government, but we will also stand strong for Manitoba.

Investing in Manitobans

Mr. Speaker, I am proud of this government's strong record of investing directly in the people of Manitoba.

In 1988, we stated that Health, Education and Family Services were our top priority programs. Since then we have increased funding for these services by $1.036 billion or 41.8 percent. Over 90 percent of the entire increase in the budget has been directed to these services. All other programs have been held to a total increase of 8.5 percent over the last eight years.

We are moving the focus of our social programs, from institutions toward the people.

In Education, the focus is on providing students with training that leads to productive employment. In Family Services, the emphasis is on encouraging individual independence. In Health, the focus is on providing care closer to home through community-based care.

We are confident that providing people with a hand up when they need it, and not just a handout, is the best approach.

Developing Skills to Succeed

The key priorities of education renewal are to ensure students have the fundamental skills necessary to succeed; to increase parental involvement; and to make schools secure, productive centres for learning.

Teaching our children to read, write, compute and problem-solve at a high level is the first priority in our public schools. At the post-secondary level, increased emphasis is directed toward partnerships to link education more closely with labour force demand, and the skills required in our rapidly changing world.

Therefore, in this budget:

Community colleges will be supported with a $2.6 million, or 6.4 percent grant increase, to enhance training opportunities in areas of higher labour demand, in line with the recommendations of the University Education Review Commission chaired by The Honourable Duff Roblin. We are working to focus funding in the areas with the greatest job opportunities.

At a time when many jurisdictions are reducing funding, our overall operating funding to public schools and universities remains essentially unchanged from last year.

Twenty-five new technology and science centres will be established to support the newly revised Senior 4 (Grade 12) curriculum for Industrial Arts.

A new $1 million Universities Incentive Fund is being created to foster change and renewal at Manitoba's universities. Consistent with the thrust of the Roblin Commission, incentive grants will be provided to encourage institutions to pay greater attention to marketable skills in their activities.

The renovation and upgrading of Riddell Hall at the University of Winnipeg will begin in 1995-96.

Finally, I am pleased to announce that a firm cap has been imposed on universities and colleges to limit tuition increases to a maximum of 5 percent this year.

Law and Order

Our government remains strongly committed to ensuring our streets and neighbourhoods are safe for all.

As recommended by my colleague, the Minister of Justice, we are significantly strengthening the Royal Canadian Mounted Police presence in Manitoba through this budget. In addition to funding 16 more officers in the field, the government has committed to invest $3.6 million to equip the force with a state-of-the-art communications system, which will complement a province-wide 911 emergency service.

The Minister of Justice has stepped to the national forefront with innovative no-nonsense measures including:

overhauling the youth corrections system through the introduction of boot camps;

introducing rigorous confinement for adult offenders; and

pioneering legislation to allow the naming of dangerous sex offenders.

In addition, during this session of the Legislature, the Minister of Justice will introduce strong new maintenance enforcement measures to ensure single parents receive the financial support to which they are entitled.

Encouraging Independence

The continued commitment of our government to services for Manitobans in need is reflected in the $668 million commitment through Family Services. Funding for child care in Manitoba will continue at one of the highest levels nationally. Family services and protection remain key priorities, and important strategic initiatives are funded to encourage greater independence.

The government has dedicated a total of $9.9 million through the Departments of Education and Training and Family Services to "Making Welfare Work." The program aims to reduce social assistance costs and dependency by enhancing employment opportunities for social assistance recipients. "Making Welfare Work" supports innovative strategies that will be introduced as pilot projects. These pilot projects will focus on placing those social assistance recipients who are job-ready into permanent jobs.

"Making Welfare Work" pilots include:

Taking Charge!-—a program that will assist single parents who are facing barriers to full participation in the workforce. The cornerstone of this project is the belief that the key to reducing the cycle of social dependency is through increased attachment to the labour force, through focusing on and fostering self-reliance.

Manitoba Youth Works-—a program which will provide employment and training opportunities for youth social allowance recipients, directly addressing the growing detachment of large numbers of youth from the provincial labour force.

Community Service Programs will provide employment opportunities for municipal assistance recipients through a Community Home Services Program that assists low-income senior citizens and disabled persons in maintaining their homes; and the Community Services Worker Program that provides services to community clubs.

Rural Jobs Project will help rural municipal assistance recipients enter the workforce by helping to pay salaries for new jobs that provide at least eight weeks of full-time work.

Increased emphasis is placed on creation of community residences and supports for adults with mental disabilities, with a $2 million increase, bringing the overall increase under our government to 65 percent.

The recently announced Manitoba Children and Youth Secretariat will provide a co-ordinated and integrated approach to services for youth and their families. The secretariat will offer a single focal point for services provided through four government departments, thereby reducing duplication and fragmentation.

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Improving Health Services

Mr. Speaker, Manitoba dedicated a greater percentage of its budget to health care than any other province in Canada last year. That leadership position will be maintained again this year. The health component of the budget reflects our firm commitment to improve the health of Manitobans, by doing the right things and doing them right.

Of the total health budget, over $1.2 billion was committed to hospitals, personal care homes and community health centres last year. We are pleased to be able to maintain this commitment-—including reinvestment in priority health care projects-—in 1995-96.

On behalf of my colleague, the Minister of Health (Mr. McCrae), I would like to highlight some of the more important initiatives:

Our commitment to community-based services is reflected in the substantial shift of resources toward long-term care and community health alternatives.

Community health centres will be strengthened to provide 24 hours per day, seven days per week service in key areas.

Increased funding-—shifted from the hospital sector-—will be provided for community-based mental health services. For example, Interlake and Eastman Regions will receive an additional $2.2 million in grants. This will result in 50 full- and part-time jobs in the region. The benefits of this ongoing improvement to mental health services include crisis intervention services and expanded community-based programs.

Nursing Resource Centres will be established to increase opportunities to work with families and the community to prevent disease, promote health and postpone disabilities. The first centre will open in Winnipeg next month, with others to follow in Thompson, and in the Norman and Parkland health regions.

The results of the successful Hospital-based Home Care Trial Project at Seven Oaks General Hospital will lead to more community-based alternatives to hospital care. Patients like the program, and physicians have identified overall benefits to patient care.

We will be taking aggressive action to expand services and reduce waiting lists for certain surgical procedures, including cardiovascular surgery and joint replacement surgery. We will be enhancing the Lung Transplant Program, which was introduced in 1993.

Members may notice that the overall budget for Health is down slightly this year. However, that is due to the savings realized under the agreement with the Manitoba Medical Association. This budget maintains our strong commitment to health care.

The Fiscal Plan

Mr. Speaker, our strategy has been to maintain public services by spending more wisely rather than simply spending more. Manitobans are now reaping the rewards of that strategy.

1994-95 Fiscal Update

Due to a stronger economy, consistent expenditure management and revisions to federal transfer payments, Manitoba's 1994-95 deficit is projected to be $218 million, or just one-half the level of the previous year.

Total expenditure for 1994-95 is right on target, as increased public debt and emergency expenditure have been accommodated by other reductions.

Revenue has shown solid growth as the economy has improved. Through February, retail sales tax revenue is up 7 percent over the comparable period last year, with greater increases occurring in recent months. Mining tax revenue has begun to rebound in line with improved metal prices and increased production. Tobacco tax revenue has remained firmly on target. That is a compliment to the honesty and integrity of Manitobans.

1995-96 Fiscal Projections

Mr. Speaker, the 1995-96 budget represents the culmination of our efforts since taking office in 1988, and opens the door to an era of fiscal stability, deficit-free budgets, growth and prosperity.

As promised, we have worked side by side with Manitobans to put provincial finances in order. The achievement of that important goal will result in Manitoba's first budget surplus since 1972-73. For 1995-96, the surplus will be $48 million.

Most importantly, we have reached our goal without any increase in major taxes. By comparison, if Manitoba had increased its sales tax rate to 9 percent, as was done in Saskatchewan, we could have balanced the budget in 1994-95. Increasing the Manitoba sales tax to the 11 percent rate charged in New Brunswick would have yielded a substantial surplus.

However, we chose not to follow the tax increase path. We believe increasing taxes jeopardizes economic growth and investment, damages the capacity of our economy to create jobs and incomes for Manitobans, and threatens vital public services.

Our solution is Canada's longest running tax freeze coupled with affordable government.

For 1995-96, overall program expenditure remains flat at $4,465 million. Public debt costs are projected to increase by $80 million, primarily due to increased interest rates and a lower Canadian dollar since October 1993. Mr. Speaker, were it not for the legacy of inherited debt, Manitoba would have had balanced budgets in each of the past seven years.

Manitobans have consistently told us that eliminating the deficit and stopping the growth of debt is a top priority.

Mr. Speaker, throughout the budget consultations, Manitobans told us that the bleeding must stop, and they also told us to use lotteries revenues to accomplish that very important goal.

Therefore, this year we will make a special lotteries transfer of $145 million.

This special transfer allows us to end the accumulation of debt by balancing the budget in 1995-96, a year ahead of schedule, and to produce a $48 million surplus.

In the future, all lotteries funds will be drawn into revenue, to continue to fund programs, help to sustain balanced budgets and start paying down debt.

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Medium-term Fiscal Plan

Mr. Speaker, the achievement of a balanced budget, one year ahead of schedule, is an accomplishment on which we will continue to build.

Our commitment to Manitobans is to protect vital services, keep the books in the black and pay down the debt.

The medium-term fiscal plan shows how this commitment will be put into action.

Our plan incorporates modest revenue growth from a growing Manitoba economy. Manitobans have told us to live within a fiscal framework which is affordable to them. We will continue to do that.

The medium-term plan projects that approximately $220 million will be available annually from lotteries operations. In 1996-97, those revenues will provide an important contribution toward a balanced budget, as well as financing a wide variety of services and programs for Manitobans.

Our medium-term fiscal plan maintains program expenditure at existing levels.

Throughout the medium term, public debt costs are expected to be slightly lower than in 1995-96.

These plans generate a balanced budget in 1996-97, and surpluses of $201 million and $348 million in 1997-98 and 1998-99, respectively.

The surpluses will allow us to rebuild the Fiscal Stabilization Fund, and to begin the process of paying down the debt.

Mr. Speaker, the medium-term fiscal plan incorporates the revenue and expenditure adjustments we have had to make arising from the 1994 federal budget.

We have not yet had an opportunity to address the full implications of the massive withdrawal of support for health care, education and family services, proposed ten days ago in the 1995 federal budget. However, Mr. Speaker, we are determined to protect these vital services for Manitobans.

I intend to further explore Manitoba's options in a meeting with my federal counterpart in the near future. If acceptable alternatives are not forthcoming, I will urge the use of the $3 billion contingency reserve included in federal fiscal planning, to protect our most important services.

Manitoba's Strong Performance

Manitoba's considerable fiscal and economic progress is being noticed by key players in the financial markets.

Standard and Poor's credited our improving fiscal situation to "stronger economic growth and the government's ambitious expenditure restraint program."

Salomon Brothers referred to our "impressive fiscal performance despite the recent recession," in citing Manitoba as one of only two Canadian provinces likely to have its credit rating increased.

Just last week, the Investment Dealers Association of Canada (IDA) issued a report which praised Manitoba for doing "a good job of controlling its finances." The IDA noted that "Manitoba was one of the first governments to rein in spending, focusing on controlling public wage costs, streamlined government operations and increased efficiencies in the delivery of public services."

Manitoba's solid performance is also winning awards in financial markets, with sharp cuts in the premiums charged on Manitoba bonds. During 1994, Manitoba enjoyed the third-best provincial borrowing rates in the country.

Mr. Speaker, I am confident this budget will build on Manitoba's growing and widely envied reputation for sound financial management. The achievement of a balanced budget and the introduction of meaningful, accountable balanced budget legislation is bound to put Manitoba in the world spotlight once again.

Conclusion

Mr. Speaker, Manitoba's prospects are bright.

We have the opportunity, with leadership and the right decisions, to make this one of the most exceptional times of progress in our province's history.

What better time to embark on this new era than Manitoba's 125th birthday.

The reasons for optimism are legion, Mr. Speaker.

We will not increase major taxes.

We will protect vital public services for Manitobans.

We will ensure our economy creates more jobs for Manitobans.

We will continue to balance the budget.

We will pay down the province's debt.

We will develop an education system where success is determined, not by how much we spend, but by how much our children learn.

We will work to ensure Manitoba is a place where all feel safe and secure.

We will provide a climate for investment and economic growth that is the best in Canada.

We will provide a stable and competitive environment in which Manitobans can dream their dreams and pursue their excellence with pride.

Mr. Speaker, this budget continues our efforts to make Manitoba the best place in Canada to live, to work and to raise a family. Together we are achieving that goal.

We have opened the door to a promising and exciting future.

Mr. Speaker, we will stand shoulder to shoulder with Manitobans as we cross the threshold to a new prosperity and a stronger Manitoba.

Thank you, Mr. Speaker.

Mr. Gary Doer (Leader of the Opposition): Mr. Speaker, I move, seconded by the member for Wolseley (Ms. Friesen), that debate be now adjourned.

Motion agreed to.

Mr. Stefanson: Mr. Speaker, I move, seconded by the Minister of Environment (Mr. Cummings), that this House at its next sitting will resolve itself into a committee to consider of the Supply to be granted to Her Majesty.

Motion agreed to.

Mr. Stefanson: Mr. Speaker, I move, seconded by the Minister of Justice (Mrs. Vodrey), that this House at its next sitting will resolve itself into a committee to consider of Ways and Means for raising of the Supply to be granted to Her Majesty.

Motion agreed to.

Messages

Mr. Stefanson: Mr. Speaker, I have two messages from His Honour the Lieutenant-Governor.

Mr. Speaker: All rise.

The Lieutenant-Governor transmits, to the Legislative Assembly of Manitoba, Estimates of sums required for the services of the province for the fiscal year ending the 31st day of March 1996, and recommends these Estimates to the Legislative Assembly, signed here in Winnipeg.

Also, the Lieutenant-Governor transmits, to the Legislative Assembly of Manitoba, Estimates of sums required for the services of the province for capital expenditures and recommends these Estimates to the Legislative Assembly, signed here in Winnipeg.

Mr. Stefanson: Mr. Speaker, I move, seconded by the Minister of Education (Mr. Manness), that the messages together with the Estimates accompanying the same be referred to the Committee of Supply.

Motion agreed to.

Hon. Jim Ernst (Government House Leader): Mr. Speaker, I move, seconded by the Minister of Family Services (Mrs. Mitchelson), that the House do now adjourn.

Motion agreed to.

Mr. Speaker: This House now adjourns and stands adjourned until 10 a.m. tomorrow (Friday).