March 22, 1999 HOUSE OF ASSEMBLY PROCEEDINGS Vol. XLIV No. 4

The House met at 2:00 p.m.

SERGEANT-AT-ARMS: All rise.

MR. SPEAKER (Snow): Order, please!

The hon. the Minister of Finance.

MR. DICKS: Mr. Speaker, I move that this House resolve itself into

a Committee of the Whole on Ways and Means and that the Speaker do now leave the Chair.

MR. SPEAKER: The motion is that the House resolve itself into a

Committee of the Whole on Ways and Means and that I do now leave the Chair.

The hon. the Minister of Finance.

SOME HON. MEMBERS: Hear, hear!

MR. DICKS: Mr. Speaker, this year we celebrate our 50th anniversary

of Confederation. During the last half century, we have made tremendous progress. Health

care, educational opportunities, roads and other public services have all improved and

expanded. Employment and incomes have grown beyond all expectations of 50 years ago. This

budget demonstrates our commitment to fulfilling the promise of Confederation and strikes

the necessary balance between the need for services and fiscal responsibility.

This budget is an example of the sound, prudent fiscal management we

have instituted over the last three years. Because we have managed prudently, we have

exceeded our financial objectives in each of these years. This has allowed us to defer to

future years certain revenues due from Newfoundland and Labrador Hydro. The amount of

revenue deferred to 1999-2000 is $82 million, of which $52 million is being deferred from

the current fiscal year, 1998-1999.

After taking this deferral into account, and recording an increase of

$198.6 million is net revenues, we were forecasting a surplus for the current fiscal year,

1998-1999, of $136.9 million. We have chosen to use $132.6 million to pay off debt, prepay

expenses, make strategic investments and cover other requirements, and will end this year

with a surplus of $4.3 million.

Mr. Speaker, what we cannot do is to make ongoing commitments on the

basis of one-time revenue increases. That is why we have used these one-time revenues to

make strategic financial decisions that do not entail future financial objections.

BUDGET PLAN

1998 Economic Review

Mr. Speaker, in previous budgets we said that 1996 and 1997 would be

difficult years for our economy, but that growth would resume in 1998. This has proven

accurate. In fact, in 1998 our economy grew by 4.4 per cent, the greatest of any province

and our strongest economic growth this decade.

A number of factors contributed to the strong performance:

an 8.1 per cent gain in total exports, led by the oil and fishing

industries;

the first full year of operation at Hibernia which produced 24

million barrels with a market value of $440 million;

the volume of fish landings increased 22 per cent, and the value to

harvesters reached an all time high of $384 million;

mineral shipments grew 3.6 per cent in value;

personal income rose by 1.5 per cent;

retail trade expanded 3.3 per cent;

there was a 2.3 per cent growth in investment, and;

tourism increased from the record level of the 1997 Cabot year.

Employment growth in 1998 was better than expected, coming in at 3.1

per cent, the highest rate of job growth of the 1990s. Six thousand, one hundred people

were working in the Province in January 1999 than in January 1998. Nationally, only

Ontario and Alberta had stronger employment growth last year.

1999 Economic Outlook

Mr. Speaker, real GDP is expected to show significant growth again in

1999. We are forecasting an increase of 5 per cent, led by capital spending on resource

developments and further export growth.

Private sector forecasters predict that our Province will again lead

the country in growth for the second year in a row.

A number of factors are fuelling this growth:

oil production at Hibernia should double its 1998 volume, reaching an

estimated 50 million barrels this year;

development of the Terra Nova oilfield this year and delineation

drilling in other offshore fields;

tourism will again increase because of the Canada Winter Games and

Soiree '99;

fish landings will increase due to the strength of the shellfish

sector;

newsprint shipments will rebound from the strike related decline of

1998, and;

increased employment is expected in business services and high tech

industries;

Employment is forecast to record a further gain of 2.5 per cent, with a

consequential decline in the unemployment rate. Job gains, combined with moderate wage

gains, should boost personal income by 2.6 per cent and lead to greater consumer

confidence and higher consumer spending.

1998-99 Fiscal Performance

Mr. Speaker, last spring we forecast a $10 million deficit for

1998-1999. I am pleased to report that we are recording a surplus of $4.3 million. This is

only the second surplus recorded by any government since our first fiscal year as a

Province of Canada in 1949-1950.

I should add that the other one was recorded when I became Finance

Minister in 1995.

SOME HON. MEMBERS: Hear, hear!

MR. DICKS: In the last three budgets our government forecast

cumulative deficits of $75.1 million. We delivered deficits of $21 million. This is the

lowest cumulative deficit recorded by any government for any consecutive three year period

since the late 1950s. Taking into account the impact of inflation, the cumulative deficit

of this government over the past three years is the lowest since Confederation.

The deficit was successfully reduced after the groundfishery had

closed, Hibernia construction was completed, federal transfer payments for social programs

were cut by $100s of millions and while GDP declined by 1.6 per cent and 1.3 per cent in

two of these years. It also occurred when we provided relief to municipalities with heavy

debt loads, eliminated hospital and school board debt and allocated substantial money for

hospital and school construction. We, as a government, are justifiably proud of this

accomplishment.

For the third consecutive year we could have recorded a substantial

surplus. But our objective is to manage responsibly, not only for the current year but

also for the future and to achieve sound fiscal performance in the coming years. By

budgeting prudently and controlling expenditures, we have been rewarded with strong

financial results. We used these to make strategic investments in public services and to

create additional fiscal flexibility in coming fiscal years.

For example, while bettering our deficit targets each year, at the end

of 1996-97, we were able to invest $24 million to eliminate school board debt. Last year,

at the end of 1997-98, we could increase the amount of school construction to $50 million.

And this year, before the end of the current 1998-99 fiscal year, we are allocating an

additional $61 million to health care and funding other initiatives. At the same time, we

have been selectively deferring revenues to future years when it will be needed to fund

public services.

Strategic Year End Investments

For 1998-99, federally estimated revenues were up by $195 million,

while other provincial revenues increased by $10 million for a total revenue increase of

$205 million.

Government has used this additional revenue and the resulting

flexibility to do several things: pay off the debt of health care boards; further assist

with municipal debt restructuring; make strategic investments, particularly in health care

and education; fulfil funding commitments to the post-TAGS program and the MUN Opportunity

Fund, and; defer accumulated revenues due from Newfoundland and Labrador Hydro until

1999-2000.

Government determined that using these funds to reduce existing future

obligations is the most prudent and responsible course of action. The money is being spent

where it is most needed and in a manner consistent with our stated priorities.

1999-2000 Fiscal Outlook

Mr. Speaker, for 1999-2000 our priorities remain health care, education

and helping those most in need. We believe these reflect the priorities of the people of

our Province. We believe this Budget strikes the right balance between the need for

services and the need to maintain fiscal responsibility.

This, of course, is the most difficult part of budget making. We do not

have sufficient revenues to satisfy every demand. Although our economy will perform well,

this will not translate into large revenue gains next year. Federal transfer payments, up

sharply because of large prior year adjustments in 1998-99, will likely be lower in

1999-2000. We face growing expenditure pressures from many sectors just to keep providing

existing service levels. Finding the right balance between demand for services and ability

to pay is the only way to ensure that important public services can be maintained and

enhanced over the longer term. The right balance will help create the conditions for

sustainable balanced budgets in the future.

The right balance for 1999-2000 is to run a modest deficit. This

permits us to deliver our commitments to priority programs and services, to avert service

cuts and layoffs and avoid higher taxes. There are no tax increases and there are no new

taxes in this budget.

Our deficit is forecast to be $33.3 million. This is modest. It does

not signal a return to the era of high deficits and mounting debt that preceded the

1995-96 fiscal year. The facts speak for themselves. Prior to 1995-96, a $33.3 million

deficit would be lower than any achieved for any fiscal year since 1965-66 - a long time

ago, Mr. Speaker -, lower in fact than any deficit in almost 30 years. We are including a

$30 million contingency reserve. If it is not used, we will, for all practical purposes,

have a balanced budget.

Public Sector Pensions

In 1998-99 with the cooperation of our public servants, we succeeded in

addressing the unfunded liabilities in our public sector pension plans. Government

contributed $196 million to the plans in 1998-99, and over the next five years we will

contribute an additional $670 million. These amounts are over and above our regular annual

pension obligations. Government is contributing its portion of the unfunded liability and

will continue to do so until all our obligations are met. Some of our employees have

agreed to reduced benefits and with us are contributing greater premiums.

INVESTING IN PEOPLE

Strategic Social Plan

Mr. Speaker, the wide ranging expressions of support for the Strategic

Social Plan, both provincially and nationally, have reinforced the importance of this

initiative.

A number of key objectives have been established for the Strategic

Social Plan this year. These include: commencing implementation in the Central region of

the Province; establishing a flexible initiatives fund to support demonstration projects;

developing a framework for the social audit, and; creating linkages among government

departments to support coordinated approaches to social and economic development.

We have allocated $2 million to support implementation of the Strategic

Social Plan. One point two million dollars of this will be committed for prevention, early

intervention and community capacity building. This development and implementation of the

Strategic Social Plan allows us to work cooperatively with community groups in addition to

our traditional approaches to addressing social issues.

Work will commence this year on a new Strategic Economic Plan that will

take into account the directions of the Strategic Social Plan to strengthen social and

economic links.

Health

Mr. Speaker, health care is our largest expenditure, accounting for

nearly $1 of every $3 we spend on all programs and services. In 1996 when this government

was forced to institute cost savings to achieve an acceptable financial position, health

care was the only sector that received additional funding. In 1997-98 we added $20 million

to the health care budget and a further $10 million was added in 1998-99.

Stabilizing the Financial Situation of Boards

At this moment we are committing $40 million to eliminate the deficits

that Regional Health and Community Service Boards have accumulated as of the end of March

A further $15 million will be added to the base budgets of Boards in

1999-2000, bringing the total base increase since 1997-98 to $45 million. This will

provide $225 million in additional funding over a five year period.

Strategic Investments in Equipment

An additional $21 million will be allocated for hospital equipment,

including $6 million to cover the cost of ensuring all Boards have a common financial

system to provide accurate and timely financial information and reporting.

Investment in Facilities

Close to $90 million will be spent to continue construction of

hospitals in St. John's, Happy Valley-Goose Bay, Gander and Harbour Breton, and to provide

new health care facilities in Stephenville, Fogo Island, Bonne Bay, Grand Bank, Old

Perlican and Grand Falls-Windsor. Planning will also continue on the Dr. G.B. Cross

Hospital in Clarenville.

Physician Recruitment

Four point one million dollars will be provided to recruit a further 35

salaried physicians.

Community Services

One point three million dollars is allocated to implement the new

Child, Youth and Family Services Act. Nine hundred thousand dollars will be provided over

the next three years for the Provincial Tobacco Reduction Strategy.

Drug Program

An additional $1.8 million will cover the cost of new drug therapies,

and the dispensing fee for pharmacists will be increased from $4.42 to $5.

Accountability Framework

Mr. Speaker, these investments clearly demonstrate our commitment to

health and community services. At the same time, however, we must ensure that hospital

boards and other agencies do not incur deficits in the future. We will, therefore, put in

place a new accountability framework for all boards and agencies. The accountability

framework will maintain the role of boards while implementing new reporting procedures

including approval of annual budgets and operating plans. Departments will take greater

responsibility for monitoring the performance of boards and providing feedback to them. We

will seek the advice of our boards, agencies and departments in devising and implementing

our accountability framework.

Health Forum

Government remains committed to the best quality health and community

services system; one that is affordable, efficient and accountable. My colleague the hon.

Minister of Health and Community Services will hold a health forum later this year to

establish our future health priorities.

Education

School System

Mr. Speaker, we are proceeding with educational reform. School

consolidation is happening, not primarily because of educational reform, but because of

declining enrolments. The challenges we face because of declining enrolment would be far

more difficult to deal with if, instead of a single system with fewer students, we faced

three separate denominational systems each with fewer students.

School Board Grants

There will be, this year, no reductions in school board operating

grants as a result of declining enrolments. School board budgets will remain unchanged and

school boards can retain savings from the consolidation of schools to facilitate the

consolidation process and to reinvest in the classroom.

In 1996 government gave a commitment to eliminate accumulated school

board deficits so all boards could go into consolidation debt free. To complete this, a

residual payment of $1.2 million is provided this year, bringing the total government

contribution to school board debt elimination to $25.2 million.

Teacher Allocations

Mr. Speaker, declining enrolments would normally, under the existing

formula, result in a reduction of 418 teachers for the 1999-2000 school year. We are

pleased to announce that 236 teaching units have been added back to the system.

Government's decision not to reduce teachers in proportion to declining enrolment in

1998-99 and now again in 1999-2000 means the Province has the best pupil-teacher ratio in

the country. In contrast, in most other provinces the ratio has increased. In 1991-92 our

pupil-teacher ratio was identical to the Canadian average, 15.2. In 1996-1997, the latest

year for which comparative figures are available, the Canadian average had climbed to 16.1

while ours had improved to 14.5.

Student Assistants

In 1999-2000 government will maintain funding of $7.4 million for

student assistants, even though enrolments are declining. This will improve the

educational experience of students with special needs. Special needs children and their

parents will be advised before they leave school in June of the level of service available

for them in September.

Investing in School Buildings

Last year government established the Newfoundland and Labrador

Education Investment Corporation to address the need for new school buildings, better air

quality and refurbishing of existing facilities. The original amount allocated last year

of $50 million has now been increased by a further $75 million, for a total of $125

million. This is the most significant school construction program undertaken since

Confederation. All projects are expected to be completed for the September 2001 school

year. Sixteen new schools will be built, six other will be redeveloped and about one

hundred other schools repaired or refurbished.

Post-Secondary System

We are also taking several initiatives to provide additional resources

for post-secondary education.

Operating Grants

In order to ensure that programs of study at Memorial University of

Newfoundland and at the College of the North Atlantic are maintained at an acceptable

level, the operating grants to both these institutions will be increased.

MUN will receive an additional $7 million which will increase its

operating budget to $106 million. We will fulfil our current commitment to the MUN

Opportunity Fund by contributing $9 million before the end of the fiscal year. To date the

university has raised $15.3 million and the Province has now matched this amount in full.

The annual grant to the College of the North Atlantic will increase by

$4.9 million to $45.4 million - an increase of 12 per cent. In addition, $1.2 million is

provided for Phase I of the redevelopment of the Prince Philip Drive campus of the

college.

While the funding increases will ensure the continued delivery of

quality education, they will also enable those institutions to freeze tuition fees at

existing levels for at least the next two years. This tuition freeze will be reviewed no

earlier than 2001. This will encourage students to pursue studies at the university and

college with greater certainty about the cost of their education and with less debt on

graduation.

Awards Program

The Awards Program established last year also reflects government

concern about student debt levels. The $4 million fund is paying over 4,000 scholarships

of $500 to $1,000 each to post-secondary students in 1998 and 1999. It is serving to

bridge the gap for many of our present students before the new federal Millennium Fund

begins scholarship payments in 2000.

Literacy

Last year government prepared a Strategic Literacy Plan to provide

people with the necessary basic literacy skills to avail of employment opportunities. We

are committing $500,000 this year to commence implementation.

Community Access

We are allocating $6 million over the next two years under a

federal-provincial agreement to increase public access to the internet, primarily through

public libraries.

Helping Those Most in Need

Mr. Speaker, on April 1 last year we completed the transformation of

the former Department of Social Services into the Department of Human Resources and

Employment. We are committed to fundamentally changing the way government formulates

income support and employment policies and delivers these services. During the past year,

While it will take several years to complete all aspects of the transformation, we are

already reaping positive results from a number of initiatives and changes.

New Employment Opportunities for More Families

The social assistance caseload declined by 6% between 1997 and 1998,

and is currently at its lowest point since July 1993. In large part, this reflects

increased employment opportunities, as well as labour market initiatives partnered by the

federal and provincial governments.

Canada/Newfoundland Labour Market Development Agreement

In 1998-99 over 5,000 sustainable jobs were created and over 1,200

social assistance clients received counselling, training and employment assistance under

the Canada/Newfoundland Labour Market Development Agreement. Government expects an

extension of the government this year which will provide a further $232 million for labour

market programs over another two years.

Single Parent Association

A pilot project commenced last year in partnership with the Single

Parent Association of Newfoundland assisted single parents on social assistance to

increase their employability skills and find jobs. This project will receive another

$500,000 in 1999-2000 to assist a further 120 clients.

NewfoundJOBS

A new pilot employment program will be implemented this year called

NewfoundJOBS. It will be funded at $2 million to assist over 500 social assistance clients

enter or re-enter the labour market to find long term sustainable jobs.

Earnings Exemption

The earnings exemption for social assistance clients will be increased

to $75 a month for single persons and $150 a month for couples and families. This will

provide them with an additional $750,000 over five years and will allow clients to become

more independent by finding part time work that will increase their monthly incomes.

Income Tax Refunds

Commencing this year social assistance clients will be allowed to keep

the first $500 of any income tax refund they receive, an increase of between three and

eleven times what they now retain. This substantial increase will support over 3,000

clients in their efforts to find and retain employment. This will leave social assistance

clients with an additional $3.5 million over five years.

Drug Card Coverage

Clients who leave social assistance for employment opportunities will

have their drug card coverage extended from three to six months to assist them to make a

successful transition to financial independence.

Assistance to Unemployed Workers

The budget also provides $5.7 million for a range of initiatives to

assist unemployed workers find and maintain employment or to start their own business.

Employment for Persons with Disabilities

Eight point two million dollars is allocated under the

federal-provincial Employability Assistance for People with Disabilities Agreement to

provide employment programs for people with disabilities. Half a million dollars is also

provided under the Opening Doors Program to give individuals with a disability the

opportunity to find work in the public sector.

Children & Youth

Youth Employment

This Province has won a national innovation award for its Student Work

and Service Program. In 1999-2000, we will provide $2 million through this program to

create another 2,000 jobs for post-secondary students, including about 500 jobs created

through partnerships with MUN and the College of the North Atlantic.

A further $5.5 million is allocated to assist youth find their

important first job and gain work experience and assist post- secondary students find

cooperative work placements.

National Child Benefit

On July 1, 1998 we participated, with other provinces and the federal

government, in the launch of the National Child Benefit. We made a commitment to a $10

million Provincial Re-Investment Program. This year the program will move from planning to

implementation, with $2.6 million provided to annualize the cost of the Province's

program. This is leading to improved infant child care and family child care services,

expanded family resource centre programs and community based youth networks, adding to our

resources for prevention and early intervention. These programs will assist children of

low income families realize their potential.

Youth Remand Centre

The Province needs adequate facilities to properly care for young

offenders. As Minister of Justice, I am pleased to announce $1.8 million is provided to

commence construction of a new $4.5 million Remand Centre for young offenders to replace

the existing outdated facility.

Minimum Wage

All sectors of society must help families regain their independence and

give youth a proper start in their working lives. With our economy performing well, there

is a broad consensus across the Province that the minimum wage should be increased.

Government is therefore announcing that the minimum wage will increase

by $0.25 cents from $5.25 to $5.50 an hour, effective October 1, 1999. This will raise our

minimum wage to a level comparable with the Maritime Provinces. This is an appropriate and

timely increase that will ease the burden on low income workers while not imposing undue

financial hardship on the business community and employers generally.

International Year of the Older Person

In 1999 we celebrate the International Year of the Older Person. Four

senior showcases, entitled "Showcase '99 - Celebrating Our Age," will be held

throughout the Province. These events will include entertainment, healthy aging seminars

and a trade show of goods and services of interest to older persons.

The clothing and personal comfort allowance for about 3,900 seniors

living in personal care homes will increase from $110 to $125 per month, putting $3.5

million more into the hands of seniors over the next five years.

Low Income Seniors' Benefit

We also recognize the concerns of many of our low income public service

pensioners. Public sector pensions have never had an indexing component. This has never

been negotiated in any collective agreement. Neither public sector pensioners, employees

or government have ever made contributions toward such a program. However, government is

prepared to discussed seriously the merits of an indexing proposal during the next round

of collective bargaining.

Public sector pensioners have made it clear that those persons with the

smallest pensions are those most in need. This is true no matter who their former employer

was. All low income seniors in the Province face hardship. In this International Year of

the Older Person, government has chosen to assist not only public sector pensioners, but

all low income seniors.

We are therefore introducing a new provincial Low Income Seniors

Benefit. All seniors aged 65 and over with annual family income less than $12,000 will

receive a cheque in the amount of $200 each year. This will reduce by $25 for every $1,000

of income up to $20,000. This program will benefit 34,000 seniors, almost 55% of the

62,000 seniors who live in our Province. Twenty-two thousand six hundred of the

beneficiaries - in other words, over two thirds - are women. At least 2,000, or one third,

of the public services pensioners over 65 will be eligible for the Seniors' Benefit. The

new Seniors' Benefit will put $25.5 million into the hands of our low income seniors over

the next five years.

Local Government

Many of our communities are in transition, while many others have

inherited a financial situation that is difficult to manage. Government will assist

communities to take advantage of their opportunities to become more independent and self

reliant.

Debt Relief Program

A significant number of municipalities have already benefited from the

Debt Relief Program. Before year end, government will provide an additional $5 million to

help more towns achieve financial stability. With this new contribution, government will

have provided a total of $17 million over the last three years for municipal debt relief.

Municipal Operating Grants

To give municipalities the financial benefits of stable and predictable

funding, government will maintain the Municipal Operating Grants at $21.5 million. This

will provide an additional $3 million in 1999 and a further $9 million in the year 2000 to

our municipalities.

Special Assistance Program

The budget also provides $3.3 million to maintain the Special

Assistance Program designed to help municipalities cope with emergency situations such as

natural disasters.

INVESTING IN INFRASTRUCTURE

Mr. Speaker, Confederation brought tremendous advances in the level of

public infrastructure in this Province. It is fitting that in this year when we celebrate

the 50th anniversary of Confederation this government is undertaking one of the most

broadly based programs of construction on hospitals, schools and other public buildings,

highways and other infrastructure than at any time since joining Canada.

Close to $90 million will be spent on hospital construction in

1999-2000, for a total of over a quarter of a billion dollars invested or committed since

$75 million will be added in 1999-2000 to the $50 million in last

year's budget, for a total of $125 million invested in schools, the largest school

construction program ever.

$118 million will find the biggest highway construction program ever

undertaken in the Province.

Local Government

Municipal Capital Works Program

A new Multi Year component is being added to the Municipal Capital

Works program. The $120 million planned consists of $20 million for the regular program

and $100 million over two years for a new Multi Year component which will be cost shared

50/50 by the provincial and municipal governments with the necessary fiscal capacity. The

program is designed to provide for more comprehensive and lower cost infrastructure

development for water and sewer, waste management facilities and roads by completing the

work in a shorter time.

St. John's Civic Centre

Today, we confirm our commitment to contribute $16 million towards the

construction of the St. John's Civic Centre. No cost overruns, as agreed with the City of

St. John's, will be permitted.

Contaminated Sites Clean Up

Investing in the Province's infrastructure includes taking care of the

environment. The budget provides $820,000 for the evaluation and clean up of six

contaminated sites. Four are former military sites, two in Labrador at North West Point

and Hopedale, and two on the Port au Port Peninsula at Jerry's Nose and West Bay. The

finding will also permit the safe disposal of PCB contaminated material stored at Baie

Verte and Foxtrap.

Roads and Transportation

Last the government undertook its largest provincial highway

construction program to that time, $108 million. This will be exceeded this year. Highway

construction on the island and in Labrador will reach $118 million, the highest level ever

in the history of the Province.

Trans Labrador Highway

We will complete phase I of the Trans Labrador Highway this year at a

cost of $10 million, bringing the total cost over 3 years to $53 million.

Pending approval of an Environmental Impact Statement, we will start

construction this summer on phase II. This road from Red Bay to Cartwright has a projected

total cost over four years of $130 million, with $36 million to be spent this year.

Provincial Roads

On the island, $56 million will be spent on improving the Trans Canada

Highway and regional trunk roads.

Government has allocated $16 million in 1999-2000 to upgrade and

rebuild other highways.

Ferry Service

Construction will commence this year on a new $3 million ferry terminal

at Farewell, the mainland terminal for the Fogo/Change Islands Ferry Service, and is

expected to be completed next year.

Cultural Infrastructure

Task Force on Cultural Infrastructure

In recognition of the importance of our cultural heritage, a Task Force

on Cultural Infrastructure has been struck to advise on developing new facilities for the

Provincial Museum and Archives and for the Art Gallery of Newfoundland and Labrador.

Appropriate provision will also be made for the needs of the Court of

Appeal.

Refurbishing Historic Sites

Government is also commencing a process of refurbishing provincial

historic sites, starting with the Bonavista lighthouse.

INVESTING FOR GROWTH

Mr. Speaker, with two thirds of all government spending devoted to

social programs, we must not forget that government also has a role in ensuring the

Province is an attractive and prosperous place to do business.

Tax Climate

In order to encourage economic growth, government must create an

environment which attracts and sustains business activity. A competitive tax climate is an

important component and government is committed to a regime which promotes investment and

employment.

Corporate income tax rates in Newfoundland and Labrador are among the

most competitive in Canada. In 1997, this government introduced the Harmonized Sales Tax,

or HST. This major tax reduction initiative cut taxes by $105 million per year. In

addition to lowering the sales tax rate for consumers by almost 5 per cent, the HST

removes sales tax from business purchases. This reduces costs and makes our businesses

more competitive.

Payroll Tax Threshold

In 1998, this government increased the exemption threshold for the

payroll tax from $100,000 to $120,000. This measure removed 225 businesses from the tax

rolls and reduced the tax burden for all employers. These measures contribute to our

economic growth.

Acting on our commitment to reduce the payroll tax, I am pleased to

announce that effective January 1, 1999, the exemption threshold for the payroll tax will

be further increased - from $120,000 to $150,000. This means 525 businesses have been

removed from the tax rolls over the past two years and all employers will share in a $2.5

million tax reduction.

Rural Renewal

All regions of the Province must benefit from economic development

initiatives. Government is partnering with Regional Economic Development Boards, the

federal government and the private sector to advance growth in all areas. We have achieved

significant success promoting economic growth.

To maintain the progress which has been achieved in regional economic

development and in small business development, and to ensure economic diversification in

rural communities, particularly those hard hit by the groundfish moratorium, this Budget

commits new resources through federal-provincial funding under the post-TAGS economic

development program. A total of $81 million has been allocated by both governments over

three years with $28 million to be spent in 1999-2000. This funding will be targeted in

conjunction with the priorities of the Regional Economic Development Boards and

initiatives led by the private sector.

In addition, $5.7 million is allocated for regional economic

development in 1999-2000 under existing federal-provincial agreements.

Tourism

The tourism potential of Newfoundland and Labrador is immense. Our

tourism industry has experienced considerable growth in recent years. This momentum will

continue in 1999 as we celebrate Soiree '99, the 50th anniversary of Confederation. An

additional $1.4 million is committed for this event.

In order to ensure tourism visits continue to increase, we must

aggressively promote Newfoundland and Labrador as a world class destination. In order to

achieve this, the tourism marketing budget is being doubled from $1.8 million to $3.6

million annually.

In 2000 the momentum will continue as the Province launches the Viking

1000 celebrations and we are allocating $2.6 million for planning, events and marketing.

Tourism creates economic activity and jobs. This Budget commits funds

to develop tourism products and build infrastructure to ensure that the experiences of

those visiting Newfoundland and Labrador are memorable. Over the next three years the

federal and provincial governments will provide $11.5 million for the development of

snowmobile trails, $5.9 million on the island for the Integrated Snowmobile Trail and $5.5

million for the Labrador Trail Initiative. This funding is in addition to ongoing

development of the Newfoundland T'Railway and East Coast Trail.

To build on the invaluable tourism exposure the Province received from

hosting the 1999 Canada Winter Games at Corner Brook, government is committing $300,000

for two more World Cup Triathlon races in Corner Brook in 1999 and 2000. We are also

committing $150,000 toward hosting the 2000 Commonwealth Judo Championships in

Stephenville.

Petroleum

Newfoundland and Labrador is a Province rich in natural resources. The

promise of a dynamic petroleum sector had its beginnings with the Hibernia development.

Hibernia is now in production with 24 million barrels of crude produced in 1998 and an

expectation that production will double to 50 million barrels in 1999. This year, for the

first time since 1988, two drill rigs will engage in exploration on our offshore.

The Terra Nova project is on

schedule to first produce oil in 2000. We

are confident that the Hebron/Ben Nevis and White Rose fields will be developed in the

near future. The $200 million transshipment facility at Whiffen Head is operational and a

further $65 million expansion is being planned to prepare for Terra Nova oil. We have now

moved to an era of a multi-development industry which is making a substantial contribution

to the economy of the Province.

This government is committed to ensuring that development of these

resources progresses in a responsible manner which provides full and fair benefits to the

people of the Province.

In order to effectively regulate this new industry and ensure that

Newfoundlanders and Labradorians fully benefit from the opportunities which are available,

government is increasing the annual operating budget of the Department of Mines and Energy

by almost $1 million. This increased funding will be used, among other things, to provide

additional professional staff including petroleum geologists, engineers and financial

analysts.

Mining

Mineral resources continue to play a key role in the economy of the

Province. Future prospects for the growth of the mining sector are very promising given

our mineral endowment and a growing junior mining sector. We recognize that the most

critical element in developing mineral resources is exploration.

Mineral Exploration Program

To attract the investment necessary for mineral exploration, government

will implement a three year, $6 million Mineral Exploration Program in support of junior

mining companies and prospectors based in Newfoundland and Labrador. The program will

provide for matching funds to be spent by the industry and will result in an additional

$12 million being invested in the mining sector over the next three years.

There are four components to the Mineral Exploration Program:

an expanded Prospectors Assistance Program with annual funding

increasing to $250,000;

a new Junior Company Exploration Assistance Program with annual

funding of $1.5 million;

a new Dimension Sone Incentive Program with annual funding of

$250,000, and

an enhanced Promotion Program with annual funding increasing to

$250,000.

Fisheries and Aquaculture

Independent small boat harvesters have an important role to play in the

recovery and diversification of the fishery. In order to enhance their ability to

participate in this new fishery, I am pleased to announce the removal of the $50,000

minimum loan amount under the Fisheries Loan Guarantee Program. This will enhance access

to government guaranteed loans through commercial banks by small boat fishers.

Newfoundland and Labrador Legacy Nature Trust

The Province's outdoor resources are priceless from both a commercial

and recreational point of view. As steward of these resources, government must conserve

them for future generations. The Province will contribute $1 million to the Newfoundland

and Labrador Legacy Nature Trust. This trust will be established as a non-profit agency

with a mandate to raise funds nationally and internationally to finance conservation

projects in Newfoundland and Labrador.

The Next 50 Years

Mr. Speaker, 1999 is a time for us to look back over the last fifty

years and celebrate the choice we made in becoming Canadians. Who living here fifty years

ago could have imagined the changes that were wrought? We have preserved our identity and

gained the privilege of being called Canadians, citizens of one of the most respected

countries in the world, admired internationally for our quality of life.

It is time to look ahead, too, to the next fifty years and the changes

they will bring. We believe Newfoundlanders and Labradorians have every reason to be

optimistic. There will be challenges certainly. But there will also be opportunities. More

opportunities, perhaps, than at any time in our history. Opportunity to avail of some of

the best social programs in the world: universal health care, publicly funded education

and equitable social programs. Opportunity to participate in a prosperous, growing,

diversified economy. Opportunity to contribute in an open and free society to our

community, our Province and our country. That is as good a measure as we can ever have of

what being Canadian has meant to us in the past and its value in the future. So let us

celebrate our first fifty years as Canadians with the realization of its value and a

commitment to do our part so the generation fifty years from now will celebrate our

contribution to Newfoundland and Labrador and this great Canadian Confederation.

Thank you, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

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

MR. DICKS: Thank you, Mr. Speaker.

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

Tuesday, at 2:00 p.m.

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

tomorrow. You have heard the motion.

On motion, debate adjourned until tomorrow, Tuesday, at 2:00 p.m.

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

MR. DICKS: 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 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 March 31, 2000, in the aggregate of $2,991,799,300 and in accordance with

the provision of the Constitution Act, 1867, I recommend these estimates to the House of

Assembly."

Signed:

A.M. House, Lieutenant-Governor

The Chair will now take a few moments to have the documents distributed

to hon. members.

The hon. the Minister of Finance.

MR. DICKS: Thank you, Mr. Speaker.

I move that the Message, together with the Estimates, be referred to a

Committee of Supply.

MR. SPEAKER: It is moved and seconded that the Message from His

Honour the Lieutenant-Governor, along with the Estimates, be referred to a Committee of

Supply and that I do now leave the Chair.

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

Speaker left the Chair.

Committee of the Whole

CHAIR (Penney): Order, please!

The hon. the Government House Leader.

MR. FUREY: Mr. Chairman, I move that the Committee rise, report

considerable 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): Order, please!

The hon. the Member for Trinity North.

MR. OLDFORD: Mr. Speaker, the Committee on Supply have considered

the matters to them referred, have directed me to report progress and ask leave to sit

again.

MR. SPEAKER: The Chairman of the Committee of the Whole on Supply

reports that the Committee have considered the matters to them referred, have made 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 Government House Leader.

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

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

at 2:00 p.m., and that this House do now adjourn.

On motion, the House at its rising adjourned until tomorrow, Tuesday,

at 2:00 p.m.