ORDERS OF THE DAY

Hon. Jim Ernst (Government House Leader): Would you call Bill 2, please?

DEBATE ON SECOND READINGS

Bill 2--The Balanced Budget, Debt Repayment and Taxpayer Protection and Consequential Amendments Act

Madam Speaker: To resume debate on second reading, on the proposed motion of the honourable Minister of Finance (Mr. Stefanson), (Bill 2, The Balanced Budget, Debt Repayment and Taxpayer Protection and Consequential Amendments Act; Loi sur l'équilibre budgétaire, le remboursement de la dette et la protection des contribuables et apportant des modifications corrélatives), standing in the name of the honourable member for Emerson, who has 24 minutes remaining.

Mr. Jack Penner (Emerson): Madam Speaker, it is again a pleasure to rise on this extremely important debate and extremely important piece of legislation.

I find it interesting that the opposition parties so far have chosen to make representation in opposition to this bill, and the areas of interest that I find is that the only reason I see, and have heard, so far is that they are afraid they are going to have to apply, should they ever become government, heaven forbid, sound economic principles to governing.

That, of course, means that if they raise a certain amount of revenue through taxation and/or other fees and issues, it would not allow them to spend more than what they actually raise. I think it is important that we realize where we have come from and where we should be heading fiscally because each and every one of us knows, especially those of us that are in business or have been in business or farm, that it takes a certain amount of capital and it takes a certain amount of working capital and it takes a certain amount of financing to run an operation throughout any kind of any given year.

So it also does, Madam Speaker, for government, and government must periodically put in place interim financing and/or funding, and periodically, as our system of government has run so far, government will borrow way beyond their means to repay. That, of course, means that you are going to have to raise taxes.

When interest rates start assuming up to 50 percent of our tax revenues, up to $640 million a year, it becomes apparent that we are certainly simply not serving the general public and the best interests of the general public. When those monies, had we run a balanced ship, had we assumed that our financial responsibilities were as they are in any private business, that you had to meet your debt obligations periodically and regularly, simply means that we would not have accumulated the huge debt and consequently the huge interest cost that we are now having to assume.

If you look at our health care system, our education system, our social welfare system, our family services system and all the other processes and services that governments provide, it does not take much to assume that if we could spend those $650 million to provide those services instead of giving it to the banks or financial institutions, it would certainly serve the people in this province in a better manner than we have in the past.

Manitoba has run a deficit for two decades, and we have simply not been immune as a government from the deficit kind of budgeting, because we had to assume the huge interest costs and because we had to assume that huge debt that was foisted upon us by previous governments.

Initially this was not a serious problem. When government first started borrowing money, it was not a serious problem, because the interest costs were small in relation to revenue and, of course, everybody knew and everybody heard and listened to the economists that said at the time that, you know, governments do not really need to balance their budgets, governments can keep on borrowing and borrowing, assuming that the total net worth of a country or a province in fact is able to provide the security that international financial institutions will require of them.

That of course is where the dilemma starts because, over the time deficits were piled up, deficits created a huge debt on which hundreds of millions of dollars of annual interest payments had to be made, and this put tremendous pressure on resources available to service, and created pressures in the form of higher taxation.

It also made it much more difficult, virtually impossible to balance the budget, assuming that $640 million had to be paid annually to pay interest costs to banks and financial institutions.

Therein lies the dilemma, and that is why in 1988 the Filmon government began to implement an economic renewal strategy. I know that the opposition members very often shook in their boots, Madam Speaker, when we talked about economic fiscal responsibility, balancing budgets, not spending more than what your income was. The government recognized that responsible taxation and spending are essential ingredients for economic growth and jobs. Sound fiscal management means getting control of growing debt load and reducing the drain of interest payments. This requires simply balancing your budget.

Then, of course, Manitobans have told us that they are unwilling and unable to pay higher taxes. I think each and every one of us in this Chamber, during the last election campaign, faced the electorate, and they said: No more taxation, we have had it up to here with taxation, we cannot afford any more.

We agree with that. The members on the government side of the House know what that means and concur with that thinking, and I say to you, ladies and gentlemen, that is why the Progressive Conservative Party was elected to govern in the future, and I think we will govern in the future for many years to come.

I would even go so far, Madam Speaker, to invite members opposite, if they would choose to be on the governing side of this House, to cross the floor and join us, because we will, after passing this legislation, in fact abide by what the legislation says and adhere to the promises that were made in spite of what the opposition members are saying continually. We will adhere to the legislation. We will abide by the rules of the legislation and the principles of debt pay-down and balancing our fiscal house.

The legislation is relatively simple, and I know that some honourable members, when I spoke last on this issue, questioned our ability to in fact come to a balanced position without borrowing huge amounts of money. I reiterate what I said at the time: this legislation will not stop government from borrowing money as long as it can demonstrate to the financial institutions a repayment scheme, and, if it cannot, if for some reason it cannot demonstrate that, it must then go to the general public, in other words, the people who own and control the purse strings, and ask permission through a referendum.

I would suspect that that is one of the difficulties that the opposition members have with this, No. 1. They will no longer be allowed to just raise taxes without asking the general public, and I think that is the fear they have, Madam Speaker. I would suggest to you that if the honourable members look very carefully at the legislation, they would find that in Section 2, the beginning was 1995-96 year, the government must insure each year that spending is no greater than the revenue. It is fairly simple that there must be a Fiscal Stabilization Fund established by 1998--by 1988--which was established in 1988--and will play an important role in maintaining the budget in balance. Money may be drawn down from the fund if necessary to make up the revenue shortfall, and I think that is what is important about this legislation.

This demonstrates clearly that government will operate its financial house as we do our own home budgets. In other words, when you have some inadvertent income, you will put it in a savings account, draw the interest, make the savings account grow. Then, when you face inadvertent reductions in revenue, you can in fact take money out of the savings account and pay down the debt that would be incurred through monies that you have saved and therefore no longer require large payments of interest to financial institutions, and then providing better services, Madam Speaker, to our general public.

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Madam Speaker: Order, please. The hour being 4 p.m., when this matter is again before the House, the honourable member for Emerson (Mr. Penner) will have 13 minutes remaining. The hour being 4 p.m., as previously agreed, private members' hour.