March 27, 2003 HOUSE OF ASSEMBLY

PROCEEDINGS Vol. XLIV No. 6

The House met at 2:00 p.m.

MR. SPEAKER (Snow): Order, please!

The hon. the Minister of Finance.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Mr. Speaker, I move, seconded by the Premier, that this

House approves in general the budgetary policy of the government.

MR. SPEAKER: The motion is that this House approves in general the

budgetary policy of the government.

The hon. the Minister of Finance.

SOME HON. MEMBERS: Hear, hear!

PLANNING FOR THE FUTURE

MS J.M. AYLWARD: Mr. Speaker, this budget will demonstrate once again

that any commitment made by this government to the people of our Province will

be a commitment kept. Over our term we have made commitments to enhance

education and youth opportunities, to better health care and to help those most

in need. We continue to honour these commitments.

We have a forward looking and focused plan, not only for social programs, but

also to better the economic circumstances of all regions of our Province. Our

commitment is to creating opportunities for jobs and growth. The result is one

of the best performing provincial economies in the country.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: We intend to do more - in education, for youth, to

improve health, to expand opportunities, to grow the economy and to create

employment. Our commitment is to the whole Province, but particularly to the

rural areas where some of the challenges may be greater.

I travelled the Province conducting pre-budget consultations to get advice

directly from the people of our Province. I thank them for their thoughtful

advice. What I heard shaped the direction and thrust of this budget. This was

particularly important this year because of the prospect of a widening deficit

gap, at least in the shorter term. The options I discussed with Newfoundlanders

and Labradorians to address that gap were to cut social programs, raise taxes or

incur higher deficits until the economy, led by offshore oil, generated higher

revenues.

People everywhere advised me to tell government not to react prematurely to

what may be a short-term fiscal challenge by cutting back their social programs.

As a government, we have worked too hard to strengthen social programs to begin

dismantling them now, in our view unnecessarily. Instead, we will continue to

manage the Province's finances prudently, as well as to enhance social

programs and grow the economy, all for the longer term. The course we have set

in this budget is a plan for the future that again acts on our commitments to

the people of the Province and respects their advice.

BUDGET PLAN

Economic Climate - 2002 Review

Mr. Speaker, when the budget was prepared last year economic uncertainties

prevailed worldwide in the wake of September 11. Our economic forecast at that

time for the Province was positive, but modest. Subsequent events have shown our

economy was much more robust in 2002. Most economic indicators out-performed

their budget forecast, some by wide margins.

The Province led the country in economic growth in 2002 for the third time in

five years. Our economy, measured by the change in GDP, grew in real terms by

8.2 per cent, its best performance in almost 30 years.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Led by growth in offshore oil production, the real value

of exports rose over 20 per cent.

Terra Nova produced first oil in January 2002. When combined with Hibernia,

total offshore oil production reached 104 million barrels, a 92 per cent

increase over the previous year. In March 2002 Husky Energy announced that it

would proceed with development of the White Rose field, with the first oil

predicted in 2005.

This government also reached an historic agreement in 2002 with Inco for the

development of the Voisey's Bay nickel deposit. The improving economy led to

employment growth, which reached 213,900 person years, the highest level ever

recorded on an annual average basis.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: The value of retail trade surpassed $5 billion for the

first time.

Economic Climate - 2003 Outlook

Mr. Speaker, our strong economic performance in 2002 is expected to carry

over to 2003. Real GDP is forecast to grow by 5.4 per cent in 2003.

Offshore oil production is expected to grow by 31 per cent to almost 137

million barrels. Offshore exploration activity will also increase, with two

exploratory wells to be drilled in the Flemish Pass area and delineation wells

drilled at White Rose and Terra Nova.

Capital investment is forecast to increase to $3.5 billion, the second

highest level ever. Direct employment with White Rose should approximate 800 in

2003, with Voisey's Bay averaging 320. Overall, employment could reach a new

record high of 217,800.

Business and consumer confidence remains high. This government has presided

over one of the few periods of sustained high economic growth since

Confederation, with real GDP growth topping the country for likely four of the

most six recent years and the number of people employed in the Province reaching

new highs.

Fiscal Framework - 2002-03 Performance

Mr. Speaker, as well as fostering a strong economy, this government has built

a record of sound fiscal performance. In the budget last year we forecast a

deficit of $93.3 million in the face of the world wide economic uncertainties

that followed September 11. We stated at that time we were optimistic that an

economic recovery could bring the deficit down even lower. Subsequent events

proved this to be correct.

By year end, we anticipate revenues will be up by $176.9 million. This was

all due to growth in our own source revenues. Transfers from the federal

government were actually $27.4 million lower than anticipated. Expenditures

should be $10.8 million lower than budget. Taken together, these developments

transformed a $93.3 million budgeted deficit into a $94.4 million surplus.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Mr. Speaker, this surplus gave us the flexibility to

take a number of measures, including not removing $97 million from the Labrador

Transportation Initiative Fund.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: One time revenues of $57 million were deferred to the

coming fiscal year, a move that mirrors a successful strategy of deficit

management that we have employed before. Finally, we will make a year end

contribution to the Memorial University Opportunity Fund of $2.1 million. These

measure total $156.1 million and brings our surplus back to a modest deficit of

$61.7 million.

It is this cash deficit figure that is on a comparable basis to all those

reported in every budget going back to Confederation. In fact, prior to the

mid-1990s when we ushered in the most responsible period of fiscal management

since Confederation, one would have to go back to 1970-71 to find a lower cash

deficit.

As part of our commitment to increase accountability, we are adopting

budgetary policy that better reflects the norms that have become common in other

jurisdictions. To this end, commencing for the 2002-2003 fiscal year we will now

be including in our budgetary position borrowing for investment in certain long

term assets and capital projects. These borrowings total $81.5 million and when

added to our cash deficit of $61.7 million brings the consolidated deficit for

the coming year to $143.2 million.

I would like to emphasize that the only thing that has changed is the way we

account for some of our capital borrowings. In the past, most of the costs would

have been recorded in our cash reporting as these borrowings were repaid, rather

than this new practice of recording them in lump sum when the funds are first

borrowed.

Fiscal Framework - 2003-04 Forecast

Mr. Speaker, preparing any budget always has its challenges, some years more

than others. For the coming fiscal year, we had a number of events that

converged to put pressure on our fiscal position.

Inevitably, the collapse of the groundfishery under federal management has

had consequences for the Province's fiscal position. On the one hand, the

Province has had to spend more to counteract some of the economic and social

consequences, while, on the other hand, a smaller population means fewer

taxpayers and lower federal transfer payments which are per capita based. If our

population remained at the 1994 level, for example, we would receive $140

million more in federal transfers in 2003-2004 than we expect to receive. In

fact, our federal cash transfers will be roughly the same in the coming year as

they were in 1994-1995, with the transfer in support of health expenditures

actually $58 million lower.

Over the same period, the cost of health care has skyrocketed. This is a

national phenomenon, and we cannot shelter ourselves from it. Since 1994-1995

the cost of operating the health care system in up 63.6 per cent, now absorbing

42 cents of every program dollar we spend. This is adding well in excess of half

a billion dollars annually to our expenditures.

Other than rising health care costs, which is a national issue, we have

contained our expenditures. Everything else we spend on the whole range of

government activities and programs, all of our other expenditures, have

increased in cost by only 5 per cent over the same period, the equivalent of

less than 1 per cent a year.

The best way that we as a government can close the gap between dramatically

rising health expenditures and flat or falling federal transfers, other than

cutting social programs, is to generate more revenues ourselves within the

Province by growing our economy. This government has not made a practice of

raising taxes. In fact, we have cut the overall tax burden, both in personal and

business taxes. By growing the economy, our provincial own source revenues will

see an increase in 2003-2004 when compared to 1994-1995 of over $625 million,

approaching 40 per cent.

The situation we face is rapidly rising health costs and modest growth in

other expenditures, offset by strong provincial revenue growth and weak federal

transfer payments. This inevitably would create a deficit gap, eventually a

larger one like the one we face for the coming year. As our oil revenues grow,

this gap can be closed, but in the interim period choices have to be made. These

choices are to cut social programs back now and restore them later as revenues

improve, to raise taxes substantially or to incur higher deficits on a temporary

basis while oil revenues grow.

Mr. Speaker, this government will keep its commitment to sustain social

programs.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: As long as the deficit is affordable and it can be

eliminated over a couple of years by revenue growth, we see no reason to cut

back our social programs, like health care and education, to lower the deficit

now. With a reasonable expectation that the deficit can be eliminated by revenue

growth, any cuts would not only be unnecessary, they would be a backward step

that goes against the advice given to me by the people of our Province.

Let me turn briefly to why we believe a higher deficit is affordable. Our

cash deficit for the coming year is forecast to be $212.7 million. We have

compared this deficit to past deficits, evaluating them as a percentage of

expenditures and the size of our economy as measured by GDP.

Our cash deficit for the coming year is 5 per cent of expenditures. From

Confederation to 1994-1995 the average was 10.3 per cent, more than double. The

only period when it has been consistently lower than 5 percent is during this

term of this government.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: If we consider deficits as a percentage of GDP, we have

the same result. Our cash deficit for the coming year is 1.3 per cent of GDP.

Prior to 1994-1995 the average was 3.6 per cent, again more than double. The

only period when it was consistently lower is during the term of this

government.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: So in terms of relative size, deficits larger than the

one we are forecasting for 2003-2004 were quite manageable in the past. And,

these previous deficits were incurred during times when there was not the

optimism there is today about growing oil revenues and our buoyant economy.

Certainly, I do not wish to imply that a deficit in the $200 million range is

insignificant or that we are simply dismissing it. This government takes prudent

financial management very seriously. Both major U.S. rating agencies upgraded

the Province during our term of office. Our credit rating now is the highest it

has been since we became a Province. Part of the reason for this is that this

government is the most fiscally responsible government in the history of the

Province.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Anyone who looks at our record for the seven fiscal

years from 1996-1997 to 2002-2003 can see our average deficit works out to be

just over $25 million. This is an achievement for which there is no parallel

since Confederation. The average deficit during the 1970s was $137.5 million,

and during the 1980s was on average $208.7 million. These numbers would be much

higher if they were adjusted for inflation to give a proper comparison.

In many, if not most, of the years since 1996-1997 there have been dire

predictions annually about unmanageable deficits and impending fiscal shocks and

doom. The reliability of these fiscal fortunetellers must be suspect by now, as

this government has brought in one responsible fiscal plan after another. We

have consistently had better financial results than our initial deficit targets.

Seven consecutive years of prudent fiscal management does not happen by good

luck..

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: No, Mr. Speaker, it does not happen by good luck, it

happens by good government.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Rushing to cut social programs now by in excess of $200

million to achieve a balanced budget is just not good public policy. As a

government, we believe there is no need to take this course of action, given the

positive outlook for our economy and for our revenues. Accordingly, this Budget

contains no cuts to social programs or other public services.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: In fact, it enhances social programs selectively where

we determined it would be prudent and responsible to do so.

Improving Accountability

Mr. Speaker, we will be improving accountability in this Budget in several

ways. This began by restating the cash deficit for the year just ending to

include borrowings for certain long term capital projects. This new policy

extends to 2003-2004 and to subsequent years.

As a result, an amount of $73.9 million is being added to the cash deficit.

This means that the consolidated deficit for 2003-2004, based on our newly

adopted reporting policy, would be $286.6 million.

This year we are also including for the first time a

schedule in the Budget

document that shows our financial position on the basis of full accrual

accounting. This methodology has been gradually adopted by other jurisdictions

across the country. Its objective is to give a better matching of government

revenue and expenditures with the periods to which they apply. Generally, the

adjustments made for full accrual accounting do not affect our cash position or

borrowing requirements. Government already reports on the basis of full accrual

accounting in its Public Accounts, which are prepared and released annually.

Mr. Speaker, if the consolidated deficit were substantially higher and our

outlook was not as favourable, a much more detailed plan for deficit reduction

would be needed. But our financial situation, certainly when compared to past

governments, is actually better than it has been for all but a few years since

Confederation. What we want to achieve now is an orderly reduction in the

deficit over time, while protecting social programs and public services, as well

as sustaining business and consumer confidence in our future. Therefore, we are

setting targets for deficit reduction that would bring us to a balanced budget

over the four-year term of our next mandate.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: If we target a modest $75 million reduction in the

consolidated deficit each year commencing in 2004-05, this deficit will be

eliminated over a four year period to 2007-08.

We believe revenue growth could account for all of the fiscal improvement

needed to eliminate the deficit, and more. For example, our current account

revenues for 2002-03 were $220.9 million higher than the previous year, and we

are forecasting these same revenues to be $96.4 million higher in 2003-04 than

they were in 2002-03. Oil revenues will have a much more positive impact during

the deficit reduction period than they had in these earlier years.

The $75 million deficit reduction amount for any particular year is only a

target because we have to retain the flexibility to manage the overall fiscal

position for the longer term. Some years we may be able to do more, others less.

Our flexibility in any year is a factor of many things that cannot be accurately

predicted now. Oil prices fluctuate. Health costs may grow or slow. The national

and international economy rises and falls. Federal transfers are currently under

review. There will be a new leadership in Ottawa. The list goes on.

But, with our record of sound fiscal management, we have demonstrated to the

people of our Province that they can have confidence our fiscal decisions are

guided by their advice and the best interests of the future of our Province.

Revenue Measures

Mr. Speaker, as well as initiating no cuts to social programs or public

services, we have avoided general tax increases in this budget. The budget

actually contains some targeted tax relief for both individuals and businesses.

It is necessary, however, to raise some additional revenues to contain the

deficit while making some social program enhancements. These measures will

affect only those individuals who choose to make certain discretionary spending

decisions.

An increase in tobacco taxes will raise an additional $10.5 million annually.

The tax on manufactured cigarettes will increase by 1.5 cents per cigarette,

while the fine cut loose tobacco tax will increase four cents per gram. Higher

prices are a deterrent to habitual smoking, particularly amongst young people

who are the most price sensitive. The Newfoundland and Labrador Liquor

Corporation is also being asked to remit an additional $10 million next year.

PEOPLE MAKE THE FUTURE

Better Education for a Better Future

Mr. Speaker, when we look to the future of our Province, nothing is more

important than creating a culture that values education and provides

opportunities for life long learning wherever people live. Education is the

foundation that will allow us to compete successfully in the global marketplace

and keep our economy growing.

This means we must provide the resources for our students to become the best

educated in the country. Our goal is to have student achievement levels in three

years that match or exceed the best in the country. We are already

out-performing much of the industrialized world. In setting a goal to attain the

best achievement levels in Canada we will be producing students whose

performance ranks among the best in the world. To do this, we will ensure all

our students, whether in urban centres or rural schools, have access to quality

educational programming.

Kinderstart Kindergarten Orientation Program

Our commitment to education begins with early literacy initiatives such as

the Kinderstart Kindergarten orientation program, which was implemented

for the first time this school year. It is an innovative program providing

supports to families so children are well prepared and ready to learn when they

enter the school system.

Greater Spending per Student in K-12

In the K to 12 school system declining enrolment is an inescapable reality.

As of September 2003, enrolment will have declined almost 20 percent over the

previous six years. But rather than spend less on education, this government

continues to reinvest in our future. Spending per student has risen over the

same period from $5,557 to $7,688, an increase per student of over $2,100, or 38

percent.

SOME HON. MEMBERS: Hear, hear!

Reinvesting the Savings of Reform

MS J.M. AYLWARD: In 1996-97, we made a commitment that school districts

could retain the savings resulting from school consolidations for a period of

three years, rather than have those savings revert to government. This meant

that if a district needed fewer schools, government would continue to fund the

school boards as if the original number of school facilities were still

operating. School boards agreed to use these funds for upgrading and capital

improvements to other schools within their district. As a result of this

initiative, to date government has reinvested $28 million in school facilities.

In 2000-01, this commitment was extended so that even after the three year

period the savings realized from consolidations would continue to be retained in

the education system. To date, this has resulted in an additional $17 million

being reinvested, bringing the total to $45 million.

For the coming year, savings of $8.5 million are anticipated. Honouring its

commitments, this government is allowing boards to reinvest the full amount in

education. Despite declining enrolments and school consolidations, total funding

has not been reduced since the advent of education reform.

SOME HON. MEMBERS: Hear, hear!

Acting on the "Facing the Challenge" Report

MS J.M. AYLWARD: We are also taking additional steps in the coming year

to support school board operations. In 2001, as part of its agreement with NAPE,

government convened a panel chaired by Dr. Philip Warren to examine the hours of

work for secretaries, janitors and maintenance staff in the school system. Dr.

Warren's report entitled "Facing the Challenge" was received in

January and its key recommendations have been accepted by government.

An amount of $2.5 million is allocated to phase in implementation commencing

in September 2003.

Leading the Country in Teaching Resources

In this budget we are again taking steps to protect teaching positions. In

2000, the Ministerial Panel on Educational Delivery in the Classroom recommended

a new formula for the allocation of teachers based primarily on student

enrolment. In 2001-02, the formula would have reduced the number of teacher

positions by 218 due to declining enrolment. Instead, we provided the funding to

retain these teachers in the education system. Despite further enrolment

declines, we retained these teachers again in 2002-03.

The coming fiscal year will mark the third year we will make the required

investment to retain these teaching positions. If we followed the formula, there

would be 218 less teachers in the education system this September. The $12

million provided in this budget brings our total investment over three years to

maintain higher teacher allocations to $35 million.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This will contribute to the Province again leading the

country with the best pupil-teacher ratio. The national average is one teacher

for every sixteen students, but our ratio is nearly 20 percent better at 13.5

students per teacher.

School Facilities Construction and Upgrading

Since the beginning of education reform, this government has remained

committed to providing school facilities which offer the best possible

educational environment for our students. The result has been the largest

program of school construction and upgrading in our history. To date, $170

million has been spent to build twenty-three new schools and undertake major

renovations on forty-nine existing facilities all around the Province.

A further $6.8 million will be committed in the coming year, including $3.5

million for priority repair and maintenance needs that arise during the year.

This government has renewed its commitment by pledging to bring every school

in the Province up to a level that meets or exceeds national standards within

five years.

SOME HON. MEMBERS: Hear, hear!

Centre for Distance Learning and Innovation

MS J.M. AYLWARD: Our Province is recognized as a national leader in the

development and delivery of quality educational programming via distance

education. This is offered through the Center for Distance Learning and

Innovation, which was established by this government on the recommendation of

the Ministerial Panel on Educational Delivery in the Classroom. There are

currently twenty-one courses available online in e-learning format to

seventy-three of our smaller schools. We are planning to almost double the

number of courses offered to forty by 2004-2005. When our plan is fully

implemented, every student in every school will have access to a broader choice

of courses to complement the regular course offerings at the school they attend.

In addition, we are working in co-operation with the Newfoundland and

Labrador Teachers' Association to also provide enhanced professional

development opportunities online for all of our teachers.

School districts are asking for more distance education programming in

e-learning format. They have our commitment that we intend to deliver it.

Broadband Internet Connectivity Project

Over the new two years, we are prepared to contribute $5 million towards a

Broadband Internet connectivity project in partnership with the federal

government and the private sector. We look forward to receiving confirmation

from our partners of their involvement so this project can commence. By bringing

Broadband Internet service to more rural and remote communities, students,

teachers and community residents would have reliable, high speed access to the

Internet.

Community Access Program

We have a program in place that puts computers into Community Access Program

sites in ninety-six communities throughout the Province. These sites, located in

schools, libraries and community facilities, offer free access to Internet

services. In the coming year, we are allocating $1.8 million to enable various

sites to increase their hours of operation or purchase new equipment and

resources.

Resources Materials for Libraries

In each of the past three years, in addition to our regular operating grant,

we have allocated an extra $1 million to our public libraries system for the

purchase of new library resource materials. This budget will add a further $1

million in the coming year.

SOME HON. MEMBERS: Hear, hear!

Making Post-Secondary Education Accessible.

MS J.M. AYLWARD: Mr. Speaker, implementing educational reform in the K-12

system is only one part of our plan to better education. Another is to ensure a

post-secondary education is accessible to all those who choose to pursue it. No

government in the country has done as much to make a post-secondary education as

affordable as we have.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Last year students across the country planned a national

day of protest against high university tuition. That protest happened everywhere

else in the country, except in our Province, because of what this government is

doing for students. We are alone, not just in holding the line, but in actually

lowering university tuition.

Best Record on Tuition in the Country

Allow me to recount our record on tuition at public institutions. Beginning

with the September 1999 academic year, this government provided funding to

implement a tuition freeze for two years at Memorial University and the College

of the North Atlantic. This was followed up by a 10 per cent tuition reduction

at Memorial in each of the 2001 and 2002 years, as well as an extension of the

tuition freeze at the College, the Marine Institute and the Faculty of Medicine.

Today, I am announcing funding for a further 5 per cent tuition reduction cut

at Memorial to take effect in September 2003 and the extension for another year

of the tuition freeze at the other institutions.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This means that students at the College of the North

Atlantic and the Marine Institute, where tuitions are already lower than

Memorial, as well as students at the Faculty of Medicine, will enjoy a tuition

freeze for the fifth consecutive year. Students at Memorial University, in

addition to a two year freeze, will see a 25 per cent tuition reduction over

three years.

These measures are all the more significant when one considers that tuition

generally has been increasing across the country over this period. This Province

stands out in the country as the only one lowering university tuition.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This is a practical measure taken by this government

that demonstrates how post-secondary education is made more accessible and

affordable to students. For students from this Province, tuition rates at

Memorial are the lowest Canadian rates in the country.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This is just one way this government is building the

future of Newfoundland and Labrador.

Memorial University Opportunity Fund

We are also fulfilling our commitment to match dollar for dollar the money

raised by the Memorial University Opportunity Fund, a special fundraising

project undertaken by the University. An allocation of $2.1 million at the

fiscal year end will bring our total contribution to date to $26.4 million.

The Fund provides scholarships and fellowships on an ongoing basis, and has

made possible the construction of the new Field House athletic complex, plus new

student centres at both the St. John's and the Corner Brook campuses.

Highest Grant per Student to any University

By far, the largest financial contribution government makes annually to the

university is our sustaining grant. This year that grant will increase by $13.1

million, over 10 per cent, to $145 million.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This will fund the new tuition reduction, as well as

other operating and infrastructure costs. This latest increase builds on our

record of giving the highest grant per student of any provincial government to

any university in Canada.

Student Investment and Opportunities Corporation

The Student Investment and Opportunities Corporation was established in 2001

as an initative of this government. Its objective is to provide students the

opportunity to reduce their need to borrow for their education by giving them

meaningful jobs and to further their education by giving them the benefits of

work experience. In 2002-2003 this initiative created over 3,900 positions for

youth and student employment, and over 7,000 since its inception.

Funding of $9.2 million is allocated to continue the present youth employment

programs and includes $3 million to fund the employment incentive portion of our

new initiative, Youth Opportunities Newfoundland and Labrador.

SOME HON. MEMBERS: Hear, hear!

Youth Opportunities Newfoundland and Labrador

MS J.M. AYLWARD: Youth Opportunities will provide incentives for

employers who hire cooperative work term students and new post-secondary

graduates. This new program will make it easier for new graduates to find

meaningful employment and pay off their student loans by working right here in

Newfoundland and Labrador.

The second major thrust of Youth Opportunities will be tax incentives for

graduates who remain in this Province to work after completing their

post-secondary studies.

Newfoundland and Labrador Student Loan Tax Credit

We are proposing the implementation of a new Newfoundland and Labrador

Student Loan Tax Credit. In concept, eligible residents of our Province who are

repaying their student loan will be able to reduce their provincial personal

income tax by an amount of up to 20 per cent of the principal payment of the

provincial portion of the loan.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This $3 million measure complements the existing tax

credit of 10 per cent for the interest portion of the payment. This tax credit

would be unique in Canada and would assist new graduates and those who have

previously graduated and are working in our Province and repaying their debt. We

will be taking this proposal to a roundtable of stakeholders in the near future

to get their input before proceeding.

Youth Apprenticeship Pilot Projects for the Manufacturing Sector

In partnership with the federal government, we have recently launched Youth

Apprenticeship pilot projects in Clarenville and Marystown to help address the

skills gap which exists in our manufacturing sector. Funding of $100,000 is

allocated for a new initiative in the St. John's region in cooperation with

local manufacturers. This third pilot project will develop pre-employment

workshops to ease the transition for new employees to the manufacturing work

site.

Our Plan for a Healthier Future

Federal Response to the Kirby and Romanow Reports

Mr. Speaker, on the future of health care, both the Kirby and Romanow reports

only underscored what premiers have been saying for some time. That is, for the

health care system to be sustainable the federal government must provide greater

financial support to our provinces. Premiers put forward an affordable proposal

to return the level of federal support to what it had been before deep cuts were

made to federal transfers in the mid 1990s.

The lackluster increment in federal support offered may be a start, but it

falls far short of what is needed to sustain existing services and programs and

at the same time move forward on needed reforms. This means it is more important

now than ever that all key stakeholders work together for the delivery of a high

quality, accessible and sustainable system.

Healthier Together: Our Strategic Health Plan

In September 2002 this government launched Healthier Together , a

strategic health plan for the Province. This plan describes the challenges

currently faced by the health and community services system and sets out new

directions for the next five years.

The key priorities this year are strategies for wellness, mental health, long

term care and supportive services. A provincial committee of stakeholder groups

has been established to lead the development of wellness priorities.

The plan sets out a new direction for primary health care as the central

focus of the delivery of health and community services. A newly appointed

Primary Health Care Advisory Council consists of representatives of key

stakeholder groups who are advising government on the development and

implementation of the Provincial Primary Health Care Framework.

A New Health Charter

In February, the Minister of Health and Community Services released a draft

Health Charter and is seeking public input. The Charter, to be finalized this

spring, will outline the commitments which citizens can rely upon related to

service delivery. The people of the Province will know what they can expect from

the health system and have an understanding of the importance of their

responsibility in achieving optimal health.

Funding Health Care

The strategic health plan, Healthier Together, and Health Charter articulate

our public commitments to better health. Consistently increasing our budget

allocation to the health system demonstrates this government places the same

high priority on health as do the people of the Province. Sustaining adequate

funding for health care has been the most significant fiscal challenge for this

government and it has for all provinces and territories.

In the new fiscal year, the operating budget for health will increase by a

further $52.5 million -

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: - excluding additional funding for physician increases.

The increase since 1994-1995 in the annual amount allocated by this government

to health operating expenditures will be over $620 million, an increment of 63.6

per cent. Federal transfers in support of health, however, will be $58 million

lower, even after taking into account the federal response to the Romanow

report. Health operating expenditures for 2002-2003 account for forty-two cents

of every program dollar we spend compared to thirty-three cents in 1994-1995.

Faced with the challenge of a rising deficit for the coming year, and with

the rise in health costs being a prime contributor to it, a less committed

government may have reneged on their obligations to fund health. Not this

government. Not only are there no cuts to the health care budget, we are

responding to the needs by making some priority enhancements.

According to the Canadian Institute for Health Information, per capita public

spending on health in this Province has exceeded the Canadian average for the

past five years -

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: - and for 2002 should exceed that average by almost 11

per cent.

Stabilizing Health Boards Budgets

In contributing greatly to the sustainability of the health care system, the

majority of regional health boards have made significant improvements in their

financial positions over the past year.

In the coming year, government will provide the boards with additional

funding of $4.5 million. With these increases, further progress will be made by

the boards in moving toward achieving balanced budget operations. The success

the boards have achieved in financial management relieves some of the pressure

on our fiscal position, and will continue to contribute to our deficit control

objectives in the coming years. We commend the institutional boards on the

progress they have made to operate within balanced budgets.

A Commitment for a Second MRI

In the coming year every health board will benefit from $26 million allocated

to further enhance medical, diagnostic and patient/resident care equipment. To

act on a broad consensus of government, medical professionals and patients, a

second Magnetic Resonance Imaging unit, better known as an MRI, will be acquired

for the Province as part of this funding. The MRI presently in service is fully

utilized and patients can face long wait-lists. Consultation with the medical

community and the boards will begin shortly to determine the type of MRI that

best suits our needs, as well as where it should be located to maximize its

benefits for the diagnostic services and patient care.

Evaluating Renal Dialysis Service for Gander

In fall 2002, the Provincial Renal Dialysis Advisory Committee recommended

deferring a decision on a dialysis unit service in Gander for one year to allow

for the evaluation of the satellite units operating as pilot projects in

Clarenville and Stephenville. We will be considering this issue after receiving

a report from the Committee this spring, and we will respond appropriately to

its recommendations.

SOME HON. MEMBERS: Hear, hear!

Health Care Facilities

MS J.M. AYLWARD: As well as equipment, this government has consistently

made major investments in health care facilities all around the Province. The

list is long and the projects many. Of the $19.4 million we are allocating for

construction and renovation of health facilities, $16 million will fund major

construction projects in progress at Stephenville, Grand Bank and Fogo. The

balance of $3.4 million will assist various facilities with renovations and

repairs.

The provision of more suitable space for cancer patients of the Central West

Institutions Board is a priority for this government. A definitive plan to

address this need will be finalized this year.

SOME HON. MEMBERS: Hear, hear!

Long-Term Care Facilities

MS J.M. AYLWARD: Mr. Speaker, government is supportive of ongoing

planning by boards to upgrade their nursing home facilities. Our objective is to

ensure the delivery of care to our elderly population will be responsive to

their expectations. The cost of delivering long term care in our Province on a

per bed basis is the highest in the country. We must explore ways to bring our

costs more in line with other provinces without impacting the quality of

service. This will give us the flexibility to reinvest in this segment of the

health care system. Government will be pursuing public private partnering as one

avenue to provide quality long-term care.

Within the next sixty days, we will be issuing an Expression of Interest for

a pilot project that would see a public private partnership arrangement for the

provision of a new nursing home to replace our aging facilities in Corner Brook.

SOME HON. MEMBERS: Hear, hear!

Increasing Nursing Enrolments

MS J.M. AYLWARD: In the Budget last year, funding was allocated to

increase the number of nursing students admitted to the Bachelor of Nursing

program in response to retirements anticipated in future years. This year we are

increasing the allocation by $445,000 to bring the total to $745,000. This

should allow at least thirty-two new nursing students to begin their studies on

a fast-track basis in September.

SOME HON. MEMBERS: Hear, hear!

Personal Care Homes

MS J.M. AYLWARD: An additional $1.3 million is provided to increase rates

for personal care homes and subsidies for individual clients. This is the fourth

consecutive year that we have increased our financial support to this sector.

A Brighter Future for Those in Need

Strategic Social Plan and Social Audit

MS J.M. AYLWARD: Mr. Speaker, our Strategic Social Plan has become the

preeminent model for social development in Canada. It advances the goals of

linking social and economic development, bringing a focus to prevention and

early intervention, making decisions for policy and program developments based

on evidence, and building partnerships and strengthening communities. Funding of

$2 million is allocated again in the coming year for Strategic Social Plan

Initiatives.

When the Plan was released, it included a commitment to a Social Audit by

2003. It is well underway and will be completed before the end of the calendar

year. The first component of the Social Audit, the web-based Community Accounts,

was launched in the fall of 2002. The second component is a report on where the

Province stands on key social and economic indicators, entitled " From

the Ground Up " and will be released next week. It will provide

information on the strengths and areas of improvement in the social and economic

fabric of the Province so that appropriate interventions can be made where

necessary. Our commitment to the Strategic Social Plan and Social Audit advances

our vision for a growing and prosperous Province.

Redesign of Social Assistance

Over the past several years we have been engaged in a process of redesigning

programs that assist persons on social assistance. A major initiative over the

past year has been the replacement of the outdated Social Services Act with the

passage of the new Income and Employment Support Act. We now have more

accurately reflected in legislation the new directions of programs and services

we have being pursuing in recent years. Combining income support with employment

and career services to assist people in preparing for and maintaining employment

is now outlined in legislation. The new Act should be proclaimed in the coming

weeks.

Declining Social Assistance Caseloads

Supporting people making the transition to employment through innovative

programs delivered in partnership with community agencies continues to generate

many success stories. Other initiatives, like extended drug card benefits,

increased earnings exemptions and increased private child care rates, are now

part of the redesigned income support program. Providing opportunities and

options to clients shows results. The social assistance caseload has shown a

steady decline for the past six years, and we anticipate it will decline again

over the coming year.

Kids Eat Smart Foundation

The Kids Eat Smart Foundation will be supported by a $500,000 contribution in

the coming year.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This brings our total contribution to the Foundation and

its predecessors since 1998 to $2.5 million. They have helped establish more

than 130 meal and snack programs in schools and community centres throughout the

Province, supported by over 4,000 volunteers who provide nutritious meals to

more than 13,000 children daily.

Affordable Housing Agreement

The federal and provincial governments will be entering into a new five year

cost shared Affordable Housing Agreement early in the new fiscal year. The

agreement will assist in meeting specific housing needs, including independent

living housing for seniors, supportive housing for the mentally and physically

challenged, specific housing needs in Labrador and affordable rental housing for

lower income earners. Upwards of $4 million could be committed under this

agreement in 2003-04.

SOME HON. MEMBERS: Hear, hear!

Enhancing the Disability Credit

MS J.M. AYLWARD: We currently provide persons with disabilities a

non-refundable personal income tax credit. The amount used to calculate the tax

credit will be increased, effective for the 2003 taxation year, from $4,233 to

$5,000.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: In addition, we are introducing a new non-refundable

disability tax credit supplement for mentally and physically infirm children

under the age of eighteen in the amount of $2,353. This supplement is

transferrable to a supporting person if the taxpayer has insufficient income to

fully utilize the credit.

These measures represent an additional $1 million in annual tax savings for

persons with disabilities.

Enhancing the Seniors' Benefit

In 1999 we implemented a Seniors' Benefit. For 2003, the benefit will be

increased from $300 to $350 for our seniors.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: About 30,000 individuals receive the Seniors' Benefit

under a program that we estimate will pay out $7.7 million annually.

More Officers for the RNC

Funding is provided for the Royal Newfoundland Constabulary to hire an

additional fifteen new permanent officers.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This will include a combination of first class

constables and more junior officers. In funding this increase, government is

responding to requests from both the Constabulary and community stakeholders. It

is our objective to further increase the number of officers in the coming years.

INFRASTRUCTURE FOR THE FUTURE

Municipal Capital Works Program

Mr. Speaker, in the Budget last year, we announced a three year strategy for

development of municipal infrastructure. Since that time, we have reaffirmed our

commitment to the St. John's Harbour clean-up, a $93 million project being

undertaken in partnership with St. John's, Mount Pearl, Paradise and the

federal government.

The Canada-Newfoundland and Labrador Infrastructure Program will see $90

million invested in the three year planning horizon. Projects targeted at clean

drinking water will continue to receive priority. The total investment will

exceed $153 million during the five year life of this program.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Under the Municipal Capital Works Program, an estimated

$21.5 million will be cost-shared by the provincial and municipal governments in

2003-2004. The total expenditure over the three year period will exceed $60

million.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Under our Multi-Year Capital Works Program, we have

committed to cost-share a total of $103 million with thirteen larger

municipalities. Total expenditures under this program could reach $110 million

upon full implementation.

We are also continuing to make capital works funding accessible to all

communities in the Province. For our smaller communities, the Province is

prepared to cover a larger share of costs so that they can undertake projects

they otherwise find unaffordable.

Municipal Debt Relief Program

Since it was established in 1997, the Municipal Debt Relief Program has

provided $47 million in debt relief to 152 towns in our Province. The program

assists those towns which, due to declining population, experience difficulties

with their annual debt repayments. During the new fiscal year, government will

review the financial position of the remaining twenty-eight municipalities who

have indicated they are unable to repay their debt due to determine if

additional debt relief assistance is warranted.

SOME HON. MEMBERS: Hear, hear!

Roads and Highways

MS J.M. AYLWARD: This government has presided over the largest annual

road and highway construction programs since Confederation. With the Roads for

Rail funding coming to an end, we need a renewed federal partnership to continue

upgrading our transportation network. We are anticipating a construction program

in the coming year totalling $74.3 million.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: The provincial roads component will receive an

additional $1 million, bringing it up to $23 million. Improvements to the

Trans-Canada Highway are funded at $15 million under the federal-provincial

Strategic Highways Infrastructure Program. Roads for Rail will complete three

projects at a cost of $9.6 million.

Ferry Replacement Program

We committed last year that we would examine options for replacing older

ferries. In the initial phase of this program, we will consider replacing the

Hamilton Sound, a swing vessel for the fleet now nearing the end of its useful

life. Over the next few months, we will issue an Expression of Interest to

determine the level of interest that exists from industry to supply a new

vessel.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This will be followed by a Request for Proposals so that

we can consider which vessels might be best suited as a replacement. We are

prepared to consider any reasonable scenario for the supply and operation of

vessels, including public-private partnerships.

Trans Labrador Highway

In the budget last year, we gave a commitment to commence Phase III of the

Trans Labrador Highway from Cartwright to Happy Valley-Goose Bay. We stated last

year that the people of Labrador had waited long enough for a highway. That wait

is about to come to an end.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: For the coming year we have allocated $26.2 million to

construction of the Trans Labrador Highway, including $17 million to begin Phase

III. Commencing construction is now only contingent on the project being

released from environmental assessment. The balance will be used to complete

Phase II.

Connecting Communities to the Trans Labrador Highway

This government wants as many communities as possible connected to that

highway. Last year, we went beyond the original plan to announce a road to the

community of Pinsent's Arm, which will be completed in the new fiscal year. We

will also begin an environmental assessment of the route for a road to Williams

Harbour.

SOME HON. MEMBERS: Hear, hear!

A FUTURE OF JOBS AND GROWTH

MS J.M. AYLWARD: Mr. Speaker, the past year has seen some significant

announcements of major projects that will have far reaching and long lasting

impacts on our economy. The White Rose offshore development is proceeding, with

the Marystown shipyard playing a substantial role. The Voisey's Bay agreement

will see a new world class mine in Labrador and a nickle refinery in Argentia

utilizing the latest leading edge technology. And we are optimistic the

successes this government has had in reaching agreements for White Rose and

Voisey's Bay bode well for our ongoing negotiations for the Lower Churchill

hydro development. This continues to be a priority for this government and one

we believe should become a reality in the not too distant future.

As important as these projects are to our future, of no less importance is

creating a business climate in our Province that will see continued economic

growth and diversification in all regions, particularly rural areas. Employment

reached record levels last year and it is expected to reach new highs again this

year. Most of our employment growth is not because of major projects. Small

business is creating 80 per cent of all the new jobs, and most of those new jobs

are being created outside the greater St. John's area.

Renewal Strategy for Jobs and Growth

Our economic plan, the Renewal Strategy for Jobs and Growth, is ensuring that

the business community in this Province, but particularly small business, can

take advantage of the broad range of opportunities that exist throughout all

sectors of our economy. Our focus is creating the right climate for growth and

to give the business community the tools they need to prosper wherever they

operate in the Province, but especially in rural areas. The robust economic

performance of the Province is enjoyed in large part due to the success of our

renewal strategy. We are please to be building on that momentum in this Budget

through a number of new measures aimed at creating an even more attractive

economic climate for investment, innovation and job growth.

Payroll Tax Relief

Mr. Speaker, in recent years, we have taken major steps to ease the payroll

tax burden on small businesses. We are giving a commitment to further reductions

and to eliminate the tax for all small businesses by the end of the next

mandate, as our fiscal situation permits.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: For 2003, we are announcing payroll tax relief that will

remove employers with annual payroll of up to $600,000 from the tax rolls -

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: - and further reduce the payroll tax liability for

employers with payrolls between $600,000 and $700,000. This will remove an

additional 160 employers from the tax roll, a total of 2,200 since 1998. An

additional 120 employers will benefit from a tax reduction.

Since 1998, we have put over $9 million back into the hands of employers

through payroll tax reductions.

SOME HON. MEMBERS: Hear, hear!

Small Business Corporate Income Tax Threshold

MS J.M. AYLWARD: Small businesses presently enjoy a lower rate of

corporate income tax than generally applies to the private sector. Eligibility

for this low rate is determined by the level of taxable income of a corporation.

The present threshold of income, above which a corporation will pay tax at the

much higher general rate, is set at $200,000. This threshold will be increased

by 50 per cent to $300,000 over four years in annual increments.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: With annual increments of $25,000, starting with the

2003 taxation year. In taking this action, the Province has decided to mirror a

similar increase in the federal threshold recently announced.

Corporate Income Tax Holiday for New Small Businesses

In addition to the threshold increase, a corporate income tax holiday will be

provided for new small businesses that start-up during the next three years

operating in designated growth sectors of the economy. Eligibility criteria will

be the same as those currently in place for Venture Capital (Direct Equity) Tax

Credit Program. For eligible businesses located in the Northeast Avalon region a

three year tax holiday will be provided and those located outside the Northeast

Avalon will receive a five year tax holiday.

SOME HON. MEMBERS: Hear, hear!

Venture Capital (Direct Equity) Tax Credit Program

MS J.M. AYLWARD: The Venture Capital (Direct Equity) Tax Credit Program

will also be enhanced. Presently, only individual investors are eligible for tax

credits under the program. Eligibility is now being extended to arms length

corporations. This will open up new sources of capital for existing businesses

looking to expand and also for entrepreneurs looking to start up a new venture.

New Provincially Based Venture Capital Corporation

Government will issue a public call for proposals within sixty days for the

establishment of a provincially based, labour sponsored venture capital

corporation by offering a provincial tax credit as an incentive to set up such a

fund in the Province. Flexibility will be provided in the call for proposals to

allow for alternatives to a labour sponsored venture capital fund, including the

possibility of support to a regionally or nationally based venture capital fund,

if structured in a manner that meets our provincial objectives.

Corporate Income Tax Holiday for Venture Capital Corporations

We will adopt additional measures to encourage new investment in private

sector venture capital corporations to help local companies expand and create

new jobs. Starting in 2003, any existing or new venture capital corporation in

the Province whose objective is to invest in growth oriented economic sectors

designated by government will be eligible for a ten year corporate income tax

holiday.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: If the business objectives of the venture capital

corporation also focus predominately on rural areas, an additional five year

holiday will be provided, bringing their full holiday to a total of fifteen

years. The tax credit does not apply to venture capital corporations eligible

for the tax credit.

New Red Tape Reduction Committee

A new Red Tape Reduction Committee, comprised of experienced and respected

entrepreneurs, will be established in 2003. Its mandate will be to identify

opportunities to reduce, streamline or eliminate the regulatory burden of

government "red tape" which can unintentionally act as a barrier to

new job creation and business growth, especially for small businesses. This

effort will not compromise legitimate public policy imperatives, such as the

protection of the environment or workplace health and safety.

New Research and Innovation Fund

As investment in research and innovation is critically important for our

Province to remain competitive and to avail of new economic opportunities, we

are establishing a new Research and Innovation Fund with an initial investment

of $5 million.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Its objective is to foster greater research and

industrial innovation within our higher education institutions. The Fund will be

targeted at high growth "clusters of excellence" in areas such as

marine technology, pharmaceutical research, biotechnology, and the oil and gas

industry.

Its goal will be to leverage significant new Research and Development

investments from the federal institutions, including the Canadian Foundation for

Innovation, as well as the private sector to help close the innovation gap

between the Province and the rest of Canada. New strategic partnerships between

government, Memorial University, other provincial research institutions and the

private sector will also be encouraged in this initiative. Our initial $5

million investment is expected to generate up to $25 million in new Research and

Development spending in the Province.

New Business Attraction Agency

The attraction of new investment, new companies and new industries to the

Province in strategic growth sectors of the economy is an important part of our

Renewal Strategy for Jobs and Growth. Following consultations last year with the

private sector, regional development organizations and municipalities to

determine a province-wide approach to meeting this challenge, we will establish

a new Business Attraction Agency early in the new fiscal year.

We are contributing $1.5 million annually for this initiative and will seek

the financial participation of the private sector as well.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This new initiative will build on the success achieved

to date by NETWORK Newfoundland and Labrador, our joint venture will Aliant

Telecom to attract new customer contact centres to the Province. The new agency

will also assume responsibility for the recently announced Near Shore IT

Development Initiative to which Aliant and the Province each committed $750,000

over three years.

Customer Contact Centre Incentives

The budget also includes $6.5 million in business incentives for customer

contact centres we have already been successful in attracting to and have

operating in the Province. These incentives were critical factors in the

decision of these companies to locate here. This industry did not exist in our

Province a mere five years ago, but today employs over 3,500 people, about

one-third of them outside the St. John's region.

SOME HON. MEMBERS: Hear, hear!

RuralEXPO 2003

MS J.M. AYLWARD: RuralEXPO 2001 was a great success in showcasing and

promoting the economic potential and entrepreneurial achievements in rural

Newfoundland and Labrador. It built on a key objective of the Renewal Strategy

for Jobs and Growth, strengthening confidence and encouraging positive attitudes

about the Province as a means of moving the overall economy forward. This budget

includes $350,000 to host RuralEXPO in the fall of 2003. Details will follow

after consultations with rural and community stakeholders.

SOME HON. MEMBERS: Hear, hear!

Strengthening Rural Development Associations

MS J.M. AYLWARD: We intend to strengthen the capacity of Rural

Development Associations to help advance the implementation of the strategic

regional development plans that have been prepared by the twenty Regional

Economic Development Boards. A comprehensive review of the role Rural

Development Associations play in the implementation of REDB strategic plans is

nearing completion. We will seek to ensure the Associations have the necessary

capacity to participate in the specific implementation roles carved out for them

by each of the twenty REDBs.

Regional Economic Development

This Budget provides $9 million to implement a wide range of industry

initiatives and community projects that have been approved under the most recent

cost-shared cooperation agreement with the federal government, the

Canada-Newfoundland and Labrador Comprehensive Economic Development Agreement,

known as CEDA. This agreement expires March 31 and to date there is no

replacement.

Should the federal government decide not to partner with the Province in an

extension to CEDA or the proposed Canada-Newfoundland and Labrador Economic

Development Board, we will use $5.5 million provided in the Budget to ensure

that key strategic economic development initiatives implemented by our

provincial departments and agencies through CEDA continue into the future.

SOME HON. MEMBERS: Hear, hear!

OTTAWA'S STAKE IN OUR FUTURE

Regional Economic Development

MS J.M. AYLWARD: Mr. Speaker, in partnership with the federal government,

we have made significant investments over the past decade in regional economic

development through various cost-shared cooperation agreements with ACOA. These

have been particularly important in helping to rebuild and diversify the economy

particularly of rural areas following the groundfish moratorium in 1992.

The federal government has taken a unilateral decision not to renew these

agreements anywhere in Atlantic Canada or elsewhere in the country. This

government states categorically that it does not agree with that federal

decision. The upcoming year will mark the first time in three decades that the

federal government has not partnered with the Province to assist in advancing

our economic agenda. This issue was raised at every pre-budget consultation

session this year by the people of the Province.

We believe it would be in the best interest of the Province for the federal

and provincial governments to pool their collective resources in support of

common economic development objectives and priorities, rather than have each

order of government going their own way. For this reason we reiterate a call

made in the recent Throne Speech for the federal government to partner with us

in a new model of federal-provincial cooperation through a Canada-Newfoundland

and Labrador Economic Development Board.

Recognizing that any such new model will take time to organize and implement,

we call upon the federal government once again to extend the Comprehensive

Economic Development Agreement by one year through to March 31, 2004, with a $20

million allocation that would be cost-shared on a traditional 70-30 basis

between the federal and provincial governments. We have already included in the

Budget a $5.5 million provincial commitment.

If the federal government does not respond in a positive or timely manner to

our proposal, these funds will have to be applied prudently to priority programs

and activities within our provincial departments and agencies that were

historically supported under cost-shared agreements with the federal government.

This will include sustaining funding for initiatives important to our economic

future like tourism marketing, the Newfoundland and Labrador Film Development

Corporation, aquaculture and fisheries diversification programs, and various

trade and export development activities.

This will consume most of the $5.5 million allocation, leaving little

opportunity to consider the needs of the many external and community-based

economic development organizations from around the Province that were supported

by the Comprehensive Economic Development Agreement.

We intend to hold the federal government, and ACOA in particular, fully

accountable for providing, from its own programs, the critical investments still

required to build stronger regional economies throughout our Province,

especially in rural areas. The federal government has the necessary flexibility

to do this if it wants to, either from its $700 million Atlantic Investment

Partnership Program or the huge budget surpluses available to it.

All-Party Symposium on Equalization

Equalization is another issue of crucial importance to the future of our

Province. We propose convening a symposium of all Members of this Honourable

House and all Members of the House of Commons and Senate in the fall to examine

Equalization prior to the five year renewal of the program scheduled for April

Now that our offshore oil industry is poised to generate significant revenues

it is more important than ever for mechanisms to be put in place to ensure that

our Province will be the principal fiscal beneficiary of this industry over the

longer term. This is the most practical way for the Province to get access to

the financial resources necessary to grow and diversify our economy so we can

close the disparity gaps that persist between us and the rest of the country.

By retracting most of the fiscal benefits of our economic growth by lowering

Equalization transfers, the federal government makes itself the principal

beneficiary, overriding the commitment they gave to the people of our Province

in the Atlantic Accord. Unless federal policy is changed, we will have a much

greater task ahead of us in shaking off fiscal dependence on the rest of the

country and taking our rightful place as a full partner in Confederation.

On a related issue, we have consistently made a case that federal transfers,

like Equalization, which are largely per capita based, should not fall in lock

step with population declines. Everyone recognizes that public services cannot

be reconfigured as quickly as population changes. A mechanism should already be

in place that phases in the impact of those changes. This has been supported by

all provinces and territories. Population decline has cost us, in this Province,

almost $900 million since 1993-94, including an estimated $140 million in

2003-04 alone. Our population decline is almost wholly attributable to the

federal management of our ground fishery. Yet, the only federal action taken to

mitigate its impact on transfers is inaction. These are among the important

issues for the All-Party symposium to consider.

BUILDING OUR FUTURE TOGETHER

Mr. Speaker, this budget lays before the people of the Province both our

record of past achievement and our vision for the future. It is a record of

commitments made and commitments kept. It is a vision for the future articulated

publicly in comprehensive long term plans, developed in broad consultation with

all stakeholders.

We have the Strategic Social Plan that is receiving national and

international attention for its innovative approach to integrating social and

economic development. We have redesigned income support programs to focus on

making the transition to employment, reducing social assistance case loads to

their lowest level in over a decade, while increasing our support through new

programs and initiatives for those most in need.

We have the Renewal Strategy for Jobs and Growth that is enhancing a business

climate already enjoying sustained high economic growth. We are now producing

jobs at a rate where each year a greater number of people are employed in this

Province than at any previous time in our history.

This government has implemented educational reform, reinvesting savings to

increase spending per student year after year. Our initiatives have ensured the

best pupil-teacher ratio in the country. We are the only province lowering

tuition, and we provide greater financial support per student to our university

than any other. We are the most active in reducing post-secondary student debt

and are continuing to take more practical steps than anyone else to do something

about this national issue.

Last fall, we launched our strategic health plan, Healthier Together, which

sets out new directions for the health and community services system for our

Province for the next five years. This spring a new Health Charter will be

released outlining the commitments people of the Province can rely on for

service delivery. Our per capita spending on health continues to exceed the

Canadian average for the fifth consecutive year.

This government has had the largest annual programs of school, hospital and

road construction and upgrading since Confederation.

And, Mr. Speaker, we have done all this while maintaining the best record of

sound, prudent fiscal management since Confederation, by any measure. We have

faced many fiscal challenges and have always delivered a responsible fiscal

plan. And our fiscal plans have always delivered a creditworthy fiscal

performance.

This year is no different. We now have a fiscal plan in place for an

affordable deficit that not only maintains all social programs and public

services, but it enhances them selectively, responding as we have done each year

to public priorities. We have set achievable targets to bring the deficit down

responsibly to a balanced budget position over the term of our next mandate.

Rather than resorting to unnecessary program cuts, we are confident that this

can be done by relying on revenue growth generated by our strongly performing

economy, one that leads the nation.

We are a government whose hallmark is establishing goals, setting agendas and

meeting its commitments. We are a government who will keep the commitments it

makes to the people of our Province.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Let me say it again, we are a government who will keep

the commitments it makes to all the people of the Province, including its

employees and their families. We are a government with commitments to balance

economic development with social development. We are a government that reflects

the values of the people of this Province. We are a government that will build

on its record. We are a government that will work with the people of this

Province to build together the new Newfoundland and Labrador.

Thank you, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Minister of Finance.

SOME HON. MEMBERS: Hear, hear!

AN HON. MEMBER: Another Budget coming down.

MS J.M. AYLWARD: Part two.

Mr. Speaker, I move that the debate be adjourned until tomorrow.

MR. SPEAKER: The motion is that the debate by adjourned until tomorrow.

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

MR. SPEAKER: All those against, nay'.

SOME HON. MEMBERS: Nay.

Motion carried.

MR. SPEAKER: The hon. the Minister of Finance.

MS J.M. AYLWARD: Mr. Speaker, I wish to inform the House that I have

received a message from His Honour the Lieutenant-Governor.

MR. SPEAKER: All rise.

The following message is addressed to the hon. the Minister of Finance:

"I, the Lieutenant-Governor of the Province of Newfoundland and

Labrador, transmit estimates of sums required for the public service of the

Province for the year ending 31 March 2004, in the aggregate of $3,674,304,000

and in accordance with the provisions of sections 54 and 90 of the Constitution

Act, 1867, I recommend these estimates to the House of Assembly."

Signed _______________________________

Edward Roberts, Lieutenant-Governor

The hon. the Minister of Finance.

MS J.M. AYLWARD: Mr. Speaker, I move that the Message, together with the

Estimates, be referred to a Committee of Supply.

On motion, that the House resolve itself into a Committee of Supply, Mr.

Speaker left the Chair.

Committee of the Whole

MADAM CHAIR (M. Hodder): We shall take a few moments now to distribute

the budgetary documents to all hon. members.

The hon. the Government House Leader.

MR. LUSH: Madam Chair, I make the most unusual motion that the Committee

rise, report progress and ask leave to sit again.

On motion, that the Committee rise, report progress and ask leave to sit

again, Mr. Speaker returned to the Chair.

MR. SPEAKER (Snow): The hon. the Member for Burin-Placentia West.

MS M. HODDER: Mr. Speaker, the Committee of Supply have considered the

matters to them referred, and have made motion that we report some progress and

ask leave to sit again.

On motion, report received and adopted. Committee ordered to sit again on

tomorrow.

Notices of Motion

MR. SPEAKER: The hon. the Minister of Finance.

MS J.M. AYLWARD: Mr. Speaker, I given notice that I will on tomorrow move

that the House resolve itself into a Committee of the Whole to consider certain

resolutions respecting the imposition of taxes on tobacco, Bill 4.

Mr. Speaker, I give notice that I will on tomorrow ask leave to introduce the

following bills:

A bill, "An Act to Amend the Income Tax Act." (Bill 5)

A bill, "An Act To Amend The Income Tax Act No. 2." (Bill 6)

A bill "An Act To Amend The Health And Post-Secondary Education Tax

Act." (Bill 7)

MR. SPEAKER: The hon. the Government House Leader.

MR. LUSH: Mr. Speaker, I give notice and by leave move that the following

heads of expenditure be referred to the Government Services Committee: Municipal

and Provincial Affairs; Newfoundland and Labrador Housing Corporation;

Environment; Works, Services and Transportation; Finance; Public Service

Commission; Government Services and Lands.

That the following heads of expenditure be referred to the Resource

Committee: Fisheries and Aquaculture; Forest Resources and Agrifoods; Mines and

Energy; Tourism, Culture and Recreation; Industry, Trade and Rural Development;

Labrador and Aboriginal Affairs.

And that the following heads of expenditure be referred to the Social

Services Committee: Education; Youth Services and Post-Secondary Education;

Human Resources and Employment; Labour; Health and Community Services; Justice.

MR. SPEAKER: Does the hon. the Government House Leader have leave to put

the motion?

AN HON. MEMBER: By leave.

MR. SPEAKER: By leave.

You have heard the motion put forward by the hon. the Government House

Leader.

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

MR. SPEAKER: Against.

Motion carried.

MR. SPEAKER: The hon. the Government House Leader.

MR. LUSH: Mr. Speaker, I move that the remaining Orders of the Day do

stand deferred and that the House on its rising do adjourn until tomorrow,

Monday, at 1:30 p.m. and that this House do now adjourn.

On motion, the House at its rising adjourned until tomorrow, Monday, at 1:30

p.m.