Vo lume XLI Th ursday Province of Newfoundland FORTY- FIRST GENERAL ASSEMBLY OF NEWFOUNDLAND Second Sess ion VERBATIM REPORT (Hansard} Speaker: Honourable Thomas Lush [Preliminary Transcript] Numbe r 5 15 March 1990

The House met at 2:00 p.m. MR. SPEAKER (Lush): Order, please! MR. BAKER: Mr. Speaker. MR. SPEAKER: The hon. the President of Treasury Board. MR. BAKER: Mr . Speaker , I ask leave to read a very brief statement. MR. SPEAKER: I assume the hon. the President of Treasury Board has leave. The hon. the President of Treasury Board. MR. BAKER: Mr. Speaker, I am pleased to announced to hon. Members that the Government of Newfoundland and Labrador and the Newfoundland Hospital and Nursing Home Association have reached a tentative collective agreement with the Newfoundland and Labrador Nurses Union.

The contract is period, ending Details of for a two year December:- 1991. the tentative settlement will not be released until union members have ratified the contract. The settlement, Mr. Speaker, recognizes that nurses are a special case in the current labour market. It also recognizes the value of the contr:-ibution made by this group of pr:-ofessionals in providing quality service in the health care field . S.OME HON. MEMB~RS : Hear, hear! L1 March 15, 1990 Vol XLI MR. RIDEOUT: Mr. Speaker. MR. SPEAKER: The hon . Leader. MR. SIMMS: the Opposition House On behalf of han.

Members on this side of the House I commend the two sides for being able to successfully conclude what appears to be at least a satisfacto~y agreement. We hope , as well , that the plight of the nurses was recognized in reaching this agreement, and that the nurses were treated in a very satisfactory way. I can only say that I hope the people in Treasury Board, and the Minister, will have as much success during the rest of the year in dealing with other groups, such as the General Service and the Teachers. We look for·ward with great anticipation to hearing similar statements from the President of Treasury Board.

SOME HON. MEMBERS: Hear, hear! MR. SPEAKER: The hon. the Minister of Finance . DR. KITCHEN: Mr. Speaker, I move that this House resolve itself into a Committee of Ways and Means and that the Speaker do now leave the Chair. MR. SPEAKER : The motion is that this House resolve itself into a Committee of Ways and Means and that . I do now leave the Chair. The hon. the Minister of Finance. DR. KITCHEN: No. 5 R1

INTRODUCTION Mr. Speaker, I am pleased to present to this Honourable House the second Budget of the Wells Administration. These first ten months of Government have brought many challenges in managing the provincial economy, in providing services essential to our people, and in responding to the changing nature of the federal - provincial fiscal balance in this country. To date, this Government has established a record of responsible action and decisive leadership, and has demonstrated a willingness to tackle head-on the tough issues that confront us.

Notwithstanding the current difficulties in our economy, optimism and enthusiasm pervade this Administration. We are restructuring the machinery of Government, we are eliminating the waste and extravagance of former years, and we are making significant progress in implementing policies for which the people of the Province voted nearly eleven months ago. The preparation of this Budget has not been easy, partly because of the far-reaching effects of the drastic reductions in cod quotas, but largely because of the economic, fiscal and monetary policies of the Federal Government.

However we have been able to produce a Budget that addresses in a very significant way this Government's three basic priorities of Economic Development, health care and education; a Budget that does not come down hard on the people. SOME HON. MEMBERS: Hear, hear! L2 March 15, 1990 Vol XLI DR. KITCHEN: This is a prudent Budget that will enable us to go a long way towards delivering to all regions of the Province the fairest and most equitable level of service we are able to provide and sti 11 be fiscally responsible to the present and to the future. Mr.

Speaker, I am proud to present this Budget for it is truly a Liberal Budget, a people's Budget. THE ECONOMY Mr. Speaker, the Province's economy continued to expand during 1989 with the Gross Domestic Product, or GOP, growing by 1.4 per cent, after adjusling for inflation. Although we have made progress, the rate of growth of the Newfoundland Economy has not kept pace with that of the rest of Canada. Over the past seven years the Newfoundland Economy grew at an average annual rate of 3 per cent, compared with average annual growth nationally of 4.2 per cent. Economic Review of 1989 Mr.

Speaker, economic growth in 1989 was not as high as in the previous two years, due p r i.mar i ly to a slowdown in the foresty and fishing industries. Most other goods producing industries and the service sector, however, continued to perform well. Newsprint production in the Province increased by 1.2 per cenl in 1989, while shipments declined slightly because of soft newsprint market conditions. Pulp wood production decreased by approximately 6. 3 per cent due to an earlier than usual suspension of wood harvesting operations. The fishing industry experienced a number of difficulties during No. 5 R2

1989. The performance of the fishing industry was affected by reduced quotas and by strikes at the two largest fish processing companies in the early part of the year. Decreased landings, combined with lower prices for some species, caused the value of fish landings to decline. Demand was strong for the Province's mineral products as the total value of mineral shipments rose by 11.1 per cent. Mineral exploration remained at a high level. Total construction investment increased by 1.5 per cent. Strong growth was recorded in residential constr-uction which increased by 10.5 per cent.

The more than 3, 500 housing starts, the highest level since 1980, represented an 11.6 per cent increase over 1988. The service sector benefitted from higher consumer spending stimulated by gains in personal income and tourism. Personal incomes grew by 8.6 per cent in 1989, while retail trade increased by about 7 per cent. The Province's inflation rate averaged 3.6 per cent last year compared to a national rate of 5 per cent. Total employment increased by 8,000 person years, up 4.1 per cent from the previous year.

Employment growth outpaced growth in the labour force causing the unemployment r"ate to fall to 15.8 per cent. Mr. Speaker, this was the lowest unemployment rate in the past eight years. SOME HON. MEMBERS: Hear, hear! Economic outlook for 1990 DR. KITCHEN: L3 March 15, 1990 Vol XLI Mr. Speaker, the Provincial economy is expected to grow again in 1990, but at a slower rate than in recent years. This is consistent with the growth slowdown expected for the national and international economies in 1990. Real GOP in the Province will increase by just under 1 per cent.

Economic growth in the United States and Canada will decline to 1. 7 per cent and 1. 3 per cent, respectively. The inflation rate in this Province will average 4 per cent compared to a national rate of 4.7 per cent. Total employment will increase by about 1, 000 person years in 1990. Growth in the labour force, however, may exceed growth in employment and this would cause the unemployment rate to aver"age 16 per cent. Further declines are expected in the fishing industey as a eesult of the reduction in groundfish quotas and the consequent increase in downtime at fish plants throughout the Province.

The economic and social consequences would be much greater if Government had not acted to extend the period of notice of termination which will result in fish plants remaining open during 1990. SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: In the mining industry, a strong performance is again expected this year. The markets for iron ore will remain healthy, and exploration activity will remain strong. Mr. Speaker, the value of mineral shipments will be the highest since 1981, and will exceed $1 billion. No. 5 R3

The fo~est indust~y is expected to expe~ience difficulties in 1990, should soft ma~ket conditions continue. The service sector will undergo economic expansion in 1990, d~iven largely by g~owth in consumer spending. Negotiations ongoing between the Federal and Provincial Governments and the Hibe~nia conso~tium should lead to a binding agreement this year to develop the Hibernia oil field. The construction industry will experience inc~eased activity in 1990 as development expenditures begin for the Hibernia p~oject.

Hibe~nia development will rep~esent the start of a new indust~y in this Province with a strong possibility of other similar developments to follow, such as Terra Nova and Whiterose. The contdbution of this new indust~y to the P~ovincial economy will be substantial. We should not, because of past delays, underestimate its potential impact on the Province. Exploration activity al~eady has resumed in the offshore.

Further explo~atory ddlling is expected in the ea~ly 1990's as a result of ~ecent land sales and the sale proposed for 1990. been further Active discussions have ongoing ~egarding the development of the hydro elect~ic potential in Labrador. Should these discussions lead to an ag~eement, the economic effects will be significant. Military t~aining in Labrador is a source of current p~osperity and futu~e economic oppo~tunity. The Canadian Fo~ces Base at Goose Bay is used as a t~aining facility by three foreign countries, and L4 March 15, 1990 Vol XLI provides employment fo~ mo~e than 1,100 people.

Over $150 million in capital projects a~e planned for the next few years in support of the cur~ent level of tL·aining. A decision to locate a NATO training center at Goose Bay would create an even mo~e substantial boost to the local economy. Due regard must be had for the concerns of native peoples and fo~ the p~otection of the envi~onment. FEDERAL-PROVINCIAL ISSUES Mr. Speaker, the future of this Province is influenced considerably by the Gove~nment of Canada. We rely on the Federal Government to implement balanced policies that are for the betterment of all ~egions of the country.

As one of Canada's presently less affluent provinces we must look to the I<'ederal Government to assist us to provide essential services and to develop our economy. In this regard, I wish to address several issues relating to the flscal and economic policies of the Federal Government. Federal Budget To balance economic growth, federal fiscal policy should be targeted to the fullest extent possible to enchance the performance of the economically disadvantaged regions. The tough measures should be directed at the overheated segments of the national economy.

Unfortunately, the recent Federal Budget did nothing to alleviate disparities between this Province and the rest of Canada. Although lhe Fede~al Budget did not include any new tax increases, some measures previously announced will become effective in 1990-91. No. 5 R4

These include the Goods and Services Tax, or GST, rate changes to the personal high income surtax and the capital tax on large corporations; as well as the phase--in of social transfer repayments. The primary target of the two-year expenditure control plan announced in the Federal Budget is transfers to provinces. Direct transfers to individuals are exempt from this federal restraint plan. The task of making the tough decisions affecting individuals in effect has been delegated to the provinces.

The largest restraint measure announced in the Federal Budget is a two-year freeze applied to the Established Programs Financing, or EPF, arrangements which provide federal financial support for provincial health and post-secondary education systems. This measure will reduce fiscal transfers to this Province by more than $50 million over the next two years. Combined with previous restraint, the federal policies make it increasingly difficult to provide adequate health care and post-secondary education programs. The federal austerity program extends beyond the major transfer programs to provinces.

Newfoundland and Labrador will be negatively affected by a broad range of changes in a variety of programs and activities such as reductions in legal aid and funding for women's centres, restrictions on cost-shared funding for social housing, lower subsidies for Marine Atlantic, and the elimination of the Canadian Exploration Incentive Program.

Equalization Program L5 March 15, 1990 Vol XLI The principle of the Equal i.zat.ion Program, as enshrined in the Constitution, is to ensure that all provinces have sufficient revenues to provide a reasonably comparable level of public services at reasonably comparable levels of taxation. However, this program currently has a transfer ceiling which limits equalization payments despite increasing fiscal need. In order lo satisfy the principle of the equalization program, there should be no ceiling on the growth of equalization transfers. Indeed, an enrichment of the equalization program is needed.

Goods and Services Tax Mr. Speaker, the Government of Newfoundland and Labrador is quite concerned about the negat ive impact the proposed GST will have on our people, our economy and our fiscal position. The Government of Canada's prediction that there will be a smooth economic transition to the new tax is too optimistic. The inflationary impact of the GST will be higher in Newfoundland during the teansi tion pedod than forecast by the Federal Government due to lower competitive peessures in _this Province and the taxation of transportation costs.

Also, few of the long term economic benefits from the GST will be derived in this Province. The output from most Newfoundland industries will be influenced more by such factors as resource supply, world demand and prices for specific products, interest rates and exchange rates, than by the removal of the present federal sales tax on business inputs. Removing the existing federal sales tax on businesses will No. 5 RS

result in shifting the tax burden almost entirely to individuals. The federal taxes paid directly by individuals will increase by about $130 million· annually, even after taking into consideration increased sales tax credits. The Federal Government contends that most of this increase in direct burden will be offset by lower prices resulting from the GST not being applied to businesses. I am skeptical that this will in fact be the case. The GST will result in a serious deterioration in the fiscal position of the Government of Newfoundland and Labrador.

Moreover, the increasing intrusion by the Federal Government into the consumption tax field will restrain our fiscal maneuverability and impede our ability to provide necessary services. The administration and compliance ·complexities associated with two retail sales tax systems will be enormous. Not only are we concerned about the GST interfering with our provincial taxes, but also with the pending loss of tax administration staff to the expanded federal system. Mr. Speaker, for all of these reasons, this Government is, has been, and will be firmly opposed to the Goods and Services Tax. SOME HON.

MEMBERS: Hear, hear! Unemployment Insurance DR. KITCHEN: The Federal Government appears determined to proceed with its reform of the Unemployment Insurance Program despite opposition throughout the L6 March 15, 1990 Vol XLI country. Under the new proposals, the Federal Government is no longer contributing its share, which averaged about 23 per cent during the 1980s. Instead, all contributions to the unemployment insurance fund are made by employees and their employers, at rates 15 per cent higher than last year.

For many claimants there will be increases in the number of weeks required to qualify for unemployement insurance, longer waiting periods and shorter benefit periods. The traditionally high unemployment rates in this Province mean that these changes will be quite burdensome and will exacerbate the present crisis in the fishery. We estimate that the proposed change~ could remove more than $100 million from our economy, result in a decline of $15 million in Government· revenues, and increase social assistance payments. This, Mr. Speaker, is not easy to accept.

Regional Development Funding Significant regional economic disparities have persisted in Canada over an extended period of time. Nowhere is this more evident than in Newfoundland and Labrador. In order to reduce regional economic disparity, resources must be targetted at Lhe disadvantaged regions. The Federal Government's current regional and industrial assistance programs are too broadly applied to ac.hieve that objective. Monetary Policy Mr. Speaker, the current high interest rate policy of the Bank of Canada is hurting this Province. The Federal Government is keeping interest rates high in No. 5 R6

order lo slow the economy and thus ease inflationary pressures. We believe this monetary policy is inappropriat~ for Newfoundland. This Province does not need the brakes applied to its economy. The inflationary pressures in Canada are not originating here, but are being generated in overheated regional economies, mainly in central Canada.

Because interest rates cannot be set on a regional basis, the Government of Canada should be targetting the overheated regions of the Country for more restrictive fiscal policies, primarily expenditure reductions and in particular the removal of industrial development incentives in these overheated regions. SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: The current policy . of applying restrictive monetary and fiscal policies evenly across the Country, including those regions where resources are underutilized, where unemployment is excessive, and where inflationary pressures are not as great is counter-productive.

Mr. Speaker, federal fiscal, economic and monetary policy must serve not just central Canada, but all of Canada, including Newfoundland and Labrador. The Constitution Mr. Speaker, this Government has come to the conclusion that economic fairness and balance will be achieved in Canada only when the Constitution makes provision for greater political equality among provinces. That is why we L7 March 15, 1990 Vol XLI support a Triple E Senate that is elected, has equal representation from all provinces, and has the power to ensure that its vote will be effective.

That is why we cannot support the present wording of the Meech Lake Accord which, by extending the Constitutional veto, will make Senate reform virtually impossible and prevent forever the ability of Newfoundland and Labrador to get out from under the yoke of economic disparity. SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: With Meech Lake the two economic solitudes that now exist in Canada would be entrenched. FINANCIAL POSITION Financial Review of 1989-90 Mr. Speaker, in my Budget-. last year I projected a current account surplus of $5.3 million for the 1989-90 fiscal year.

I am pleased to announce today that we surpassed that estimate and achieved a surplus of $37.8 million on current account. SOME HON. MEMBERS : Hear, hear! DR. KITCHEN: The improvement of $32.5 million from Budget is largely the result of higher revenues. Net current account expenditures remained substantially on target. Our overall deficit or total budgetary requirement was $221.7 million last year, or $31.7 million less than Budget. Mr. Speaker, in my Financial Report to this December, I estimated account surplus of $52 No. 5 Midyear House in a current millio n. R7

Out of this surplus on current account, Government decided to begin the process of addressing the serious unfunded liability in the Province's Pension Fund by making a $21 million special contribution this year. SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: This substantial contribution furthers the process of ensuring the long term integrity of our pension plans. Financial outlook for 1990-91 Mr. Speaker, it is with considerable satisfaction and pride that I am able to announce that in 1990-91 we will achieve our second . consecutive current account surplus, at a level of $10.2 million. SOME HON.

MEMBERS: Hear, hear! DR. KITCHEN: Current account revenues are projected to grow by 5 per cent, on the strength of growth in Provincial revenues. Federal transfers are expected to increase by only 2.1 per cent. Expenditures on capital account will be $36 7. 5 million. Of this, $108.8 million will be offset by related revenues, leaving a net capital account requirement of $258.7 million. The combined current and capital budgetary requirement will be $248.5 million, which is approximately $5 million less than last year's Budget. Budget Strategy Mr.

Speaker, when this Government L8 March 15, 1990 Vol XLI took off lee less than a year ago, we made a commitment to manage the people's finances in a prudent and responsible manner. We are fulfilling that commitment. If we are to ensure our future ability to provide the services our citizens deserve, then we must not burden ourselves and those that follow us with excessive debt. It is all too easy to say that prosperity is just around the corner so let us borrow from our future and avail of it today. There has been too much of that in the past. SOME HON. MEMBERS: Hear, hear! DR.

KITCHEN: The total debt of the Province is $5.2 billion. That is more than $9,000 for every man, woman and child in the Province. That will grow again this year. The interest on that debt will be over $470 million this year. This is almost as much &s we spend to operate our primary, elementary and secondary school system. It is equivalent to what we spend to operate all our hospitals. Despite our achievement of a current account surplus in the 1989-90 fiscal year, our total per capita budgetary requirement was the second highest budgeted by any Province last year.

Our credit rating, which influences the interest rate we must pay on our debt and determines the markets in which we may borrow, remains at the lowest level assigned to any Province. Mr. Speaker, we do not have the capacity for unrestrained expenditure. In developing Government this took Budget, its responsibilities very seriously. No. 5 R8

The overriding pt"inciple was that we must balance our current account position, and keep our ovet"all budgetary requirement at a manageable level, while providing necessary services. Achieving the current account surplus was not an easy task. We are saddled with servicing the debts of our predecessors. The recent Federal Budget dictated that we shouldet" an even greater share of theit" deficit. The economy is experiencing a period of slower growth. The needs of the people of this Province are real and many.

In pursuing our budgetary objectives, there are two courses of action available to us: restrain our spending and enhance our revenues. Mr. Speaker, this Government is committed to fiscal restraint, to eliminating extravagance and waste, to reducing the cost of operating government, and to making the public service leaner and more efficient. All expenditures of all departments have been examined, and non-essential services have been tt'immed to make gt'eater f lnancial resout'ces available fat' higher priorities. SOME HON. MEMBERS: Heat', hear! DR.

KITCHEN: As pat't of an extensive pt'e-Budget exercise, every department of Government was dit'ected to identify substantial expenditure reductions. The savings genet"ated tht"ough this exet'cise, as well as further reductions established through the Budget process, are reflected in operating budgets throughout the public service. L9 March 15, 1990 Vol XLI Expenditures for travel, supplies, and other operating items have been kept to a minimum. To meet Government's changing priorities some re-allocation of human resources has been necessary. A conscious effort, however, has been made to keep layoffs to a minimum.

Permanent employees affected have been notified of this decision. There are 1,264 automobiles and similar vehicles directly under the control of Government departments. There are hundreds more in Crown corporations and other Government agencies. Mr. Speaker, Government has decided to reduce this oversized fleet of vehicles by eliminating all non-essential use built up over the years. ~-Je are placing an immediate freeze on the purchase of all new automobiles except where absolutely necessary, thereby saving Government $1.8 million this year.

In addition, we will be substantially downsizing the fleet, thereby achieving additional savings both in capital and operating costs. This long-overdue efficiency measure will mean substantial savings for the people of Lhis Province. Mr. Speaker, Government will shortly be introducing legislation to repeal the Parliamentary Commissioner (Ombudsman) Act. In Government's view, the number and substance of complaints investigated by the Ombudsman and his staff do not warrant an office costing $236,000 annually.

In future, complaints against departmental actions will be brought directly to Ministers and to the other Members of the House of Assembly. No. 5 R9

Many of the expenditure reduction decisions were very difficult, and were not taken lightly. Others were part of a vitally important re-evaluation process, which we intend to continue throughout our mandate, whereby all programs and services will be regularly examined. Only through such a process can we ensure that our limited financial resources are used most effectively. The expenditure plan contained in this Budget continues the efforts of my first Budget to eliminate spending that is no longer serving a useful purpose. We have further rationalized and downsized many programs and services.

By doing so, we have lessened our need to borrow and freed up resources to address our most pressing exp~nditure priorities. Mr. Speaker, this Government has established three priority areas for this Budget, three areas which are essential to ensuring a better future for our citizens. These · high priorities are economic development, health care and education. We must advance in these areas despite a diminished commitment to them by the Federal Government. Our attempts to achieve our fiscal goals through sound fiscal management have been interfered with by transfer cuts in the recent Federal Budget.

Because of the very real need to sustain funding, particularly for our health care and post-secondary education systems, we have, Mr. Speaker, been left with no choice but to recover the shortfall through our own revenue sources. REVENUE MEASURES: This Government does not take L10 March 15, 1990 Vol XLI lightly a decision taxes. In choosing measures for this deliberately avoided measures which would additional burden on able to pay. to raise the revenue Budget, we regressive inflict an those least Mr.

Speaker, because the Federal Government chose in its recent budgets to cut teansfers for health and post-secondary education by over $20 million commencing April 1, I am announcing today our intention to implement on August 1 a new tax, to be called the Health and Post-Secondary Education Tax. This will apply at a general rate of 1. 5 per cent to employer payrolls in excess of $300,000 each calendar year. For primary producers and secondary processors in the three renewable resource industries of fisheries, forestry and agriculture, the rate will be 0 per cent.

This measure is expected to generate $15 million during 1990- -91 and $25 million in 1991-92. The balance of the EPI<' shortfall wi 11 be recouped from two revenue sources. An additional $5 million in fees and 1 icences will be generated by various measures spread across several departments. Our Corporation Capital Tax, which applies to banks, trust and loan companies, will have a rate increase of one percentage point feom 2 per cent to 3 per cent, for a $1.7 million revenue gain. This Government recognizes the impact the taxation system has on our economy.

To ensure that the taxation system is enhancing rather than inhibiting our long term economic development strategy based on diversification and small business, the Department of No. 5 RlO

Finance will complete four taxation studies this year. First, our review of the implications . of the proposed GST on Provincial consumption taxes, announced in my last year's Budget, is continuing. Emphasis is being placed on assessing whether broadening the Retail Sales Tax base to incorporate some goods and services presently excluded, while lowering the tax rate to maintain a constant revenue yield, would give the Province a fait"'et"' and simpler tax. Secondly, the school tax review already underway will be completed.

For the interim, it must be stated clearly that the existing school tax system will be retained for at least another yeat"'. Thirdly, we will be scrutinizing, with a view to possible rationalization, many fees and licences which are annoyances to the businesses and people of the Province, rather than important tax revenues. Fourthly, .the mining tax review begun last year will be concluded. ECONOMIC DEVELOPMENT INITIATIVES Mr. Speaker, this Government will pursue with vigour its sound and rational approach to economic development.

The current fisheries crisis threatens to disrupt the social structure of our rural regions and encumber the substantial investments already made throughout the Province by individuals, businesses and Government in homes, equipment and infrastructure. This Government is determined to see that these investments of hard work and faith in our Province will bring rewards to those who persevere to secure a brighter economic future. A strategy which emphasizes long term, permanent economic development and diversification Lll March 15, 1990 Vol XLI will be one of the pr-inciple initiatives of this Government. Mr.

Speaker, this Government has moved to establish an Economic Recovery Commission as the focus of its effort to implement this strategy. Funding of $2.1 million has been provided for the Commission in this Budget compared with $900,000 spent in the shorter period last year .

As a result of considerable consultation between the Minister and senior officials of the Department of Development, and the Commission, Government has decided to combine the Newfoundland and Labrador Development Corporation and parts of the Department of Development into a new Crown corporation with a mandate to deliver all local development and business programs and services to assist new and existing business enterprises. There will be five regional offices - ·st. John's, Clarenville, Gander, Corner Brook and Goose Bay, with field off lees reporting to them in each region.

This structure will provide one -stop access to Government with a minimum of red tape, for" small and medium-sized enterpr"ises requiring assistance and ser"vices. It is the intention of Government to allow a substantial amount of decision making Lo be made at the regional level, in line with an election commitment. The new corpor"ation will r"epor"t directly to the Minister of Development. Mr. Speaker, to cover the additional cost of this corporation an amount of $1 million has been approved bringing its total budget to $13.9 miLlion this year. Mr.

Speaker, in focus on long this Government No. 5 keeping with our ter·m development recognizes the Rll

importance to our economy of technological change. I am pleased to announce that financial support has . been provided by the Province in the amount of $300,000 for the continued work of the Newfoundland and Labrador Science and Technology Advisory Council. More details of our Government's policy in this area, indicating the role and activities of the Council, will be released shortly. Government looks forward to pursuing on a priority basis new federal-provincial agreements in several areas including tourism and cultural-historical development, forestry and minerals. Tourism Mr.

Speaker, I would like to highlight tourism for its potential positive impact on the economy in rural and urban regions both in the short term and in the long term. This Government has been successful in negotiating a Comprehensive Labrador Subsidiary Agreement with the Government of Canada. The tourism component of this agreement will see $800,000 in new money, cost-shared with the Federal Government, go to various tourism related projects in that region.

Funding is also provided to cover the cost of producing a new tourism marketing video which will reinforce our efforts to portray the Province as a distinct and attractive tourist destination. and special increased. Grants for festivals events will also be This Government not only as a destination but sees the Province seasonal summer also as an alternative. year this all-season tourist During the past Ll2 March 15, 1990 Vol XLI Government provided over $1 million for Marble Mountain.

I am pleased to report today that we have budgeted considerably more funding for the Marble Mountain Development Corporation lhis year. With this additional investment, we get closer to generating the private sector interest needed to develop this area into an all season tourist resort. The benefits to the local economy and to the Provincial treasury will be substantial. At a time when budgetary funds are scarce, I am pleased to indicate that we are maintaining our tourism marketing budget at an all time high. Trade and Investment Mr.

Speaker, this Government will not ignore the significant opportunities that exist beyond our shores. Particularly do we sei the Pacific Ri~ as a source of investment, a market for our products, and a wealth of business acumen and technical know-how. To enhance our promotional efforts in these nations we are providing $450,000 for an Asian initiative to raise the level of awareness for investment opportunities in this Province. We hope to identify potential joint venture and strategic partnerships as well as new products we can export to these markets.

We believe this initiative offers great potential for the growth of trade and investment. Han. Members should know that hundreds of millions of new investment dollars are entering Canada each year under the Business Immigration Program. Newfoundland and Labrador will be pursuing these dollars under Lhis Asian initiative. Forestry and Agriculture No. 5 Rl2

Mr. Speaker, the base diversified Newfoundland will continue to be the sectors. of a economy resource Funds are provided to continue our forestry programs in anticipation of a renewed Forest Resources Development Agreement with the Government of Canada. The current Agreement expires on March 31, but we are confident that a new Agreement will be concluded shortly. A $12.8 million Forest Workers Training Agreement was signed recently with the Federal Government.

This unique arrangement will see over $3 million spent annually over the next four years to tcain over 300 young men and women in many aspects of forest work, especially silviculture. Funding is provided to complete the work of the Agri-Foods Task Force. This Government believes that we have not yet reached our potential in agricultural production. The report of the Task Force should assist Government in implementing a long term development strategy. Mining Geoscientific surveys carried out by the Department of Mines and Energy have played a major role in the increase in ~ineral exploration in the Province.

Last year, when the continuation of federal cost sharing was in doubt, we increased funding to maitnain this important activity. Government will continue these surveys this year, although the level of activity will be reduced in keeping with our current program of fiscal restraint. We anticipate that the new Mineral Development Agreement, now in the final stages of negotiations with Ll3 March 15, 1990 Vol XLI the Federal Government, provide additional funding these surveys. will for Fishery Mr. Speaker, the state of the fishery is of deep concern to the entire Province. I will not tt·y to minimize this concern.

At least some segments of the fishery, some plants and some communities are facing very lean and unsettled times. This troubles me and the other Members of this Hon. House, not only because we have the responsibilities of Government, but also because we have family and fciends in these communi ties, and because we share the strong attachment our people have to their home and to their Province. But there will be a fishery next year. Plants will open and people will be employed. The same is true for the year after that, and for as many years to come as any of us can realistically foresee.

This Government will continue to support and encourage Lhat fishery, and remains resolutely committed to the fishing industry's being one of Lhe cornerstones of our economy. In this regard, funding is to operale four new Service Centres. Funding Fisheries Loan Board for approved Mat"ine to the incentives and assistance will be maintained. Cost-shared spending under the Canada/Newfoundland Inshore Fisheries Development Subsidary Agreement will increase by 25 per cent to $3.7 million.

The f lsheries component of the Labrador Subsidary Agreement will provide $7 million of support to the industry over a five year period. Current and capilal No. 5 Rl3

-'-' expenditures of $1.5 million have been earmarked for this fiscal year. Details of the fisheries component of the Agreement will be announced in the near future. Government is confident that this initiative will have extremely positive implications for the Coastal Labrador Fishery. For the first time, Mr. Speaker, provision has been made in the Budget to facilitate the distr-ibution of sur-plus fish landings dudng the glut season, and to distr-ibute fish to processing plants in Labrador. An amount of $300,000 has been allotted. SOME HON. MEMBERS: Hear, hear! DR.

KITCHEN: While we are determined to maintain our financial support for the industry, the shortage of fish stocks and consequent reduction in quotas will require an additional response. This Government already has acted by implementing th~ Adjustment Program for Fish Plant Workers which will provide $9 million to ensure that workers in the processing plants in Trepassey, Grand Bank and Gaultois will have an adequate notice of termination. The magnitude of the supply crisis for some communities, however, goes beyond what the Province of Newfoundland can be expected to bear alone.

Nor should we have to bear this alone because the supply crisis is not of our making. The jur-isdiction and responsibility to manage the stock lies with the Federal Government. They have to accept the reality that their quota reductions have led to dire consequences that threaten the Ll4 March 15, 1990 Vol XLI very existence of entire communities in this Province and throughout Atlantic Canada. It is not the fishermen, plant workers or fish companies who control the state of the stocks, yet il is they who suffer from the mismanagement of the resource. The responsibility of the Federal Government to act is clear.

One-industry communities cannot be expected in the short time given to absorb the shock of drastic quota reductions. Last week's Throne Speech clearly outlined this Government's position with respect to the supply problem in the fishery. We have already indicated to the Government of Canada that the Province is prepared, within its financial capability, to share the cost of a comprehensive fisheries revitalization and economic diversification program. A broadly based economic response program must be implemented to address the social and economic consequences of the stock rebuilding process.

This Government will continue to press for federal action. HEALTH CARE INITIATIVES: Mr. Speaker, this Budget eef lee ts Government's continued commitment to the health care system. The budgetary allocation to health will increase by $74 million, a growth rate of 10 per cent over the 1989-90 fiscal year. SOME HON. MF.MBERS: Hear, hear! DR. KITCHEN: In the recent Throne Speech, the Government outlined iLs concern about the considerable pressure that has been exerted on the health system in recent years and No. 5 Rl4

indicated that planning is now underway to develop a f~amewo~k fo~ a compt"ehensive new community Health Cat"e Pt"ogt"am. Govet"nment is concerned about beds being closed in medical facilities tht"oughout the Province, due to insufficient funding. Mr. Speaker, in this Budget, we have made funding available to these institutions to enable them to open eighty-eight of those beds. This yeat", additional funding will be pt:"ovided to the General Hospital to enhance ct"itical ca~e set"vices, with pat"ticular emphasis on cat"diac sut"gery.

I am pleased to announce that the General Hospital will t"eceive funding to open fifteen additional beds, including four beds in the newly redeveloped ct"itical care area. A total of fot"ty additional beds are being opened at hospitals in Gandet", Gt"and Falls and Cot"ner Brook. Govet"nment also t"ecognizes the pressures on the Pt"ovince's nut"sing homes, particularly in view of the changing demogt"aphics of out" society. To assist in meeting the ever increasing demand fot" cht"onic cat"e in nut"sing homes, funding will be pt"ovided to enable the Agnes Pt"att Home to open thit"teen additional beds.

Also, funding wi 11 be provided to open twenty additional beds at the Dr. Hugh Twomey Health Centre in Botwood. SOME HON. MEMBERS: Heat", heat"! DR. KITCHEN: Mt". Speaker, Government continues its commitment to increase the number of nut"sing positions in the health cat"e system. In my last Budget, 1 announced the Ll5 March 15, 1990 Vol XLI establishment of a minimum of forty-five new nut"sing and resident care positions in the health system. t am pleased to announce today that anothet" thit"ty-three nut"sing positions will be appt:"oved for the health system by Octobet" 1.

As well, effective Apdl 1 funding will be pt"ovided for thit"ty-two additional residential cat"e staff fot" the Province's nut"sing homes. All of these nut"sing and othet" positions a~e in addition to those t"equit"ed to open the eighty-eight beds t"eferred to previously. Additional funding is pl:"ovided to assist in integt"ating childt"en with disabilities into the regulat" school system and to met lheil:" special health cat"e needs.

This year, in coopet"ation with Health and Welfare Canada, the Department of Health will commence a five-year initiative to addt"ess cardiovasculat" disease tht"ough public education and pt:"eventlon. Also, funding will be provided to expand our initiatives in public education with t"espect to AlDS pt"evention. The Govet"nment l:"ecognizes the importance of the services pl:"ovided by the Newfoundland Cancer Treatment and Reseaech Foundation.

I am vet"y pleased to announce a joint ventul:"e with the Cancel:" Foundation undet" which Govet"nment will provide $5.4 million of the pl:"ojected $6.9 million cost of new facilities, adjacent to the Health Sciences Center. SOME HON. MF.MBERS: Hear, hear! DR. KITCHEN: In 1990-91, $1.9 million of the Govet"nment's commitment would be No. 5 Rl5

p~ovided to enable this p~oject to get undec-way. As a fu~the~. step in ~ationalizing health ca~e se~vices on the Bu~in Peninsula, I am pleased to announce that funds a~e being p~ovided fo~ the planning of a new community health centC"e fo~ G~and Bank and fo~ a new 40 bed n~~sing home in St. Law~ence. Planning funds will be p~ovided fo~ the ~edevelopment of James Paton Memo~ial Hospital in Gande~. fo~ the ~edevelopment of B~ookfield Hospital, fo~ new community health cent~es and long te~m ca~e facilities at Bu~geo and Po~t Saunders, and fo~ the ~edevelopment of the Inte~faith Senio~ Citizens Home in Corne~ B~ook.

The GoveC"nment will also be taking p~eliminary steps to assess the manne~ in which the need for nu~sing home facilities in the Po~t aux Basques a~ea can best be add~essed. Also, funding is allocated fo~ the completion of the Roddickton Community Health Centr-e. SOME HON. MEMBERS: Hear, hea~! DR. KITCHEN: M~. Speake~. in total $22.8 million will be allocated in this Budget to support capital imp~ovements in the health ca~e system. EDUCATION INITIATIVES Mr. Speaker, education is a key component of this Gove~nment' s long term economic st~ategy.

We a~e committed to imp~oving the quality and accessibility of educational oppo~tunities throughout the P~ovince. · The measures announced today will enhance the efficiency and equity Ll6 Ma~ch 15, 1990 Vol XLI of ou~ education pr-og~ams. Funding has been p~ovided to inc~ease the pe~ pupil operating g~ants to school boa~ds by 4 pe~ cent. The School Tax Equalization G~ant will be maintained at $10 million this yea~. up ft"om $4.5 million in 1988. The budget for building and equipping schools will be $27 million, including $1 million fo~ making school buildings mo~e accessible to people with disabilities.

As well, the~e will be a $200,000 inc~ease in scholarship funding fo~ seconda~y school students. SOME HON. MEMBERS: Hear-, hear! DR. KITCHEN: M~. Speake~. I am pleased to announce that we are making an additional $1.7 million available fo~ student aid, which rep~esents an 11 per- cent inc~ease in funding ove~ last year. Government's ~ecent White Paper on post-secondary education presents p~oposals to imp~ove greatly the equality, excellence and efficiency of the post-secondary education system in this P~ovince.

Consistent with the high priority placed on education, capital funding is provided for the planning of both the Central Newfoundland Campus and the expansion of the Grenfell College in Corne~ Brook. SOME HON. MEMBERS: Hea~. hear! DR. KITCHEN: The $10 million capital budget for Memo~ial University includes provision for an extension to the Arts and Administration Building, imp~ovements to the Schools of Pharmacy and Nursing, as well as No. 5 Rl6

for the construction of a facility for small animal care. Funding of $1.7 million is allocated ·to commence the construction of an $8 million extension to the Fisher Institute in Corner Brook. SOME HON. MEMBERS: Hear, hear! DR. KITCHE N: Planning funds have been provided for a Centre for Engineering Technology in St. John's. The capital budget for the Marine Institute , will exceed $10 million. These include funds for the establishment of a Simulator Training Centre and an Offshore Survival Centre, both to be financed primarily from the Offshore Development Fund. Mr.

Speaker, I am pleased to announce that this year Education's total capital budget will be $60 million. The Department of Education will work with the education community to develop and implement specific measures to improve efficiency and cost-effectiveness. Mr. Speaker, the Department of Education has launched a major initiative to prepare high school students to meet lhe modern challenges of mathematics, science and technology, by using savings achieved this past year to purchase computers and other instructional materials.

This $2 million initiative, $1.5 million of which was for computers, will result in a significant improvement in the quality of high school education in the Province. OTHER INITIATIVES Government Pension Plans Ll7 March 15, 1990 Vol XLI Mr . Speaker, in the 1989 Budget . Speech, I expressed Government's concern with the financial condition of the four pension plans covering public servants, teachers, uniformed services personnel and MHAs . Because of this concern, Government appointed a Commission of Enquiry On Pensions to review the plans.

The final Report of the Commission should be ready for Government's consideration in the very near future. I am confident that this Report will be an essential ingredient in Government's formulation of appropriate measures to resolve the financial difficulties being experienced by the pension plans. With the financial position of Government's pension plans in mind, Government has decided to make an immediate special payment of $21 million into the Pension Fund in 1989-90.

This payment, made during a time when the Province's economy is feeling the effects of problems in lhe fishery and a general slowdown in olher areas, should give a clear indication to all employees of Government's commitment to doing its share towards putLing the pension plans on a sound financial basis. SOME HON. MEMBERS: Hear, hear! Mr. Speaker, in view of the fact that the Commission of Enqu iry Report is not yet availab le, Government has decided to def er for the time being any decis ion regarding increases to pensioners.

This subject will be addressed in the near future afler reference to the Commission's Report and in the context of possible indexation of Government's pension plans. No. 5 Rl7

Social Services Mr. Speake~. Gove~nment views with alarm the dramatically increasing incidence of child abuse ~efe~~als in this P~ovince. Child abuse is not a new phenomenon and neithe~ is it unique to this P~ovince. A large segment of ou~ society now appears ready to repo~t openly and to discuss this complex and unacceptable p~oblem. Acco~dingly, I am pleased to announce that funding has been p~ovided in the Budget for 50 new f~ont-line positions in child welfa~e services. Government is committed to imp~oving the quality and quantity of services to those who need assistance of va~ious kinds.

To this end, I am pleased to announce that allowances paid to social assistance recipients will increase by fou~ pe~ cent, effective May 1. Allowances fo~ foste~ pa~ents will also inc~ease by fou~ pe~ cent while the clothing allowance fo~ foste~ children will inc~ease by 20 pe~ cent. SOME HON. MEMBERS: Hea~. hea~! DR. KITCHEN: M~. Speake~, $8.3 million has been p~ovided to accelerate const~uction of the new young offende~s · facility at Whitbou~ne. M~.

Speaker, one of the g~eat success sto~ies of this Province is the outstanding community se~vice p~ovided by an organization called the HUB, which p~ovides jobs, rec~eation, and pe~sonal services to physically disabled pe~sons. We are awa~e of the ext~emely crowded conditions unde~ which they p~esently ope~ate. I am, the~efo~e. ve~y L18 March 15, 1990 Vol XLI p~oud to announce that to assist them to p~ovide additional opportunities to those among us who a~e physically disabled, this Gove~nment is enabling the HUB to extend thei~ building by p~oviding a capital grant of $1 million. SOME HON. MEMBERS: Hear, hear!

DR. KITCHEN: The Depa~tment of Social Se~vices is one of the most decent~alized departments in Gove~nment with 53 offices located th~oughout the Province. We have app~oved the development of a majo~ computer system to facilitate and further enhance the delive~y of social services and p~og~ams to all regions of the Province. Justice Mr. Speake~, both the Royal Newfoundland Constabular-y and the Royal Canadian Mounted Police ar-e faced with inc~eased wor-kloads, including cases involving child abuse.

Gover-nment is committing sufficient funds for- the deployment of up to five per cent more police officers across the Pr-ovince. This will be accomplished thr-ough the hiring of additional office~s and the more effective re-deployment of existing officers now performing civilian work. This measure, combined with the allocation of additional resources for fr-ont-line social work positions, rep~esents a major- step in the prevention of the abuse of children, and will provide additional resources to assist the police forces in all areas of their wo~k. Employment Initiatives Mr. Speake~. Government will No. 5 R18

continue to p~ovide several prog~ams to help women, students, older workers and youth take advantage of job opportunities. We will adhe~e to the objective of creating meaningful, long term employment fol:' all of out' labour' fOI:'Ce. The G!:'aduate Employment Pl:'ogl:'am to help post-secondary education graduates obtain job !:'elated experience will continue. The Provincial Government will participate in the joint Federal-Provincial Progl:'am for Older Wo~kel:' Adjustment.

Provincial funding will continue for the Canada-Newfoundland Employment Strategy Pl:'ogl:'am, with major' emphasis being placed on enabling people in the 16 to 24 age group to make the tl:'ansition from school to wo~k. Funding is provided through this progl:'am for' the ongoing development of a Provincial Career and Labour' Market Resoul:'ce Centl:'e. A computet' netwol:'k will ensul:'e that career' and labour' mal:'ket information is easily accessible in all al:'eas of the Province. Women's Issues This Government is firmly committed to imp~oving the economic and social well-being of women.

The Budget. is pl:'oviding $6.3 million to support pay equity in the health sector. Opel:'ating funding of $100,000 is pl:'ovided for a new t~ansition house in Gander. Eligibility criteda have been modified to enable more single-parent families to obtain subsidized day care. Changes in the student aid prog~am will provide for' single parents and married students additional funding estimated to reach $500,000.

The~e is more money fo~ L19 March 15, 1990 Vol XLI progl:'ams to assist women obtain employment, including $500,000 for' the Women in Successful Employment Program, a pl:'ogram of flexible learning, counselling and other self-development assistance. There will be a continued funding of $300,000 for' the Newfoundland and Labl:'ador Advisory Counci 1 on the Status of Women and for the Interagency Committee on Violence Against Women. These and other initiatives, Ml:'. Speaker, demonstl:'ate this Government's continued commitment to women's issues. Transportation Mr.

Speaker, this Government will continue its effol:'ts to improve· the Province's road system through an extensive construction program. We have provided $80.5 million for further road upg~ading, primarily of the Trans Canada Highway, under th~ ERDA agreement and the Newfoundland Transportation Initiative. Expenditures unde~ the Provine ial Road and Bridge Program will total $30 million this coming year. Under the Compt'ehensiv~ Labr-ado~ Subsidiary Agreement, we are providing $3 million fo~ the Charles River Bddge at Lodg~ Bay Labl:'ador.

This Government ls pr-oviding imp~oved fen·y se~vices to the island communities of the Province. We a~e ente~ing the second yea~ of a th~ee -yea~ pLan to reduce marine services ~ates to equivalent l:'oad transportation costs. Const~uction will begin on a new ferry with ice breaking capabilities for the Fogo Island service. The vessel will be built at the Marystown Shipyard at a cost of $24 million, $4 million of which will be spent this com ing year. Also, $12.5 million is No. 5 R19

allocated for the operation of the Provincial ferry system. Municipal Capital Program Mr. Speaker, Government will support the expenditure of $55 million this year on water, sewer and paving projects in communities throughout the Province. Details have already been announced to facilitate early tendering and constr'Uction. Crown Corporations Government has approved a capital budget of $98.7 million for the Newfoundland and Labrador Housing Corporation. These funds will be used to deliver over 300 new social housing units throughout the Province, and to upgrade approximately 2000 homes through the RRAP program.

Newfoundland and Labrador Hydro expects to spend $97 million on capital projects to improve electrical generation and transmission facilities. CONCLUSION Mr. Speaker, this Budget has been prepared within an environment of adversity. The fishery is beset with serious problems. The economy is slowing in other areas, though it is not without its bright spots. The Federal Government's high interest rate policy is restraining business in parts of the country, like Newfoundland, where restraint is not needed.

The recent Federal Budget has reduced EPF transfers for health and post-secondary education services, at a time when the need for those services is great. And, we will feel the impact of the GST in this Budget year, an impact which we know will L20 March 15, 1990 Vol XLI be considerable in many different ways. Despite this difficult environment, the Government has taken important initiatives towards achieving its objectives in economic development, health care and education.

We have shown our sincere commitment to solving the problems of our pension plans by making a sizeable special payment into the Pension Fund. We have restrained Government's operating expendi lures both by general cuts across departments and by specific measures to eliminate wasteful and unproductive expenditures. And where we have raised additional revenues, we have done so without regressive tax measures. SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: In

summary, Mr. Speaker, the fiscal and economic plan contained in this Budget is based upon a prudent and realistic assessment of what we can achieve over the coming year. We are refocusing both the substance and the delivery mechanisms of Government's programs to meet Lhe needs of the people of this Province. Mr. Speaker, a major transformation of the Province's economy cannot be achieved overnight. This Budget clearly demonstrates, however, that the groundwork has been set for creating a stronger economy and a meaningful and productive lifestyle for Newfoundlanders and Labradorians in all regions of the Province. Thank you, Mr. Speaker. No. 5 R20

SOME HON. MEMBERS: Heat", heat"! DR. KITCHEN: Mr. Speaker; I move that the debate be adjourned until tomorrow, Tuesday, March 20. On motion, debate adjourned until tomorrow, Tuesday, March 20. MR. SPEAKER: The hon. the Minister of Finance. DR. KITCHEM: Mr. Speaker, I wish to inform the House that I have t"eceived a message ft"om Hi~ Honour:" the Lieutenant-Governor:". MR. SPEAKER: All rise. The following message is Government House, dated 15th, addt"essed to the hon.

Minister:" of Finance. from Mat"ch the "I, the Lieutenant-Govet"not" of the Pt"ovince of Newfoundland, tt"ansmit estimates required fot" the public set"vice of the Pt"ovince for the yeat" ending the 31st day of March 1991, in the aggregate of Two Billion, Seven Hundred and Seventy-Two Million, Tht"ee Hundred and Thit"ty-Seven Thousand Tht"ee Hundt"ed Dollat"s ($2,772,337,300) and in accot"dance with the provisions of The Constitution Act of 186 7, I recommend these estimates to the House of Assembly. (Sgd.) Lieutenant-Governor:"" We will· take a few moments to distt"ibute documents to all hon. Membet"s.

Order:", please! The hon. the Minister of Finance. L21 March 15, 1990 Vol XLl DR. KITCHEN: Mt". Speaker, I move that the Message together with the Estimates be t"eferred to a Committee of Supply. On motion, that the House t"esolve itself into Committee of Supply to consider:" the Message from His Honour:" the Lieutenant- -Govet"not", together:" with the Estimates, Mt". Speaker:" left the Chair. Committee of Supply MR. CHAIRMAN (Snow): Ot"det", please! The hon. the Pt"esident of Tt"easut"y Boat"d. MR. BAKER: Mt". Chairman, I move that the Committee t"ise, repot"t pt"ogt"ess and ask leave to sit again.

On motion, . that the Committee t"ise, t"epot"t pt"ogt"ess and ask leave to sit again, Mt". Speaker retut"ned to the Chait". MR. SPEAKER: The hon. the Member:" fat" Tt"inity Bay de Vet"de. MR. L. SNOW: Mt". Speaker, the Committee of Supply has considet"ed the matters to it t"efet"t"ed, has made some pt"ogt"ess and asks leave to sit again. On motion, repot"t t"eceived and adopted, Committee ordered to sit again on tomorrow. Notices of Motion DR. KITCHEN: No. 5 R21

Mr. Speaker. MR. SPEAKER: The han. the Minister of Finance. DR. KITCHEN: Mr. Speaker, I give notice that I will on tomorrow move that this House resolve itself into Committee of the Whole to consider certain resolutions relating to the imposition of a tax on employers for the - purpose of funding health care and post-secondary education. I give notice that I will on tomorrow move that this House resolve itself into Committee of the Whole to consider certain resolutions relating to the Financial Corporations Capital Tax Act.

I give notice that I will on tomorrow ask leave to introduce a Bill entitled, "An Act To Amend The Mineral Holdings Impost Act." MR. BAKER: Mr. Speaker. MR. SPEAKER: The han. Leader. the Government House MR. BAKER: Thank you, Mr. Speaker. Before adjourning I would like to advise han. Members, because the House is not sitting on Monday, that the Private Member's resolution for debate Wednesday will be the resolution put forward by the Member for Bellevue (Mr. Barrett) on Women's Issues. Now, 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. L22 March 15, 1990 Vol XLI and that this House do now adjourn. MR. SIMMS: Mr. Speaker. MR. SPEAKER: The Opposition House Leader. MR. SIMMS: I was going to ask the Government House Leader if he was going to do what is traditionally done, I guess, on Budget Day. Are you going to move the Estimates Committees? MR. BAKER: (Inaudible). MR. SIMMS: You are going Tuesday? Tuesday? MR.

BAKER: Yes. to wait until On motion, the House at its rising adjourned .until tomorrow, Tuesday, at 2:00 p.m. No. 5 R22

Volume XLI Thursday Province of Newfoundland FORTY- FIRST GENERAL ASSEMBLY OF NEWFOUNDLAND Second Session VERBATIM REPORT {Hansard) Speaker: Honourable Thomas Lush [Preliminary Transcript] Number 5 15 March 1990

..:. The House met at 2:00 p.m. MR. SPEAKER (Lush): Order, please .! MR. BAKER: Mr. Speaker . MR. SPEAKER: The hon. the President of Treasury Board. MR. BAKER: Mr. Speaker, I ask leave to read a very brief statement. MR. SPEAKER: I assume the hon . the President of Treasury Board has leave. The hon. the President of Treasury Board. MR. BAKER: Mr. Speaker, I am pleased to announced to han. Members that the Government of Newfoundland and Labrador and the Newfoundland Hospital and Nursing Home Association have reached a tentative collective agreement with the Newfoundland and Labrador Nurses Union.

The contract is period, ending Details of settlement will for a two year December 1991. the tentative not be released until union members have ratified the contract . The settlement, Mr. Speaker, recognizes that nurses are a special case in the current labour market. It also recognizes the value of the contribution made by this group of professionals in providing quality service in the health care field. S.OME HON. MEMBERS: Hear, hear! L1 March 15, 1990 Vol XLI MR. RIDEOUT: Mr. Speaker. MR. SPEAKER: The hon. Leader. the Opposition House MR. SIMMS: On behalf of hon .

Members on this side of the House I commend the two sides for being able to successfully conclude what appears to be at least a satisfactory agreement. We hope, as well, that the plight of the nurses was recognized in reaching this agreement, and that the nurses were treated in a very satisfactory way. I can only say that I hope the people in Treasur-y Board, and the Minister, will have as much success during the rest of the year in dealing with other groups, such as the General Service and the Teachers. We look forward with great anticipation to hearing similar statements from the President of Treasury Board.

SOME HON. MEMBERS : Hear, hear! MR. SPEAKER: The hon. the Minister of Finance . DR. KITCHEN: Mr. Speaker, I move House resolve itself Committee of Ways and that the Speaker do now Chair. MR. SPEAKER: that this lnto a Means and leave the The motion is that this House resolve itself into a Committee of Ways and Means and that. I do now leave the Chair. The hon. the Minister of Finance . DR. KITCHEN: No. 5 Rl

INTRODUCTION M~. Speake~. I am pleased to p~esent to this Honou~able House the second Budget of the Wells Administ~ation. These fi~st ten months of Gove~nment have b~ought many challenges in managing the p~ovincial economy, in p~oviding se~vices essential to ou~ people, and in responding to the changing nature of the federal - p~ovincial fiscal balance in this count~y. To date, this Government has established a record of responsible action and decisive leadership, and has demonstrated a willingness to tackle head-on the tough issues that conf~ont us.

Notwithstanding the cu~rent difficulties in ou~ economy, optimism and enthusiasm pervade this Administ~ation. We are restructuring the machine~y of Gove~nment, we a~e eliminating the waste and ext~avagance of forme~ yea~s, and we are making significant prog~ess in implementing policies for which the people of the P~ovince voted nearly eleven months ago. The p~eparation of this Budget has not been easy, partly because of the far-reaching effects of the d~astic reductions in cod quotas, but largely because of the economic, fiscal and monetary policies of the Federal Gove~nment.

However we have been able to produce a Budget that add~esses in a very significant way this Government's three basic priorities of Economic Development, health care and education; a Budget that does not come down hard on the people. SOME HON. MEMBERS: Hear, hear! L2 March 15, 1990 Vol XLI DR. KITCHEN: This is a p~udent Budget that will enable us to go a long way towa~ds delivering to all regions of the Province the fairest and most equitable level of service we are able to provide and still be fiscally responsible to the present and to the future. M~.

Speaker, I am proud to p~esent this Budget for it is truly a Liberal Budget, a people's Budget. THE ECONOMY Mr. Speaker, the Province's economy continued to expand during 1989 with the G~oss Domestic Product, or GOP, growing by 1.4 per cent, after adjusting for inflation. Although we have made progress, the rate of growth of the Newfoundland Economy has not kept pace with that of the rest of Canada. Over the past seven years the Newfoundland Economy grew at. an average annual ~ate of 3 pe~ cent, compa~ed with ave~age annual g~owth nationally of 4.2 pe~ cent. Economic Review of 1989 M~.

Speake~. economic g~owth in 1989 was not as high as in lhe p~evious two years, due p~i.mari ly to a slowdown in the forest.y and fishing indust~ies. Most othc~ goods p~oducing industries and the service sector, however, continued to pe~form well. Newsprint production in the Province increased by 1.2 per cenl in 1989, while shipments declined slightly because of soft newsprint market conditions. Pulp wood production decreased by approximately 6. 3 per cent. due to an earlier than usual suspension of wood harvesting operations. The fishing industr·y experienced a number of difficulties during No. 5 R2

•· 1989. The per'formance of the fishing industry was affected by r'educed quotas and by strikes at the two lar'gest fish pr'ocessing companies in the ear'ly par't of the year'. Decreased landings, combined with lower' pr'ices for' some species, caused the value of fish landings to decline. Demand was str'ong for' the Province's mineral pr'oducts as the total value of miner'al shipments r'Ose by 11.1 per' cent. Miner'al explor'ation r'emained at a high level. Total constr'uction investment incr'eased by 1.5 per' cent. Strong gr'owth was r'ecor'ded in r'esidential constr'uction which incr'eased by 10.5 per' cent.

The mor'e than 3,500 housing star'ts, the highest level since 1980, repr'esented an 11.6 per' cent increase over' 1988. The service sector' benefitted fr'om higher' consumer' spending stimulated by gains in per'sonal income and tour'ism. Personal incomes gr'ew by 8. 6 per cent in 1989, while r'etail tr'ade increased by about 7 per cent. The Province's inflation r'ate aver'aged 3.6 per' cent last year compared to a national rate of 5 per' cent. Total employment incr'eased by 8,000 per'son year's, up 4.1 per' cent from the previous year'.

Employment gr'owth outpaced gr'owth in the labour' for'ce causing the unemployment r'ate to fall to 15.8 per cent. Mr'. Speaker', this was the lowest unemployment r'ate in the past eight years. SOME HON. MEMBERS: Hear', hear! Economic outlook for' 1990 DR. KITCHEN: L3 Mar'ch 15, 1990 Vol XLI Mr. Speaker', the Pr'ovincial economy is expected to grow again in 1990, but at a slower' r'ate than in recent years. This is consistent with the growth slowdown expected for' the national and international economies in 1990. Real GOP in the Province will increase by just under 1 per' cent.

Economic gl'owth in the United States and Canada will decline to 1. 7 per' cent and 1. 3 per' cent, l:'espectively. The inflation ~:"ate in this Province will avel'age 4 per cent compared to a national r'ate of 4.7 per' cent. Total employment will increase by about 1,000 person years in 1990. Gr'owth in the laboul' for'ce, however, may exceed gr'owth in employment and this would cause the unemployment ~:"ate to average 16 per cent.

Further' declines are expected in the fishing industey as a l'esult of the r'eduction in gl'oundfish quotas and the consequent incr'ease in downtime at fish plants thl'oughout the Province. The economic and social consequences would be much gl'eater' if Government had not acted to extend the pel'iod of notice of termination which will result in fish plants remaining open dur'ing 1990. SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: In the mining industt"y, a stt"ong performance is again expected this year. The markets for' iron ore will remain healthy, and exploration activity will remain strong. Mr.

Speaket", the value of mineral shipments will be the highest since 1981, and will exceed $1 billion. No. 5 R3

The fo~est indust~y is expected to experience difficulties in 1990, should soft ma~ket conditions continue. The service secto~ will undergo economic expansion in 1990, driven largely by growth in consumer spending. Negotiations ongoing between the Federal and P~ovincial Governments and the Hibernia consot"tium should lead to a binding agreement this year to develop the Hibernia oil field. The construction industry will experience increased activity in 1990 as development expenditu~es begin for the Hibe~nia p~oject.

Hibernia development will ~ep~esent the stat"t of a new indust~y in this Province with a st~ong possibility of other' simila~ developments to follow, such as Te~~a Nova and Whiterose. The contt'ibution of this new indust~y to the Pt'ovincial economy will be substantial. We should not, because of past delays, underestimate its potential impact on the Pt'ovince. Exploration activity alt'eady has ~esumed in the of fshot'e. Fu~the~ explot'atory ddlling is expected in the eat'ly 1990's as a result of ~ecent land sales and the sale proposed for 1990.

Active discussions have been ongoing ~egat'ding the fu~thet' development of the hydro electric potential in Labrador'. Should these discussions lead to an agreement, the economic effects will be significant. Military t~aining in Lab~ador is a source of cut"~ent p~osperi ty and future economic oppo~tunity. The Canadian Forces Base at Goose Bay is used as a training facility by three fo~eign count~ies, and L4 March 15, 1990 Vol XLI p~ovides employment fa~ mo~e than 1,100 people. Ove~ $150 million in capital pt"ojects a~e planned fa~ the next few yea~s in suppo~t of the cu~~ent level of tt·aining.

A decision to locate a NATO t~aining center at Goose Bay would c~eate an even mo~e substantial boost to the local economy. Due regard must be had fo~ the concerns of native peoples and fo~ the p~otection of the envi~onment. FEDERAL-PROVINCIAL ISSUES M~. Speake~. the futu~e of this Province is influenced considerably by the Government of Canada. We rely on the Fede~al Government to implement balanced policies that are for the bettement of all regions of the countt"y.

As one of Canada's p~esently less affluent pt"ovinces we must look to the Fede~al Government to assist us to provide essential services and to develop our economy. In this ~egard, I wish to add~ess seve~al issues relating to the fiscal and economic policies of the Federal Government. Federal Budget To balance economic growth, fede~al fiscal policy should be targeted to the fullest extent possible to enchance the performance of the economically disadvantaged regions. The tough measures should be di~ected at the overheated segments of the national economy.

Unfo~tunately, the ~ecent Federal Budget did nothing to alleviate disparities between this P~ovince and the ~est of Canada. Although the Fede~al Budget did not include any new tax increases, some measures p~eviously announced will become effective in 1990-91. No. 5 R4

These include the Goods and Services Tax, or GST, rate changes to the personal high income surtax and the capital tax on large corporations; as well as the phase- in of social transfer repayments. The primary target of the two-year expenditure control plan announced in the Federal Budget is transfers to provinces. Direct transfers to individuals are exempt from this federal restraint plan. The task of making the tough decisions affecting individuals in effect has been delegated to the provinces.

The largest restraint measure announced in the Federal Budget is a two-year freeze applied to the Established Programs Financing, or EPF, arrangements which provide federal financial support for provincial health and post-secondary education systems. This measure will reduce fiscal transfers to this Province by more than $50 million over the next two years. Combined with previous restraint, the federal policies make it increasingly difficult to provide adequate health care and post-secondary education programs. The federal austerity program extends beyond the major transfer programs to provinces.

Newfoundland and Labrador will be negatively affected by a broad range of changes in a variety of programs and activities such as reductions in legal aid and funding for women's centres, restrictions on cost-shared funding for social housing, lower subsidies for Marine Atlantic, and the elimination of the Canadian Exploration Incentive Program.

Equalization Program LS March 15, 1990 Vol XLI The principle of the Equalization Program, as enshrined in the Constitution, is to ensure that all provinces have sufficient revenues to provide a reasonably comparable level of public services at reasonably comparable levels of taxation. However, this program currently has a transfer ceiling which limits equalization payments despite increasing fiscal need. In order Lo satisfy the principle of the equalization program, there should be no ceiling on the growth of equalization transfers. Indeed, an enrichment of the equalization program is needed.

Goods and Services Tax Mr. Speaker, the Government of Newfoundland and Labrador is quite concerned about the negative impact the proposed GST will have on our people, our economy and our fiscal position. The Government of Canada's prediction that there will be a smooth economic transit ion to the new tax is too optimistic. The inflationary impact of the GST will be higher in Newfoundland during the tt·ansition period than forecast by the Federal Government due to lower competitive pressures in _this Province and the taxation of transportation costs.

Also, few of the long term economic benefits from the GST will be derived in this Province. The output from most Newfoundland industries will be influenced more by such factors as resource supply, world demand and prices for specific products, interest rates and exchange rates, than by the removal of the present federal sales tax on business inputs. Removing the sales tax on No. 5 existing federal businesses will RS

result in shifting the tax burden almost entirely to individuals. The federal taxes paid directly by individuals will increase by about $130 million · annually, even after taking into conside~ation increased sales tax credits. The Federal Government contends that most of this increase in direct burden will be offset by lower prices resulting from the GST not being applied to businesses. I am skeptical that this will in fact be the case. The GST will result in a sedous deterioration in the fiscal position of the Government of Newfoundland and Labrador.

Moreover, the increasing int~usion by the Federal Government into the consumption tax field will restrain our fiscal maneuverability and impede our ability to provide necessary se~vices. The administration and compliance ·complexities associated with two retail sales tax systems will be enormous. Not only are we concerned about the GST interfering with our provincial taxes, but also ~ith the pending loss of tax administration staff to the expanded federal system. Mr. Speaker, for all of these reasons, this Government is, has been, and will be firmly opposed to the Goods and Services Tax. SOME HON.

MEMBERS: Hear, hear! Unemployment Insurance DR. KITCHEN: The r'ederal Government appears determined to proceed with its reform of the Unemployment Insurance Prog~am despite opposition throughout the L6 March 15, 1990 Vol XLI country. Under the new proposals, the Federal Government is no longer contributing its share, which averaged about 23 per cent during the 1980s . Instead, all contributions to the unemployment insurance fund are made by employees and their employers, at rates 15 per cent higher than last year.

For many claimants there will be increases in the number of weeks required to qualify for unemployement insurance, longer waiting periods and shorter benefit periods. The traditionally high unemployment rates in this Province mean that these changes will be quite burdensome and will exacerbate the present crisis in the fishery. We estimate that the proposed changeG could remove more than $100 million from our economy, resu lt in a decline of $15 million in Government · revenues, and increase social assistance payments. This, Mr. Speaker, is not easy to accept.

Regional Development Funding Significant regional economic disparities have persisted in Canada over an extended period of time. Nowhere is this more evident than in Newfoundland and Labrador. In order to reduce regional economic disparity, resources must be targetted at Lhe disadvantaged regions. The Federal Government's current regional and industrial assistance programs are too broadly applied to objective. Monetary Policy Mr. Speaker, the achieve that current high interest eate policy of the Bank of Canada is hurting this Province. The Federal Government is keeping interest cates high in No. 5 R6

order lo slow the economy and thus ease inflationary pressures. We believe this monetary policy is inappropriat~ for Newfoundland. This Province does not need the brakes applied to its economy. The inflationary pressures in Canada are not originating here, but are being generated in overheated regional economies, mainly in central Canada.

Because interest rates cannot be set on a regional basis, the Government of Canada should be targetting the overheated regions of the Country for more restrictive fiscal policies, primarily expenditure reductions and in particular the removal of industrial development incentives in these overheated regions. SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: The current policy. of applying restrictive monetary and fiscal policies evenly across the Country, including those regions where resources are underutilized, where unemployment is excessive, and where inflationary pressures are not as great is counter-productive.

Mr. Speaker, federal fiscal, economic and monetary policy must serve not just central Canada, but all of Canada, including Newfoundland and Labrador. The Constitution Mr. Speaker, this Government has come to the conclusion that economic fairness and balance will be achieved in Canada only when the Constitution makes provision for greater political equality among provinces. That is why we L7 March 15, 1990 Vol XLI support a Triple E Senate that is elected, has equal representation from all provinces, and has the power to ensure that it~ vote will be effective.

That ls why we cannot support the present wording of the Meech Lake Accord which, by extending the Constitutional veto, will make Senate reform virtually impossible and prevent forever the ability of Newfoundland and Labrador to get out from under the yoke of economic disparity. SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: With Meech Lake the two economic solitudes that now exist in Canada would be entrenched. FINANCIAL POSITION Financial Review of 1989-90 Mr. Speaker, in my Budget-. last year I projected a current account surplus of $5.3 million for the 1989-90 fiscal year.

I am pleased to announce today that we surpassed that estimate and achieved a surplus of $37.8 million on current account. SOME HON. MF.MBERS: Hear, hear! DR. KITCHEN: The improvement of $32.5 million from Budget is largely the result of higher revenues. Net current account expenditures remained substantially on target. Our overall deficit or total budgetary requirement was $221.7 million last year, or $31.7 million less than Budget. Mt:'. Speaker, in my Financial Report to this December, I estimated account surplus of $52 No. 5 Midyear House in a current million. R7

Out of this surplus on current account, Government decided to begin the process of addressing the serious unfunded liability in the Province's Pension Fund by making a $21 million special cont~ibution this year. SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: This substantial contribution furthers the process of ensuring the long term integrity of our pension plans. Financial outlook for 1990-91 Mr. Speaker, it is with considerable satisfaction and pride that. I am able to announce that in 1990-91 we will achieve our second . consecutive current account surplus, at a level of $10.2 million. SOME HON.

MEMBERS: Hear, hear! DR. KITCHEN: Current account revenues are projected to gr:ow by 5 per cent, on the strength of growth in Provincial revenues. Federal transfers are expected to increase by only 2.1 per cent. Expenditures on capital account will be $367.5 million. Of this, $108.8 million will be offset by related revenues, leaving a net capital account requirement of $258.7 million. The combined cut"r:ent and capital budgetar·y r:equit"ement will be $248.5 million, which is approximately $5 million less than last year's Budget. Budget strategy Mr.

Speaker, when this Government L8 March 15, 1990 Vol XLI took off lee less than a year ago, we made a commitment to manage the people's finances in a pt"udent and responsible manner. We at"e fulfilling that commitment. If we are to ensure out" future ability to pt"ovide the services our citizens deserve, then we must not burden ourselves and those that follow us with excessive debt. It is all too easy to say that prosperity is just around the corner: so let us borrow f eom out" future and avail of it today. There has been too much of that in the past. SOME HON. MF.MBERS: Hear:, hear! DR.

KITCHEN: The total debt of the Pt"ovince is $5. 2 billion. That is more than $9,000 for every man, woman and child in the Province. That wi 11 grow again this year:. The interest on that debt will be ovet" $470 million this year:. This is almost as much qS we spend to operate our primary, elementary and secondar·y school system. It is equivalent lo what we spend t.o operate all our: hospitals. Despite our: achievement of a current account surplus in the 1989-90 fiscal year, our total per capita budgetar·y requirement was the second highest budgeted by any Province last yeat".

Our: credit t"ating, which influences the intet"est rate we must pay on out" debt and determines the markets in which we may borrow, remains at the lowest level assigned to any Province. Mr. Speaker, we do not have the capacity for: unrestrained expenditut"e. In developing Government this took Budget, its responsibilities ver:y seriously. No. 5 R8

The overriding principle was that we must balance our current account position, and keep ou~ overall budgetary requi~ement at a manageable level, while providing necessary se~vices. Achieving the current account surplus was not an easy task. We a~e saddled with servicing the debts of ou~ predecessors. The recent Federal Budget dictated that we shoulder an even g~eater share of thei~ deficit. The economy is experiencing a pe~iod of slower growth. The needs of the people of this Province are real and many.

In pursuing our budgeta~y objectives, there are two cou~ses of action available to us: rest~ain our spending and enhance our revenues. Mr. Speaker, this Government is commit ted to fiscal restraint, to eliminating extravagance and waste, to reducing the cost of operating government, and to making the public se~vice leaner and more efficient. All expenditures of all departments have been examined, and non-essential services have been t ~immed to make gt'ea ter f inane ial resou~ces available fo~ highe~ priori ties. SOME HON. MEMBERS: Hear, hear! DR.

KITCHEN: As part of an extensive pre-Budget exercise, evet"y department of Govet'nment was directed to identify substantial expenditu~e t'eductions. The savings genet"ated tht"ough this exercise, as well as furthe~ ~eductions established through the Budget p~ocess, a~e reflected in operating budgets th~oughout the public set'vice. L9 Mat'ch 15, 1990 Vol XLI Expenditures fo~ t~avel, supplies, and other operating items have been kept to a minimum. To meet Government's changing priorities some re-allocation of human resources has been necessary.

A conscious effort, however, has been made to keep layoffs to a minimum. Permanent employees affected have been notified of this decision. There are 1,264 automobiles and similar vehicles di~ectly under the control of Government departments. There are hundreds more in Crown corporations and other Government agencies. Mr. Speake~, Government has decided to reduce this oversized fleet of vehicles by eliminating all non-essential use built up over the years. We are placing an immediate freeze on the pu~chase of all new automobiles except where absolutely necessa~y. thereby saving Government $1.8 million this year.

In addition, we will be substantially downsizing the fleet, thet'eby achieving additional savings both in capital and operating costs. This long-overdue efficiency measut'e will mean substantial savings for the people of lhis Province. Mr. Speaker, Government will shortly be int~oducing legislation to repeal the Pa~liamentat"y Commissione~ (Ombudsman) Act. In Government's view, the number and substance of complaints investigated by the Ombudsman and his staff do not warrant an office costing $236,000 annually.

In future, complaints against departmental actions will be bt"ought directly to Ministet"s and to the othe~ Members of the House of Assembly. No. 5 R9

Many of the expendi tut"e t"educ tion decisions wet"e vet"y difficult, and were not taken lightly. Other's wet"e pat"t of a vitally important re-evaluation pt"ocess, which we intend to continue tht"oughout out" mandate, whet"eby all progt"arns and set"vices will be t"egulat"ly examined. Only through such a process can we ensure that our 1 imi ted f inane ial t"esources are used most effectively. The expenditut"e plan contained in this Budget continues the efforts of my first Budget to eli~inate spending that is no longer set"ving a useful purpose.

We have further' rationalized and downsized many programs and services. By doing so, we have lessened out" need to borrow and f t"eed up t"esources to address our most pressing exp~nditure pt"iorities. Mr. Speaker, this Government has established tht"ee priority areas for this Budget, three areas which are essential to ensut"ing a better future for our citizens. These · high priorities are economic development, health care and education. We must advance in these areas despite a diminished commitment to them by the Federal Government.

Our attempts to achieve our fiscal goals through sound fiscal management have been interfered with by transfer cuts in the recent Federal Budget. Because of the vet"y real need to sustain funding, particularly for our health care and post-secondat"y education systems, we have, Mr. Speaker, been left with no choice but to recover the shortfall through out" own t"evenue sout"ces. REVENUE MEASURES: This Government does not take L10 March 15, 1990 Vol XLI lightly a decision taxes.

In choosing measures for this delibet"ately avoided measut"es which would additional but"den on able to pay. to raise the revenue Budget, we regt"essive inflict an those least Mr. Speaker', because the Federal Government chose in its recent budgets to cut transfers for health and post-secondary education by over $20 million commencing Apt"il 1, I am announcing today our- intention to implement on August 1 a new tax, to be called the Health and Post-Secondary Education Tax. This wi 11 apply at a general rate of 1.5 per cent to employer' payt"olls in excess of $300,000 each calendar year'.

For primary producers and secondat"y processors in the tht"ee renewable resource industt"ies of fisheries, forestry and agricultur-e, the t"ate will be 0 pet" cent. This measut"e is expected to genet"ate $15 million during 1990- -91 and $25 million in 1991-92. The balance of the EPI:<" shortfall will be recouped from two revenue sources. An additional $5 mill ion in fees and licences will be generated by various measures spread across several departments.

Out" Corporation Capital Tax, which applies to banks, trust and loan companies, will have a t"ate inct"ease of one pet"centage point from 2 per cent to 3 pet" cent, for a $1.7 million revenue gain. This Government recognizes the impact the taxation system has on our economy. To ensure that the taxation system is enhancing rather' than inhibiting our long term economic development strategy based on diversification and small business, the Department of No. 5 R10

.. Finance will complete four taxation studies this year. First, our review of the implications of the proposed GST on Provincial consumption taxes, announced in my last year's Budget, is continuing. Emphasis is being placed on assessing whether broadening the Retail Sales Tax base to incorporate some goods and services presently excluded, while lowering the tax rate to maintain a constant revenue yield, would give the Province a fairer and simpler tax. Secondly, the school tax review already underway will be completed.

For the interim, it must be stated clearly that the existing school tax system will be retained for at least another year. Thirdly, we will be scrutinizing, with a view to possible rationalization, many fees and licences which are annoyances to the businesses and people of the Province, rather than important tax revenues. Fourthly, .the mining tax review begun last year will be concluded. ECONOMIC DEVELOPMENT INITIATIVES Mr. Speaker, this Government will pursue with vigour its sound and rational approach to economic development.

The current fisheries crisis threatens to disrupt the social structure of our rural regions and encumber the substantial investments already made throughout the Province by individuals, businesses and Government in homes, equipment and infrastructure. This Government is determined to see that these investments of hard work and faith in our Province will bring rewards to those who persevere to secure a brighter economic future. A strategy which emphasizes long term, permanent economic development and diversification Lll March 15, 1990 Vol XLI will be one of the principle initiatives of this Government. Mr.

Speaker, this Government has moved to establish an Economic Recovery Commission as the focus of its effort to implement this strategy. Funding of $2.1 million has been provided for the Commission in this Budget compared with $900,000 spent in the shorter period last year.

As a result of consid.erable consultation between the Minister and senior officials of the Department of Development, and the Commission, Government has decided to combine the Newfoundland and Labrador Development Corporal ion and parts of the Department of Development into a new Crown corporation with a mandate to deliver all local development and business programs and services to assist new and existing business enterprises. There will be five region~l offices - ~t. John's, Clarenville, Gander, Corner Brook and Goose Bay, with field offices reporting to them in each region.

This structure will provide one-stop access to Government with a minimum of red tape, for small and medium-sized enterprises requiring assistance and services. It is the intent ion of Government to allow a substantial amount of decision making lo be made at the regional level, in line with an election con1mitment. The new corporation will report directly to the Minister of Development. Mr. Speaker, to cover the additional cost of this corporation an amount of $1 million has been approved bringing its total budget lo $13.9 million this year. Mr.

Speaker, in focus on long this Government No. 5 keeping with our term development recognizes the Rll

importance to our economy of technological change. I am pleased to announce that financial support has . been provided by the Province in the amount of $300,000 for the continued work of the Newfoundland and Labrador Science and Technology Advisory Council. More details of our Government's policy in this area, indicating the role and activities of the Council, will be released shortly. Government looks forward to pursuing on a priority basis new federal-provincial agreements in several areas including tourism and cultural-historical development, forestry and minerals. Tourism Mr.

Speaker, I would like to highlight tourism for its potential positive impact on the economy in rural and urban regions both in the short term and in the long term. This Government has been successful in negotiating a Comprehensive Labrador Subsidiary Agreement with the Government of Canada. The tourism component of this agreement will see $800,000 in new money, cost-shared with the Federal Government, go to various tourism related projects in that region.

Funding is also provided to cover the cost of producing a new tourism marketing video which will reinforce our efforts to portray the Province as a distinct and attractive tourist destination. and special increased. Grants for festivals events will also be sees the Province a This Government not only as destination but seasonal summer also as an alternative. year this all-season tourist During the past Ll2 March 15, 1990 Vol XLI Government provided over $1 million for Marble Mountain.

I am pleased to report today that we have budgeted considerably more funding for the Marble Mountain Development Corporation this year. With this additional investment, we get closer to generating the private sector interest needed to develop this area into an all season tourist resort. The benefits to the local economy and to the Provincial treasury will be substantial. At a time when budgetary funds are scarce, I am pleased to indicate that we are maintaining our tourism marketing budget at an all time high. Trade and Investment Mr.

Speaker, this Government will not ignore the significant opportunities that exist beyond our shores. Particularly do we sei the Pacific Ri~ as a source of investment, a market for our products, and a wealth of business acumen and technical know-how. To enhance our promotional efforts in these nations we are providing $450,000 for an Asian initiative to raise the level of awareness for investment opportunities in this Province. We hope to identify potential joint venture and strategic partnerships as well as new products we can export to these markets.

We believe this initiative offers great potential for the growth of trade and investment. Han. Members shou ld know that hundreds of millions of new investment dollars are entering Canada each year under the Business Immigration Program . Newfoundland and Labrador will be pursuing these dollars under Lh is Asian initiative. Forestry and Agriculture No. 5 Rl2

Mr. Speaker, the base diversified Newfoundland will continue to be the sectors. of a economy resource Funds are provided to continue our forestry programs in anticipation of a renewed Forest Resources Development Agreement with the Government of Canada. The current Agreement expires on March 31, but we are confident that a new Agreement will be concluded shortly. A $12.8 million Forest Workers Training Agreement was signed recently with the Federal Government.

This unique arrangement will see over $3 million spent annually over the next four years to train over 300 young men and women in many aspects of forest work, especially silviculture. Funding is provided to complete the work of the Agri-Foods Task Force. This Government believes that we have not yet reached our potential in agricultural production. The report of the Task Force should assist Government in implementing a long term development strategy. Mining Geoscientific surveys carried out by the Department of Mines and Energy have played a major role in the increase in mineral exploration in the Province.

Last year, when the continuation of federal cost sharing was in doubt, we increased funding to maitnain this important activity. Government will continue these surveys this year, although the level of activity will be reduced in keeping with our current program of fiscal restraint. We anticipate that the new Mineral Development Agreement, now in the final stages of negotiations with L13 March 15, 1990 Vol XLI the Federal Government, provide additional funding these surveys. will for Fishery Mr. Speaker, the state of the fishery is of deep concern Lo the entire Province. I will not tL-y to minimize this concern.

At least some segments of the fishery, some plants and some communities are facing very lean and unsettled times. This troubles me and the other Members of this Hon. House, not only because we have the responsibilities of Government, but also because we have family and friends in these communities, and because we share the strong attachment our people have to their home and to their Province. But there will be a fishery next year. Plants will open and people will be employed. The same is true for the year after that, and for as many yeat"s to come as any of us can realistically foresee.

This Government will continue to support and encout"age Lhat fishery, and remains reso lu Le ly committed to the fishing industry's being one of Lhe cornerstones of our economy. In this regard, funding is to operate four new Service Centres. Funding Fisheries Loan Board for approved Marine to the incentives and assistance will be maintained. Cost-shared spending undet" the Canada/Newfoundland Inshore Fisheries Development Subsidary Agreement will increase by 25 per cent to $3.7 million.

The fishet"ies component of the Labt"ador Subsidary Agreement will provide $7 million of support to the industt"y over a five year period. Current and capital No. 5 R13

expenditures of $1.5 million have been earmarked for this fiscal year. Details of the fisheries component of the Agreement will be announced in the near future. Government is confident that this initiative will have extremely positive implications for the Coastal Labrador Fishery. For the first time, Mr. Speaker, provision has been made in the Budget to facilitate the distribution of surplus fish landings during the glut season, and to distribute fish to processing plants in Labrador. An amount of $300,000 has been allotted. SOME HON. MEMBERS: Hear, hear! DR.

KITCHEN: While we are determined to maintain our financial support for the industry, the shortage of fish stocks and consequent reduction in quotas will require an additional response. This Government already has acted by implementing th~ Adjustment Program for Fish Plant Workers which will provide $9 million to ensure that workers in the processing plants in Trepassey, Grand Bank and Gaultois will have an adequate notice of termination. The magnitude of the supply crisis for some communities, however, goes beyond what the Province of Newfoundland can be expected to bear alone.

Nor should we have to bear this alone because the supply crisis is not of our making. The jurisdiction and responsibility to manage the stock lies with the Federal Government. They have to accept the reality that their quota reductions have led to dire consequences that threaten the Ll4 March 15, 1990 Vol XLI very existence of entire communities in this Province and throughout Atlantic Canada. It is not the fishermen, plant workers or fish companies who control the state of the stocks, yet il is they who suffer from the mismanagement of the resource. The responsibility of the Federal Government to act is clear.

One-industry communities cannot be expected in the short time given to absorb the shock of drastic quota reductions. Last week's Throne Speech clearly outlined this Government's position with respect to the supply problem in the fishery. We have already indicated t.o the Government of Canada that the Province is prepared, within its financial capability, to share the cost of a comprehensive f lsheries revitalization and economic diversification program. A broadly based economic response program must be implemented to address the social and economic consequences of the stock rebuilding process.

This Government will continue to press for federal action. HEALTH CARE INITIATIVES: Mr. Speaker, this Budget reflects Government's continued commitment to the health care system. The budgetary allocation to health will increase by $74 million, a growth rate of 10 per cent over the 1989-90 fiscal year. SOME HON. MF.MBERS: Hear, hear! DR. KITCHEN: In the recent Throne Speech, the Government outlined its concern about the considet"able pt"essut"e that has been exerted on the health system in r-ecent year-s and No. 5 Rl4

indicated that planning is now underway to develop a f~amewo~k for a comprehensive new community Health Care Program. Government is concerned about beds being closed in medical facilities throughout the Province, due to insufficient funding. Mr. Speaker, in this Budget, we have made funding available to these institutions to enable them to open eighty-eight of those beds. This year, additional funding will be p~ovided to the General Hospital to enhance critical care services, with particula~ emphasis on cardiac su~gery.

I am pleased to announce that the General Hospital will receive funding to open fifteen additional beds, including four beds in the newly redeveloped critical care area. A total of forty additional beds are being opened at hospitals in Gander, G~and Falls and Corner Brook. Government also recognizes the pressures on the Province's nursing homes, particularly in view of the changing demographics of our society. To assist in meeting the ever increasing demand for chronic ca~e in nursing homes, funding will be p~ovided to enable the Agnes Pratt Home to open thirteen additional beds.

Also, funding will be provided to open twenty additional beds at the Dr. Hugh Twomey Health Cent~e in Botwood. SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: Mr. Speake~. Government continues its commitment to inc~ease the number of nu~sing positions in the health care system. In my last Budget, I announced the Ll5 March 15, 1990 Vol XLI establishment of a minimum of forty-five new nursing and resident care positions in the health system. I am pleased to announce today that another thirty-three nursing positions will be approved for the health system by October 1.

As well, effective April 1 funding will be provided for thirty--two additional residential care staff for the Province's nursing homes. All of these nursing and other positions are in addition to those requi~ed to open the eighty-eight beds refer~ed to previously. Additional funding is p~ovided to assist in integrating child~en with disabi litles into the regula~ school system and to met their special health care needs. This year, in coope~ation with Health and Welfare Canada, the Department of Health will commence a five-year initiative to address cardiovascular disease through public education and prevention.

Also, funding will be p~ovided to expand our initiatives in public education with respect to AIDS prevention. The Government recognizes Lhe importance of the services p~ovided by the Newfoundland Cance~ Treatment and Resea~ch Foundation. I am very pleased to announce a joint venture with the Cancer Foundation under which Government will provide $5.4 million of the projected $6.9 million adjacent Center. cost to of the SOME HON. MF.MBERS: Hear, hear! DR. KITCHEN: new facilities, Health Sciences In 1990-91, $1.9 million of the Gove~nment's commitment would be No. 5 RI5

provided to enable this project to get underway. As a further. step in rationalizing health care services on the Burin Peninsula, I am pleased to announce that funds are being provided for the planning of a new community health centre for Grand Bank and for a new 40 bed nyrsing home in St. Lawrence. Planning funds will be provided for the redevelopment of James Paton Memorial Hospital in Gander, for the redevelopment of Brookfield Hospital, for new community health centres and long term care facilities at Burgeo and Port Saunders, and for the redevelopment of the Interfaith Senior Citizens Home in Corner Brook.

The Government will also be taking preliminary steps to assess the manner in which the need for nursing home facilities in the Port aux Basques area can best be addressed. Also, funding is allocated for the completion of the Roddickton Community Health Centre. SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: Mr. Speaker, million will be Budget to improvements in system. in total $22.8 allocated in this support capital the health care EDUCATION INITIATIVES Mr. Speaker, education is a key component of this Government's long term economic strategy.

We are committed to improving the quality and accessibility of educational opportunities throughout the Province. The measures announced today will enhance the efficiency and equity Ll6 March 15, 1990 Vol XLI of our education programs. Funding has been provided to increase the per pupil operating grants to school boards by 4 per cent. The School Tax Equalization Grant will be maintained at $10 million this year, up from $4.5 million in 1988. The budget for building and equipping schools will be $27 million, including $1 million for making school buildings more accessible to people with disabilities.

As well, there will be a $200,000 increase in scholarship funding for secondary school students. SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: Mr. Speaker, I am pleased to announce that we are making an additional $1.7 million available for student aid, which represents an 11 per cent increase in funding over last year. Government's recent White Paper on post-secondary education presents proposals to improve greatly the equality, excellence and efficiency of the post-secondary education system in this Province.

Consistent with the high priority placed on education, capital funding is provided for the planning of both the Cenleal Newfoundland Campus and the expansion of the Grenfell College in Corner Brook. SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: The $10 million capital budget for Memorial University includes provision for an extension to the Arts and Administration Building, improvements to the Schools of Pharmacy and Nur-sing, as well as No. 5 Rl6

for the construction of a facility for small animal care. Funding of $1.7 million is allocated ·to commence the construction of an $8 million extension to the Fisher Institute in Corner Brook. SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: Planning funds have been provided for a Centre for Engineering Technology in St. John's. The capital budget for the Marine Institute , will exceed $10 million. These include funds for the establishment of a Simulator Training Centre and an Offshore Survival Centre, both to be financed primarily from the Offshore Development Fund. Mr.

Speaker, I am pleased to announce that this year Education's total capital budget will be $60 million. The Department of Education will work with the education community to develop and implement specific measures to improve efficiency and cost-effectiveness. Mr. Speaker, the Department of Education has launched a major initiative to prepare high school students to meet the modern challenges of mathematics, science and technology, by using savings achieved this past year to purchase computers and other instructional materials.

This $2 million initiative, $1.5 million of which was for computers, will result in a significant improvement in the quality of high school education in the Province. OTHER INITIATIVES Government Pension Plans Ll7 March 15, 1990 Vol XLI Mr. Speaker, in the 1989 Budget . Speech, I expressed Government's concern with the financial condition of the four pension plans covering public servants, teachers, uniformed services personnel and MHAs. Because of this concern, Government appointed a Commission of Enquiry On Pensions to review the plans.

The final Report of the Commission should be ready for Government's consideration in the very near future. I am confident that this Report will be an essential ingredient in Government's formulation of appropriate measures to resolve the financial difficulties being experienced by the pension plans. With the financial position of Government's pension plans in mind, Government has decided to make an immediate special payment of $21 million into the Pension Fund in 1989-90.

This payment, made during a time when the Province's economy is feeling the effects of problems in the fishery and a general slowdown in other areas, should give a clear indication to all employees of Government's commitment to doing its share towards putling the pension plans on a sound financial basis. SOME HON. MEMBERS: Hear, hear! Mr. Speaker, in view of the fact that the Commission of Enquiry Report is not yet available, Government has decided to defer for the time being any decision regarding increases to pensioners.

This subject will be addressed in the near future after reference to the Commission's Report and in the context of possible indexation of Government's pension plans. No. 5 R17

Social Services Mr. Speaker, Government views with alarm the dramatically increasing incidence of child abuse referrals in this Province. Child abuse is not a new phenomenon and neither is it unique to this Province. A large segment of our society now appears ready to report openly and to discuss this complex and unacceptable problem. Accordingly, I am pleased to announce that funding has been provided in the Budget for 50 new front-line positions in child welfare services. Government is committed to improving the quality and quantity of services to those who need assistance of various kinds.

To this end, I am pleased to announce that allowances paid to social assistance recipients will increase by four per cent, effective May 1. Allowances for foster parents will also increase by four per cent while the clothing allowance for foster children will increase by 20 per cent. SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: Mr. Speaker, $8.3 million has been provided to accelerate construction of the new young offenders· facility at Whitbourne. Mr.

Speaker, one of the great success stories of this Province is the outstanding community service provided by an organization called the HUB, which provides jobs, recreation, and personal services to physically disabled persons. We are aware of the extremely crowded conditions under which they presently operate. I am, therefore, very LlB March 15, 1990 Vol XLI proud to announce that to assist them to provide additional opportunities to those among us who are physically disabled, this Government is enabling the HUB to extend their building by providing a capital grant of $1 million. SOME HON. MEMBERS: Hear, hear!

DR. KITCHEN: The Department of Social Services is one of the most decentralized departments in Government with 53 offices located throughout the Province. We have approved the development of a major computer system to facilitate and further enhance the delivery of social services and programs to all regions of the Province. Justice Mr. Speaker, both the Royal Newfoundland Constabulary and the Royal Canadian Mounted Police are faced with increased workloads, including cases involving child abuse.

Government is committing sufficient funds for the deployment of up to five per cent more police officers across the Province. This will be accomplished through the hir-ing of additional officers and the more effective re-deployment of existing officers now performing civilian work. This measure, combined with the allocation of additional resources for front-line social work positions, represents a major step in the prevention of the abuse of children, and will provide additional resources to assist the police forces in all areas of their work. Employment Initiatives Mr. Speaker, Government will No. 5 Rl8

,_, continue to provide several programs to help women, students, older workers and youth take advantage of job opportunities. We will adhere to the objective of creating meaningful, long term employment for all of our labour force. The Graduate Employment Program to help post-secondary education graduates obtain job related experience will continue. The Provincial Government will participate in the joint Federal-Provincial Program for Older Worker Adjustment.

Provincial funding will continue for the Canada-Newfoundland Employment Strategy Program, with major emphasis being placed on enabling people in the 16 to 24 age gL·oup to make the transition from school to work. Funding is provided through this program for the ongoing development of a Provincial Career and Labour Market Resource Centre. A computer network will ensure that career and labour market information is easily accessible in all areas of the Province. Women's Issues This Government ls firmly committed to improving the economic and social well-being of women.

The Budget is providing $6.3 million to support pay equity in the health sector. Operating funding of $100,000 is provided for a new transition house in Gander. Eligibility criteria have been modified to enable more single--parent families to obtain subsidized day care. Changes in the student aid program will provide for single parents and married students additional funding estimated to reach $500,000.

There is more money for L19 March 15, 1990 Vol XLI programs to assist women obtain employment, including $500,000 for the Women in Successful Employment Program, a program of flexible learning, counselling and other self-development assistance. There will be a continued funding of $300,000 for the Newfoundland and Labt"adot" Advisory Council on the Status of Women and for the Intet"agency Committee on Violence Against Women. These and other initiatives, Mt". Speaker, demonstrate this Government's continued commitment to women's issues. Tt"anspot"tation Mt".

Speaker, this Government wi 11 continue its efforts to improve­ the Province's road system through an extensive construction program. We have pcovided $80.5 million for further road upgt"ading, primarily of the Trans Canada Highway, under' the ERDA agreement and the Newfoundland Transpot"tation Initiative. Expenditures under the Provine ial Road and Bridge Program will total $30 million this coming yeat". Under' the Co.mpt"ehensivP. Labradot" Subsidiary Agreement, we are providing $3 million fot" the Chat"les River Bt"idge at Lodge Bay Labrador'.

This Govet"nment ls pt"oviding improved ferry set"vices to the island communities of the Province. We at"e entering the second year' of a tht"ee yeat" plan to t"educe mat"ine services rates to equivalent road transpot"tation costs. Construction will begin on a new ferry with ice breaking capabilities for' the Fogo Island service. The vessel will be built at the Marystown Shipyard at a cost of $24 million, $4 million of which will bP. spent this coming year. Also, $12.5 million is No. 5 Rl9

allocated for the operation of the Provincial ferry system. Municipal Capital Program Mr. Speaker, Government will support the expenditure of $55 million this year on water, sewer and paving projects in communities throughout the Province. Details have already been announced to facilitate early tendering and construction. Crown Corporations Government has approved a capital budget of $98.7 million for the Newfoundland and Labrador Housing Corporation. These funds will be used to deliver over 300 new social housing units throughout the Province, and to upgrade approximately 2000 homes through the RRAP program.

Newfoundland and Labrador Hydro expects to spend $97 million on capital projects to imptove electrical generation and transmission facilities. CONCLUSION Mr. Speaker, this Budget has been prepared within an environment of adversity. The fishery is beset with serious problems. The economy is slowing in other areas, though it is not without its bright spots. The Federal Government's high interest rate policy is restraining business in parts of the country, like Newfoundland, where restraint is not needed.

The recent Federal Budget has reduced EPF transfers for health and post -secondary education services, at a time when the need for those services is great. And, we will feel the impact of the GST in this Budget year, an impact which we know will L20 March 15, 1990 Vol XLI be considerable in many different ways. Despite this difficult environment, the Government has taken important initiatives towards achieving its objectives in economic development, health care and education.

We have shown our sincere commitment to solving the problems of our pension plans by making a sizeable special payment into the Pension Fund. We have restrained Government's operating expenditures both by general cuts across departments and by specific measures to eliminate wasteful and unproductive expenditures. And where we have raised additional revenues, we have done so without regressive tax measures. SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: In

summary, Mr. Speaker, the fiscal and economic plan contained in this Budget is based upon a prudent and realistic assessment of what we can achieve over the coming year. We are refocusing both the substance and the delivery mechanisms of Government's programs to meet lhe needs of the people of this Province. Mr. Speaker, a major transformation of the Province's economy cannot be achieved overnight. This Budget clearly demonstrates, however, that the groundwork has been set for creating a stronger economy and a meaningful and productive lifestyle for Newfoundlanders and Labradorians in all regions of the Province. Thank you, Mr. Speaker. No. 5 R20

SOME HON. MEMBERS: Hear, hear! DR. KITCHEN: Mr. Speaker; I move that the debate be adjourned until tomorrow, Tuesday, March 20. On motion, debate adjourned until tomorrow, Tuesday, March 20. MR. SPEAKER: The han. the Minister of Finance. DR. KITCHEN: Mr. Speaker, I wish to inform the House that I have received a message from Hisc Honour the Lieutenant-Governor. MR. SPEAKER: All rise. The following message is Government House, dated 15th, addressed to the han.

Minister of Finance. ft"om March the "I, the Lieutenant-Governor of the Province of Newfoundland, tt"ansmit estimates ["equi["ed fa[" the public service of the Province for the year ending the 31st day of March 1991, in the aggt"egate of Two Billion, Seven Hundred and Seventy-Two Million, Three Hundred and Thirty-Seven Thousand Three Hundred Dollars ($2,772,337,300) and in accordance with the provisions of The Constitution Act of 186 7, I recommend these estimates to the House of Assembly. ( Sgd.) Lieutenant-Governor" We will· take a few moments to dist["ibute documents to all han. Members. Order, please!

The han. the Ministe[" of Finance . L21 March 15, 1990 Vol XLl DR. KITCHEN: Mr. Speaker, I move that the Message together with the Estimates be ref