Manitoba Hansard — 21 March 1974 (Sitting 62, 30th Legislature, 1st Session)

30-1-62

Manitoba — Debates (Hansard)

THE LEGISLATIVE ASSEMBLY OF MANITOBA 8:00 o'clock, Thursday, March 21, 1974 MR . SPEAKER: The Honourable Minister of Finance. (Applause) The Honourable Member for Morris. 1657 MR. JORGENSON: Mr. Speaker, on a point of order. I do think that there is a formal motion that is to be presented before the presentation of the Budget. A MEMBER: It's been done both ways. MR. CHERNIACK: Mr. Speaker, does the Honourable the Member for Morris allude to the Ways and Means motion as coming first? I'd be glad to rwcommodatehim,I must say that I have never seen it done that way before but then I'm young and I'm willing to learn.

MR. JORGENSON: Well, Mr. Speaker, before the .. . MR . CHERNIACK: But as long as I don't eliminate my opportunity to speak, I'll move it before, after or in the middle. MR . SPEAKER: The Honourable Member for Morris. MR. JORGENSON: Mr. Speaker, I am not attempting to eliminate the possibility of the Minister presenting his Budget. I am simply attempting to make sure that the formalities are observed. MR . SPEAKER: Order please. On the point of order. I think it has been customary usually to make the presentation and then make a motion saying this is why. I believe that's what we've done in the past.

A MEMBER: We've done it both ways. MR . CHERNIACK: Sorry. MR. JORGENSON: The motion must come first. It's the way the Minister can make the presentation. BUDGET PRESENTATION MR. CHERNIACK: Mr. Speaker, I have been here for a fair amount of time. I follow precedent which is more recent and that is that the motion comes at the end. So I intend to speak first. Mr. Speaker, four and a half years ago, I had the privilege of presenting our government's first budget to this Assembly.

That budget began a process of economic and fiscal reform which helped the people of Manitoba realize unparalleled returns from our province's development in the years that followed. In June of 1969, the citizens of this province entrusted the New Democratic Party with the responsibility of bringing a new kind of government to Manitoba- a government fully committed to working for real political, social and economic equality for the average wage earner, the old-age pensioner, the widow with small children,the local businessman, the farmer, and the residents of the north.

The people of Manitoba wanted a governme nt that would not be afraid to challenge the status quo and to implement basic reforms- even though such reforms would be unpopular with the wealthy and the influential, and were certain to be opposed by those with a vested interest in preventing change. Last June, Manitobans reaffirmed their support for our policies of social and economic justice, and gave our government a renewed mandate to pursue our program of reform- by an increased majority and popular vote. Our budget for 1974/75 fiscal year has been formulated in the context of this mandate.

It is a budget which relates new program initiatives and taxation reforms to the requirements of our citizens for new and improved servi ces- and to their ability to pay for these services. - not to abstract theories about the appropriate size of the public sector, or the desirability of "incentives" for a small number of wealthy individuals or corporations. Our government is proud of the substantial progress achieved by the people of Manitoba in the last few years, but freely recognizes that greater efforts will be necessary in the future, to rectify many inequities which still characterize our society.

The new policy directions which our government has already introduced will ensure a firm foundation upon which to base t:J.ese efforts. The budgetary proposals I will place before the House tonight will build on this foundation and strengthen it. In 1973, our economy expanded at a pace which outdistanced even our most optimistic forecasts. Although the data are not yet complete, virtually every indicator thus far ,suggests that 1973 was a "Boom Year" in the truest sense.

1658 March 21, 1974 BUDGET (MR. CHERNIACK cont'd) .we now estimate that the total value of goods and services produced in Manitoba in 1973 reached an all-time high of close to $5. 2 billion - an increase of some 15. 4 percent over the total recorded in 1972. When the effects of inflation are netted out, it appears that the real growth in our economy's output last year was at least 8. 5 percent compared to 7. 1 percent for Canada as a whole. Manitoba's gross provincial product in 1973 was nearly 50 percent greater than total the output in the year we took office.

For the third year in a row, growth in production in our province has exceeded the national rate - both in current and in constant dollars. For the record, and for those who lay great stress on statistics, I feel I should also list the year-over-year percentage increases in some of the major sectors of the Manitoba economy between 1972 and 1973: Total personal income- up over 14 percent. Personal income per capita - up over 14 percent. "After Tax" income per capita- up over 14 percent. Value of agricultural output - up nearly 90 percent. Value of mineral resource output - up about 30 percent.

Value of manufacturing shipments- up more than 20 percent. Total retail trade - up around 14 percent. New capital investment - up about 16 percent. These are but a few of the areas where new records have been set. There are more and a detailed set of economic statistics will be appended to the text of this address. We believe, of course, that individual growth measurements should not be regarded in isolation as self-evident indicators of economic advancement.

It cannot be assumed auto matically that favourable aggregate statistics mean that everyone in our province has benefitted equitably from the gains which have been recorded. But, no one can deny our progress toward that goal. Despite nation-wide problems, it is clear that our economy is growing increasingly stronger and more balanced. Although we should not ignore the impact of national inflationary pressures, we must also recognize Manitoba's gains compared to other regions in Canada. Our jobless totals and the rate of increase in prices have remained well below the national average.

During 1973, a year in which net out migration dropped, our province's average unemployment rate - 3. 9 percent was the second lowest of any province in Canada, and was well below the national average of 5. 6 percent. Similarly, the increase in the "All Items" consumer price index for Winnipeg from December, 1972 to December, 1973 was the second lowest recorded for any major city in Canada. Well inflation and unemployment are national problems. This is obvious from the statistics I referred to earlier.

It is also clear that some of Canada's cost of living difficulties reflect trends in the United States and elsewhere. If full employment and a reasonable degree of price stability are to be achieved through out this country in the foreseeable future, major new initiatives will be required at the federal level. Without such initiatives by the federal government, all any single province can do is try to offset the negative impact of rising prices and high levels of unemployment, as best it can, within the limits of its jurisdictional authority and its fiscal ability.

Although Manitoba's budgetary capacity is comparatively small, our government has done much in the past few years to deal with inflation and unemployment.

In fact, we have probably done significantly more, in relation to our size, than any other province in Canada for example: year; The elimination of Health Insurance premiums, giving families a tax cut worth $200 a Our Property Tax Credit Program, with benefits up to another $200 a year; Our new $200 guaranteed minimum monthly income for those over 65; The provision of insured nursing home care; The pharmacare program for the elderly; The dr'!.lg substitution program to hold down or reduce prescription drug costs; and Our massive efforts to provide low-cost housing for those who need it.

March 21, 1974 1659 BUDGET (MR. CHERNIACK cont'

d) We have also implemented a number of major new employment and training programs, including : The Provincial Employment Program, encompassing Pensioners' Home Repairs, plus Special Community, Northern and Native Employment Measures; The Student Temporary Employment Program; Special Municipal Loans; Accelerated capital projects; The Northern Manpower Corps; The New Careers Program; and Various work activity projects. The positive results of all these measures are evident in the rapid increases in per capita disposable income and the relatively low unemployment figures to which I referred earlier.

It is critically important that our government sustain and strengthen these expansionary policy thrusts. And attached, as an appendix to tonight's budget, will be a statement I made two months ago at a Federal-Provincial Conference of Finance Ministers in Ottawa. in which I expressed serious concern about the possible impact of current economic pressures on our citizens. I suggested that the Federal Government consider the effectiveness of the fiscal and econ omic policy measures introduced in Manitoba in the past few years and adopt similar initiatives on a Canada-wide basis.

I also pointed out the recent dramatic increases in corporate profits in this country in relation to increase s in the cost of living. Between 1972 and 1973, the rate of growth in corporation profits before taxes was the highest in some 25 years. roughly 37 percent following increases of 21 percent and 16 percent in the two previous years. These increases account for a substantial portion of the inflationary pressures in Canada today. And yet, the Federal Government is continuing to reduce corporate taxes every year on a regular

schedule which started in 1972. We estimate that current corporate tax advantages total about $2 billion a year in this country. MR. McKENZIE: Why doesn' t Lewis quit going to bed with Trudeau? MR. CHERNIACK: The honourable member- I interrupt my speech to recognize that the honourable member seems to have one important thing on his mind. I'll leave it on his mind. In addition, Mr. Speaker, I called for early implementation of a properly -designed and enforced combines policy to end profiteering, as well as for some form of increased tax on profits resulting from monopolistic practices.

This would hold down prices and ensure that the corporate sector of the economy would begin to bear a fair share of the cost of financing public services in Canada. I also joined other provincial finance ministers in requesting an immediate inquiry into oil company prices and profits. In recent years, our government has advocated selective controls as a means of dealing with inflation, along with subsidization where necessary. This type of approach should include adequate home mortgage funds at reasonable interest rates, and extension of the twc:rprice system now in effect for oil to some other primary products.

There is an obvious need, as well, for the Federal Government to take effective steps to regulate advertising and packaging because of their influence on prices in general, and on food prices in particular. Mr. Speaker, although there is still over a week remaining before the end of the 1973-74 fiscal year , and approximately a month left until the accounts are closed formally, it is now clear that the government will end the year with a substantial revenue surplus.

It appears that approximately $32 million of the total surplus will represent recent, and yet-to-be confirmed recalculations by the Federal Government in respect of certain transfer payments - including at least $25 million in equalization adjustments for the current and previous years. The balance of the surplus will be a direct result of the buoyancy of our province's economy in the past year.

Under the authority provided by the.F.inan cial Administration Act, an amount of $32.5 million from the surplus will be carried forward and included with current revenues for the 197 4/7 5 fiscal year, as compared with a carry -forward of $42 million last year.

1660 March 21, 1974 BUDGE T (MR. CHERNIACK cont'

d) In addition, surplus funds will be used to develop a special multi-purpose housing pro gram, whose primary objectives are: To assist in the assembly of land for housing in major urban areas and larger rural communities; To enable the Manitoba Housing and Renewal Corporation to service land for residential and related purposes; and To provide mortgage financing for new and existing housing in smaller rural and remote communities, which are unserviced or partially-serviced, and in which the CMHC will not provide loan funds.

I am happy to announce that $20 million from the 1973/74 surplus will be allocated to a newly-created land servicing and home mortage fund for this purpose. Further details will be made available by the Minister responsible for the Housing and Renewal Corporation. Any residual surplus revenues will be set aside as a contingency reserve in accordance with the �Special Loans and General Emergency FUJld Act. Mr. Speaker,the members of this Assembly have already begun to consider our govern ment's main expenditure proposals for the fiscal period beginning April 1, 1974.

Since most program plans have not been reviewed in detail, I wish to draw atte ntion to some of the major initiatives in the main estimates, including: New and expanded stay.option programs for agricultural producers; Additional funds for expanded legal aid services; Further support for universities to keep tuition costs down; Increased assistance on an equalized basis for local school divisions and their taxpayers, including a reduction in the foundation levy on farm and residential property to 3 mills; and A continuation of our highly-successful property tax credit program, which will cost $42 million in 1974/75 MR.

BILTON: What about public debt? MR. CHERNIA CK: In the past - the Honourable Member for Swan River is interested, and he will hear if he is patient. MR . SCHREYER: You have to find something negative all the time. MR . CHERNIACK: In the past few months, we have been able to secure the first detailed statistics concerning the operation of the Property Tax Credit Program in its first year, when it applied only to school taxes. These date have been summarized in a technical paper as an appendix to my address.

They reveal that about 2 out of 5, or 40 percent, of homeowners and tenants in our province had their 1972 school taxes completely offset by their 1972 tax credits. (Applause) Nearly half of those Manitobans who received credits either obtained benefits of $140. 00 or had the full amount of their school taxes erased. A MEMBER: This year too. Next year too. MR. PAULL EY: It's always before an election, Jim. MR . CHERNIACK: About 84 percent of pensioners, some 62 percent of farmers who claimed credits received maximum benefits of $140 or had their entire school property tax burdens offset.

Of course, higher credit benefits of up to $200 in 1973 and 1974 are providing even greater school and general property tax relief. Last year, Manitoba became the first province in Canada to provide direct income tax revenue sharing for municipalities. The amount of the revenue sharing grants was set at five percent of income taxes at current rates in the fi.1scal year ending in the year for which the grants apply. Under this formula, the 1974 interim grant payments to municipalities will be $10. 61 per capita.

In 1975, we estimate that the interim payments to municipalities will be about $12. 60 per capita, subject to an adjustment for the previous year based on actual revenue totals. And in additon to these increased unconditional grants for municipalities, the estimates tabled in February also contain an allowance of some $1. 8 million for special experimental urban transit projects such as: Dial-a-Bus, electrically-operated vehicles, and heated bus shelters:

March 21, 1974 1661 BUDGET (MR. CHERNIACK cont'

d) The Health and Social Development Estimates provide for our government's plan to "Index" social allowance benefits in line with increases in the cost of living- a basic reform in our income security system. We mve recently announced the agreement between our government and the Government of Canada with respect to the joint guaranteed annual income experiment to be carried out in Manitoba during the next few years.

The project will cost about $17 million, of which the Federal Government will pay 75 percento It is now acknowledged that our experimental program is perhaps the best-designed of any yet undertaken in North America. The "Mincome Manitoba" experiment will make possible the evaluation of a number of income support and work incentive alternatives, and will also provide valuable insights into the impact of both federal and pro vincial fiscal policies, including our current system of taxation. The estimates provide $4 million for the experiment in 197 4/7 5.

At the conclusion of my address tonight, I will table the Government's estimates of current revenues for the fiscal year commencing Aprill, 1974. As members are aware, the energy situation has led to a degree of uncertainty tbrouglr out Canada. No decision has yet been made with respect to oil and natural gas prices for the period following March 31. In addition, no decision has been made as to the allocation of any increased returns from higher prices later in 1974.

And, perhaps most important of all from the standpoint of our budgetary position, no decision has been made concerning the treatment under the national equalization formula of any increased returns which producing provinces may realize in the coming year and those which follow. Another area of concern relates to our income tax collection arrangements with the Federal Government.

Recent federal income tax changes have reduced provincial revenues substantially- so much so that Ottawa has agreed to compensate us for a portion of these losses up to the end of 1976 and this explains the "Income Tax Revenue Guarantee" item in the fiscal arrangements

section of the estimates. Unfortunately, the fe deral compensation arrangements will not cover the very serious revenue shortfalls resulting from the new system of "indexing" income tax exemptions and tax brackets which started on January 1st of this year. For those members who were not aware of it, Manitoba's personal income taxes are now also being reduced under this indexing system. We expect indexing will reduce our potential revenues from progressive income taxes by $9 million in 1974/75 alone, and by $100 million in total between now and 1977/78.

At the finance ministers' conference in January, I said that our government feels this is too high a price to pay for a tax change which produces grossly unfair results. Because the indexing plan is based on exemptions instead of credits, it favours the rich and almost completely disregards the effects of inflation on those with low and fixed incomes. MR. BILTON: Where are the rich? MR. PAULLEY: Right there. Well, there's their representatives over there, there's no doubt about that. Oh, there he stands, there's the cheap one. MR.

CHERNIACK: In view of the magnitude of the revenue losses now facing us - and the resulting negative implications of these losses for our own tax reform plans- we have asked the Federal Government to consider adopting a realistic compensation scheme or some other arrangement whereby provinces that feel indexing is inequitable could replace it with a different system, such as a tax credit plan, to help offset the effects of inflation on the real incomes of their taxpayers. Despite our concerns about these problems, our government plans no personal tax increases in the coming year.

Certain changes will be proposed, however, to improve the overall equity of our revenue structure. At present, our revenue tax act and some other tax statutes provide for vendors' com missions- in effect, a share of tax revenues- for those individuals or businesses which act as tax collectors on behalf of the government. Because of the methods used for calculating these commissions, some inequities have resulted- with a few large collectors receiving disproportionately high commissions in relation to collection costs. MR, BILTON: You don't even pay the postage. MR.

CHERNIACK: Some years ago the Smith Report on Taxation in Ontario recommended the aboliton of these commissions in that province, and in 1972, the Ontario Government

1662 March 21, 1974 BUDGET (MR. CHERNIACK cont'dl ••.• adopted this recommendation eliminating all commissions and thereby increasing its revenues significantly. It is not our government's intention at present to recommend a complete abolition of vendors' commissions in Manitoba. Instead, we will propose new formulas under which all collectors of provincial taxes will continue to receive commissions, but on a more equitable basis. The present revenue tax act commission formula permits vendors to retain 3 percent of tax collected under $200 for each remission period, and 2 percent of the balance.

We pro pose to change this formula effective June 1 to permit the retention of a higher percentage, 5 percent of tax collected, on totals under $200; but a lower amount, 1 percent on the remainder. This change will give many small businesses increased commissions and will reduce the amount paid to certain large collectors. I again, Mr. Speaker, interrupt my formal address to accept the congratulations which I believe are being offered by the Member for Swan River. Details of changes in the commission rates under Other Tax Statues will be included in an appendix to the Budget.

Overall, these commission adjustments should result in yearly revenue increases for the government totalling about $1 million.

For a number of years, representatives of Manitoba's native people have called on the Province to remove the 5 percent sales tax from purchases on Reserves, or for use on Reserves, by Indians with treaty status, in line with practices in our neighbouring provinces of Saskatchewan and Ontario, and some other jurisdictions as well. ·Amendments to the Revenue Tax Act will be proposed in order to effect such exemptions for purchases of certain special categories of tangible personal property- excluding motor vehicles, alcoholic beverages, and assets acquired for resale or commercial purposes.

Because of the need to establish a satisfactory system for administering this exemption, no date has yet been set for its implementation. The present maximum exemption for restaurant meals under the sales tax is $1. 99. Because of the increases in the costs of restaurant meals, we have decided that the exemption should be raised so that all meals under $3. 00 will no longer be taxed. I again depart from my text, Mr. Speaker, to point out that this change is not designed to assist particularly members of the Legislative Assembly. This new higher exemption level will take effect on April 1st.

The increase in the restaurant meal exemption will result in a yearly sales tax revenue loss of about one half million dollars. In recent months, our government has completed an intensive study of the provincial Amusement Tax. In the course of this review, we identified a number of anomalies related to current exemption practices. We also considered various alternative methods of rectifying these inequities, including expansion of the tax base to cover many types of admission ex penditures which are not presently taxable.

In addition, we looked at the possibility of incorporating amusement taxes into our sales tax legislation, as Ontario has done. And, finally we noted that some other provinces - Saskatchewan, Quebec and Newfoundland - have transferred certain amusement tax powers to their municipalities. After consideration. we have concluded that collection and enforcement may well be left at the community level. Accordingly, the Provincial Government intends to discontinue its generallO percent Admissions Tax on December 31, 1974.

If it appears that municipalities are desirous of increasing their revenues by adopting this tax, we are prepared to bring in the necessary enabling legislation, as well as to assist in an orderly transfer of taxing power and administration. The Province will continue to levy the taxes at race tracks as well as certain specific fees under the Amusements Act. Over a year ago, our government announced its willingness to provide municipalities with any help they might require in studying and implementing taxation measures designed to discourage land speculation.

Specific reference 'was made to the possibility of adopting a levy on the enhanced value of land resulting from rezoning. The apparent reluctance on the part of the City of Winnipeg representatives to follow up this suggestion was somewhat surprising to us, given their continuing concern about budgetary problems and the rising cost of housing I

March 21, 1974 1663 BUDGET (MR, CHERNIACK cont'

d) Our government wishe s to repeat its offer of assistance to any municipality which may now want to consider applying such a tax, and if there remains little interest at the municipal level, the Province, which is presently studying this matter, may decide to enter this field itself in order to lessen further speculative profiteering. SOME MEMBERS: Hear. Hear. MR, C HERNIACK: Mr, Speaker, my colleague, the Minister of Mines, Resources and Environmental Management, has presented a major statement to this House on mineral re source policy.

In his statement, he emphasized our government's determination to secure for the people of Manitoba a fairer share of the wealth derived from the extraction and processing of the natural resourc es which are their birthright under our Constitution. The current situation with respect to energy has helped to make all Canadians aware of the urgent need for better management of our non-renewable resources and of the immense potential benefits which can result from a carefully-planned development policy.

In the last year other provinces, such as Saskatchewan, Alberta and British Columbia, have taken important new steps to implement such policies and to utilize added returns to improve the quality of life of their citizens. During our government's first term in office, we adopted several measures- including changes in royalties - to ensure that the people of Manitoba would gain greater advantage from their resources. This year, as my colleague has already announced, we propose to undertake a number of new initiatives designed to increase the benefits accruing to Manitobans.

Legislation will be introduced shortly to permit the implementation of a variable system of folumetric taxation related to a base price and price fluctuations. This system will help to make certain that, in the future, the people of Manitoba will retain an equitable proportion of the economic rent or the "super profits" inherent in our natural resources. At the same time, it will guarantee that mine operators will continue to realize a fair return on their investment. The legislation will permit specific tax rates to be established by authority of the Lieutenant-Governor in council as circumstances warrant.

Amendments will also be introduced to the Mining Royalty and Tax Act. Included among these amendments will be provision for similar rate-setting authority for the Lieutenant Governor in Council in respect of Royalty Tax Levels, effective July 1, This will parallel current practices with respect to production from oil resources in Manitoba and other western provinces. As a result of these changes-and in light of the rising value of our minerals, mining taxation revenues are expected to total some $30 million in 1974/75.

For the year now closing, we expect revenues from this source, at existing tax rates, to be about $15 million $18 million. In addition to these changes in mining taxation, our government will also take steps to prevent oil producers from profiting unduly from the current energy situation. We are now considering legislation which may be introduced in this session - depending on federal actions with respect to oil pricing and other matters. Overall, it is expected that provincial revenues for the 1974/75 fiscal year will total some $834. 5 million.

It has already been noted that this amount includes an allowance of $32. 5 million in respect of the anticipated revenue surplus in the current year, which will be carried forward. Mr. Speaker, I have already referred briefly to the Main Expenditure Estimates for 1974/75 which are now before the Committee of Supply, At the conclusion of my address tonight, I will also table Supplementary Estimates for the next fiscal year totalling some $35. 8 million.

The Supplementary Estimates include an amount of $3. 7 million to be allocated to the Manitoba Health Service Commission to cover the cost of the recently -negotiated increases in doctor's fees. These estimates also provide for an additional $1 million for mineral exploration in 1974/75. An allowance of $6. 8 million has been included in the Supplementary Estimates to cover a portion of Manitoba's share of planned Current Expenditures in 1974/75 under a new generat development agreement and sub-agreements which should be signed very soon

1664 March 21, 1974 BUDGET (MR. CHERNIACK cont'd) •..• by our government and the federal Department of Regional Economic Expansion. Other funds are contained in the Main Estimates. The new agreements with DREE represent an important advance in the co-ordination of federal and provincial economic development efforts. One sub-agreement, dealing with Agro-Manitoba, will include programs to improve livestock production, to establish agricultural services centres, to undertake land and water use studies as well as new conservation efforts, to provide general training, and to upgrade existing infrastructure.

A second sub-agreement, dealing with Manitoba's northlands, will encompass a variety of initiatives in the areas of manpower programming, cultural, recreational and youth services, infrastructure development and housing, as well as detailed general economic and community planning. A third sub-agreement, dealing with industrial and commercial opportunities, will involve possible developments in transportation, forestry agricultural machinery, and steel production. Provision has been made in the Supplementary Estimates for further assistance to urban areas as well.

An additional amount of $3. 3 million will be made available under the Depart ment of Highways Appropriation for: An increase of over 70 percent in public transit grants to help offset operating deficits, Increased contributions to the City of Winnipeg for Street Maintenance; and Certain other purposes, including equipment acquisition. Some urban transportation problems can be extremely complex; but a few main policy issues are clear - and common to every major city in the world. Decisions have to be made between more freeways and better public transit.

The substantial new assistance for urban transit included in this Budget reflects our government's position on this question. We do not want to see Manitoba's cities split up - and whole neighbourhoods destroyed - by expensive and inefficient expressways, or "beltways", or "through ways". We intend to work with urban government representatives and planners to ensure that this does not happen. The Supplementary Estimates also contain provision for three important new health and social development initiatives.

To augment funds of approximately $1 million already in the Main Estimates, an amount of $ 3 million has been included in the Supplementary totals to help finance a major new Day Care Program. Under this program, substantial income related subsidies will enable many families to t:ake advantage of child care services on a regular basis. Start-up assistance will also be made available to individuals and groups wishing to provide day care. (Applause) The FedEral Government has now indicated it will help underwrite the cost of the new program.

When final arrangements regarding federal financial participation are completed, more details of the program will be made available. An amount of $2 million has been included in the Supplementary Estimates to launch a new province-wide ambulance service program. Under this program, our government will co operate with municipalities and District Health Authorities in setting up co-ordinated ambulance services. The Province will share operating costs and certain initial capital costs, including improved communications equipment and vehicles where necessary.

A further sum of $2 million will be allocated to expand the Provincial Pharmacare Pro gram to make it applicable to Manitobans, regardless of age. The system of deductible amounts and provincial contributions which applies in respect of the Elderly Persons' Pharmacare Plan will be extended to the universal program. More complete information on the New Ambulance Service and Pharmacare programs will be provided by the Minister of Health and Social Development at a later date.

Earlier in this address, I described our government's plans to guarantee that Manitobans will realize far greater benefits in the future from the development of their natural resources. For 1974, additional revenues from mining royalties will finance an important new tax reduction to give further help to those who are suffering the greatest hardship as a result of inflation. I am pleased to announce that our government will be introducing a new $14 million Cost-of-Living Tax Credit Program this year.

Our Cost-of-Living Credit System will operate in much the same way as our Property Tax Credit Plan, and will have the same basic objective- to ensure that the largest benefits

March 21, 1974 1665 BUDGET (MR. CHERNIACK cont'd) .. .. from the tax cut will be received by those in lower income ranges - the people who are most in need of real income protection at a time when prices are rising rapidly throughout Ca nada. Under our new plan, maximum credit benefit levels will be established at 2 percent of a taxfiler's claim for personal income tax exemptions- thus, the more dependants, the larger the exemption claim, and the larger the potential credit.

Because personal exemptions are now indexed to grow at tile same annual rate as the consumer price index, maximum cost-of-living tax credits will increase acco rdingly, year after year. These maximum benefits will be reduced by one percent of taxable income to determine the taxfiler' s annual credit entitlement- so, the greater the income, . the lower the credit. . . . . continued on next page

1666 March 21, 1974 BUDGET (MR.

CHERNIACK Cont'd) ••••• Members may be interested to know that the formula to be used for calculating Manitoba 'a cost-of-living tax credits is very similar to the formula introduced by the Ontario Government last year when it implemented its sales tax credit program, The major diff erence is that our formula will provide maximum benefits which are twice as large as those now available under the Ontario plan, (Applause) We feel it is appropriate to adopt this type of formula because we want our new credit plan to help reduce the impact of provincial sales taxes in an equitable way, consistent with the principle of ability-to-pay. (Applause) Compared to other factors such as retail and wholesale mark-ups, the provincial sales tax has a limited impact on an average family's living costs - and virtually no effect at all on the prices charged for basic necessities such as food, which are exempt from tax, Still, it is true that the sales tax is less equitable than the income tax.

And by relating our new cost-of living tax credits to income and family size, we will be able to introduce a greater degree of equity in our overall tax structure, while ensuring greater purchasing power for many Manitobans. For a family of four - a couple with two children under 16 - the maximum Manitoba cost-of-living tax credit for 1974 will be about $77,00, For a married couple, where one spouse claims the other as a dependant, the maximum credit will be approximately $64. 00.

For a single person, the maximum credit will be around $34,00, Because elderly people are entitled to claim larger exemptions for income tax purposes, their maximum cost-of-living tax credits will be correspondingly higher. For example, a married taxfiler aged 65 or over could receive up to $85.00 for 1974, while a single person over 65 could receive up to $55,00, A detailed set of benefit estimates will be included with the material which is to be tabled at the end of my address.

The Manitoba cost-of-living tax credit plan will be administered by the Federal Govern ment, alongside our property tax credit program, in conjunction with the income tax system, This means that cost-of-living credits will be claimed by filing an income tax return and a credit application - whether or not a claimant has any taxable income to report. And so, Mr.

Speaker, the combined main and supplementary estimates of current expenditure for 1974/75 total $834,4 million, Altogether, our cost-of-living and property tax credits, plus the extra health insurance costs resulting from the premium cuts in 1969 and 1973, will account for nearly 15 percent of our current budget. Other measures designed to provide tax relief, such as our increased con tributions to the Education Foundation program, account for another 5 percent or more.

In total, then, about 20 percent of our expenditures next year will go directly towards tax reduction measures - all of them designed to make our tax system more equitable. (Applause) As was noted earlier, our current revenues for 1974/75 are estimated at $834,5 million. On the basis of these figures, our government is budgeting for a small surplus on current account for the coming year. Mr. Speaker, as has already been announced, the capital supply bills for 1974/75 totals $699.3 million - up $395,8 million from last year's total authorization of $303,5 million.

At a time when supplies of non-renewable energy resources appear to be becoming scarce in many parts of the world, the government feels it is essential to proceed expeditiously with the large remaining hydro development sites on the Nelson River and related water systems in order to ensure a continuing adequate supply of low cost power for Manitobans, MR. SCHREYER: Lower than any other place in Canada, MR. CHERNIACK: I again depart from my text ••• MR . SPEAKER: Order, please. MR .

CHERNIACK: • • • and invite honourable members to tell us which other juris dictions on this continent pay less and will pay less than do Manitobans. (Applause) Of the total authority required for 1974/75, Hydro's portion alone is increased by $380 million - thereby accounting for almost all of the yearts increase in Capital Supply requested. At present, Hydro is using up most of its accumulated authority from previous years and, as a result, this large authorization is now required to cover advance commitments and contracts which must be entered into,

March 21, 1974 1667 BUDGET (MR . CHERNIACK Cont'

d) I1d like to draw special attention to the fact that the total debt charges to be paid out of the general revenue of the province . • . I depart from my text again, Mr. Speaker, to point out to the Member for Swan River I1m just entering into the one paragraph he asked about earlier this evening. (Applause) I would like to draw special attention to the fact that the total debt charges to be paid out of the general revenue of the province for the 1974/75 fiscal year are projected at just over $10 million. This is about 1 percent of the current government budget.

A table, which will i:Je included among the budget appendices, shows the relationship between debt charges in the budgets of the province since 19 69. It will be observed that debt charges have not been a heavy proportion of our expenditure load and that they continue to remain at very low levels as against rising revenue and expenditures - despite increasing interest rates, with which all of us are only too familiar. And in this connection, I want to make one special observation.

As soon as the report of the Commission of Inquiry into the Churchill Forest Industries matter is completed, the government will be considering a restructuring of the capital position of that enterprise, It may well be that such a reorganization of the debt relationship between the Manitoba Development Corporation and Churchill Forest Industries will have some effect on the analysis which I have just provided, but our overall position will not be affected greatly. This will entail a bookkeeping adjustment, but since the monies involved have already been spent, no additional funding will be required.

Earlier this evening, I referred to the strongly-balanced economic base which has been developed and maintained in our province, despite certain national problems. This base has made it possible for our government to undertake the wide-ranging, expansionary fiscal policy measures for which provision has been made in this budget.

As I have already stated, our budgetary plans for 1974 include: A new cost-of-living tax credit program, made possible by fairer returns from mineral resources; A major new land servicing and home mortgage fund; Important new economic and industrial expansion efforts throughout Manitoba - especially in rural areas and the north, under a general development agreement and sub-agreements with the federal government; Substantially-increased conditional and unconditional assistance to municipalities, including aid for streets and urban transit, and access to additional "growth revenues" from amusement taxes; A guaranteed miminum income for the elderly; A broadly-based day care program; A greatly-expanded pharmacare program; A new ambulance service plan; A larger sales tax exemption for restaurant meals, and sales tax exemptions for native people on reserves.

These measures, and others covered in our 1974-75 current and capital estimates will: Help ensure a fairer distribution of our province's economic benefits; Will introduce greater equity in our tax structure; Will assist in the creation of new employment opportunities; and Provide significant relief from pressures of inflation. This is a budget of accomplishment and of promise. The citizens of Manitoba confirmed last June that they aspire to greater economic and social equality and that they want their government to do all it can to meet the challenges implicit in these goals.

Our budget tonight reaffirms our determination to fulfill this mandate. We believe this budget, and those which follow it in the years ahead, will justify the confidence the people of our province have shown in the New Democratic Party. (Applause) And so, Mr. Speaker, I beg to move - proudly - seconded by the Minister of Labour, that Mr. Speaker do now leave the Chair and the House resolve itself into a Comtnittee to consider the Ways and Means for raising of the Supply to be granted to Her Majesty. MOTION presented. MR. SPEAKER: The Honourable Leader of the Opposition.

1668 March 21, 1974 BUDGET MR . SPIVAK: Mr. Speaker, I move, seconded by the Honourable Member for Riel, that debate be adjourned. MOTION presented and carried. MR . SPEAKER: The Honourable Minister of Finance. MR . CHERNIACK: Mr. Speaker, I have a message from His Honour the Lieutenant Governor. MR . SPEAKER: The Lieutenant-Governor transmits to the Legislative Assembly of Manitoba, Estimates of further sums required for the services of the Province for the fiscal year ending March 31, 1975, and recommends these Estimates to the Legislative Assembly, The Honourable House Leader. MR . GREEN: Mr.

Speaker, I take it that there would be no objection at this time if I • where is it? MR . CHERNIACK: I don't have it, Jack? MR . CLERK: I typed it myself. MR . CHERNIACK: Give me some wording. Mr. Speaker, I have another motion to present. A MEMBER: What motion? MR . CHERNIACK: Some silly archaic • MR . SPEAKER: Order, please, The Honourable Minister of Finance. MR . CHERNIACK: Mr. Speaker, I beg to move, seconded by the Honourable the House Leader, that the message of His Honour the Lieutenant-Governor, together with the Estimates accompanying the same, be referred to the Committee of Supply.

MOTION presented and carried. MR . SPEAKER: The Honourable House Leader. MR . GREEN: Well, Mr. Speaker, I take it that the material is now going to be distributed to honourable members but there is no necessity, I take it, for me to wait with the adjournment motion, Then I would move, Mr. Speaker, seconded by the •.• MR . SPEAKER: The Honourable Member for Morris. MR . JORGENSON: Mr. Speaker, since the business that has been introduced by the Minister of Finance is now concluded, I would presume that we move to Private Members' Hour. MR . GREEN: Mr.

Speaker, I asked whether honourable members would have objections, earlier when I got up, to the adjournment of the House, and I gathered that there was no objection, MR . JORGENSON: Mr. Speaker, notwithstanding the sort of largesse that has been provided by the Minister of Finance, I think that honourable members on this side would like to proceed to Private Members' Hour which is the normal procedure at this time of the day, MR . SPEAKER: Order; please. The Honourable House Leader. MR . GREEN: Well, Mr. Speaker, I move, seconded by the Honourable the Minister of Agriculture, that the House do now adjourn.

MOTION presented and carried, MR . JORGENSON: The Ayes and Nays, Mr. Speaker. MR . SPEAKER: Call in the members. The motion before the House is that the House do now adjourn. A STANDING VOTE was taken, the result being as follows: YEAS Messrs. Adam Asper Axworthy Barrow Bostrom Boyce Burtniak Derewianchuk Messrs. McBryde Marion Miller Os land Patrick Patterson Paulley Pawley

March 21, 1974 1669 BUDGET (YEAS Cont'd) . Messrs. Dillen Messrs. Petursson Doern Shafransky Evans Toupin Gottfried Turnbull Green Uruski Hanuschak Uskiw Jenkins Walding Johannson Watt NAYS Messrs. Banman Messrs. F, Johnston Bilton Jorgenson Blake McGill Brown McKellar Craik McKenzie Einarson Minaker Ferguson Sherman Henderson Spivak MR . CLERK: Yeas 32, Nays 16. MR . SPEAKER: In my opinion the ayes have it. I declare the motion carried. The House is accordingly adjourned and stands adjourned until 10 a. m. tomorrow morning. (Friday)

1670 1974 MANITOBA BUDGET ADDRESS A P P E N D I C E S APPENDIX A - ECONOMIC STATISTICS APPENDIX B - FINANCIAL STATISTICS APPENDIX C - DETAILS OF COST-OF-LIVING TAX CREDIT PLAN March 21, 1974 APPENDIX D - DETAILS OF MODIFICATIONS TO VENDORS' COMMISSION FORMULAS APPENDIX E - STAFF STUDY - SUMMA RY OF RESULTS OF 1972 EDUCATION PROPERTY TAX CREDIT PLAN APPENDIX F - STATEMENTS BY HONOURABL E SAUL CHERNIACK AT FEDERAL-PROVINCIAL CONFERENCE OF FINANCE MINISTERS: JANUARY, 1974 APPENDIX G - REVENUE IMPLICATIONS OF FEDERAL CORPORATION TAX REDUCTIONS

March 21, 1974 APPENDIX A - ECONOMIC STATISTICS APPENDIX A - ECONOMIC STATI STICS List of Tables 1. Comparison of Manito ba' s Estimated Gross Provincial Pro duct and Canada' � Gross National Pr oduct 2. Industrial Activity - Se lected Sectors 3. Value of Manitoba 's Pri mary Resource Pr oduction 4. Total Public and Private Investment in Manitoba 5. Sel ected Economic Indicators for Manitoba 6. Per Capita Income Comparison - Manitoba and Canada 7. Consumer Price Changes -W innip eg and Canada 8. Consumer Price Changes - Regional Cit ies 9. Residential Dwelling Unit St arts in Manitoba 10. Electric Power Available in Manitoba 1671

1672 March 21, 1974 TABLE I CO MPARISON OF MANITOBA' S ESTI MATED GROSS PROV INCIAL PRO DUCT AND CANADA'S GROSS NATIONAL PR ODUCT (Milli ons of Dolla rs ) Perc ent Manito ba's E!>timated Change Gro ss Perce nt Change Gross Pro vinc ial Rela tive to the Na tional Rela ti ve to the Year Product Pre vious Year Product- Pre vious Year 1960 $ 1,9 34 $ 38 , 359 1961 1, 891 -2 .2 39.646 3. 4 1962 2,1 09 11. 5 42, 927 8.3 1963 2,17 4 3.1 45, 978 7.1 1964 2, 394 10 .1 50 ,2 80 9.4 19 65 2, 550 6. 5 55, 364 10 .1 1966 2, 735 7.3 61 ,8 28 11. 7 1967 2, 994 9.5 66, 409 7.4 19 68 3, 2 89 9. 9 72 ,5 86 9. 3 1969 3, 492 6.2 79, 815 10. 0 19 70 3, 669 5.1 85, 610 7. 3 1971 4, 031 9.9 93, 402 9.1 1972 4,4 86 11 .3 103, 407 10.7 1973 * 5,177 15.4 118 ,6 78 14.8 Note: Data ha ve been re vised to accord with updated Sta tisti cs Canada seri es. *Esti mated Source: Depar tment of Finance.

March 21 , 1974 1673 TABLE 2 INDUSTRIAL ACTIVITY - SE LECTED SECTORS (Millions of Dolla rs) PRIMARY RESOURCES CONSTRUCTION MANUFACTURING RETAI L TRADE Percent Percent Perce nt Percent l�l!!.

Y.l!l�� - �hl!Il&� Y.:a!.�� Q.h:ailB.L Y.:a!.�� Qh<iUB!L Y.l!!.Y.� Q.b.au&.e..:... 1960 438 396 711 843 1961 401 -8.4 369 -6.8 717 .8 767 1 N/A 1962 615 53.4 361 -2.2 753 5.0 801 4.4 1963 58 1 -5 .5 403 11.6 794 5.4 82 8 3.4 1964 636 9.5 421 4.5 861 8. 4 87 3 5.4 1965 682 7.2 415 -1.4 913 6.0 918 5.2 1966 701 2.8 485 16.9 1, 019 11.6 1, 0071 N/A 1967 683 -2.6 558 15 .1 1, 080 6.0 1, 073 6.6 1968 698 2.2 662 18.6 l,l l9 3.6 l,l l8 4.2 1969 759 8. 7 754 13.9 1, 230 9. 9 1, 188 6.3 1970 820 8. 0 695 -7.8 1, 258 2.2 1, 227 3.3 1971 908 10.7 671 -3.5 1, 310 4.2 1, 318 7.4 1972 1, 024 12.8 745 11.0 1, 465 11.8 1, 470 11.5 1973 1, 700* 66.0 826* 10.9 1, 80 9 23.5 1, 676 14.0 * Estimat ed 1 Data for this year and subsequent years should not be compared dire ctl y to those of pr evious years as the seri es has been re vised to accord with Sta tistics Ca nada 's data re visions.

So urce: Department of Industry and Commerc e/Depar tment of Agricultur e/Depar tment of Mines, Resource s and Environmental Management/Department of Finance.

TABLE 3 VALUE OF MANITOB A'S PRIMARY RESOURCE PRODUCTION (Thousands of Dollars) 1968 1969 197 0 197 1 1972 19 73* Agri culture 1 458, 000 474,0 00 457, 000 545, 000 672, 000 1,2 50, 000 Minerals 209 , 617 245, 596 332, 146 329,9 13 311, 154 404,9 14 Forest Products 19, 500 25, 300 22 , 200 26,0 00 31, 000 34 ,0 00 Furs 2 5,262 5, 911 4,8 21 3, 164 2,6 47 3, 650 Fi sher ies 3 5,4 97 8,2 86 3, 360 3,8 29 7, 415 7, 415 --- To tal Value of Output 697, 876 759,0 93 819 ,5 27 907, 906 1, 024 ,2 16 1,699, 979 *Estimated 1 Excludes fur farm produc tion and agr icultur al forest product ion reported in "Fur s" and "Forest Products".

Ser ies revised . 2 Ranc h and wild furs. 3 Based on the fi scal ye ar. Sour ce: Department of Agri culture/D epartment of Mines, Resources and Envir onmental Management. ..... Cl) -J ""' s:: � "-:l ..... ..... <C -J ""'

TABLE 4 a:: e; '"' D" TOTAL PUBLIC AND PRIVATE INVESTMENT IN MANITOBA 1>:> ,!-' ,_. (Includes new and repair capital expenditures) � -.1 .,.. (Millions of Dollars) Institut ional Pri vate Sector Services and and Other Government Percent Per cent Capital Percen t Percent Year Depar tments Change Uti lities Change Investment Change Total Change -- --- --- 1960 140 .8 17 8.2 339 .4 65 8.4 1961 142 .6 1. 3 151 .2 -15 .2 29 0.9 -1 4.3 58 4.7 -1 1.2 1962 13 1.5 -7 .8 170 .2 12 .6 29 4.7 1.3 596 .4 2.0 1963 133 .5 1.5 208 .5 22 .5 33 3.4 13.1 67 5.4 13. 2 1964 14 8.1 10 .9 19 0.9 - 8.4 380.3 14 .1 71 9.3 6.5 1965 145 ,6 -1 .7 173 .7 - 9.0 414 .9 9.1 73 4.2 2.1 1966 19 3.5 32 .9 20 1,2 15 .8 465 .4 12 .2 86 0.1 17 .1 19 6 7 18 0. 4 -6 .8 27 1.3 34 .8 49 5.5 6.5 94 7.2 10 .1 1968 20 7.6 15 .1 334 .1 23.1 509.9 2.9 1,0 51 . 6 11 .0 1969 244 .5 17 .8 29 6.8 -1 1.2 60 6.9 19 .0 1,1 4 8.2 9. 2 1970 23 4.1 -4 .3 28 3.1 - 4.6 61 5.6 1.4 1, 13 2.8 - 1. 3 ;1971 22 0.7 -5 .7 280 .6 - 0.9 573.2 - 6.9 1, 07 4.5 - 5.1 1972 1 23 1.5 4.9 363 .4 29 .5 617 .3 7.7 1,2 1 2.2 12 .8 1973 2 25 1.9 8.8 41 3.4 13.8 714 .2 15 .7 1,3 79. 5 13. 8 1 Preli minary actu al figures . 2 Mid-year review figures . ,_.

St atis tics Canada. 0'> Source : -.1 c:n

1676 PUBLIC AND PRIVATE INVESTMENT IN MANITOBA Pr imary Industries and Construct ion Industry Manufacturing Utilities Trade, Finance and Commer ci al Services Housing Instituti onal Services and Government Departme nts TOTAL New Capital Investment* 197 2 and 19 73 ($ millions ) 197 21 1973 2 157. 7 212 .9 49 .8 65 .2 274.5 319 .4 81.8 95 .9 17 7. 8 177. 0 19 4.7 214.1 93 6.3 1,0 84.5 March 21, 1974 Percent Change +35% +31% +16% +17% +10% +16% *New Capital Investment is made up of capital expenditures on new construct ion and on new machinery and equipmen t. 1 Preli minary Actual 2 Mid-year review .

PERS ONAL INCOME Perce nt r��E Y:�!!!� £1:!e��- 1960 1,492 1961 1,4 36 -3.8 1962 1, 611 12.2 1963 1,6 47 2.2 1964 1, 775 7.8 1965 1,8 92 6.6 1966 2,0 39 7.8 1967 2,2 80 11 .8 1968 2,5 23 10 .7 1969 2,7 04 7.2 1970 2, 857 5.7 197 1 3,1 67 10 .9 1972 3,5 51 12 .1 19 73 4, 066* 14 .5 * Esti mated TABLE 5 SELECTED ECONOMIC INDI CATORS FOR MANITOBA (Millio ns of Dollars) 1 LABOUR INCOME2 FARM CASH INCOME - Percent Percent Value �!!��- Value £!:!'!�&�- 884 233 905 2.4 243 4.3 955 5.5 26 2 7.8 1,0 03 5.0 270 3.1 1,0 58 5.5 300 11 .1 1,1 43 8.0 342 14 .0 1,2 42 8.7 377 10 .2 1, 410 13 .5 373 -1 .1 1,5 57 10 .4 365 -2 .1 1, 720 10 .5 350 -4 .1 1,8 35 6. 7 341 -2 .6 1,9 89 8.4 378 11 .7 2, 213 11 .3 484 27 .0 2,4 17* 9.2 633 28 .1 1 All data have been revised to accord with updated Stat istics Canada series . 2 Unadj usted wages and salaries .

Sour ce: Depar tment of Agriculture /Depar tment of Labour/Depar tment of Finance/S tatis tics Canada. CHEQUE CASHINGS Percent Value £1:!e�&!L 19 ,0 81 21 ,1 31 10 .7 21,1 91 2.8 26 ,496 25 .0 27,2 84 3.0 30, 922 13. 3 33, 715 9.0 35 ,3 72 4.9 34 ,1 84 -3.4 36 ,436 6.6 39 ,8 97 9.5 43 ,1 66 8. 2 47,8 00 10 .7 61 ,4 13 28 .5 a:: I» Cl ::r !>:> .; ,_. u:> -l ,.,. ,_. 0> -l -l

X ear Manit2ha 1960 $1,6 47 1961 1, 557 1962 1, 721 1963 1, 736 1964 1,8 51 1965 1, 961 1966 2,1 17 1967 2,3 68 1968 2,5 98 1969 2, 762 1970 2,9 06 1971 3, 206 1972 3,5 80 1973* 4, 096 * Esti mated PERS ONAL INCOME PER CAPITA Percent t:;bangl:_ !;.S!!!!H!S! $1,6 56 -5 .5 1,6 51 10.5 1, 764 0. 9 1,8 40 6. 6 1,9 33 5.9 2,0 91 8.0 2,3 03 11 .9 2, 482 9.7 2,6 90 6. 3 2,9 43 5.2 3, 131 10 .3 3, 403 11 .7 3,7 50 14.4 4,2 35 Source : Depart ment of Financ e.

TABLE 6 PER CAPITA INCOME COMPARISON MANITOBA AND CANADA Percent !;.!:!S!ngL ��!!!!:�Q� $1,4 89 -.3 1,3 95 6. 8 1, 550 4.3 1, 562 5.1 1,6 56 8.2 1,7 52 10 .1 1,8 54 7.8 2,0 47 8.4 2, 231 9.4 2,2 93 6. 4 2,3 85 8.7 2,6 38 10.2 2, 960 12 .9 3,3 95 PERS ONAL DISPO SABLE INCOME PER CAPITA Per cent Ch��B;!::_ �!!��!!!! $1,4 87 -6. 3 1, 475 11 .1 1,5 79 .8 1,6 46 6.0 1, 713 5.8 1,8 46 5.8 1, 994 10.4 2, 116 9.0 2, 262 2.8 2,4 24 4.0 2,5 39 10.6 2, 749 12 .2 3, 036 14 .7 3,4 34 Percent ��!!��- -.8 7.1 4.2 4.1 7.7 8.0 6. 1 6. 9 7.2 4.7 8. 3 10.4 13 .1 ..... 0) -J OD == l<l '"' ::r t-:l .!"" ..... Cl) -J ""'

TABLE 7 CONSUMER PRICE CHANGES - WINNIPEG AND CANADA CONSUMER PRICE INDEX (1961=100) CANADA 1972 1973 % Increase lq72 -------- -- Jan . /Mar . 137 .1 145 .2 5.9 13 1.5 Apr. /June 138.3 148 .5 7.4 13 2.3 July /Se pt . 14 1.1 152 .6 8.2 134 .1 Oct . /Dec . 142 .5 155 .4 9.1 135 .9 Jan. /Dec. 13 9.8 150 .4 7.6 13 3.5 Source: St atistics Canada . WINNIPEG 1973 13 8.0 14 0.2 143 .7 146 .3 142 .0 % Increase 4.9 6.0 7.2 7.7 6.4 s::: � 1>.:> ,!-' .... CO -'1 """ .... 0> -'1 CO

1680 March 21, 1974 TABLE 8 CONSUMER PRICE INDICE S - REGIONAL CITIES % RATE OF INFLATION DECEMBER 1972 - DECEMBER 1973. Health & Recrea tion Tobacco All Tr ansport- Personal & & Items Food Housing Cl othing ation Ca re Reading Alcohol St.

John's 11.3 20.8 10.0 4.9 8.0 2.9 5.5 1.6 Ha lifa x 8.9 17 .2 8.0 16 .2 7.5 3.2 4.0 1.8 Sa int Joh n 9.7 17 .8 7.5 7.1 7.5 3.9 5.5 1.3 Montreal 9.5 18 .7 5.8 7.7 8.5 3.6 3.9 1.8 Ottawa 10. 3 18 .3 7.1 8.5 11 .3 7.8 5.3 0.4 Toronto 7.8 15 .5 5.3 8.2 2.5 10 .8 4.8 0.5 Winnipeg 7.4 15 .7 4.9 6.7 1.2 8.0 5.9 1.5 Regina 6.5 13.4 2.3 7.8 4.5 3.2 6.5 4.0 Edmonton 8.1 18 .0 4.3 6.6 3.2 4.9 7.5 5.5 Vancouver 9.0 20.1 5.6 6.2 3.5 5.0 4.5 1.5 Source : Sta tistic s Canada

Si ngle Percent Year De tached Change 1960 3, 539 1961 3, 759 6.2 1962 3, 279 -12.8 1963 3, 794 15 .7 1964 4, 270 12.5 1965 3, 621 -1 5.2 1966 3, 200 -11.6 1967 3, 374 5.4 1968 2, 649 -21.5 1969 3, 315 25.1 1970 3,06 8 - 7.5 1971 3, 719 21.2 1972 4, 889 31.5 1973 5,81 6 19.0 Source : St atis tics Canada.

TABLE 9 RESIDENTIAL DWELLING UNIT STARTS IN MANITOBA Row and Percent Apartm ent Percent Two · Family Change and Other Change 444 1, 149 307 -30.9 1, 612 40.3 519 69.1 891 -44.7 446 -14.1 2, 148 141.1 642 43.9 1, 740 -19 .0 394 -38 .6 1, 954 12. 3 325 -17. 5 1, 727 -11 .6 583 79.4 1, 880 8.9 511 -12.3 3, 2 96 75 .3 1, 123 119 .8 7, 406 124.7 1, 824 62.4 4, 053 -4 5. 3 1,7 07 - 6. 4 5, 279 30.2 1, 2 87 -24.6 5,892 11 .6 541 -68.0 5,17 4 -7.7 To tal -- 5, 132 5, 678 4, 689 6, 388 6,6 52 5, 969 5, 252 5,83 7 6, 456 11 ,84 4 8, 945 10 , 705 12, 068 11, 531 Percent Change 10.6 -17. 4 36.2 4.1 -10 .3 -12.0 11.1 10.6 83.5 -24.5 19 .7 12.7 -4.4 E:: � "' ...... ......

CO -J ""' ...... C'l 00 ......

1682 March 21, 1974 Year 19 60 1961 1962 19 63 19 64 19 65 1966 19 67 19 68 1969 1970 1971 19 72 1973* * Esti mated TABLE 10 ELECTRIC POWER AVAILABLE IN MANITOBA Kilowatt HourR (Million) 4,56 5 4, 908 5,2 52 5, 778 5, 844 6, 264 6, 817 7,2 07 7,5 39 8, 097 9, 27 9 10 ,3 19 11 , 700 13 ,0 00 Source : Manitoba Hydro Electric Board . Average Net Value (Thousands of Dollars) 36, 387 41 ,13 7 44, 293 47 , 344 49,82 2 51 , 931 55 ,3 85 58, 541 65 ,2 50 73, 235 82 ,4 82 90 , 294 102, 960 113, 100

March 21, 1974 1683 APPENDIX B - FINANCIAL STATISTICS BUDGETARY (CURRENT) EXPEND ITURES FI SCAL 19 74-75 EDUCAT ION TAX CRED ITS AND DI RECT LOCAL GOVERNMENT ASS IS TAN':::,C:;.E _ __, __ ECONOMIC AND RESOURCE DEVELOPMENT HI GH�IAYS EDUCAT ION HEALTH AND SOC IAL DEVELOPMENT HIGHW AYS TAX CRED ITS AND DIR ECT LOCAL GOVERNMENT ASSISTANCE ECONOMIC AND RE SOURCE DEVELOPMENT GENERAL GOVERNMENT SER VICES AND ADMINI STRAT ION PUBL IC DEBT TOTAL HEALTH AND SOC IAL DEVELOPMENT GENERAL GOVERNMENT SERVICE S AND ADMINI STRAT ION ($ MI LL IONS) $231 .6 282 .7 70 .6 80 .7 93 .0 65 .6 10. 1 $83 4.4

1684 March 21, 1974 MAIN AND SUPPLEMENTARY ESTI MATES OF CURRENT EXPENDITURE FISCAL 1973-74 AND 1974-75 % % Fiscal of Fiscal of 1973-74 Total 1974-75 Total 1. Education (

a) Education -M ain $13 4,7 27,4 00 $1 45 ,3 92,8 00 - Supplement ary Ill 4,5 00 ,0 00 - Supple mentary 112 1,1 89 , 700 (

b) Colleges and Universities Affairs -M ain 75 , 529 '7 00 86 ,23 1, 700 - Supplementary 112 415 ,0 00 $216 ,3 61,8 00 31 .0 % $23 1 ,624,5 00 27.8 % 2. Healt h and Social Development -M ain $196 ,92 6 ,500 $271,9 91,7 00 - Supplementary Ill 22 ,5 00 ,0 00 10 , 700 ,000 - Supplementary 112 49 4,8 00 $219 ,921 ,3 00 31 .6 % $282,691, 700 33.9% 3. Economic and Resource Develo pment (

a) Agri culture -M ain $ 20 ,618,0 00 $ 24 ,7 39,2 00 - Supplement ary 112 28,5 00 (

b) Industry and Commerce 4,8 95 ,900 5 '7 34 ,000 (

c) Mines , Resources and Environmental Management -M ain 25 ,1 44,4 00 28,2 04,0 00 - Supplementary Ill 1,0 00,0 00 - Supplementary 112 61 ,600 (

d) Tourism, Recreation and Cultural Affairs -M ain 10 ,8 21,1 00 $ 13,597 ,000 - Supplementary 112 155 , 500 (

e) Northern Affairs - Main 9,1 52 ,8 00 $ 11,962 ,8 00 - Supplement ary 112 32 8, 700 (

f) Co-opera tive Development -M ain $ 721,1 00 $ 907,6 00 (

g) General Development Agreement - Supplement ary #1 6, 848 ,500 71,927 ,6 00 10 .3 % 92 ,993,1 00 11 .1 % 4. General Government Services and Adminis tration (

a) Consu mer, Corporate and Internal Services -M ain 1,945 ,1 00 $ 1,8 49 ,3 00 - Supplementary 112 21,0 00 (

b) Atto rney-General -M ain 14, 169 , 600 16 ,682' 400 - Supplement ary 112 211, 600 (

c) Labour -M ain 2, 01 1,8 00 2,1 23,2 00 (

d) Legislation -M ain 1,913,0 00 1, 950 , 700 - Supplementary 112 16 ,000 .. . 2

March 21, 1974 1685 -2- % % Fiscal of Fiscal of 1973-74 Total 1974-75 Total 4. General Government Services and Adminis tration (Cont ' d) (

e) Executive Council - Main $ 2,3 14, BOO 3,03 9,2 00 - Supplementary l/2 200 , 700 (

f) Finance (excluding Public Debt) -M ain 4,1 03,1 00 4, 54 2,3 00 - Supplementary 1/2 22 ,000 (

g) Public Works -M ain 12, 909 ,300 16 ,54 7,3 00 - Supplementary 1/2 76 ,000 (

h) Civil Service -M ain 4, 616 ,100 5, 383 ,300 - Supplementary 1/2 165, 700

(1) General Salary Increase 13, 500 ,000 $ 44,6 95 ,800 6.4 % 65,61 7.7 00 7.9% 5. Highways -M ain 60 ,03 2, 700 67, 394, 700 - Supplementary #1 3, 250 ,000 - Supplementary 1/2 38, 700 60,071,4 00 8.6% 70 ,644,7 00 8.4 % 6. Tax Credits and Direct Local Government Assis tance (

a) Municipal Affairs - Main 21,8 17 ,400 22,8 82 ,900 - Supplementary Ill 2, 000 ,000 - Supplementary 1/2 6, 500 {

b) Urban Affairs -M ain 1, 785 ,400 1,4 03,4 00 - Supplementary Ill 2,0 00 ,000 - Supplementary 1/2 50 ,000 (

c) Manitoba Property Tax Credit Plan -M ain 338 ,500 42 ,438, 500 - Supplementary #1 47,0 00 ,000 (

d) Manitoba Cost of Living Tax Credit Plan - Supplementary #1 14,0 00 ,000 74,9 97,8 00 10 .8 % $ 80,7 24,8 00 9. 7% 7. Public Debt - Main 8,98 9,8 00 1.3 % $ 10 ,07 2 ,000 1.2 % $696 ,965 ,500 100 .0 % $ 834 ,368,5 00 100.0% ---

1686 Appro . No . 3 4 6 8 1 2 3 1 DETAILED SUPPLEMENTARY ESTIMATES OF CURRENT EXPENDITURE OF THE PROVINCE OF MANITOBA FOR THE FISC AL YEAR ENDING MARCH 31st, 1975 SERVICE HIGHWAYS (XV) Highway Maintenance and Construction, Aids to Cities , Towns and Vill ages , Work in Unorganized Territory and Operation of Ferries - Construction and Maintenance Grants Relevant to a Metropolitan Street System Establ ished by the Lie utenant Governor in Council and Grants for Urban Transit (

b) Assista nce Programs $3,2 50,0 00 TOTAL FOR HIGHWAYS Details of Approp pri ations $ 3, 250 ,000 HEALTH AND SOCIAL DEVELOPMENT (IX) Communi ty Operations Division (

j) Income Security Programs

(2) Maintenance of Children Manitoba Health Services Commission $3,0 00 ,0 00 TOTAL FOR HEALTH AND SOCIAL DEVELOPMENT $ 3,0 00 ,0 00 7,7 00,0 00 March 21, 1974 ¥ear Ending March 31st 1975 $ 3,2 50 ,000 $10,7 00 ,0 00 Resolution No. 1 3 MINES, RESOURCES AND ENVIRONMENTAL MANAGEMENT (XI

I) Minerals Exploration $ 1,0 00 ,0 00 TOTAL FOR MINES , RESOURCES AND ENVIRONMENTAL MANAGEMENT GENERAL DEVELOPMENT AGREEMENT (XXVI) Manitoba Northlands Sub-Agreement Maj or Industrial and Commercial Opportunities Sub-Agreement Agro-Manitoba Sub-Agreement TOTAL FOR GENERAL DEVELOPMENT AGREEMENT $ 4, 927 ,5 00 627,0 00 1,2 94,0 00 MANITOBA COST OF LIVING TAX CREDIT PLAN (XXVII) Manitoba Cost of Living Tax Credit Payments $14,0 00 ,0 00 TOTAL FOR MANITOBACOST OF LIVING TAX CREDIT PLAN TOTAL SUMS TO BE VOTED $ 1,0 00,0 00 $ 6,8 48, 500 $14 ,0 00 ,0 00 $35,798, 500 4 5 6 8

March 21, 1974 BUDGETARY (CURRENT) REVENUES FI SCAL 19 74-75 IN COME TA XES , SUCCE SSIO N DUT IES AND GIF T TAXES NATURAL RESOURCES OTHER TAXES, FEES, ETC . IN COME TAXES, SUCCE SSIO N DUTY AND GIF T TAX NATIO NAL EQUALIZ ATI ON OTHER TAXES, FEES, ETC . NATURAL RESOURCES GOVERNMENT ENTERP RI SES SHARED-COST RECE IP TS TRANSFER OF REVENUE ACCOUNT SURPLUS TOTAL SHARED-COST RECEI PTS NATI ONAL EQUAL! ZA TI ON ($ MI LLIO NS) $26 6.9 11 2.7 24 3.8 39 .1 42 .0 97 .4 32 .5 $83 4. 5 1687

1688 March 21, 1974 REVENUE ESTI MATES � FIS CAL 1973-74 AND 1�74-J5 1. Income Taxes and Provincial Success ion Quty and GHt Tax (

a) Indivi dual Income Tax (

b) Corporation Inco me Tax (

c) Manitoba Succession Duty and Gift Tax (

d) Income Tax Revenue Guarantee 2. National Equalization 3. Other Taxes , Fees , etc. (

a) Legislation (

b) Atto rney-General (less Liquor Commissio n) (

c) Colleges and Universities Affairs (

d) Consu mer, Corporate and Internal Services (

e) Co-operative Development (

f) Education (

g) Finance (

h) Healt h and Social Development (

i) Labour (

j) Municipal Affairs (

k) Public Works

(1) Motor Vehicle Fees (

m) Mis�ellaneous Receipts for Sundry Services 4. Natural Resources (

a) Agriculture (

b) Finance (

c) Mines, Resources and Environmental Management (

d) Northern Affairs (

e) Tourism, Recreation and Cultural Af fairs 5. Government Enterprises (Liquor Commrrssio n) £. Shared Cost Receipts 7.

Transfer of Revenue Account Surplus Fis-cal 19 73-74 $1 66 ,8 23,5 00 41,28 2,8 00 4,0 00 ,0 00 % of Total Fiscal 19 74-JS $1 97,6 00 ,0 00 50,3 00 ,000 4,0 00,0 00 15 ,000 ,0 00 % of Total $212 ,1 06 ,3 00 30 .6 % $266 ,9 00 ,0 00 31.9% $ 97, 915 ,000 14 .1 % $112 , 700 ,0 00 13 .5 % $ 244 , 500 4,8 60 ,000 92 2,6 00 782 ,2 00 73,6 00 81, 60() 172 ,1 01 ,3 00 372 ,0 00 349 , 000 23 ,000 673,8 00 16 ,1 25 ,000 6, 448, 800 $ 300,2 00 6, 474 ,1 00 98 1,8 00 799 ,5 00 500 85 , 200 20 7,6 62 ,2 00 710 ,0 00 376 , 200 26 ,0 00 1,1 93,4 00 17,8 45 ,000 7' 361, 300 $L03,0 57,4 00 29 .2 % $243, 815 ,4 00 29 .2 % 412 ,6 00 1 5, 575 ,il00 6 '2 40 ' 800 39 , 500 1,2 33,4 00 13 ,5 01 ,3 00 1.9% 510 '7 00 30 ,600 , 0001 6 ,655' 700 40 ,0 00 1, 330 ,4 00 39 ,1 36, 800 4.7 % 39 ,0 00 ,0 00 5. 6% $ 42 ,000 ,0 00 5.0 % $ 87,0 20 ,4 00 12 .5% $ 97, 438, 600 11. 7% $ 42 ,ooo ,o oo n. l% $ 32 , 5oo ,o oo 4.0 % $6 94,6 00 ,4 00 100 .0% $8 34 , 490 ,8 00 100 .0 % 1Includes Mining Royalty Tax, Mining Cl aim Lease Tax, Mineral Tax and Mineral Acreage Tax.

March 21, 1974 CAPITAL REQ UIREMENTS - FISC AL 19 74-75

SCHEDULE "A" SELF SUSTAINING PROGRAMS The Manito ba Hydro-Electric Board The Manitoba Telephone Sys tem •. The Manitob a Water Services Board The Manitoba Agricultural Cre di t Corporatio n The Manitoba School Ca pital Financing Authorit y The Manitoba Hospital Capi tal Financing Authority Manitoba Mineral Resources Ltd. . . . . .•. The Manitoba Housing and Renewal Corporatio n Manito ba Deve lopment Corporation The Communities Economic Development Fund ..

SCHEDULE "B" DIRECT GOVERNMENT PROGRAMS Churchill Townsite Redevelopment . . • . . Educational Purposes (

a) Frontier School Div isi on $3,03 0, 000 (

b) Univers it ies .•.•••• 6,000,0 00 Frontier and Resource Roads Grants re Municipal Sewer and Water Sys tems .•••...•. • · • · Winter Works and Emergency Programs General Development Agreement General Purposes . . • • . . . • . • $ 6,3 90 ,0 00(1) 9 ,0 30 ,000 10 ,0 00,0 00 3,1 00,000 7,2 50 , 000 7,68 5, 000 33, 650,0 00 1689 $4 80,0 00,000 29 ' 780,0 00 4, 560 ,0 00 14 ,65 0,0 00 14 ,0 00,000 18 ,0 00,000 340,0 00 20 ,0 00,0 00 39 ,90 0 ,0 00 1, 000,0 00 $622 , 230, 000 $ 77, 105,0 00 $699 , 335 ,0 00 ( 1) Of this amount 55% is recoverable from the Government of Canada.

1690 SUMMARIZED STATEMENT OF DIRECT PUBLIC DEBT AS OF MARCH 31 , 19 73 Funded Debt: Bonds and Debentures : Payable in Canadian Dollars • . • . . • • . . . . . • . . Paya ble in United States Dollars (U .S. $155 ,000 ,0 00) .. . Payable in European Units of Ac�ount (E.U.A. 23,8 50 ,000) . Payable in Swiss Trancs (S . Frs . 80 ,000 ,0 00) ......• Treasury Bills and Other Notes : Payable in Canadian Dollars Total Funded Debt . • . Unfunded Ilebt: Accrued Interest and Other Charges Accounts Payabl -e Special Funds . . Total Unfunded Debt Total Direct Public Debt.

The Province considers the fol lowing assets to be proper deductions in arriving at Net Direct Public Debt: Sinking Funds - Cash and Investments Special Reserve for Retirement of Beb t Cash on hand and in Banks - net ..•. Temporary and Other Inves tments ••.. Advances to The Ma nitoba Hydro-Ele ctric Board Less: Premium on U. S. Funds ...•.... Less: Sinking Funds included above .•. Advances to The Ma nitoba Te lephone System. Less : Sinking Funds included above ...

Advances to Manitoba Development Corporation Advances to The Manitoba Agricultural Credit Corporation Advances to Lea f Rapids Corporation. • Advances to Municipalities and Schools Other - net .... ..• Total Deductions .

Net Direct Public Debt. $1 84,()8 2 , 430 10,04 0,4 30 174 ,042 ,000 11 ,1!42,7 26 48 ,700 ,0 00 7, 502 ,507 March 21, 1974 $356 ,1 66 , 746 155,0 00,000 25 ,678,3 13 20 ,4 92, 315 557, 337 , 374 58,1 84 ,8 04 615,5 22 ,1 78 15 ,914, 702 2, 516 , 79 8 52 ,2 96 ,4 98 70 ,7 27 ,998 686,2 50 , 176 71,983, 732 21, 99 1, 93 2 37 �046 ,661 45 ' 35 3, 77 0 162, 199 ,2 74 41 ,1 97,4 93 174, 846 ,1 15 52 ,47 4,8 42 7, 900 ,0 00 14 ,3 19 , 790 22,0 77,2 47 651 ,3 90 ,8 56 $ 34 ,8 59 ,320 Note : The Financial st atement of Manitoba Development Corporation shows a deficit on operations of $3 9,9 25,0 2 7 its ·at !-larch 31, 19 73.

The auditor 's report indicates that the valu ation of assets of the Corporation at this date does not include any provision for principal losses �•hich mig ht arise from loans relating to The Pas complex. Note : A comparison of net Direct Public Debt for the years 1969-72 is as follows : 1969 19 70 19 71 19 72 As at March 31 $7 6 ,5 36 ,7 91 $54,5 92 ,0 24 $27 ,023,598 $48 ,5 09 , 132 Source : Department of Finance .

March 21, 1974 STATEMENT OF GUARANTEES OUTSTANDING BY CLASS OF BORROWER 1691 Dece mber 31 , 1972 March 31 , 1973 December 31 , 1973 Guaranteed as to Principal and Interes t: Manitoba Hydro ...... . Manitoba Telephone System . Mani tob a Water Supply Board University of Manitoba. Manitoba Development Corporation . . . . . Manitoba School Capi tal Financing Authority Manitoba Agricultural Credi t Corporat ion . Hospi tals and Other . Guaranteed as to Interes t Only : School Districts .

Municipaliti es . $74 6, 945 ,000 16 8, 500 ,000 5, 977 ,000 26 ,5 32 ,5 62 24,91 5,0 00 10 3' 000, 000 8,8 50 ,000 6,1 21 ,4 56 $7 45 ,94 5 ,000 178 ,5 00,000 5, 977 ,000 26 ,51 3,5 62 24,91 5 ,000 105 ,5 00,000 8,8 50 ,000 8,2 06 ,27 0 $879,945 ,ooo 178 ,5 00,000 5, 977 ,000 26 ,4 08,5 54 41,4 99,000 112 ,5 00,000 8,8 50 ,000 8,3 74, 769 $1 ,090, 841 ,0 18 $1,1 04 ,4 06 , 832 $1,2 62 ,054,3 23 $ 1,93 4, 946 $ 1, 934, 946 $ 1, 672 ,5 77 1,2 02 ,1 35 1,2 02 ,1 35 987, 436 $ 3,1 37 ,0 81 $ 3, 137 ,08 1 $ 2, 660 ,0 13 $1, 093,97 8,0 99 $1,1 07 ,5 43, 913 $1, 264, 714 , 336 --- ---- Note : Sinking Funds and other Debt Retir ement Funds at December 31 , 1973, total : (

a) For General Purpose Deb t . . . . . . . . . $ (

b) For self-sustaininR Direct and Guaranteed Debt ... 77,2 89, 448 103, 121, 785 $ 180 ,4 11 ,2 33 '------------------- ---- --- -- - --- - --------i Source : Depa rtment of Finance .

1692 March 21, 1974 DEBT CHARGES AS A PERCENTAGE OF EXPENDITURES ($millions) Budgeted Es timated Debt Charges Fiscal Current Public Debt as a % of Year Expendi tures! Charges Expenditures 1969 - 70 $ 398.4 $ 12 .8 3.2 1970 -7 1 448 .1 13.0 2.9 1971 - 72 51 6.8 9.4 1. 8 1972 - 73 57 5.8 10 .1 1.7 1973 - 74 697. 0 9. 0 1.3 1974 - 75 83 4.4 lO .l 1.2 lMain and Supplement ary.

March 21, 1974 APPENDIX C - DETAILS OF MANIT OBA COST OF LIVING TAX CREDIT PLAN Under the Manitob a Cost of Living Ta x Credi t Plan, maximum benefit levels will be establi shed at 2% of the taxf iler ' s cla im for persona l exemptions. The la rger the exemption cla im, the larger will be the potent ial cred it. In subsequent ye ars , as persona l exempti ons ar e indexed to grow at the sa me ra te as the Consumer Pr ic� Index, so will the maximum cred it benefi ts.

For 1974, maximum benefit levels will be $7 6.7 6 for a marri ed taxfi ler with two dependent children under 16 years of age, $6 3.9 6 for marr ied taxf ilers where one spouse cla ims the other as a depend ant , and $3 4.1 2 for single taxfi lers . 1693 To relate benefits to abili ty-to-pay, these maximum benefi t .levels will be reduced by 1% of the taxfi ler 's ta xable income to determi ne the actual co�t -of living tax credi t entitlement. Thus , those with la rger fa milies and larger exemptions ar e el igible for larger potential benefi ts.

Those with no taxable incomes recei ve maximum benefits while those with higher taxable incomes and gre ater ability- to-pa y re ceive smaller credits . In order to obtain benefi ts, the appli cant must fi le an income tax return and Manitob a credit for m. In general , all taxf ilers qualify for credits except those under 16 yea rs of age, those not res ident in Manitoba for income tax purposes, and those cla imed as a dependant by another taxfiler .

Credit benefits will be recei ved either in the form of a reduct ion in income taxes or in the form of a cheque - to be sent to eli gible cl aimants on behalf of the Manitob a Govern ment by the federa l Depart ment of Nat ional Revenue which ad ministers this plan on behalf o f -the Provi nce. Follo wing are three tables which illustrate the assistance the Manitoba Co st of Living Tax Cred it Plan will provi de for Manitob ans and more parti cularly, its effectiveness in directi ng benefits to those in lower income ra nges.

1694 March 21, 1974 TABLE 1 ESTI MATED Gross Income $ 1, 800 1,900 2,0 00 2,2 00 2,5 00 3, 000 3,5 00 4,0 00 4,5 00 5,0 00 5, 500 6,0 00 6, 500 7,000 7,5 00 8,0 00 8,5 00 9,0 00 9, 500 10,0 00 10,5 00 11,0 00 11�500 12,000 13 ,000 ASSISTANCE PROVillED BY 1974 MANITOBA COST OF LIVING TAX CREDIT PLAN TO VARIOUS �TYPICAL TAXPAYERS * Married Taxpayer Married Taxpayer Married Taxpayer Over Single Tax12al!:er No De12endants 2 De12endants Under 16 65 - No De12endants $ $ $ $ 34 .12 63.96 76 .7 6 85 .28 33.7 5 63.96 76 .7 6 85 .2 8 32 .7 8 63 .96 76 .7 6 85 .2 8 30.84 63.96 76.7 o 85 .2 8 27,93 63.96 76 .7 6 85 .2 8 23 .08 63 .96 76 .76 85 .28 18.23 62.99 76 .7 6 85 .2 8 13.38 58 .14 76 ,7 u 85 .28 8. 53 53.29 72.4 9 83 .92 3.6 8 48 .4 4 67.6 4 78.92 43 .44 62 .64 73 .92 38.4 4 51.6 4 68.92 33.4 4 52 .6 4 63 .92 28 .4 4 47 .6 4 58 .92 23.4 4 42.64 53 .92 18 .44 37 .64 48.92 13.4 4 32.6 4 43.92 8.4 4 27 .6 4 38 .92 3.4 4 22.64 33.92 17 .6 4 28.92 12.6 4 23 .92 7.6 4 18.92 2.6 4 13.9:2 8.92 *In calculating credit benefit levels, the 1974 exemption levels of $1, 706 single exemption , $1,4 92 married exemption, and $3 20 dependant under 16 years of age exemption and $1,0 66 aged exemption were used.

March 21, 1974 TABLE 11 ESTIMATED DIS TRIBUTION OF BENEFITS UNDER 1974 MANITOBA COST OF LIVING TAX CREDIT PLAN BY MARITAL STATUS AND INCOME CLASS* Single Taxfiler Married Taxfiler No Dependants Married Taxfiler Two Dependants 1695 Gross Income Average % of This Group Credit in This Class Average % of This Group Credit in This Class Average % of This Group Credit in This Class $ % $ % $ Under 3,0 00 36 (l ) 37 .0 6S (l ) 24 .0 77 3,0 00 -3 ,999 32 10. 9 66 ( l) 9.7 78 (Z) 4,0 00 -4 ,999 21 11.0 64 9.4 77 5,0 00 - 5, 999 12 9.5 60 7.7 74 6, 000 - 6, 999 4 6.6 52 6.3 73 7 '0 00 - 7' 9 99 2 5.6 40 6.0 70 8,0 00 - 8,9 99 1 4, 6 34 6.3 60 9,0 00 - 9,-999 ** 3.7 25 5.2 48 10, 000+ ** 11.2 5 25 .4 17 100.0 100.0 *This table was developed Irom 1971 income tax st atistics which were adjusted to reflect 1974 income levels, to take into account tax changes % 16.3 4.1 4.6 4.1 5.6 4.5 6. 7 7.3 46. 8 100.{) since 1971 and to take into account persons not covered by the 1971 st atistics . **Average credit under $1.0 0 Percentages may not add to 100.0 due to rounding. (�) These average credit benefit levels are higher than the normal maximum for these groups because of the inclusion of pensioners who have higher entitlements . (

Z) This average credit benefit level is higher than the usual maximum for this group because dependants over age 16 are included.

1696 March 21, 1974 TABLE 111 ESTIMATED DISTR IBUTION OF BENEFITS UNDER 19 74 MANITOBA COST OF LIVING TAX CREDIT PLAN BY INCOME CLASS - PENSIONERS , OVER 65 's AND FARMERS* PENSIONERS (! ) OVER 65 's (2) FARMERS(

J) Percentage of Percentage of Percentage Average Group in Average Group in Average Group in Gross Income Credit This Class Credit This Class Credit This Class $ $ % $ % $ % Under 3,0 00 53 44. 2 55 30 .5 54 41 .7 3,0 00 - 3,9 99 59 18 .5 60 18 .4 69 16 .7 4,0 00 - 4, 999 55 12 .8 58 12 .9 67 12 .5 5,0 00 - 5,9 99 49 7.7 49 9.4 71 9.3 6,0 00 - 6,9 99 38 5.5 40 6.6 58 5.2 7,0 00 - 7,9 99 27 3.0 30 4.6 54 3.8 8, 000 - 8,9 99 23 2.7 27 4.2 44 2.4 . 9,0 00 - 9, 999 16 1.1 20 2. 7 40 2.2 lO , OOOt 7 4.5 5 10.8 19 6.4 100. 0 100. 0 100. 0 *This table was developed from 1971 income tax statistics which were adj usted of to reflect 1974 income levels and to take into account tax changes si nce 19 71.

Percentages may not add to 100. 0 due to rounding . (l )The group "Pensioners" includes only those who filed personal income tax returns in 1971 and whose principal source of income was pension inc�me . (2 ) The group "Over 65 's" includes only those over 65 who filed personal income tax returns in 1971 . (J)The group "Farm ers" includes only those who fi led personal income tax returns in 1971 and whose principal source of income was farming .

Grbss � $ 1,8 00 1, 900 2,0 00 2, 200 2, 500 3,000 3,5 00 4, 000 4,5 00 5,0 00 5,5 00 6,000 6,5 00 7,0 00 7,5 00 8,0 00 9,0 00 10, 000 11,0 00 12,0 00 13,0 00 14,0 00 l5 , 000 1& ,0 00 SUMMAAY OF TOTAL BENEF ITS AVAILABLE UN OER THE MAN ITOBA PROPERTY TAX CREDIT PLAN AND THE MANitOBA COST OF LIVING tAX CREDIT PLAN MAMiTOBA TAX CREDIT BENEF1TS FOR 1974 SELECTED TAXPAYERS BY GROSS INCOME Single Taxpayer Married Taxpayer No llepenl;lants M�rtied Taxp�yer 2 tlependants under Age 16 Married Taxpayer over 65 Propetty Tax Cr$dit� 200 .0 0 199 .6 3 198.6 6 196.7 2 193. 81 188 .96 184 .1 1 179 .2 6 17 4.4 1 169 .5 6 164 .5 6 159 .5 6 154 .5 6 149 .5 6 14 4.5 6 139 .5 6 129 .5 6 119 .5 6 109 .5 6 too.oo 100 .0 0 100 .0 0 100 .0 0 100 .0 0 Gost of Living Tax c;r;$t!it 34 .1 2 ' :l3. 75 32 .7 8 30 .8 4 27 .9 3 23 .0 8 18. :13 1:3.]8 8.5 3 3.6 8 Total Benefits --r--- 234 .1 2 233. 38 231.4 4 227 .5 6 221 .7 4 212 .0 4 202.3 4 18 5.6 4 18 2.9 4 173 .2 4 164 .5 6 159 .5 6 154 .5 6 149 .5 6 144.5 6 139.5 6 129 .5 6 119.5 6 109 .5 6 100 .0 0 100 .0 0 100.0 0 100 .0 0 100 .0 0 Property tax Credit* 200 .0 0 200.0 0 200 .00 200.0 0 200 .0 0 200 .0 0 199 .0 3 194 .1 8 189 .3 3 184 .4 8 179 .4 8 174 .4 8 169 .4 8 164 .4 8 159 .4 8 154 .4 8 14 4.4 8 134.4 8 124.4 8 114.4 8 104 .4 8 100.0 0 100 .00 ioo.oo Cost elf Living Tax Cr$dit 63. 96 63 .9 6 63.96 63.96 63 .9 6 63.96 62 .9 9 58 .1 4 53 .2 9 48 .4 4 43 .4 4 38 .4 4 33 .4 4 28 .4 4 23 .4 4 18 .4 4 8.4 4 Property Total t�x Benefit$ Credit* 26:l.96 200 .0 0 263 .96 263 .96 263 .96 263.9 6 263 .96 262 .0 2 252.3 2 242 .6 2 23 2.9 2 222 .92 212.9 2 202 .92 19 2.9 � 182 .92 172. 92 152 .9 2 134 .4 8 124 .4 8 114.4 8 104 .4 8 100 .0 0 100 .0 0 100 .0 0 200 .0 0 200 .0 0 200 .0 0 200 .0 0 200.0 0 200 . 00 200 .0 0 195 .7 3 190 .8 8 185 .8 8 180 .88 175 .8 8 170 ,8 8 165 .8 8 160 .8 8 150 .8 8 140 .8 8 130 .8 8 120 .8 8 110 .8 8 100 .8 8 100 .0 0 100 .0 0 Cos t of Living Tax Credit ---r-- 76 .7 6 76.76 76.7 6 76.7 6 76 .7 6 76.7 6 76 .7 6 76.7 6 72 .4 9 67 .6 4 62 .6 4 57 .6 4 52 .6 4 47 .6 4 42 .6 4 37 .6 4 27 .6 4 17 .6 4 7.6 4 Property Total Tax Benefits C!iedit* �� 276 .76 27 6.7 6 276 76 276. 76 27 6.7 6 276 .7 6 27 6.7 6 276 .76 268 .2 2 258 .5 2 248 .5 2 238 .5 2 228 .5 2 218.5 2 208.5 2 198.52 17 8.5 2 158 .5 2 138 .5 2 120 .8 8 110.8 8 100 .8 8 100.0 0 100.0 0 200 .0 0 200 .0 0 200 .0 0 200 .00 200 .00 200 .00 200 .0 0 200 .0 0 198 .6 4 193 .6 4 18 8.6 4 183 .6 4 178 .6 4 173 .6 4 168.6 4 163.6 4 153 .6 4 143 .6 4 133 .6 4 123.6 4 113 .6 4 103 .6 4 100 .0 0 100.0 0 Cost of Living Tax Credit --r- 85 .2 8 85 .28 85 .2 8 85 .2 8 85 .2 8 85 .2 8 85 .2 8 85 .2 8 83. 92 78. 92 73.9 2 68 .9 2 63.92 58.9 2 53.92 48. 92 38.92 28.92 18.92 8.9 2 Total Benefits � 285.2 8 285 .2 8 285 .2 8 285 .2 8 285 .2 8 285 .2 8 285 .2 8 285.2 8 28 2.5 6 272 .5 6 262 .5 6 252 .5 6 242.56 232.5 6 22 2.5 6 212 .5 6 192 .5 6 172 .56 152 .5 6 132 .5 6 113. 64 103 .6 4 100 .0 0 100.0 0 *AssumeS sufficlertt ptoperty taxes or rental equivale nts to qualify for these benefit level s. � g. � ,_. (0 -'1 11'>- ..... a> (0 -'1

1698 March 21, 1974 APPENDIX D - DETAILS OF MODIF ICATIONS TO VENDORS' COMMISSIONS COMPARISON OF ESTIMATED IMPACT OF PRESENT REVENUE TAX ACT COMMISSIO N STRUCTURE (3% ON FIRST $200 , 2% ON BALANCE)* WITH NEW SYSTEH Range in Monthly Remitta nces $ Under 50 50-100 100-200 200-300 300-400 400-500 500-600 600-700 700-800 800-900 900-1 ,0 00 1, 000-2 ,0 00 2,0 00-3 ,0 00 3,0 00 -4, 000 4, 000-5, 000 5, 000-10, 000 10, 000+ (5% ON FIRST $ 200 , 1% ON BALANCE)* BY VENDOR SIZE Numb er of Vendor s in this Range 5,4 57 1, 574 1, 570 981 617 436 318 243 213 183 126 676 267 148 81 158 142 Percentage of Vendors in This Range % 41 . 4 11 . 9 11 .9 7.4 4.7 3.3 2.4 1.8 1.6 1. 4 1.0 5.1 2.0 1.1 0.6 1.2 1. 1 Average Yearly Commiss ions Current System $ 1.6 1 23. 54 46. 68 73. 95 95 .0 6 116 .3 9 138 .1 5 158 .9 2 180 .7 1 202.3 7 223.9 6 321 .1 4 53 9.8 9 754 .2 8 964 .4 9 1,4 66.4 9 7,2 76 .6 9 Average Yearly Commissions New System $ 2.6 9 39 .2 4 77 .8 1 10 9.8 9 120.4 2 131 .1 4 141.9 8 152.2 9 163.2 3 174 .0 6 184 .8 9 233. 44 342 .9 1 450. 00 555.2 0 806 .1 4 3, 708.3 1 Average Yearly Diffe rence $ + 1.0 8 + 15 .7 0 + 31 .1 3 + 35. 94 + 25 .3 6 + 14 .7 5 + 3.8 3 6.6 3 17 .4 8 28. 31 39. 07 . 87 .7 0 - 19 6.9 8 - 304.2 8 - 40 9.2 9 660 . 35 -3 ,5 68.3 8 *These comm iss ion rates refer to the collection period of the ven dor .

NOTE

(1) Over 83% of vendors recei ve greater comp ensation under the new system, while ju st under 17% recei ve less.

(2) The saving to the province as a result of the new commission structure is est imated at $675, 000 in a full year .

March 21, 1974 ACT The Tobacco Tax Ac t Par t I of The Revenue Ac t

(1964) The Gasoli ne Tax Act The Motive Fuel Tax Act COMMISSION CHANGES UNDER OTHER PROVINCIAL TAX STATUTES FORMER COMMISSIONS Currently 3% on the fi rst $5, 000 of tax remitted , 2% on the balance.* YEARLY SAVING : $1 40, 000 Currently 3% on the fi rst $10, 000 of tax remit ted , 2% on the next �50, 000, 1% on the balance.* YEARLY SAVING : $29,0 00 Currently 1/5� per gallon on coloured produc� and 1/1 0� per gallon on taxable non-coloured product . Currently 1/1 00� per gallon on colo ured product and 1/1 0� per gallon on tax able non-coloured product.

REVISED COMMISSI ONS 3% on the fi rst $5, 000 of tax remit ted , 1% on the balanc e.* 5% on the first 1699 $200 of tax remitted , 1% on the balance.* 1/25� per gallon on coloured product and 1/ 20� per gallon on tax able non-co loured product. 1/ 25� per gallon on coloured product and 1/ 20� per gallon on tax able non-coloured product. COMBINED YEARLY SAVING (GASOLINE AND MOTIVE FUEL) : $210 ,0 00 *These commissi on rates refer to the collection peri od .

1700 March 21, 1974 APPENDIX E STAFF STUDY -

SUMMARY OF RESU LTS OF 1972 EDUCATION PROPERT Y TAX CR EDIT PLAN Introduction PRELIMINARY ANALYSIS OF MANITOBA DEPARTMENT OF FINANCE STAFF STUDY MARCH, 197 4 THE 1972 EDUCATION PROPERTY TAX CREDIT PLAN The 197 2 Manitoba Budget Address announced a maj or reduction in school property taxes - a reduction related to the income levels of those who pay school property taxes either directly through their property tax stateme nts or indir ectly through their rents. Pre liminary data are now available from the Departm ent of National Revenue which permit an appraisal of the im pact of the 197 2 plan.

The data are , however , incom plete - preventing this study from dealing with the imp orta nt matter of the incidence of school property taxes and the mann er in which the regressi ve nature of these taxes was mitigated by the 197 2 plan. The data now available show only the dist ribution of benefits under the 197 2 credit plan. It should also be recalled that the 197 3 Budget Address announced im portant addit ions to the 197 2 credit Plan.

Maximum and minimum benefits were both incre ased , and the base of the plan was widenee substantially by including all property taxes rather than ju st education property taxes . No data are yet available that would allow a careful examina tion of the precise mann er in which the 197 3 plan worked to alter the incidence of the property tax since benefits are being claimed at the present ti me . Both the 1972 and 197 3 plans are si milar in design , but the 197 3 plan is si gnificantly larger and has a correspondingly larger effect on the incidence of the property tax.

The tables in this paper indicate that $2 4 million in credits were disbursed under the 1972 plan. This is not a fi nal figu re , but is probably close to the final cost of the plan . Similarly , the dist ribution data reported below are prelimina ry . Some changes - perhaps si gnificant in respect of certain income groups - will be apparent when all the data are available. The 197 2 Credit Plan provided for reductions in education property tax - reductions to be received by claiman ts through the income tax system.

A formul a relati ng credits to income was developed in order that larger benefits would flow to those mo st needing education property tax reli ef . The form ula was : $1 40 minus 1% of taxable income to a general minimum of $50 (i .e. even those with high taxable incomes would recei ve at least $50) . In addition , no credit could exceed the am ount of education property taxes actually paid in •••.. 2

March 21, 1974 - 2 - respect of 1972 .* For tenants , education property taxes were deemed to be equal to 10% of rent paid . All individuals could claim a 1972 credit except : - those under the age of 16 in 1972 ; - those claime d for tax purposes as a dependant by someone else; - those livin g in accommodat ion exemp t from school taxes . In the case of married couples , credits could be claimed only by the spouse with the higher taxable income .* * 17 01 Preli minary esti mates indicate that some 292 , 300 people claimed credits under the 197 2 plan.

This represents some 60% of all those who filed income tax returns for 1972 . The 292, 300 includes alm ost 61 , 000 people who had no income tax liability at all . Presuma bly, a large proportion of this group filed an income tax return solely for the purpose of obtaining an education property tax credit . Table I provides an overview of the effects of the 1972 credit plan. It displays the income , provincial income tax and education property tax credit positi on of all those in Manitoba who clai med a 1972 credit .

The average credit was some $82 - with those reporting incomes of around $9,0 00 or less receiving , in general , higher-t han-average credits . For those with low incom es , of course, the effects of the credit plan were especially large . For exam ple the average credit for those with incomes under $3,0 00 was $88 .0 0. For this income class , the credits increased * The 1972 Education Property Tax Credit Plan was in addition to the School Lax Reduction Plan, which also applied to 197 2 school taxes .

Under this latter plan , rebates were calculated on the basis of one-half of school taxes paid to a maximum of $50. For homeowne rs , property tax bills were reduced by this amou nt . For renters , benefits were received directly from the land lord . It is im portant to note that the 1972 Education Property Tax Credit Plan stipulated that credits would be paid in respect of the gross amount of 197 2 school taxes , i.e. school taxes before the reduction under the School Tax Reduction Act . Thus claima nts received "double" benefits in 197 2 . ** "Income" is of course defined as income for 1972 tax purposes .

Family allow ances , Youth Allowances , Workmen 's Com pensation payme nts , War Disability Pensions , Blind Persons Allowances , Old Age Assis tance payme nts , Guaranteed Income Supplement and Social Assis tance payments such as Disa bled Persons Allow ances and Mother 's Allowances were not included in 1972 income for tax purposes . • •.. 3

1702 March 21, 1974 - 3 - incomes , on average, by over 5% . As incomes rise , credit entit leme nts , in general , fall with the proporti onal effects of the credit on income declining rapidly (see Column 7, Table 1) . The effect of the general minimum credit of $5 0 is clearly shown in Column 6. Table I can be summarized by noti ng that for those whose incomes were under $5,0 00, the average credit for 197 2 was some $9 0. For those with incomes between $5,0 00 and $1 0 ,0 00, the average credit was $86 .

For those with incomes between $1 0,0 00 and $15,0 00, the average credit was $62 , and for those with incomes over $15,0 00, the average credit was $5 0. Of those in the under $5,0 00 income clas� 17% recei ved the formula maximum of $140 while an addit ional 67% received credits equal to their school taxes i.e . 84% of those in the under $5,0 00 income class who received credit s, obtained maximum benefits . This illustrates that maximum benefits were of two kinds under the 197 2 plan. Those receiving $140 received maximum benefits .

In addition , those whose credit equalled education property taxes paid also received maximum benefits. Preli minary indicat ions are that of the 29 2,3 00 individuals who received credits for 1972 , some 20 , 500 or 7% of the total recei ved the dollar maximum of $140 , while an addit ional 116 , 000 people (40% of all credit claimant

s) received a maximum paymen t in that the credit completely erased the education property tax lia bility . Many of this latter group would be living in relat ively inexpensive housing throughout rural Manitoba. In addition , a num ber of tenants and roomers would be part of this latter group . The data allowing for an examin ation of the characteristics of the "maximum benefit" group are , unfortunately , not yet available. To summ ari ze , the available data indicate that of the 29 2,3 00 credit claiman ts , some 13 6,5 00 individu als, or 47% of the total , recei ved max imum benefits under the 197 2 plan.

The disti nct ion between the two types of maximum credits can best be displa yed by an exam ple. Case 1 Consider a family of four li ving in its own home , where the 197 2 school property taxes am ounted to $15 0. Only the husband worked and his 197 2 earned income was , say , $3, 500 arising from working most of the year at the minimum wage. (In such a case some social assis tance might have been received - but such paymen ts are not taxable.) In this exam ple, the 197 2 education property tax credit would be calculated as follows : ..... 4

March 21, 1974 - 4 - Tot-al Income �� E!!�!!:� Basic Personal Exemp tion Married Exemp tion $3 , 500 Dependent Chil dren Exemp tio n (2) 1, 500 1,3 50 600 Deductions Emp loyment Expense Deduction Medical & Charitable Deduction Exemp tions and Deductions Taxable Income Education Property Tax Credit : 105 _l.QQ $3,6 55 i_Q_ $140 minus .01 ($0) = $140 . This family then would receiv e the maximum credit calculated on the basis of the formu la . 1703 Case 2 Consider a pensioner and his wife both rece�v�ng the basic old age security pension , with the man also in receipt of a pension from his pre vious jo b.

Assum e that the couple resides in a modest apartmen t where the rent in 1972 was $80.0 0 per mo nth . Only the husband would file an income tax return . In this exam ple , the education property tax credit would be comput ed as follows : Total Income O.A. S. Other Pension Total Basic Personal Age Exem ption Married Exemp tion Deductions : Medical & Charitable Total Exemp tions & Deductions Taxable Income $ 995 3, 000 $3,9 95 $1,5 00 1, 000 605 * On tbe basis of the formu la , this couple would receive as an education property tax credit : $140 minus .Oll790) = 132.1 0.

However , since education property taxes (assumed to be 10% of annual rent ) amou nted to only $96 , the education property tax credit would be $96. Since the credit program is designed to * Married Exem pti on in respect of a spouse receiving basic Old Age Security Pensi on . • •••• 5

1704 March 21 , 1974 - 5 - offset education property taxes , the credit it self , of course, cannot exceed those taxes (or , in this case, the proxy for taxes - 10% of rent). Both the working man of Case 1 and the pensioner of Case 2 received maximum benefits under the plan and each would therefore be included in the 47 % of credit claimants who received the maximum benefits for 1972 . It is , of course , to be expected that the average income of the group receiving maximum benefits would be significantly lower than for the total credit clai ming group . This is , in fact , the case.

The average income of all credit clai ma nts in 197 2 was $7,0 65. For the group that received the maximum benefits (47% of the tota l) , the average income was $3,8 10 . For the remaind er , those receiving benefits on the basis of the formula noted above (inc luding , of course , those who received the $50 formula minimum) , the average income was $9,9 10. Taxable and Non-Taxable Returns --- --- -- ----------- ---- --- - -- -- Many of the individuals who filed 1972 income tax returns in Manitoba had no income tax liability .

A large portion of this group filed such returns in 1972 solely for the purpose of applying for the education property tax credit . Of the 292 ,3 00 people who received credits in 19 72, some 60, 900 or 21% of the total paid no federal or provincial income tax. The average income of this group was, of course, very low - less than $1, 900. The average credit received by those in this group was $95 . It is interesting to note that 98% of this group received the maximum benefits under the Education Property Tax Credit Plan .

The balance of the 292 ,3 00 was , of course, made up by those individuals who did have an income tax liability . The average income of this group was , as expect ed, higher - some $5,1 00 - with the average credit received lower - at $ 79 . In 1972 some 44 ,1 00 pensioners filed income tax returns in Manitoba. Of this num ber, 31 ,7 00 , or 72% , received the education property tax credit. The average income of this group was very low, $2,5 70, com pared to the average income of all credit claimants of $7,0 65 .

The average credit received by pensioners was $91. * For purposes of this study , pensioners are defined as those individuals where pension income predominated on the 1972 income tax return. Most of these people would be over 65 but some people over 65 would not turn up in the pensioner category - i.e. , those whose non-pension income exceeded their pension income . • •••• 6

March 21, 1974 1705 - 6 - A very high proportion of credit clai ming pensioners received maximum benefits ; 5,4 00 recei ved the formul a maximum of $140, and 21 , 100 received all the education property taxes back through the credit . In total , 26 ,5 00, or 84% of pensioners who clai med the credit for 1972, recei ved maximum benefits under the credit plan. As would be expect ed , a large proportion of this group (73 %) had no 1972 income tax liabili ty . Most of these individuals therefore filed an income tax return in order to receive the education property tax credit .

Over 99% of this latter group received maximum benefits - either the $140, or a credit equalli ng the education property taxes paid . Farmers Some 25 ,6 00 farmers received credits under the plan. As farm ers ' average incomes in 1972 were lower than that for all credit clai man ts ($4, 185 com pared to $7,0 65) and as school tax burdens are , in general , higher for farmers than for credit claima nts in general , the average education property tax credit paid to farmers - $112 - was significa ntly higher than the general average credit of $82 .

Of the 25, 600 farm ers , 15 ,900, or 62% , received maximum benefits . Well over half this group received $140, while the remainder recei ved a credit equal to their education property taxes paid . Conclusion It is generally agreed that property taxes (and for tenants the rental equivalents of property taxes) are a regres sive form of taxation i.e . those with lower incomes pay a higher proportion of these incomes toward property taxes than do those with higher incom es .

This of course applies to education property taxes as well . (Education property taxes made uP about one- half of the property taxes levied in 1972) . The 1972 Budget Address announced a change in the structure of education property taxation in Mani toba. Through the Manitoba Education Property Tax Credit Pl an 1972 education propert y taxes were to be reduced - the am ount of the reduction to depend on both education property taxes paid and taxable income . In order to link the property tax reducti ons to taxable income the plan was admi nis tered through the income tax system.

On the basis of preli minary data this study has outli ned some of the principal effects of the plan. 1) Linking school property tax reductions to the taxable income positi on of credit claiman ts concentrated tax relief in the below average income classes . .. ... 7

1706 March 21, 1974 - 7 - 2) Low income groups - whether defined by their taxation st atus (taxable versus non-taxable returns) or by their occupation (f arme rs , pensione rs ,) received higher than average benefits from the Education Property Tax Credit Plan. 3) A large proport ion (40%) of those who claimed credits received all of their sahool taxes back through the credi t.

An additional 7% recei ved the form ula maximum of $1 40. 4) Virtua lly all of those credit clai ma nts who filed a tax return with no federal or provincial tax payable recei ved maximum benefits under the plan . 5) A large proportion of total tax credits were concentrated in the below average income classes . For exam ple , 44% of the dollar value of all credits went to those whose 1972 incomes were less than $5,0 00.

For pensioners the corresponding fi gure was 89% and, for farmers , 76%. 6) The extension of the 197 2 plan - The Manitoba Property Tax Credit Plan - is . a much larger plan but as its design is essentially the same as its predecesso4 one can reasonably expect that the benefits under the new plan will have an array of effects similar to those described above.

TABLE 1 ----- -- Inco me Class $ Less than $3,0 00 3, 000 - 3,9 99 4,0 00 - 4, 999 5, 000 - 5, 999 6,0 00 - 6, 999 7, 000 - 7, 999 8,0 00 - 8,9 99 9,0 00 - 9,9 99 10 , 000 - 11, 999 12, 000 - 14, 999 15,0 00 - 19 , 999 20 ,0 00 - 24 ,9 99 25, 000+ TOTAL Source : Average Income $ 1,6 30 3, 521 4, 494 5,4 86 6,5 06 7,5 05 8, 47 7 9,4 61 10, 910 13 , 225 16 ,8 63 22 ,1 48 40 ,5 69 -- 7,0 63 CREDIT CLAIMING FILERS IN 1972 - SELECTED STATIS TICS Number of Tax Returns 64, 044 24 ,16 1 26,9 48 25 , 78 9 24 , 870 25 ,1 58 21 , 547 20 ,457 25 ,4 05 17 ,8 48 9, 450 2,9 39 3,637 --� 292 , 253 Average Manitoba Provincial In come Provincial Income Tax Income $ % 8 .5 % 70 2.0 % 132 2.9 % 199 3.6 % 282 4. 3% 360 4.8 % 422 5.0 % 503 5.3 % 621 5.7 % 814 6.2 % 1,1 67 6.9 % 1, 703 7.7 % 4,2 97 10 .6 % -- --- 371 5.3 % Preli minary data , supplied by Depar tment of National Revenue .

Average Education Education Propert y Property Tax Cre dit Tax Credit Inco me $ % ·8 8 5.4 % 91 2.6 % 92 2.0 % 91 1. 7% 89 1.4 % 87 1. 2% 83 1.0 % 77 .8 % 67 .6 % 55 .4 % 51 .3 % 51 .2 % so .1 % - -- 82 1.2 % E: � 1..:> .... .... "' -.J """ .... -.J 0 -.J

1708 TABLE 11 Credit All Credit Cl aimants 20 ,5 02 Pensioners 5,437 Farmers 8, 906 March 21, 1974 NUMBER OF INDIVI DUALS RECEIVING MAXIMUM BENEFITS UNDER THE 1972 EDUCATION PROPERTY TAX CREDIT PLAN $140 Credit = Education Total Number Those Receiving Maximum Property Taxes Receiving Benefits as % of all Maximum Credit Cl aimants in Class Benefits 115 ,991 136 ,493 47% 21 ,1 07 26, 544 84% 7, 039 15 ,945 62% Source : Preli minary data. Supplied by Department of National Revenue .

Inc ome Class Less than $5,0 00 5,0 00 - 9,9 99 10 , 000 - 14 ,9 99 15,0 00 - 19 ,9 99 20 ,0 00 - 24,9 99 25, 000 + TABLE 111 DIS TRIBUTION OF CREDITS BY INCOME CLASS ALL CREDIT CLAIMERS PENSIONERS Number in Class %* % 6f Total Credits Number in Class % % of Total Credits -- -- 115 ,1 53 39 .4 % 43.1% 28 ,3 90 89 .6 % 117, 821 40 .3 % 42.3 % 2,9 23 9.2 % 43, 253 14 .8 % 11 .2 % 306 1.0 % 9, 450 3.2 % 2.0 % 47 .1 % 2,939 1.0 % .6 % 15 3, 637 1. 2% .8 % 14 29 2,2 53 100 .0 % 100 .0 % 31 , 695 100 .0 % *Percentages may not add to 100 .0 % due to rounding . �: Preliminary data.

Supplied by Department of National Revenue . 89 .4 % 9.8 % .7 % .1 % 100 .0 % FARMERS Number in Class % - 18,42 1 72.1 % 5,6 76 22.2 % 1,0 68 4. 2% 238 1.0 % 87 • 3% 72 . 3% 25 ,5 62 100.0 % % of Total Credits 75.9 % 20. 8% 2.5 % .5 % .2 % .2 % 100 .0 % f ::r ....., .!"" .... CO ...:] "" .... ...:] 0 CO

17 10 APPENDIX F STATEMENTS Honourable Saul Cherniac k, Q.C. Minis ter of Finance Government of Manitoba March 21 , 1974 Conference of Mini sters of Finance and Provincial Treasurers Ot tawa, Ontario : January 24th and 25th, 1974 . A. State ment On The Economic And Fiscal Situation B. State ment On Tenth Annual Report - Economic Council of Canada C. State ment On The Revenue Guarantee and Indexation D. State ment On Health Insurance Financing

March 21, 1974 STATEMENT ON THE ECONOMIC AND FI SCAL SITUATION This Conference is taki ng place at a critic ally important time in the life of our nation - and , indeed , of the world . Most of the standard economic indicators for the year just past paint a pi ct ure that presents a substantial challenge to governments . The various numbers produced by statis tical agencies are now, for the most part, availab le fo� the year 1973 - putt ing us in a positi on of being able to draw some comparisons and conclusions on the economic per formance of the recent past and of the desired future path .

That the comparisons with previous years are not encouraging gives weight to the view that the decisi ons taken at this Conference will be criti cally importa nt for the future of the country over the next two or three years. Perhaps the most dramatic number is the 7.6 % year-over-year increase in the consu mer pric e index - a rate of incre ase not experienced in Canada for over twenty years. Unemployment remained exceedingly high 1711 in 1973 at 5.6 % of the labour force, which was an improvement of about 1/ lOth from the 1972 level .

It need hardly be said that this improvement should not be cause for complacency . It is pre sently esti mated that the real growth in the Canadian economy in 1973 will approach 7%. This is an encouraging number . I will have more to say about forecas ts of real growth in a mome nt , but I want to emphasize here that the maintenance of a high rate of real growth is criti ca lly important at this

part icular time . The future developments regarding growth, prices and unemployment are considerably clouded by the uncertainties brought about by the energy situation, While it is impossi ble to predict prec isely what the effect of the oil embargos and the new price posit ions will be in 1974 and beyond, it is possi ble to say that the situati on presents a substantial concern to Government s. Future Pol icy Options With re gard to fis cal policy in 1974, it is clear that an acti ve intervent ionist policy is called for.

There also appears to be general agreement that this positi ve intervention should occur on the demand side . This is certai nly our view. While shortages of oil and other atte ndent shortages will probably be relatively severe in some countries , that will apparently not be the case in Canada. The effect of the shortage on us , however, will be derivative - that is to say that one can confidently expect that aggregate demand in Canada will be reduced from what it would oth erwise have been as a result of the slowdown in the economies of our major tradi ng partners.

The conclusion is clear - the so-called energy crisis will manifest itself in Canada as a problem of lack of dem and for many of our produc ts.

17 12 March 21, 1974 Governments should respond with the use of traditi onal fi scal and monetary policy desi gned to fac ilitate growth and to expand job opportunit ies. I emphasize this point because there are a number of worrying trends that suggest to me that the federal government is not acti ng in a manner consiste nt with this view. There is, for example , some evidence that suggests that the stimulus ex pec ted from the federal government in 1974/75 is signif icantly smaller than the stimulus arisi ng from the provincial and local governments .

Another piece of evidence, the deficit posi tion of the federal, provincial and local governments on a natio nal accounts basis (and this is on a nine month basis for 1973) , suggests not only that the federal government will be running a very small 1973 deficit but also that the combined fi scal impact of all provinc es and all local governments far outs trips that of the federal government . In my judgment , from the point of view of stabilizat ion , this situatio n is not appropriate and should not be allowed to conti nue into 1974.

Another indicati on of this trend is the federal government 's recent past action regarding direc t winter job creati on. From a 1972-73 program of around $275 million, plus some capital acc eleratio n , the 1973/7 4 winter program has shrunk to under $1 00 million (again not counting capital acceleratio n) . In Manitoba , on the other hand, our provincial employment program is at $1 0 million - down slightly from last year 's fi gure of $13 million .

But on the capital acc eleration side, our efforts are substantially greater than last year 's given our "normal accelerat ion" and we added a new $13 mill ion special municipal loans program. If one vi ewed the size of last winter 's federal program as appropriate (and this is cle arly not Manitoba 's positi on) one could perhaps argue that 1973-74 winter programs should in aggregate be smaller than in the previous year given the somewhat bette r unemployment experience (although, I emphasize such an overall reduction did not occur in Manitoba) .

It is impossible , ho��ever , to argue that a cut of fully two-thirds is appropriate - yet that is what the federal policy produced this wint er . My point , Mr. Cha irman , is a simple one - but one that has been missed in the past on a number of occasi ons . Not only do the present economic ci rcumstances call for an ex pansionary fiscal and monetary policy but the very existence of over a half million unemployed in this country argues even more strongly for the same thing .

Some recent events have suggested that the federal government is moving in the opposite direc ti on while other levels of government are clearly on the proper path. I urge that the federal government clarify its intentions in this regard. Inflat ion Last year inflati on was extremely severe and forecasts for the coming year suggest that it will conti nue at least at the 1973 rate of increase. While the federal government 's recent acti on of indexing some of the major transfe r payments was a necessary , and, incident ally , a long-advocated step in helpi ng to shelter the poor fr om inflation , no one

March 21, 1974 can sensibly argue that these actions are sufficie nt . No one doubts that a substantial part of Canadian inflation is "i mported" and that Draconia n measures such as were taken a few short years ago by the federal government to control such inflation are com pletely inappropriate and wasteful of resources , both human and mate rial . But , while part of Canada 's inf lation stems from internat ional forc es , a good part of it comes from domestic sources .

Exami ne , for examp le, the record of corporate profits before taxes in this country. 1713 It should hardly please us to note that the rate of increase in such profits for the fi rst three-quar ters of 1973 over a similar period in 1972 was the highe st rate of increase in some twenty-fi ve years. Now it is true that corporate prof its exhibit marked increases and decreases over the economic cycle - but note that the 32% increase in 1973 over 1972 comes afte r increases of 21% and 16% , respecti vely, in previous years .

In the face of these quite fantasti c increases in before-tax, prof it s, the federal government has been busy reduc ing corporate taxes so that the corporate sector is contr ibuting far less than it s proper share to the public sector . In addit ion , of course, the inflatio nary im pli cat ions of such increa ses are clear . As is so of ten the case , situations such as this draw at tention and suggesti ons for change. In the face of these prof it levels , it is time for the federal governmen t to ,reconsi der the vitally im portant subject of restricti ve trade practic es.

A properly desi gned and enforced combine s poli cy would help on the inflation front ; certainly the present Act, still does not prevent certain monopo listi c practices , which result in prof i teering year af ter year . Maybe governm ents should now seriously consider some form of increased tax on corporate prof its , resultant from controlle d mark ets . This may well be ju stifi ed in the face of a year-over-year incr ease of one-third in corporate profits which is coupled with federal tax cuts for mo st companie s.

In the light of an ind icated 7% to 8% rate of inf lation, we must consider measures which would moderate price increases somewha t and ensure that the corpora te sector of the economy would begin to bear its fair share of the Canadian tax load . Manitoba volunteers to form part of an inter-governmental on goi ng group studying the effect of present and perhaps innovative corporate tax policies as they may affect produc tivity , emp loyment and contribute to lower pri ces . Unemp loyment Along with inf lation, the principal problem still fac ing Canada is the high rate of unemp loyment .

Given the poli cy prescription I outl ined earlier , it is evident that a part of the necessary stimulation could come from a direct emp loyment program. Whether such a program is cast as a solutio n to winter unemp loymen t - which only now is begi nning to mo unt - or whether it is viewed as part of a more general emp loyment policy is not im portant . People are unem ployed ; the economy needs stimul ation, and the

1714 March 21, 1974 federal government has the resources and the responsibility to ac t. I do not intend to recite an exhaustive list of suggestions for the components of such a program but I cannot pass without commenting on the success of Manitoba 's provincial employment program. The idea of a pensioners' housi ng program, for example - a program that provided the elderly with income-r elated grants to repair their homes - could easily be expanded to a national scale . Why not generalize this program on such a scale so that all low-income homeowners could benefit from a general housing repair program?

In addition, I commend the atte ntion of the federal government to Manitoba 's Farm PEP Program - a program that in Manitoba has demonstrated great success in removing people from the ranks of the unemployed and from the welfare rolls . A natio nal program of this sort would str engthen the agricultural sector and reduce unemployment. Even prior to re cent energy developments, it was the virtually unanimous view that 1974 real growth in Canada would be far below 1973 growth and it is probably fair to say that the consensus view was for real growth around the 5�% - 5�% level .

Even these fore casts, then , put expected real growth at levels lower than anything exper ienced since the dramatic downturn of 1970. Now, of course, with the energy situa tion changed, forecasts have been revised downward and it see ms apparent that real 1974 growth in Canada will be somewhere between 4% and 5% , with unemployment rising perhaps to the 6% level . Given the lags associ ated with government policy it is essential that acti on be taken now to affect the se forecas ts. We are in a situation when it would be easy to err on the side of caution .

If mista kes are to be made in stabilizati on poli cy in 1974 , let them be made on the "high side" . Conclusion In the federal Minist er 's last Budget , he emphasized the need for greater coord ination of stabilizati on policy given the important part tha t provincial go vernments play in Canadian fi scal arrangements . Your Budget , sir , stated that " -- when there is a need to accelerate growth in the economy , substantial provincial deficits as well as federal deficits may be appropriate" .

I agree with this !nd I emphasize now that the data show that the expected provinc ial stimulation in the near future is presently significant - more so than the expecte d federal fi scal stimulation . I believe the current cir cumstances call for an expansionary policy on a massive scale . We in Manitoba are doing our part - we call on the federal government to do its .

March 21, 1974 STATEMENT ON TENTH ANNUAL REPORT - ECONOMIC COUNCIL OF CANADA In its last two Annual Reports , the Counc il has spoken for greater coordi nat ion between governments in Canada and between governments and the private sector in the formation of economic poli cy. To this end it has recentl y repeated its recommendation that the federal and provincial government s, through the auspices of our offi cia ls ' committ ee, together establish some indicators of the desi rable increase in public expenditure for a coming three-year period .

One has the impress ion from the Council Reports , that it believes ' that simply placi ng represe ntati ves of all eleven senior government s in a room (perhaps with a computer) will inevita bly resul t in coordi nated policies desi gned to further ends upon which all have agreed. Meaningful coordi nation of policy can only occur when basic agreement exists on the ends. The experi ence of this committee has shown that , but this should not hide the fact tha� when basic views di ffer , a coordi nat ing mechanism can be of limited use.

We have a number of mechanisms for coordination of policy already , and I sense that when these ar e judged to be defi cie nt it is not due to the inappropriateness of the mechanism, but of ten due to important policy diffe rences amongst government s. Methodology Last year , Manitoba outli ned some of the reservations we had with the approach taken by the Council in developing what it chose to call "Perfor mance Indicato rs" . These res ervations remain .

The indicators are ref erred to in the review as "ta rget s" , and yet the discussi on of the individual indicators seems to be couched in terms of the likely outcome rather than the desired outcome . While the approach adopted does allo w for an appreciation of the past inter-relat ionships of maj or economic aggregates , one wonders whether the indicator s are not simply forecas ts, since they often seem to be the result of past trends . Targets are only useful if they direct the economy along dif ferent lines from the current trend - if indeed that is what is desi red .

I compare the approach taken by the Council with that adop ted in Guidelines for the Seventies - a policy and planning document published last year by the Government of Manitoba . Guideli ne s sets out some broad 171 5 but basic obj ecti ves . The discuss ion of each poli cy area begins with a restate ment of these objecti ves from the point of view of agricul tural poli cy, land poli cy, tax policy , etc .

While Guidelines only represents a start to an ongoing planning proce ss, I must say that I fi nd the approach adopted there, including the unequivocal statement of economic and social policy obj ecti ves at the outset , far more useful than the appro ach adopted by the Economic Council. Some

Part icular Issues I will spare you a detailed look at the Tenth Annual Review - but I will deal briefly with some of the speci fi c issues that come to mind upon scanning the Report .

1716 March 21, 1974 Income Redistri bution One of the things that concerns me about the two last Annual Reports of the Council is that there is very li ttle said about the important issue of income redistri but ion . The issue is mentioned in relati on to the discussi on on transfer payments - a matter I wish to deal with in a moment - but nowhere in the discuss ion of targets is mention made of what goals we should be working towards in this important area .

This is a di sturbing omission , espec ially when the Council chara cte rizes its search for what it refers to as an "opti mum solut ion" as having taken place only afte r taking into account "the major goals of economic policy" . It would seem to me that neglecting the issue of income redistri butio n in such a to tal way seriously reduces the value of the Counci l's work. It is all the more surprisi ng , given the fact that the Council in previous years has done some very useful work on this very issue.

The Size of the Public Sec tor In both the Ninth and Tenth Annual Reviews, the Council has made explicit suggesti ons concerning the appropriate size of the public secto r . Indeed, one of the performance indicator s is the maintenance of a growth rate of current government expenditures at 5% per year (i n cons tant dollars) . Now, the matter of the appropriate size of the public sector is one on which views diffe r considera bly .

The government which I repre sent has expanded the si ze of the provincial public sec tor somewhat through such programs as public automobile insuranc e, and the emphasis we have placed on direct employment programs , to ci te ju st two initiati ves . The data show that other government s in Canada have, in fact, produced a similar result due to the adoption or enlargement of programs that represented for them the implementation of desi red policy optio ns .

Although I need hardly emphasize the point in this forum, nothing could be more clear than that the governments which introduced various policies and programs bear the responsibility for them - not only in debate but ultimatel y at the polli ng booth . In my view, governments have a responsibility to examine the economic and soc ial needs of a society , and to move in a planned and eff icient way to fi ll them , if indeed this accord s with the poli cy thrusts of the government s in questi on . If these decisions affect the size of the public sector , then - so be it .

Given this , I wonder if it is even the business of the Ec onomic Council of Canada to suggest that the public sector should be a

part icular size. Transfer Payments to People The Council recommendation that has attracte d mo st atte ntion is the suggesti on that the growth rate of government transfers to persons should be slowed down from the 13 .5 % per year increase that the Council esti mates will occur , to 11 .2% per year over the 1973 to 1976 period . This latter fi gure is apparently chosen because it is the rate at which these expendit ures grew during the 1960' s. For some pecul iar reason , not easily understood by me , the Council seems to imply that since the expected

March 21, 1974 percentage growth in total government expendi tures for the 1972 - 1976 period is also 11 .2 % - that that is an addit ional justi fi cat ion for limitation on the growth of transfer payments to people. I must conf ess that the logic of this apparent combinati on of oranges and apples escapes me - the more so since it is presented as being self evidently logical !

In framing its recommendati ons, the Counc il identifies what it calls the maj or provincial transfer programs - such as post-s econdary educat ion , and the social assis tance system - and fi nds that total provincial and municipal transfe rs to people are expected to rise by some 14% in the 1972 - 1976 period . The major federal transfer programs - Old Age Se curity, Family All owances , Unemployment Insurance are, on the other hand , expected to increase by 11% per year over a similar period . The C.P .P. and the Q.P.P. are expecte d to increase out-payments by about 45% per year in the 1972 - 1976 peri od.

Now, amongst these transfer programs , the Council recommends finding $4 .6 billi on that should be withdrawn from their future growth. The Council does not suggest ju st where these cuts should be made , but some hints can be gleaned from a close reading of the Report . For 1717 example , it is not explicitly suggested that provincial welfare be cut back from its expecte d growth rates. Indeed the Council looks favourably on the movement towards the indexing of these trans fers to shelter reci

Document details

Collection	Manitoba — Debates (Hansard)
Citation	30-1-62
Type	hansard
Volume / chapter	30th 1st hansardpdf 62.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	1623d1d403ced81a9a6668d5959355915cc2fab3

Source file is stored in the law ingest library (pdf).