Manitoba Hansard — 13 May 1971 (Sitting 39, 29th Legislature, 3rd Session)

29-3-39

Manitoba — Debates (Hansard)

THE LEGISLATIVE ASSEMBLY OF MANITOBA 8:00 o'clock, Thursday, May 13, 1971 INTRODUCTION OF GUESTS 909 MR. SPEAKER: Before we proceed I should like to draw the attention of the honourable members to the gallery where we have 50 students of Grade 9 standing of the Arborg Junior High School. These students are under the direction of Mr. Schneider. This school is located in the constituency of the Honourable Member for St. George. On behalf of all the honourable members of the Legislative Assembly I welcome you here today. The Honourable Minister of Finance. BUDGET ADDRESS MR. CHERNIACK: Mr.

Speaker, the Province of Manitoba has entered its second hundred years of participation in the Confederation of Canada. Yet, as the 70's begin, this country is still confronted with major defects in our economic and social system. The failure of present policies are revealed in the mass unemployment of workers, the desperate plight of such primary producers as our farmers and fishermen, the hardships endured by the neglected poor, the squalor of the slums, and the pollution of the environment. In acute form, it is underscored by our inability to provide meaningful opportunities for our youth.

Before outlining the intentions of this government for 1971-72, I want to review some general philosophical considerations that underly the development of programs and policies by this social democratic government. It is a goal of this government to direct Manitoba 's economy towards the needs of all of the people, rather than those few who possess power because of their wealth or influence. We are committed to win the fight to root out inequity, and to achieve a humane society that re sponds, through the democratic process, to the actual needs of all of our citizens.

The Government of Manitoba firmly believes that society's first obligation is to alleviate the condition of the millions - yes, literally the millions - of Canadians who are now living in conditions of economic, social, and cultural misery. The policies of the old-line parties have shown that when in office, they are the spokesmen of the privileged and the elite. The results of their policies are all too obvious in the inexcusable disparities in income, education, housing, health and social development throughout this land.

The results have also meant the existence of far too many alienated groups in Canada; the native people, the pensioners, the rural poor, the urban poor, and perhaps the most tragic group of all, young people, students and dropouts alike, who are completely dissatisfied and disillusioned with the economic and social order, and are frustrated by the refusal of governments to reorder their priorities. The essence of this social democratic government is to promote the equality of the human condition. This objective, to seek greater equality for all Manitobans, is the common theme of all this government's policies.

It is evident (and I will elaborate on this later), in our redirected health and social development programs; in our revitalized goals for rural and northern development; in our new agricultural projects; in our emphasis on public housing construction; in our urban reorganization plans directed to equalization; and, of course, in our reformed taxation policies based, as much as possible, on "ability to pay". In order to achieve needed reforms, a pattern of nationwide economic and social criteria must replace the narrow tests of individual profitability that now guide most of our public decisions.

For many years, social philosophers have been warning us that society faces a glut of private goods and a famine of public goods. The truth of these warnings is self-evident today. While our stores are jammed with every kind of electrical gadget and toy, governments from the old-line parties attempt to place arbitrary limits and ceilings on the great social programs such as medicare, hospitalization and education.

Even where the gross national product increases each year, we are told that there are not sufficient funds for policies and programs aimed at eliminating regional disparities and for bettering the condition of the one fifth to one-quarter of all Canadians who presently exist on poverty incomes. We are living in a system in Canada that has led to an absurd imbalance.

We are lavish in the production of things that add little to the welfare of all Canadians - such as competing soaps, yearly car model changes, three supermarkets in the same shopping centre, three or four gas stations at the same intersection, extravagant advertising expenditures that sell but do not inform, and general built-in obsolescence. At the same time, we skimp on all goods

910 May 13, 1971 (MR. CHERNIACK cont'd.) ••••• and services that are provided collectively; that is, on schools for education, hospitals for health, urban renewal projects, pollution control, low cost housing and all forms of social services. This government rejects this chaotic condition and is prepared to work for the development of a system in Manitoba, responsive to the public needs and concerned with overall public social and economic objectives.

Naturally, in a con federal arrangement, the efforts and resources of one provincial government are restricted and we can't always achieve, immediately, as much as we would like to achieve. However, we shall at least shape the direction of our objectives and attempt to accomplish them step by step. Let me be clear regarding the technical apparatus the Manitoba Government intends to employ in developing a more equitable society. This government accepts the advantages of a mixed economy.

We do not advocate the wholesale substitution of public for private ownership, though, as in auto insurance, we shall continue to advocate public ownership by the people of this province where necessary and desirable. The crux of things is that there are areas of desirable economic and social activity where the criteria of private profit alone is not sufficient to determine progress. Given the present economic system, this does not mean that the private sector should be faulted for its criteria of profitability.

However, response to unmet social and economic needs requires the development of co-ordinated planning that will involve the people themselves. Such planning cannot be achieved through private, unco-ordinated activity. This government believes that government must be activist, an initiator of events, at times an initiator of enterprise as well, and not merely a passive last recourse in failing circumstances. An excellent example of the lack of public planning by successive federal governments is the steady erosion of our national economic independence.

No other country in the Western world has allowed so much of its natural resources, of the ownership of its industry, and of the decision-making power of its economy to fall into foreign hands as Canada has done. We should not blame the Americans, the Japanese or the British. for gradually taking over our firms and industries. One can't help but observe that governments have quietly acquiesced in the lack of planning, control, and knowledge that has determined the foreign domination of our economy.

As a still better example, there is the current illustration of policies not concerned with planning and equity, namely the massive and socially destructive unemployment crisis delib erately created by the Liberal Government in Ottawa. It is of little satisfaction, to me, to point out that this government predicted a year ago, precisely the consequences that would follow from the policies that the federal authorities stubbornly imposed upon the national economy. To predict a disaster is not to avert a disaster; only now does it seem that the truth of the prediction is being understood.

Two ex-cabinet ministers of the federal government have denounced federal policy in terms even harsher than anything this government has said. This past winter, Canada experienced the largest levels of unemployment in a decade, with unemployment figures registering far over two-thirds of a million people, numbers that when translated in terms of family support meant that anywhere from one to two million Canadians were immediately affected by the federal government's destructive economic policies. It is the poorest, weakest and the most alienated in our society who have borne the brunt of these calamitous events.

There should be only one policy by the government of Canada that is acceptable to Canadians, and that is a commitment to full employment, as it is defined with unemployment not more than the 3 percent level recommended by the Economic Council of Canada. The disaster that has been brought upon us by the abandonment of full employment as an over-riding goal, has already shown what heavy unemployment does to individuals and communities alike. The waste of goods, the pointless hardship'"" these things have been visible again this winter as they have not been visible for many years.

The Government of Manitoba calls upon Ottawa to remember its promises of a quarter century back, clearly articulated in the 1945 White Paper on Employment and Income, when Canada was assured that the elementary lesson had been learned that full employment must be a foundation for a decent and humane society. While recognizing the need to control inflation and rising prices, last June at the Minis ters• of Finance meeting here in Winnipeg, I suggested alternative federal policies that could be developed. The present policy of deliberately creating mass unemployment must be rejected, and emphatically.

May 13, 1971 911 (M R. CHERNIACK cont'd.) Clearly, the efforts of the Government of Manitoba to give full dimension to our policies have been restricted by the federal government's war on inflation - in the form of unemploy ment for many of our citizens and limited federal support for public programs. The Budget Address that I present to you tonight spells out in specific terms the intentions of this government for 1971-72. The usual practice of tabling an economic review will be followed, and accordingly, I have made copies available for distribution to Honourable Members.

The Budget and the Economic Review have been framed in the context of economic circum.-· _ stances which, despite the damage inflicted by federal government policies, shows some sign of recovery. EMPLOYMENT: The Government of Manitoba made explicit provision for the looming crisis in employment as long ago as the Spring Legislative Session of last year. At that time, special "general purposes" authority was established as a capital reserve to fight unemployment.

Thus, when it became obvious that the federal government was not prepared to act, despite the urgings of many concerned citizens, the Manitoba Government took action to stimulate economic activities in the province and the capital program was immediately utilized. In a series of major policy statements by the Premier, the time-table of provincial capital works of housing, of municipal works, and of various lesser items were quickly accelerated. We would not sit idly by waiting for the federal government to correct the consequences of their economic policies while the jobless figures continued to mount.

Naturally, any pro vincial government's ability to remedy massive unemployment is circumscribed by the openness of a provincial economy and the limited range of its fiscal and monetary powers. In a rational world full employment would be the assumed result of policy at the federal level, for this is where the powerful instruments of control exist. Nevertheless, the province has done and will continue to do what it can to overcome Ottawa's dereliction.

A very rough estimate of the cost to the national economy of the federal crusade against inflation has been approximated at $4 billion a year by the Chairman of the Economic Council of Canada. We estimate the corresponding cost to the Manitoba economy, was about $150 million a year. The human counterpart is found in the hundreds of thousanda of Canadian citizens who have lost their jobs and whose families have been so often exposed to hardships that are no fault of theirs. It has been expressed in financial terms in the crisis of escalating welfare costs that provincial and municipal governments have faced.

If the federal government continues to ignore or dismiss the situation and accepts the unemployment levels which ranged from 5% to 6% throughout this year, it will compound its drastic errors. Manitoba, as a result of this government's early and decisive response to alleviate unemployment significantly cut the unemployment which had been forecast for the province for the period 1970-71. Let me just mention here, Mr. Speaker, that the current statistics on unemployment released this morning, reflect the seriousness of the situation.

As my colleague, the Minister of Labour reported to this House this afternoon, the seasonally adjusted national unemployment rate jumped from 6% to 6. 7% of the labour force, and actual unemployment in fact rose by 9, OOO persons, from 650 thousand to 659 thousand, in a month when it should have fallen for seasonal reasons by 60 thousand or more. In Manitoba, against this dismal federal background, the situation actually improved for the third month in a row. Unemployment fell from 20 thousand to 18 thousand, or in percentage terms, from 5. 4% to 4. 8%.

The fact is that rational expansionary policies at the provincial level have caused this notable difference in performance. Together with all other provinces, we are dependent on the overall approach toward monetary and fiscal matters exercised by the federal government. The federal Summer Budget must announce decisive action to combat unemployment. To do otherwise would be to risk the danger of further injuring the economy as well as sacrificing the future of a multitude of Canadians.

POVERTY AND HUMAN DEVELOPMENT: The Government of Manitoba has taken as a special mandate the responsibility to respond to hardships experienced by the sick, the aged, the needy, by all those who are

912 May 13, 1971 (MR. CHERNIACK cont'd.) ••••• disadvantaged and alienated from our society, We consider that one of our major tasks is to clarify and articulate the problems that the disadvan taged face, so that coherent solutions can be found; solutions that are properly proportioned to the scale of the problems and that are technically efficient in form.

It is our hope that through our programs and policies it will be possible eventually, for every Manitoban to be assured of the services that are essential to his or her well-being, We believe that the social policy of the federal government's, as indicated in its White Paper on Income Security, is completely inadequate.

Existing piecemeal social development programs should be transformed into an integrated income security system, The implementation of an adequate guaranteed income scheme should be carefully considered, Such action would estab lish once and for all satisfactory minimum income standards as a right for all Canadians.

In regard to existing social development services in Manitoba, legislation was passed at the last Session lowering eligibility criteria so that provincial assistance would be available for more needy persons and families, More recently, Manitoba was one of only two provinces which passed on directly and in full, the benefits accrued by recent increases for old-age pensioners with guaranteed income supplements, As a result of these actions and the more responsive policies of this government taken together with the more flexible administrative attitudes of the Department of Health and Social Development, more people in need are getting help faster.

I am informed that the Department of Health and Social Development has adopted a planning approach to its operations and has conducted several basic research studies into important health and social service areas, The first major attempt in Manitoba to rationalize the overall health and social services for a key segment of the province's population is implicit in the study now underway by the Department to determine the needs of our elderly citizens, Other priorities are being responded to: programs to protect and to salvage the environ ment are being expanded; new techniques for teaching and learning, to make education acces sible for all, are being investigated; our legal system is being reviewed so that it may more adequately reflect compassion in the provision of justice; many more methods of informing, educating, and directly protecting consumers more fully are being considered, As announced in the Throne Speech, the government intends to provide the funds for new and expanded pro grams at all levels for Manitobans of native ancestry, The list goes on and on, HOUSING: There can be no doubt that the lack of adequate public housing for Canadians should be an urgent government priority - particularly in view of the dire state of the economy.

Certainly, the situation presented a clear opportunity for the federal government to ameliorate the unfor tunate consequences for the unemployed. However, instead of taking any positive action in its December Budget, the federal government provided only a very small increase to the Central Mortgage and Housing Corporation's budget, This federal increase amounting to $40 million was less than the estimated initial expenditures of $55 million planned by the Government of Manitoba for a major provincial public housing program in 1971.

Although cutbacks were necessary from our original plans, due to the refusal of funds available from c. M. H. C, , the Government of Manitoba has gone ahead with a massive public housing plan for 1971, It will amount to estimated expenditures of $33 million, by far the largest in the history of this province, In percentage terms, this represents an increase of 154% from 1970, when estimated expenditures for public housing amounted to $13 million.

The number of housing units represented by this commitment in 1971, is in excess of 2, 200, an increase of 107% from 1970, when 1, 065 units were built, and an increase of almost 1, 000% from 1969, when 201 units were constructed, In total for 1971, the Manitoba Government has committed an estimated $63 million in regard to housing or projects associated with housing, REGIONAL DEVELOPMENT: There are other commitments that the Government of Manitoba believes are of the utmost importance such as supporting the aspirations of the regions within _the province, In regard to the North, the Northern Task Force, a special committee of the Legislature has made progress towards meeting its objective of developing a process to find workable solutions to northern problems within a planned-approach and strategy.

May 13, 1971 913 (MR. CHERNIACK cont'd.) A joint announcement in April by the Premier and the Minister of Mines, Resources and Environmental Management together with the President and Vice-President of Sherritt Gordon Mines Limited confirmed that a new townsite for about 3, 500 people is to be developed near Sherritt Gordon's Ruttan Lake mining properties under arrangements without precedent in Canada. Previously, such townsites have operated under agreements by which the mining com panies were to provide certain community assets in return for special local tax concessions.

Under the arrangement for the new townsite, the assessable surface property of Sherritt Gordon will be placed on the local tax roll for all taxation purposes. The new townsite will be located near Leaf Rapids on the Churchill River. Under our five-year agreement with the Federal Department of Regional Economic Expan sion, the government began last year to locate infrastructure in and around The Pas which will help it to develop as an urban-transitional centre. We anticipate more negotiations with DREE regarding the provision of basic infrastructure in other key regional centres throughout Manitoba.

In the Interlake area, the plan based on the Fund for Rural Economic Development - FRED - continues to show progress. The original Agricultural Redevelopment Act Agreement ARDA - expired in 1970 but projects initiated under that Agreement are being carried forward to completion in the present fiscal year. A new five-year ARDA Agreement is under negotia tion, as is a special agreement for projects in remote areas. The Government of Manitoba has stressed the importance of achieving balanced regional development in the province and the need to evolve selective actions within a comprehensive plan.

We want to promote the development of more secondary and processing industries in Manitoba related t.o the province's supply of natural resources so that our citizens may benefit from the exploration of our resource wealth. AGRICULTURE AND FISHERIES: In the field of agriculture and fisheries the Government of Manitoba has challenged the recent federal approach to those of our people who choose to live in agricultural areas, and the federal emphasis on the need to move farmers out of farming.

The Manitoba Minister of Agriculture has expressed repeatedly our dissatisfaction with current federal agricultural policies. Economic conditions on Manitoba farms became so depressed last year that our Minister approached the federal government with an offer to jointly make immediate cash payments to farmers. The federal government refused to participate in this joint action, and the farm problem became even more acute.

The Government of Manitoba felt morally obligated to undertake a program of its own to help ameliorate the existing situation, and to remind the federal government of their obligation to the farmer. So we have provided cash payments to Manitoba farmers amounting to one dollar per acre up to 100 acres per farm for which legislation was passed authorizing provincial expendi tures up to $4 million this year.

In no way should this program be considered of a continuing nature, and although it does not adequately meet the long-range needs of the farm community, it does provide help in easing the current low cash income position of Manitoba's farmers. The Government of Manitoba has been particularly concerned about the plight of unem ployed fishermen in the province whose livelihood was abruptly halted by the discovery of mercury pollution in many Manitoba lakes.

Last December, the Premier announced a series of winter projects to provide jobs worth $380 thousand, for the fishermen and those involved in shore operations in the Cedar Lake-Lake Winnipeg area, who were unable to engage in their usual occupations because of the fisheries pollution problem, Funds for this program were provided on an equal basis by the provincial and federal authorities with a total value equal to the approximate net dollar value of the last normal fishing season on the affected lakes. This program was considered a very high priority by the Government of Manitoba.

We will continue to press for additional programs and for more adequate long-term compensation for the fishermen.

914 May 13, 1971 (MR. CHERNIACK cont'd.) LOCAL GOVERNMENT - EQUALIZATION/PARTICIPATION: The Manitoba Government is intensely aware of urban need in a province characterized by its single major metropolitan centre and has committed itself to a meaningful and effective provincial-municipal partnership. This partnership is implicit in our proposals for the urban reorganization of the Greater Winnipeg area. It also underscores our conviction that the federal government must participate fully if the modern urban challenge is to be met adequately.

The equity sought in these partnerships is dependent initially on fiscal equity. Accord ingly, the Government of Manitoba has proposed the unification of the tax bases presently available to local governments in the Greater Winnipeg area. Through the unified tax base, disparities in property tax burdens that result from unequal distribution of tax resources and responsibilities should be eliminated. Under the new regional government property tax rates in the Greater Winnipeg area will be fully equalized for general municipal purposes and substantially equalized for educational purpos�s.

The Government of Manitoba firmly believes that the proposed establishment of com munity committees is fundamental to local government reorganization in the Greater Winnipeg area. These committees will provide citizens a direct contact with elected representatives on a better balance to population, and will ensure to residents the opportunity to participate in reaching decisions about plans for their community. We recognize that the community committees concept will only be effective if the people and their elected representatives work at the task.

Surely, this is the basic criterion for achieving success in any responsible government. I'd like now to deal with Federal-Provincial Relations. COST-SHARING PROGRAMS: As I reported to this Assembly on the occasion of my last Budget Address, the major joint programs have become the object of intensive analysis and negotiation in recent years. There has been general agreement among all governments that measures must be implemented to ensure adequate control over the expenditures of public monies involved in many of these programs.

However, on the question of the ways and means of effecting these controls, and on the basic rationale for the controls themselves, the positions of the Government of Manitoba and the Government of Canada have diverged significantly. In mid-1970, as I informed the House during our last Session, attempts were made by the federal government to obtain agreement among the provinces for the imposition of arbitrary percentage ceilings on shared expenditures in the coming year.

Honourable Members may recall that, on the occasion of the Ministers of Finance meeting here in Winnipeg last June, I reported that Manitoba had rejected these federal "guidelines" proposals on the grounds that the application of simplistic and rigid arithmetic rules in areas of such vital importance to the citizens of this province constituted an outright denial of the responsibilities of both governments to reduce disparities in fundamental social services.

At the same meeting, Manitoba repeated our Premier's earlier proposal for priority option grants and the government's desire to establish practicable controls - through program rationalization and similar means - in close cooperation with the federal authorities and other provincial governments.

This government argued at that time, and continues to bold the position - a position which in fact has been borne out in every major federal-provincial joint . program cost study - that many of the root causes of rapid cost increases can be traced to manageable factors within the service fields themselves, and that solutions to these problems can be achieved through careful study and joint action.

Regrettably, the Government of Canada bas continued to direct its attention to arbitrary rules for limiting its financial and program commitments in the vital health, social develop ment and post-secondary education fields. New sharing proposals put forward by the federal government in respect of the Hospital Insurance program, Medicare and the Post-Secondary Educational program, lead me to believe that little consideration has been given to the diff er ent service requirements of the citizens of this country.

Within the next few months we expect to be presented with similar proposals for revisions to the Canada Assistance Plan financing arrangements. The extent and levels of health services, of social development services, and post secondary education services for at least a decade ahead will be determined in the very near

May 13, 1971 915 (MR. CHERNIACK cont'd.) ••••• future. It is to be hoped that in the negotiations process, the federal government will recognize the vital importance of the decisions which are to be reached. It is further to be hoped that these decisions will reflect for the first time a truly equitable distribution of the resources of this country and will offset the tendencies to balkani zation that delayed reforms will encourage. TAXATION: In the field of taxation, the Government of Manitoba is gravely concerned about the federal government's present position on tax reform in Canada.

Tax reform is of major importance to every Canadian, and is basic to federal-provincial relations given the fact that the two levels of government share the same tax base. In light of statements made in the last few months by the federal Minister of Finance, it seems increasingly probable that the federal government will introduce tax legislation which will mean a continuation of an inequitable, regressive, and inefficient tax system in Canada, a system in which special privileges will be perpetuated.

In late March, when it became apparent that the federal Minister of Finance could not arrange a meeting with this provincial counterparts before the draft tax reform bill was intro duced in Parliament, I felt compelled to make public a letter to the federal Minister of Finance. That letter reiterated this government's view that the final tax reform package may continue many of the regressive and discriminatory features of the existing legislation. We have strongly opposed these features in the present legislation and obviously could not support them under a supposedly reformed system.

This letter was particularly prompted by recent federal declarations from which I infer that the concept of equity among taxpayers, as well as the fundamental need to relieve the tax burden on all low income groups, have been abandoned by the federal government in the inter ests of what has been called "economic growth". The practical side of this principle of "economic growth", simply means providing special tax concessions to the corporate elite, and to wealthy individuals. A copy of my letter is appended to this Address.

The Government of Manitoba observes that in determining equity and economic growth, as these variables are affected by the system, there is no necessary sacrifice of one thing for the other. The variables are independent and are linked only when policy issues have been illogically framed. Accordingly, we forwarded to the federal Minister a list of our major tax recommendations in order to achieve both equity and a sensible pattern of growth. These are:

(1) The new income tax legislation should be based on tax credits instead of tax exemptions. Since exemptions provide greater benefits to those in higher incomes, a system of tax credits, with attention to marital status, to dependants, to day-care services, would be more equitable.

(2) A comprehensive income concept should be adopted with all forms of income to be included and to be subjected to a graduated scale of income tax based on the ability to pay.

(3) Capital gains should be taxed at full rates in the same way as salaries and wages and other forms of income, with exemptions and particular arrangements to prevent undue hardship for the family farm and the homeowner.

(4) Strict limits should be placed on corporation capital cost allowances, advertising, entertai.m:Ilent and convention expenses.

(5) There should be adequate assurances of sharing revenue increases with provincial governments, with estate and corporation taxation levied and administered across the country by the federal government.

(6) The same treatment for employment expenses should be allowed for wage and salary earners as is now allowed for the self-employed.

(7) Natural resource industries should be taxed on the same basis as other industries, and

(8) There should be a continuation of progressive top rates in the income tax

schedule which would enable the lowering of rates at the bottom of the scale. This government reminds the federal government of the wise words of the Royal Commis sion on Taxation (the Carter Commission) which stated: ". • • a social and political system cannot be strong and enduring when a people becomes convinced that its tax structure does not distribute the tax burden fairly among all citizens".

916 May 13, 1971 (MR. CHERNIACK cont'd.) The federal tax reform legislation is expected shortly and, I can assure every Manitoban that despite the crucial time constraints imposed by. the federal government, the legislation will be minutely examined by this government. With the results of that analysis at hand, we will press the federal government for those changes in the legislation essential to promote fairness and equity in income taxation for all Canadians. We hope to be able to present to this Assembly - before the end of this year - amendments to the Manitoba Income Tax Act which will reflect these changes.

FISCAL ARRANGEMENTS: Related to the taxation decisions to be made by the Government of Canada will be the revision of federal-provincial fiscal arrangements that will have effect for the five-year period beginning April 1, 1972. As Honourable Members are aware, the present Fiscal Arrangements legislation, which expires at the end of the current year, provides authority for the tax collec tion agreements, estate tax sharing, the equalization formula, and revenue stabilization guarantees.

I have already outlined the present situation as it relates to tax reform as well as the negotiations now under way on the future financing of higher education, but the other facets of the fiscal arrangements have also been under close scrutiny. Several proposals have been put forward with respect to the equalization formula, including important technical modifications intended to reflect changing patterns of provincial taxation.

Suggestions for incorporating municipal revenues and a measure of provincial municipal "tax effort" in the equalization formula are also under consideration as is a broader "total income" basis for distributing equalization payments. A highly significant feature of the new fiscal arrangements will be the revenue guarantee system which is to accompany the amended income tax legislation and tax collection agreements.

Any revenue short-falls which the Government of Manitoba may experience as a result of anticipated changes in federal income tax rates, must be fully offset by guaranteed payments if the province is to be able to fulfill its expenditure commitments without altering its own income tax rate structure, As yet, we have not been provided with suff icient information by the Government of Canada to assess the adequacy of the proposed guarantee arrangements in respect of both amount and duration.

The failure of the federal government to communicate full details of its intentions to us, and the resulting uncertainty as to our income tax revenue position after the end of the curr ent fiscal year has hindered our planning process considerably.

Because there is concern about the adequacy of the revenue stabilization provisions in the present Fiscal Arrangements Act in times of crisis, certain suggestions have been made for incorporating short-term stabilization provisions in the 1972-1977 Fiscal Arrangements legislation, It is to be hoped that the federal government will respond to these suggestions positively.

Clearly, however, all these technical and administrative questions related to the Fiscal Arrangements are but manifestations of a fundamental problem confronting the senior ievels of government in Canada at this time - the urgent need for a more equitable redistribution of the tax resources of this nation. The pattern of economic and social relationships that has developed in Canada - and in all other industrialized communities - has greatly extended the responsibilities of the public sector, and within the public sector has extended the relative importance of provincial and local responsibilities.

The provinces have ever greater obliga tions to discharge. The fulfilment of these obligations can only be ·ensured through drastic reform of the financial relationships among governments, In simplest terms, the provinces - including Manitoba - require proportionately more tax money than in the past because they have proportionately more to do - both within their own jurisdictions and in the areas of responsibility they have chosen to entrust _to local governments. What is at issue is this structural fact which should not be a matter for petty bargaining between competing political jurisdictions.

Unless some rational method is found for transfer ring national revenues from Ottawa to the provinces, there will be increasing frustration and waste in wide areas of social policy. Canada as a whole will be worse off; many Canadians will be poorer, and the fabric of the nation will be further strained.

May 13, 1971 917 REVENUES AND EXPENDITURES 1970-71: Let me turn now more directly to our province's financial affairs. In the year just closed as of March 31, 1971, our total expenditures on current account approximated $458. 5 million. Our normal revenues have totalled $459. 1 million which would have left us with an excess of revenue over current account expenditures of approximately $600, OOO.

However, by reason in part at least, of Manitoba's strong representations to the federal government all provinces have received a one month's speed-up in the payment by Ottawa to us of those taxes collected by the federal Department of National Revenue acting as tax collection agent for the province. This brought us in an unusual and clearly non-recurring extra month's payment of $12, 600, OOO. In addition, we received an unexpected $6. 7 million by way of an equalization payment adjustment for the year 1968-69.

Both these amounts were received shortly before the year end, and as you will notice from our new revenue estimates for 1971-72, these two amounts have been carried forward for the year just beginning. This is not a new precedent. A review of former years' budgets reveals that past government's have opted from time to time to bring forward from one year to the next, excess of revenues over expenditures from the previous years.

FINANCING - CURRENT AND CAPITAL ACCOUNT 1971-72: You will recall in my first Budget Address on September 18, 1969, I announced that effective November, 1969, the basis of financing medicare would be altered to reflect the ability-to-pay principle. Accordingly, monthly medicare insurance premiums were reduced from $9. 80 for a family to $1. 10, and from $4. 90 for a single person to $. 55. The major part of the financing of the medicare program was shifted to the progressive income tax and the provincial income tax rate was increased effective January 1, 1970, to provide the necessary revenues.

It has been shown that this shift resulted in a real financial advantage for any single taxpayer with a yearly income of less than $6, 363, and for an average married taxpayer with an annual income of less than $11, 348. 00. The Manitoba Government is keenly aware of the inequity of the real property tax. In our current estimates we have removed nearly $12 million of educational costs from Manitoba property taxpayers in 1971. These programs will rise to approximately $20 million in the following year.

This substantial property tax decrease, I am pleased to announce, will be made without any effective tax increase in 1971. Provincial support for the Education Foundation Program will be increased in 1971 in unitary school divisions and remote school districts. Legislation has been enacted this Session to provide the following:

(1) An increase in the provincial share of the Foundation Program from a 70% - 30% to 75% - 25% formula.

(2) An increase in the exemption on farm and residential property which will have the effect of reducing the rate required on farm and residential property for purposes of the Foundation Program by 1. 5 mills down to S. 4 mills. The 33. 9 mills on "other" assessment will be unchanged. It is the intention of the government to finance this additional responsibility in respect of education from general revenues.

The monies necessary to finance the decrease in the property tax burden, otherwise payable in the current year, will be provided through adjust ments monies received in Manitoba 's equalization entitlement from the federal government, and in part, from monies provided from the one month "speed-up" in the remittance of tax collections and from careful fiscal management by the Government of Manitoba.

If provincial tax increases are required in regard to this program in the future, they will be considered in the context of all governmental programs financed through general revenues and in relation to fiscal policy as a whole. Naturally, the assessment of future provincial taxation policies will have to be directly related to the yet unknown position the federal government will take in regard to tax reform legislation. This is the critical variable missing from all provincial calculations.

You will realize that the Budget I am presenting tonight, particularly in view of the economic circumstances, is again an expansionary one. Our estimates of expenditures on current account come to $516, 850, 800. The revenue estimates, on the other hand, total $517, 132, 730, leaving a small excess of revenues over expenditures amounting to $281, 930. Capital requirements for new investments will approximate $250 million. This, plus amounts

918 May 13, 1971 (MR. CHERNIACK cont'd.) ••••• that we estimate we may need for the paying off of maturing debt issues and savings bond redemptions, will involve us in borrowing something like $300 million over and above our ordinary revenues. The breakdown is as follows: (

a) For our utilities and other agencies some of whose monies the province provides directly and the balance of whose requirements is found by the issue of debt guaranteed by the province: Manitoba Hydro $113. 5 million Manitoba Telephones 20. 5 million Agricultural Credit Corporation 15. O million Manitoba Development Corporation 25. 0 million Manitoba Housing and Renewal Corporation 63. O million Manitoba School Capital Financing Authority 20. O million (

b) For other general requirements of the government, including monies for our direct purposes such as buildings, highways, parks, schools and universities, we are asking for authority to spend some $38. 5 million. This includes more than $3 million to start our Churchill townsite redevelopment and the new townsite development for Ruttan Lake (at Leaf Rapids). (ti) In addition, we are expecting to have to provide for upwards of $8 million of redemptions for general purpose debt of the province.

These demands for capital will be met, as usual, in part from funds available from the Canada Pension Plan, and from the Central Mortgage and Housing Corporation which in total will provide approximately $100 million. With capital borrowing already completed for Manitoba Hydro in the amount of $43 million since the first of April, 1971, and with such other funds as may be available from time to time during the year, we expect to require something in the order of $150 million from the public investment market. As I have already stated, this is a planned expansionary Budget.

The total we and our agencies will be spending for the improvement of the living conditions in Manitoba and the economic development of the province will be almost $770 million. The similar total for last year was approximately $650 million. One notices that many of our sister provinces are also undertaking what people could refer to as cash deficit financing. Actually, over the past many years, the Province of Manitoba has been financing its cash deficits all along, including of course, the requirements of the utilities and other agencies, by its annual borrowings.

Our government intends to expand the economic and social base of this province by a vigorous program of expenditure designed for the betterment of the condition of all our citizens. The programs we are proposing will both increase the well-being of people within the province and will result in growing current revenues as years go by. ACCOUNT REVIEW: I would like to make reference to another subject which I regard as most important and that is the form of our annual presentation of the forecasts of the government's financial trans actions.

For many years the provincial budget has been brought down in the form which has become very familiar to us. In the meantime in addition to the familiar form, the federal government and a few of the other provinces, are presenting their financial transaction fore casting, on what is termed, "A National Accounts" basis. The "National Accounts" system of presentation which has now been used by Canada for the past 6 years, is a system designed to provide more information concerning the impact of activity in the government sector on the total economy of the province.

It is hoped that by next year our studies which we propose to carry on extensively this summer will enable us to provide this additional insight into the government's expenditure and revenue plans giving us further tools to help evaluate the results of our programs. CONCLUSION: Mr. Speaker, I have presented to you tonight a deliberately planned and a carefully considered expansionary Budget designed to provide increased employment in the province.

Because of the initiative shown by the Government of Manitoba, our provincial economy has shown encouraging signs of vigour, even through the crisis-ridden period just past. Through this Budget, we have been able to expand our program commitments and to assume new

May 13, 1971 (MR. CHERNIACK cont'd.) ••••• responsibilities while at the same time providing a tax decrease for Manitoba's property taxpayers. 919 This Budget is characterized by the absence of any tax increases. We believe that the rationalization of our accounting presentation in this Budget Review and the planned deficit to be budgetted on capital account are in complete accord with the best interests of our citizens and our province. Our future taxation policy is, of course, highly dependent on the forthcoming federal statement regarding income tax reform.

Together with all provincial governments and con cerned Canadians, we await this announcement, as well as a declaration by the federal government of its intention to achieve full employment, and to correct deep-rooted regional economic disparities in Canada. We believe the federal government's first priority, is of necessity, to establish a clear and positive co=itment to eliminate the rampant unemployment that exists in this country. This action is of the utmost urgency for it is this issue that hurts our people the most in terms of human anguish and suffering.

The philosophy of government from which this present budget evolved maintains that meeting the social needs of the individual, family, co=unity and society should be the objectives of government policy, meeting the needs and meeting them equitably. With this we also affirm that planned economic growth can and will be accompanied by the promotion of equity. Our encouragement of social development and of economic development are comple mentary, rather than competitive goals.

We believe that this intention, coupled with comprehensive planning to promote balanced development, is the most effective contribution we as a government can make to Manitoba and to Manitobans. Our future prosperity in both the human and material sense depends on the ability of each of us to accept a degree of responsibility for all of us. Therefore, Mr. Speaker, I beg to move, seconded by the Honourable the Minister of Labour, Mr. Speaker do now leave the Chair and the House resolve itself into a committee to consider of the Ways and Means for raising of the Supply to be granted to Her Majesty. MR.

SPEAKER presented the motion. MR-. SPEAKER: The Honourable Leader of the Opposition. MR. SPIVAK : Mr. Speaker, I move, seconded by the Honourable Member for Lakeside, that the debate be adjourned. MR. SPEAKER presented the motion and after a voice vote declared the motion carried. MR. SPEAKER: The Honourable Minister of Finance. MR. CHERNIACK: Mr. Speaker, I have a message from His Honour the Lieutenant GoYernor. MR.

SPEAKER: The Lieutenant-Governor transmits to the Legislative Assembly of Manitoba estimates of sums required for the service of the province for capital expenditure and recommends these estimates to the Legislative Assembly. The Honourable Minister of Finance. MR. CHERNIACK: I move, seconded by the Honourable the Attorney-General that the said message, together with the estimates accompanying the same, be referred to the Co=ittee of Supply. MR. SPEAKER presented the motion and after a voice vote declared the motion carried. MR. SPEAKER: The Honourable Minister of Mines and Natural Resources. MR. GREEN: Mr.

Speaker, my impression is that all of the members of the House are now in agreement that the House adjourn for this evening, therefore I would move, seconded by the Honourable the Minister -- (Interjection) -- did the member ••• ? All right. I'll wait till it's completed. MR. SPEAKER: The Honourable House Leader. MR. GREEN: Mr. Speaker, I move, seconded by the Honourable Minister of Labour that the House do now adjourn. MR. SPEAKER presented the motion and after a voice vote declared the motion carried. MR. SPEAKER: The House is accordingly adjourned until 10:00 a. m. tomorrow morning.

The Appendices to the Budget Address appear as a supplemen ta1 booklet

APPENDICES to the BUDGET ADDRESS by Hon. Saul Cherniack, 0.C. Minister of Finance May, 1971

APPENDIX "A" FINANCIAL STATISTICS ESTIMATED REVENUES - FISCAL 1970 (Revenue Division) 2.9% OTHER TAXES, FEES, ETC. 30.1% SHARED COST RECEIPTS 15.1% INCOME TAXES AND SHARE OF FEDERAL EST ATE TAX 33.7% MISCELLANEOUS RECEIPTS 0.7% (MILLIONS OF DOLLARS) Income Taxes and Share of Federal Estate Tax ..................................... $151 .1 National Equalization .......... . ..... . ........ . ................................................ .. 41.0 Other Taxes, Fees, etc. .................. . .. ....... .. .. ........ . ........... . ... .................. 135.3 Natural Resources ................................................................................. 9.4 Government Enterprises (Liquor Commission)...... .. ... ........ .. ... . ...... .... ... . 28.1 Motor Vehicle Fees ....... . .... . .. ............ ....... . ... ...... . .......... . ............ . ......... 13.2 Shared Cost Receipts .... ... .... .. ...... . ...... . ...... . ....... . ..... . ........... . ..... .. ..... ..... 67 .8 Miscellaneous Receipts for Sundry Services ..... .. .............................. ..... . 3.0 TOTAL $448.9 .1

ESTIMATED EXPENDITURES - FISCAL 1970 (Revenue Division) YOUTH & EDUCATION 35.9% GENERAL GOVERNMENT 3.4% URBAN& ---"'-�::::::::::.._-------------"lRURAL AID 3.1% HEAL TH & SOCIAL DEVELOPMENT 30.3% DEVELOPMENT OF RESOURCES (MILLIONS OF DOLLARS) Youth and Education .......................................................................... $160.7 Health and Social Development ...................... ....... .. ........................... 135.9 Development of Resources ... ........ . ........................... ................... ....... . 45.7 Public Services ................................................. ................................. . .. 11.2 Highways ............................................................................................ 52.4 Urban and Rural Aid ............................................................................ 13.9 General Government ............... ............ . ....... .......... .................. ..... ........ 15.3 Public Debt ......... . ............ . ........... . .............. ... ............................. . .... .... 13.0 TOTAL: $448.l

ESTIMATED REVENUES - FISCAL 1971 (Revenue Division) MOTOR VEHICLE FEE S 3.1% OTHER TAXES, FEES, ETC.

SHARED COST RECEIPTS 17.1% MISCELLANEOUS RECEIPTS 0.7% 27.2% INCOME TAXES AND SHARE OF FEDERAL ESTATE TAX 30.3%· TRANSFER OF TBA T PORTION OF EXCESS of 1970-71 REVENUE OVER EXPENDITURES 3.7% (MILLIONS OF DOLLARS) Income Taxes and Share of Federal Estate Tax .. .... ...... . ... ..... ...... . ... ..... . $156.4 National Equalization ... ...... .. ............... . ... .......... . ..... ..... . ... ...... . . .. .. .... ... ·49.3 Other Taxes, Fees, etc . ..... . ... .. ....... . ........ . ............ .. . ·............................... 140.9 Natural Resources ................................................................................ 12.3 Government Enterprises (Liquor Commission) .. ......... . . ......................... 31.1 Motor Vehicle Fees ········· '···································································· 15.8 Shared Cost Receipts .. ........ ............ . ............. . ....... .. .... .. ..... ..... .. ........... 88.5 Miscellaneous Receipts for Sundry Services .. ..... . ........ .... ... . ......... . .... ..... 3.5 Transfer of That Portion of Excess of 1970-71 Revenue Over Expenditures............ .. ........ . ... .... ..... .. .. .... .... .. .. ..... ...... . 19.3 TOTAL $517.1

ESTI MATED EXPEND IT URES - FI SCAL 1971 (Revenue Division) YOUTH & EDUCATION 34.8% GENERAL GOVERNMENT 3.4% URBAN& RURAL AID HEAL TH & SOCIAL DEVELOPMENT 32.7% 10 3% HIGHWAYS 10 .1% 4.5% (MILLIONS OF DO LLARS) Youth and Education .......................................................................... $179.9 Health and Social Development ..................... .. .............. ...................... 168.7 Development of Resources .................................. ........... ....................... 53.4 Public Services .... .............................. ............... ......... ................. ..... ..... 12.6 Highways ............ ....... ....... .............. .................. .......... .................... .... 52.0 Urban and Rural Aid .. .. .... ..... ................... ......................... ............. ... .. 23.4 General Government ........................ ............... ................................ .... 17.4 Public Debt .. .. ..... .. ........ ...................... ................. ... ........................... 9.4 TOTAL: $516.8

REVENUE ESTIMATES - FI SCAL 1970 and 19 71 Fis cal 1970 Fie��l �"71 (Hillions of Doll..:c:;:.;) 1. Income Taxes and Share of Federal Estate Tax 151.l (3 3.7 %) (

a) Individual Income Tax $109 ,778,0 00 $121 ,5 43 ,0 00 (

b) Corporation Income Tax 36 ,0 00 ,0 00 30 ,5 79 ,0 00 (

c) Estate Tax 5,2 98 ,000 4,3 00 ,000 $151 ,0 76,0 00 $156 ,4 22,0 00 · 2. Natio nal Equali zatio n 41. 0 (9 .1 %) 3. Other Taxes , Fees , etc. 135 .3 (30 .1%) (

a) Legislation $ 182 , 700 $ 195 �OOO (

b) At torney-General( less .L iquor Commissio n) 3, 712,0 00 4, 076 ,0 00 (

c) Consu mer, Corporate and Internal Services 616 ,3 75 67 8,6 00 (

d) Co-operative Devel op- ment 65 ,000 65 ,000 (

e) Fi nance (less a, b(l l) , b (1 2) ,b (13) and d) 129 ,1 20 , 384 (1) 134 ,2 14,4 00 (1 ) (

f) Health and Social Develo pment 320 ,9 00 295,0 00 (

g) Labour 387 ,9 00 340 , 000 (

h) Municipal Affairs 14 ,0 00 21 ,4 00

(1) Publ ic Works and Highways (less c, d. and e) 91,2 00 71,1 00 (

j) Youth and Educatio n 8361600 907,5 00 $1 35 ,3 47,0 59 $140 ,8 64,0 00 4. Natural Resources 9.4 (2 .1%) (

a) Agriculture $ 127 ,8 00 $ 103,3 00 (

b) Fi nance (b (l l) , b (1 2) and b (1 3) ) 3,2 59 ,000 5,2 65 ,0 00 (

c) Mines , Resources and Environmental Management 5, 278 ,0 00 5,8 78, 230 (

d) Tourism, Recreation and Cultural Affairs 698 1000 1,071,3 00 $ 9,3 62,8 00 $ 12 ,3 17 ,8 30 5. Government Enterprises (Liquor Commission) 28 .l (6. 3%) 6. Motor Vehicle Fees 13 .2 , (2 .9%) 7. Shared-Cost Receipts 67 .8 (1 5.1 %) 8. Miscel laneous Receipts for Sundry Services 3.0 (0. 7%) 9. Transfer of That Portio n of Excess of 1970-71 Revenue Over Expenditures 448 .9 (10!1.0%) NOTE (1 ) - Incl udes Revenue Tax SOURCE: DEPARTMENT OF FINANCE 156 . 4 ( ::.o . 31,'.) 49 .3 (9 . 51;) 140 .g (27. 21:'.) 12 .3 (2.4 %) 31. 1 (6.0 %) 15 .8 (3.1 %) 88. 5 (1 7.1 %) 3.5 (0 .7%) 19 .3 (3.7 %) 51 7.1 (100 .0%) L

_, l cx�=�IDITURE EST IMATES - FI SCAL 19 70 and 19 71 .L . Y ct!�:i. ar..cl Education -'- · '.'".'-,]_th .o.nc Social Develo pment .o . -:le-::clo;>T".ent of Resources (i ncluding pollution ::ort�o!.) ��) Agriculture (: ) �ndustry and Commerce � c) }'.ir.es, Resources and �nvironmental Management (G.) ':'ot1.r::.sm, P.ecreation and C".lltural Affairs �e) �lood Control and Emergenc y Expenditures (

f) che ?as Special Area Agreement $ 9, 973 ,5 00 $1 2 ,607 ,O OO 5,3 10 , 700 5,3 60,4 00 22 ,4 92 ,3 00 26 ,01 4,8 00 7,7 87 ,4 00 7, 438 ,0 00 196 ,0 00 200 , 000 1, 797 ,OOO $4 5, 759 ,900 $53,4 17 ,2 00 4. O'c1blic Services (i ncluding protection of people) (<"-) Consumer, Corporate and :nternal Ser vices $ 1,01 3,1 00 $ 1,1 73, 700 (

b) Attor ney-General 8,5 28,1 00 9, 567 ,4 00 (

c) Co-operative Deve lopment 26 3, 600 361 ,8 00 (

Q) Labour 1,377 ,800 1,54 4,3 00 $1 1,1 82 , 600 $12, 647 ,2 00 5. Highways 'J 6. Urban and Rural Aid (

a) Municipal Affairs $1 3, 873 ,0 00 $2 0 ,656 ' 800 (

b) Urban Affairs 2, 783 ,600 $13 ,873 ,0 00 $2 3,4 40 ,4 00 7. General Government (

a) Legis lation $ 1, 415 ,4 00 $ 1,4 97 ,5 00 (

b) Executive Co uncil 2 ,0 09 '3 00 2,4 88,2 00 (

c) Fi nance (ex cluding Publ ic Debt) 3,4 22 ,9 00 3, 29 3,4 00 (

d) Pub lie Works 6, 49 1,4 00 7,8 16 ,700 (

e) Civil Service 2,0 07,2 00 2,2 82 ,600 $1 5' 346 ' 200 $1 7 ,3 78,4 00 8. Publ ic Debt SOURCE: DEPARTMENT OF FINANCE Fis cal 19 70 Fiscal 19 71 (Mill ions of Dollars) 160 . 7 (35 .9 %) 135 .9 (3 0.3 %) 45 . 7 (1 0. 2%) 11 .2 (2 .5 %) 52 .4 (1 1. 7%) 13 .9 (3 .1 %) 15 .3 (3.4 %) 13 .0 (2.9 %) 44 8.1 (100 .0 %) 179 .9 (34. 8%) 16 8. 7 (32 . 7%) 53 .4 (1 0.3 %) 12 .6 (2.4 %) 52.0 (10 . 1%) 23 .4 (4 .5 %) 17 .4 (3.4 %) 9. 4 (1. 8%) 516 ,8 (1 00 . 0%)

;;. :ALTH AND SOCIAL DEVELOP1"I:NT F.XPENDJTL'ICE�; f"1Sr. :;:, E7 0 ·"'· l c·Pi (Thou�and� of Dollarb) Manitoba Health Services Commission (

a) Direct Government Support (

b) l'remiums (

c) Government of Canada .Shared-Cos t Recoveries Mental Health and Correct ional Services* Publ ic Health Services* Social Services * Other Purposes (including Elderly and Infirm Persons' Housing) * Total Expenditures for Health and Social Development (i ncluding the Manitoba Health Services Commissions ' Federal Recoveries and Premiums) Fiscal 19 70 $ 52,1 80.2 28 ,8 00 .0 70 ,925 .0 $15 1,9 05.2 }'lscal J9 7l $ 63 ,3 5 2.3 28 ,8 00 .0 79 ,900 .0 $ 172 ,052. 3 $ 29 ,944 .0 (1)$ 33 ,6 64.0( 2} 14,593. 7( 3) 17 ,3 51 .8 (4) 39 ,8 44 .6 56 ,5 92.5( 5) 8,0 18 .8( 6) 8,3 24 .5 �$ 244 ! 306 . 3 .$2�7 ._� 85�, 1 13 .:i 12 ./ .;. 13.9 42 .0 " � ..i.U l7.9 *Includes additional capital funds authorized for capital cons truction in 19 70- 71 by Bill 47 (1970) and additional capital funds reques ted for capital con� <.::uc�i o'1 in 1971-72 by Bill 20 .

Mental Health Services Co rrection Services Public Health Services Social Services Other Purposes (Elderly and Infirm Persons ' Housing SOURCE: DEPARTMENT OF FINANCE Fis cal 1970 $ 5, 062 .3 3 ,0 93. 2 � 8,1 55 .5 (1) . $ 75 ;0 (3) $ $ 500 .0

(6) Fisc al 19 71 $ 5 'l.12 . l 5, JC,() , 9 i ;i,_o_,�O h'c<2� � __ }� ·_Q_(l ;) s p.�( 5) $ - == - (

!;ov�:n:-.'}mNT OF MANITOBA EXPENDITURE FOR ED<ICA 'i'TOi·l Pri mary and Secondary Schools (

a) Operati ng (

b) Capital Community Colleges , Vocat ional and (

a) Opera tin g (

b) Capital Univers it ies (

a) Operating (

b) Capital Total Inves tment in Education Fi,;c:.tl Jli:; cc:l 1970 1�17J (Thousa nds of Dollar;;) $ 9 1,4 48 .2 3,954 .9 $ 95 ,4 03 .1 Special Schools $ 13,034 .0 3, 440 .4 (2) $ 16 ,4 74 .4 $ 39 ,2 64.5 12,550 .0 $ 51, 814 . 5 $ 163,6 92.0 $ll 5 , 402. i 3, 03 5 .2( ::.) $11 8,437. 3 $ 14, 86 4. 4 1, 090 .0 (l) $ 15 ,95 4 .4 $ 40 ,4 89.5 16 ,6li3. 1(3) $ 57,1 32 .6 $ 19_1_,_5_� · l 24 . .i. (. J. :!) 10 . '.; 17 .0 FOOTNOTES : (1 ) To be financed from capital funds requested in The Lo<in .Ac� . :fo . .':: , 19 /l.

(2) Inc ludes $3.0 million borrowed under capi tal authority for the con;;truc tion o f Regional Secondary Schools . (3 ) Of this amount , $7,3 35 .0 being financed from capi tal funds requcs "ed in The Loan Act , No. 2, 1971. SOURCE : DEPARTMENT OF FINANCE

SUMMARIZED STATEMENT OF DIR ECT PU BLIC DEBT AS OF MARCH 31, 1970 Funded Debt: Bonds and Debentures Payable in Canadian Dollars ........... .......... ........ $217 ,464,905 Payable in United States Dollars ........... ........... 175,000,000 Payable in European Units of Account (Canadian Dollar Value) ............ ..................... 29,066,250 $421,531,155 Treasury Bills Payable in Canadian Dollars ............. ..................... ...... ................. 50,793,400 472,324,555 Unfunded Debt: Outstanding Cheques - Net ... ..................... ......... ..... 24,056,576 Accrued Interest and Other Charges ......................... 9,830,209 Accounts Payable ..... .. .......... ....... ............................ 3,214,795 Special Funds .... ..... .................... .......... ............ ........ 30,774,582 67,876,162 Total Direct Public Debt ........ .... ..... .. ............................ ................... 540,200,717 The Province considers the following assets to be pr9per deductions in arriving at Net Direct Public Debt: Sinking Funds - Cash and Investments ..................... 65,991 ,345 Special Reserve for Retirement of Debt ......... . ......... 21,506,102 Temporary and Other Investments .... ... .................. 40,472,763 Advances to Manitoba Hydro .... $199 ,040,431 Less: Premiums on U.S.

Funds. ...... 10,040,431 189 ,000,000 Less: Sinking Funds included above 9 ,259 ,084 Advances to Manitoba Telephones 40,200,000 Less: Sinking Funds included above 7 ,328,995 Advances to Manitoba Agricultural Credit Corporation ....................................... : .. Advances to Manitoba Development Fund .. ........ . Advances to Municipalities .................................. . Amounts due from Canada .. .... ...... .. ... ... .... ........ .. .

Other · Net .. .... ....... .. ...... ........ ... ..... .... ....... .......... . 179,740,916 32,871,005 31,463,942 85,285,000 13,702,768 4,404,008 10,170,844 485 ,608,693 Net Direct Public Debt ........... ........................... ........ ....... .................... $ 54,592 ,024 Source : Department of Finance.

DI RECT PUB LI C DEBT OUTSTAND IN G AS AT 31st DECEMBER, 1970 (Grouped as to purposes for which incurred) Provincial Capital Assets Roads and Bridges ................ .... ........... ....... .... $14 7 ,602,830 Buildings and Public Works ........ . ... ................. 16,355,033 Self-sustaining Agencies: Public Utilities (Electricity and Telephones) . .. .. 243,714,000 Other (1) ... .......... ..... ........ .......... ...... ....... ......... 88,265,208 Other: Grants and Advances (2) ................................. .

Unemployment Relief (Pre-War) .. .. .. ... ..... ......... . 11,479,960 4,591,615 Amortization and Discount ........... ........ .... .. ........ ....... .... ............. . Funds provided for Debt Retiral .... .... .. ... .... ...... .. ... ..... ... . ..... ....... . Less: Self-sustaining Investment and General $163,957 ,863 331,979 ,208 16,071,575 6,476,271 5,681,000 524,165 ,917 Debt Retirement Funds ............. . ..... . ......... ................ ......... . ... 404,642,254 $119,523,663

(1) Other Self-sustaining Provincial Investment: Agricultural Credit Corpora tion ($22,742,000); Business Development Fund ($53,000,000); Municipal Works Assistance ($12,523,208); Total ($88,265,208).

(2) Grants and Advances: Agricultural Research ($5,124,695); Hospitals and Homes for Aged ($2,405,265); Shares of Manitoba Development Fund ($1,200,000); Nelson River Energy Studies (Recoverable) ($750,000); General Purposes - ·V ocational Composite Schools ($2 ,OOO ,OOO) ; Total ($11,479,960) . Source: Department of Finance.

DI RECT FUNDED DEBT COMPAR ISON Debentures ..... ........ .... ......... : ........ ....................... . .................. .. Savings Bonds .. .. ........ ..... ................. .... ... ...... .. ... ....... ..... ... ... . .. Treasury Bills ....... ............ ...... ... . ...... ... .. .... ...... .. ... .. ..... .. ....... .. Total ...... ........ ............................ ............................. ............... .. Debt issued for Utilities and Other Self-Sustaining Purposes ..... Debt issued for General Purposes ....... .... .... ... ..... .. ........ ... ... .. .. ..

Less: Funds provided for Retirement of General Purpose Debt ...... ...... ...... ....... .... . ; ................. . . .. Net General Revenue Debt ...... ... ......... .. ............. : ...... ..... ....... .. Source : Department of Finance. · I December 31 1969 $397 ,536,770 12,023,600 88,680,600 $498,240,970 305,684,770 $192,556, 200 64,226,518 $128,329 ,682 March 31 19 70 $410,135,855 11,395,300 50,793,400 $472,324,555 265,765,546 $206,559, 009 81,895,793 -- $124,663,216 December 31 19 70 $422,588,458 61,510,500 40,066,959 $524 ,165, 917 331,952,150 $192,213, 767 72,690,104 $119, 523,663

STATEMENT OF GUARANTEES OUTSTANDING BY CLASS OF BORROWER December 31 1969 Guaranteed as to Principal and Interest: Manitoba Hydro ........ ........................ $467 ,209,040 Manitoba Telephone_ System .... ..... .... Manitoba Water Supply Board .. ......... University of Manitoba ... ....... . ........ .. Manitoba Development Fund ··· ······· · Manitoba School Capital Fina ncing ... . Manitoba Agricultural Credit ...... . ..... Hospitals and Other ........... .. ..... ..... ... .

Guaranteed as to Interest Only: School Districts Municipalities 148,500,000 5,977,000 25,860,521 24,915,000 45,049,000 8,850 ,000 7,065,804 7 33,426,365 2,690,599 1,791,228 March 31 1970 $462,209,040 148,500,000 5,977,000 24,760,521 24,915,000 55,566,000 8,850 ,000 7,030,804 737,808,365 2,690,599 1,791, 228 December 31 1970 $502.,209,040 148,500,000 5,977,000 24,688,345 24,915,000 83,000,000 8,850,000 6,750,767 804,890,152 2,452,963 1,602,770 4,481 ,827 4,481,827 4,055,733 $737,908,192 $742,290,192 $808,945,885 Note: Sinking Funds and other Debt Retirement Funds at December 31, 1970, total: (

a) For General Purpose Debt ....... .......................... ................ $ 72,690,104 (

b) For Self-sustaining Direct and Guaranteed Debt ......... ....... 75,267,066 $14 7 ,957 ,170 Source : Department of Finance.

APPEND IX B REVIEW OF THE MANITOBA ECONOMY IN 1970 AND PROSPECTS FOR THE CU RRENT YEAR 1971 The Manitoba economy in 1970 was dominated by the influence of the federal government 's anti-inflat ionary p�lici es . Manitoba and , inde ed , all of Canada has suffe red from tl. ' onslaught of the eco nomic slowdown create d. by deliberat� federal economic polici es. Unemployment levels rose to dangerous heights . The performance of the Manitoba ec onomy in 1970 was better than that achieved in many other areas of Canada .

The province is fortunate to have had the diversificat ion of economic acti vity necessa ry to withs tand , to a somewhat greater extent than else where, federal policies that must indeed measure their success in terms of the unemployed in this cou ntry . The Government of Manitoba has pl ayed a crit ical role throughout this diff icult period . Public measures were initiated to cou nteract the effects of the federal eco nomic ac tions and thus lessen the sever ity of the economic crisis this pas t wint er.

These measures were not simply random emergency acti ons designed to meet what was hoped would be a short-term problem. Rather they were aimed at accelerati ng provincial proj ects in such a way as to sti mulate the necessary areas of the economy and , in so doing , provide needed facilities for Manitoba ns . These measures in combination with the diversificati on which has been achieved in the Manitoba economy have brought the provincial economy through a criti cal period. ��2!�i-�!2!2 l!! !��E-!��-�22�!!E!2� In Manitoba, gross provincial income grew by 7.5 % during 1970 to reach an esti mated $3,8 26 million.

This increase was paralleled by the 7.5 % growth rate of the Gross Nat ional Produc t. However, while the growth rate of the gross national product slowed down, Manito ba 's esti mated gross provincial income increased at a faster rate than in 1969 . Wages and salaries level increases in Manitoba lagged behind the national rate for the first half of 1970 , but increased marginally fast er for the remainder of the year . In total Manitoba and Canada figures increased at a similar rate - the former at 7.6 % (

and the latter at 7.8 %. However, this st ill lef t Manitoba average weekly wages and salaries more than 9% below the Canadian average . Both rates decreased signific antly from the previous year due mainly to rapidly diminishing employment opportu ni ties . Wages and salaries showed acceleration in both goods producing and service-producing indus tries . In· the former, the gain was entirely due to increases in average earnings as employment dec lined slig htly . Within goods-producing indus tries acceleration was recorded in constructi on and the primary indus tries .

While a sl ower growth rate was recorded in manufacturing nationally, the growth rate in Manitoba increased over that for 1969 . In the service producing indus tries both employment and average earnings contributed to the increase. The Manitoba increase in real wages (money wages adjusted for changes in . the consumer price index) was marginally less than the Canadian average - 4.3 % as opposed to 4.4 % - although both rates increased considerably over last year, with Manitoba having an increase in real wages of 2.8 % in 1969 , and Canada an increase of 2.6 %.

As is thus eviden t, there has been a reduction in the rate of price inflation, particularly in the fourth quarter of 1970 , and the consu mer price index for 1970 showed the lowes t annual rate of increase since 1966 .

At first glance , this must be viewed as an indication that the deflat ionary efforts of the federal government have achieved some succ ess , but in fact there were various other influences that also contributed to the drop , .The "grocery price war" greatly reduced the rate of increase of a major component of the consu mer price index, while the unpegging of the Canadian dollar eased the rate of increase of import prices . Despite heavy grain movements in 1970 the cash receipt posi tion of farmers is sti ll dec lining at the same rate as last year due to repayments of cash advances.

This cont inuing trend of the pas t four years illustrates the unfortunate plight of the farm COIDlllunity and further emphasizes the need for extensive federal act ion in this area to effect measures that will guarantee our farmers a minimal and st able income in the future .

During 1970 the Canadian unemployment rate averaged a st agger ing 5.9 % as compared to 4. 7% in 1969.

Manitoba 's average unemployment rate showed a similar trend , rising from 2.7 % in 1969 to 4.5 % in 19 70. (And further, the employment sit uation beco mes even more critic al when one considers that native people on reserves are not included in these figures nor is the serious problem of underemployment adequately reflected in Canada ,) Fortunately, immediate action on the part of the Province of Manitoba has helped cushion the continual blows st ruck upon our labour force by the federal government 's anti-inf lati onary measures .

The population of Manitoba increased by 4,0 00 in 1970 as compared with 2,0 00 in 1969 due to a decline in net out-migration. At such a time as th is , when the effects of economic slowdown and resultant high unemployment have seemingly pl ayed less havoc on the Manitoba economy than on that of the nation as a whole , it is a driving task of the Province of Manitoba to produce jo bs that will both hold and attract persona to the province and demonstrate that a strong and cohes ive base exists for further economic growth and prosperity. !�Y!!

E!!�E- !��-f ��!E!�E!!�� Private and public capital spendi ng in Manitoba in 1970 natural ly reflected the depressed investment sit uation that occurred across Canada. Total investment expend itures in Manitoba increased marginall y from 1969 to 1970 - a reassuring reversal from the 4.7 % decline origi nally antici pated but well be low the rate of growth experienced over the previous four years.

The largest increase in investment in Manitoba was recorded in the manufacturing sector , with total cons truction, machinery and repair expend itures set ting an all time record , which was encouraging in view of the depressed st ate of the Canadian economy in 197 0 . Reflecti ng the overall sl owdown in the economy however, there was a decline in the housing sec tor . With the approaching completi on of major hydro electric installati ons at Kettle Rapids , a decline in investment was also regis tered in the utilities sect or.

Once again this year , public sector spending consti tuted a substantial por tion of total capital spending in the province - and was instrumental and especially important in buoying up the economy. The Government of Manitoba realized the very necessary sti mulus that was demanded of such funds in 1970 , and set about immedia tely to institute capital works proj ects that would provide a maximum of employment and enhance the Mani toba economy.

Such action has been viewed by the Province of Manitoba and should have been viewed by the federal government as unquestionably the role that the public sec tor mus t adopt in such times as these. New dwelli ng unit st arts in all centres in Mani toba totalled 8,9 45 in 19 70, down over 24% from 1969 . However , 1969 was an exceptional year for housing in Manitoba. The 1970 results are st ill 38% above the 1968 figure , in direct contrast with the sit uation in the other Prairie Provinces - where dwelling unit st arts in 1970 were not only below 1969 st arts but also below starts in 1968.

Si gnificantly , complet ions in Manitoba for 1970 were 23% above those for 1969 , while for the same per iod, all Canada complet ions were �ver 10% lower than in 1969 . Increasi ng mortgage rates and a tightened money supply throughout much of 1970 were major factors in xhe sharp decline in constr��tion activity during this period , and bore

part icularly heavily on the lower income groups . For tunately , it was a maj or desire of. the Manitoba Government during 197 0 , not only to acti vate jo b produci ng public cons truction work, but in doing so , to provide facilities to meet the needs of all Manitoba ns . Hence there has been , and will cont inue to be large amounts of funds committed to public housing programmes .

The sl uggish ness of the Canadian economy was naturall y felt in the product ion sector , For tuna tely , industry in Manitoba has proven to be quite resil ient to the general economic factors due to sufficient diversification in the st ructure of the economy and positi ve management decis ions . Total fact ory shipments for 1970

clearly illustrate the st ability of provincial indus tries , showing a rate of increase in excess of that for Canada, l.6 % versus 0,4 %, although Manito ba 's superior performance was largely confined to the early portion of the year . In particular , food and beverages , accounting for 40% of Manito ba '& factory shipment s, showed a useful gain of 4% in 1970. Viewing performance by indus trial group , Manitoba disp layed an above average performance in textiles , clothing , wood , printing and publishi ng, and transportation equipment.

Our high growth rate in printing and publishing has been due in part to technol ogical competit iveness in a very innovative indus try. The upsurge in bus production in the last two years has helped produce a very favourable growth rate in transportati on equipment . Nevertheless the st ill somewhat depressed agricultural sit uation and the st eady slowdown in the housing st art boom of 1969 did affect the Manitoba portion of the manufacturing indus try, partic ularly with regard to the metal fabricati ng , chemical and machinery indus tries .

The agriculture sector did make some gains during 1970 however, with a heavy movement in grains and a much improved showing of lives tock production. The diversification that has been stressed in this industry is beginning to take hold and produce needed st abilit y . Further, the excess ive buil d-up in grain inventories that has taken place over the previous two years was reduced during 1970. Nevertheless cont inually depressed prices in the agricultural sector cont inue to st ress the need for national attention and response .

Manitoba '& gross primary resource output during 1970 was inf luenced by the closure to fi shing of Lake Winni peg , the Winnipeg River Water Shed , the Saskatche wan River Water Shed and some smaller commercially fished lakes on the Nelson River system as a result of mercury cont amination . The effect of this closure on commercial fis hing resulted in an esti mated drop in value of production from $8 .3. million in 1969 to $5.5 million in 1970.

This obviously has had a very major impact on those people dependent upon the industry for their liveli hood , and here again, Manitoba has continually expressed its concern to the federal government for the welfare of these peop le . /6 j

The value of mineral production, a major portion of total primary resource output, increased by 34% in 1970 , due principall y to increases in nickel and copper production . There was conti nued activity in this sector of the ec onomy throughout the year with the number of producing mines in the Flin Flan-Snow Lake copper-zinc districts increasing from 5 to 7. In addi tion , the Anderson Lake and Fox Lake mines were opened during the year .

Continued exploration and development occurred in many other areas , including the dis covery of mineral ore bodies to be known as the Centennial Mine and the Ruttan Lake Mines as well as continued development and construct ion at the Manibridge nickel property and exploration of the Bowden Lake and Bucko Lake nickel depos its . The product ion of tantalite concentrates in 1970 was valued at over $ 2 million. There has also been increased activit y with regard to non-metallic minerals in the province .

During 1970 a major thrust was made in st udies and projects associated with the opt imum utilization of natural resources primarily as a means of enabling our nati ve people to improve and advance their social and economic well-being . The three main areas of thrust are in the development of pulp cutt ing operatio ns , wild rice paddies and commercial fishing with the aim of the opt imum involvement of nati ve and local peo ple.

It is esse ntial that the development of the province 's primary and sec ondary resources is continu ed , not ju st for the revenues that will result , but with the aim that every person in Manitoba should benefit from such activity in a well-balanced healthy production sector . Utilities ------ --- It is very necessary to have the hydro power and tele phone faciliti es at hand to support and enchance economic deve lopment and growth in any area. In line with this , 19 ,0 00 more tele phones were installed in the province in the fiscal year 1970 -71.

Further, the northern radio tele phone sys tem is being expanded to provide greater coverage area and increased relia bil ity and traf fic handling capacity.

Capital expend itures of $28,1 million were made during this period to meet the high demand for local and long dis tance service and to continue a program of service improvement and modernization throughout Manito ba. Extensi ve construction and installation of transmission and terminal sta tions was conti nued this year to provide electric power in Manitoba. Not only has such activity been of benefit to Manitobans through direct usage, but it has resulted in surplus power that finds a good market among neighbouring utilities .

The effect of cont inuing low cos.t power has been advantageous to both the Manitoba economy and Manitoba indus try. Retail sales throughout Canada slowed considerably in 1970 from previous years . This decline in growth rate also occurred in Manitoba , but retail sales in our province sti ll conti nued to out-perform not only the other two Prairie Provinces , but also increased at a faster rate than total Canada sales .

Sluggis hness of demand was evident throughout 1970 in major categories of consu mer spending and obviously had a direct effect on retail sales - no doub t reflecting the wariness of the public in a period of high unemployment and economic sl owdown . The same slowdown in demand did not occur for Canadian goods and services abroad. Increases in merchandize exports were wide-spread , parti cularly in metals and cereals , and an increase in trade of almost 14% was regis tered for 19 70.

Reflect ing the slowdown of the Canadian ec onomy , � owever, imports of goods and services rose by only 2% - result ing in a very favourable balance on transact ions in goods and services with non-residen ts. A serious problem has been developing recently in regard to interprovincial restraints on trade . The Province of Mani toba has continually st ressed the necessity for federal action to remove interprovincial trade barriers, realizing that one of the essential concep ts in the development and maint enance of the Canadian nation will be lost if such restraints continue.

Expendi tures by tou rists visiti ng Manitoba in 1970 reached $135 million, an increase of almos t 11% over 1969 , and the highest increase recorded by any Canadian province. Our Centennial year had much to do with the appeal of Manitoba to tou rists , but within the last few years our tou rist trade has grown steadily , and continued promotion and expansion of faciliti es should ensure us of valuable tourism in the future .

With the cont inued emphasis being placed on leisure time and extensive travel, it is very favourable for Manitoba to have had the surroundings and the peopl e neces sary to bring such increased tourism to this province - tourism that will provide the needed funds and necessary st imulus to the econo my which , if properly implemented , will greatly enhance the life of all Manito ba reside nts . !!�!P��E!�!�!_E�!_f �!!!� E-!��!_:_l�Il Various indicators are at present reflecti ng an outlook of caut ious opti mism for the year 1971 relative to the past year.

A quickened pace of activity is beginning to show itself in major sectors of the ec onomy . The auto mobile strike has been over for some time and the product ion of small domestic auto mobile to compete directl y with imports is expected to sti mulate. the economy . Housing st arts across Canada are up sig nif icantly over last year and loan approvals have increased rapidly. Inves tment intentions for the housing sector in Manitoba are up 19% for 1971 over 1970 .

Prospects for western agriculture in 1971 are more promising than in the previous year with a heavy movement of grain expected and the effects of recent emphasis on needed dive rsific ation coming into play . However, up until now , there has been only a sl ight improvement in the national unemployment level. With this hoped for upswing in such major areas of the ec onomy , the outlook for the various supporting indus tries is expected to brighten.

Manitoba 's chemical , metal fabricat ing , and machinery industries , which were particularly affected by last year's unfavourable agricul tural si tuation , should receive increased benefit along with the subsequent increase in factory shipments. In addition increasing tourism has been and will cont inue to be ins trumental in increasin g

provincial revenues - with st rong emphasi• being placed on developing this fas t growing indus try. Perhaps most important of all , the quick and immediate action taken by the Manitoba Government in 1970 will, and has already, produced a st rong base upon which the Mani toba economy can move ahead , Indeed , during this ·early portion of 1971 there has been a signific ant decli ne in Manito ba 's unemployment rate - falli ng from 6.5 % in January to 6.0 % in February.and to 5.4 % in March.

Provincial public cons tructi on works contracte d out or committed to the end of January add up to almost $1 10 million - over 2� times the amount recorded during the previous fiscal year. This year to date $33 ,3 33 million has been committ ed to the public housing program for 1971 -7 2, while the total figure last year was $1.5 million. In addition many other programmes have been greatly speeded up and expanded with the two-fold aim of not only providing employment for many and releasing needed inves tment funds , but also of directly benefi ting all Manitobans .

The special development loan programme, announced by the federal government in December of 1970 , allocated to Manitoba $8 million out of a total fund of $1 60 million, While the amount was considered small in light of ec onomic conditions and the size of Manito ba 's special capital works programme requirements , nevertheless such funds were immediately related to this programme and are being fully and quickly util ized for jo b producing capital cons tructi on proj ects . However, there are several all important factors that indicate that any comeback made during 1971 will be both slow and gradual.

Despite such healing measures taken by the provincial government, the atmosphere of the economy seems to exude a general feeling of "l et 's wait and see" - reflec ting in no small measure previous harsh and seemingly unwavering acti ons taken federally to conquer inflation. Although credit restraints are being slowly eased, it is anticipated that investors . will wait for very st rong posi tive signs of recovery in the economy before making commitments .

Further, with many firms operat ing well below capacity during 197 0 , much of this excess capacity will have to be absorbed before capital investment and planning begin. Even if consu mer spending does increase to such an extent in 1971 to warrant expansion and modernizatio� of indus tries , the impact of such changes on capital investment are not likely to be felt extensively before late 19 72 - as plans have already been committed for this year .

A very major factor in the economic growth which took place across Canada in 1970 was the st rength shown in foreign trade, partic ularly from the resource based indus tries . This very favourable balance of trade did not come through increased sales activity with the United States , but rather from a spec tacular surge in expor ts to Eastern Europe, the United Kingdom and Japan combined with only a very slight growth in the import of goods and services .

Unfortunately, such exports are not likely to provide the same degree of st imulus to the Canadian eco nomy this year, as there has been some slowd_own in the European econo my and a recovery in the American sit uation is not expected until the second half of 19 71. In add ition , the higher value of the Canadian dollar will produce added hardships, not only for Canadian exporters , but also for our home industries - with the increased att ractiveness to import using the "weightier" Canadian doll ar .

Manitobans must not delude themselves into believing that there are any shortcut measures that can be grasped to bring about an immed iate return to a healthy economy . It was unfortu nate that the direct acti on taken by the Province of Manitoba to ease the troubled st ate of our eco nomy was not paralleled and indeed st rengthened by the federal government . The above average performance by mos t of the Manitoba eco nomic indicators during 1970 truly attest s to the value of such measures .

It should be st ressed , however , that while some apparent recognition of raging unemployment and a faltering eco nomy has finally been given by the Government of Canada , it is essential that a st rong and cont inued commitment be made if the eco nomy is to be restored to full health .

APPENDIX C ECONOMIC TABLES COMPARISON OF MANITOBA ' S ESTIMATED GROSS PROVINCIAL INCOME AND THE GROSS NATIONAL PRODUCT (!) (MILLIONS OF DOLLARS) Manitoba ' s Percent Percent Est ima ted Change Change Gross Over Gross Over Provincial Previous National Previous Year In come Year Product Year 1960 $1 , 928 $37 ,7 75 196 1 1, 893 -1 .8 39 ,0 80 3.5 1962 2,1 22 12 .1 42 , 353 8.4 196 3 2, 185 3.0 45 , 465 7. 3 1964 2,4 15 10 .5 49,7 83 9.5 1965 2,5 69 6.4 54 , 897 10 .3 1966 2,7 85 8.4 61, 421 11 .9 1967 3,0 28 8.7 65 , 608 6.8 1968 3, 338 10 .2 71, 454 8.9 1969 3, 559 6.6 78, 560 9.9 1970 * 3,8 26 7. 5 84 ,4 68 7.5 *Esti mated

(1) At market price NOTE ; Data have bean -reviaeQ. �o . accc)rd wi.th. updated D.B.S. st at;lstical ser ies � SOURCE : DEPARTMENT OP' FINANCE I I ! i I I I I I i

' PERSONAL INCOME(!) YEAR VALUE PERCENT CHANGE 1960 1,4 61 1961 1,4 25 -2.5 1962 1,6 02 12 .4 1963 1, 639 2.3 1964 1, 777 8.4 1965 1,9 00 6.9 1966 2,0 73 9.1 1967 2, 318 11 .8 1968 2, 579 11 .3 1969 2, 785 8.0 1970 * 2, 999 1. 1 *E sti ma.ted SELECTED ECONOMIC INDICATORS FOR MANITOBA (Millions of Dollars) LABOUR FARM INCOME(2) .

CASH INCOME VALUE PERCENT VALUE PERCENT CHANGE CHANGE 864 233 899 4.1 243 4.3 953 6.0 263 8.2 1,0 07 5.7 272 3.4 1,0 60 5. 3 302 11 .0 1,1 47 8.2 342 13 .2 1,2 48 8.8 377 10 .2 1,4 13 13 .2 37 3. -1 .l 1,5 77 11 .6 365 -2 .4 1, 774 12 .5 352 -3. 6 1,9 10 1. 7 342 -2.8 (1 ) Dat a have bee n revised to accord with updated D.B,S. st atis tical series . (2 ) Unadju st ed wages and salari es .

SOURCE : DEPARTMENT OF FINANCE/DEPARTMENT OF AGRICULTURE/DEPARTMENT OF LABOUR CHEQUE CASHINGS VALUE PERCENT CHANGE 19 , 081 21 ,1.31 10 .7 21 ,1 91 0. 3 26 ,4 96 25 .0 27, 284 3.0 30 ,9 22 13 .3 33, 71 5 9.0 35 ,372 4.9 34, 184 -3 .4' 36 , 436 6.6 39 ,897 9.5

Yc�i; la :; l,i ::u ti on;.] S1i21"vi..:�s �1nd Guv\.'!rnn1�n.t 19 60 1.52 .6 19 6 1 142 .6 I I 1962 13 1.5 I I 1963 133 .5 1964 14 8.1 1965 145 .6 1966 ! 19 3.5 I 1967 180.4 ! 1963 21 2.8 1969 244 .5 1970 . 25 0.4 *Preli minary Ac tual NEW CAPITAL INVE STMENT IN MANITOBA (Millio ns of Dollars) Perc..!nt Utili ties Pe rcent Pri v.'.l.tc Ch ange Change Sector and Ot her Capi tal Inves tment 181 .S ; -. ,, 34 6.7 -6 . 6 151 .2 -16 .8 290 .9 -7 .8 17 0.2 12 .6 29 4.7 - 1.5 20 8.5 22 .5 333 .4 10 .9 190 .9 -8 .• 4 38 0.3 -1. 7 17 3.7 -9 .0 41 4.9 32 .9 20 1.2 15 .8 46 5.4 -6 .8 I 27 1.3 34 .8 495 .5 I 18 .0 305.4 12 .6 501 .0 14 .9 296 .8 -2 .8 60 6.9 2.4 29 1.6 -1 .8 60 6.7 Sou rce : Depar ti:lent of Fina� ce i To tal Pcrcc nt 1 P ercen t Change I Change .,. 681 .l .. -16 .1 58 4.7 .. 14 .2 1.3 596 .4 2.0 I 13 .1 I 67 5.4 13 .2 I I 14 .1 I 71 9.3 6.5 9.1 73 4.2 2.1 12 .2 86 0.1 17 .l 6·.5 941 . 2 I · io .1 I 1.1 1,0 19.2 i 7.6 21 .1 l l, 148 •. 2 I 12 .7 - i,1 48 .1 ! -- ' I. .

MANITOBA PROVINCIAL OUTPUT GROSS VALUE (Millions of Dollars) PRIMARY RESOURCES CONSTRUCTION MANUFACTURING RETAIL TRADE -- · Percent Percent Percent Percent Year Value Change Value Change Value Change Value Change 19 60 $438 $397 $ 71 1 - $ 843 l 767 (l) 1961 403 -8 .0 370 -6 .8 717 0. 8 N/A 1962 61 6 52 .9 361 -2 .4 753 5.0 801 4.4 1963 581 -5 . 7 403 11 .6 794 5.4 827 3.2 1964 637 9.6 421 4.5 861 8.4 873 5.6 19 65 682 7.1 415 -1 .4 913 6.0 91 8 5.2 19 66 701 2.8 485 16 .9 l, 019 11 .6 1,0 01 <1 > N/A 19 67 683 -2 ,6 558 15 .1 1,0 80 .

I 6.0 1,0 76 6.9 19 68 697 2.0 645 15 .6 1,1 19 3.6 1,1 21 4.2 19 69 756 8.5 754 16 .9 1, 199 7.1 1,1 62 3.7 1970* 828 9.5 702 -6 .9 1,2 1 8 1.6 1,1 82 1. 7 *Es timated (1 ) Data for this year and subsequent years should not be compared directly to those of previous years as the series has been revised to accord with D.B.S. data revisions . SOURCE : DEPARTMENT OF INDUSTRY AND COMMERCE/DEPARTMENT OF AGRICULTURE DEPARTMENT OF MINES AND NATURAL RESOURCES/DEP ARTMENT OF FINANCE

I Agriculture (1 ) ••••.• Minerals ••• ••••••••• Forest Produ ct s •••••

(2) Furs ......• .•.•••

(3) Fisheries ••••••••• Gros s Resource Output *Estimated 19 64 $429 ,0 00 174, 270 22, 500 5,0 47 6,0 48 636 , 865 VALUE OF MANITOBA' S.

PRIMARY RESOURCE PRODUCTION (Thousands of Dollars) 1965 1966 $4 64,0 00 $4 87 ,0 00 18 2,8 83 179 ,3 71 - 21, 100 <4> 22,2 00 <4> 6,6 76 5,1 34 7 ,0 39 < 4> ] ,5 45< 4> 682 , 298 I 701, 250 19 67 $471,0 00 18 4 ,6 54 18 , 400 <4> 4 ,5 90 <4> 4 ,7 21 683 ,3 65 I 19 68 $458 ,0 00 209 , 000 1 9 500 <4> t . 5 262< 4> t ' 5,4 97 697 ,2 59 1969 19 70* $4 73, 0uO $4 68 , 000 246,0 00 <4> 330 , 000 23,0 00 <4> 20, 000 5, 911 <4> 4 ,8 21 8,2 86 < 4> 5,5 00 756, 197 828 ,3 21 (1 ) Excl udes fur farm product ion and agricultural forest production reported in "Furs" and "Forest Products " . Series re vised.

(2) Ranch and wild furs.

(3) Base d on the fi scal year .

(4) Revise d . SOURCE : DEPARTMENT OF AGRICULTURE/DEPARTMENT OF MINES AND NATURAL RESOURCES

ELECTRIC POWER AVAILABLE IN MANITOBA KILOWATT HOURS AVERAGE NET VALUE YEAR (Million) (Thousands of Dollars ) 1960 4 ,5 65 $36 ,3 87 19 61 4 ,9 08 41,1 37 1962 5,2 52 44 ,2 93 19 63 5,7 78 47,3 44 196 4 5,8 44 49,8 22 1965 6,2 64 51, 931 19166 6, 817 55 ,3 85 1967 7,2 07 58 ,5 41 1968 7,5 39 65 , 209 1969 * 8,0 55 73, 492 1970* 9, 238 84 ,2 50 � *Es timated SOURCE : MANITOBA HYDRO ELECTRIC BOARD Previous year 's data revised to accdtd with D.B.S. statis tical series of electric power availabilit y.

DIST RIBUTION OF INCOMES IN MANITOBA (Based on Income Tax Data for Latest Year .Avai lable) NUMBER OF PERCENT OF TOTAL INCOME NUMBER OF GROSS INCOME TAX RETURNS INCOME TAX RETUR.i.�S Under $ 1, 000 51 , 267 12 .4 1,0 00- 2,0 00 59 ,4 52 14 .3 2, 000- 3,0 00 55 ,0 05 13 .3 3, 000- 4,0 00 51, 626 12 .5 4, 000- 5,0 00 42 ,1 84 10 .2 5, 000- 6,0 00 36 ,3 72 8.8 6, 000- 7,0 00 34,1 92 8.2 7, 000- 8,0 00 24 , 951 6.0 8, 000- 9, 000 16 . 405 4.0 9, 000- 10 ,0 00 11 ,8 04 2.8 10 , 000- 15 ,0 00 21 . 971 5.3 15 , 000- 20 ,0 00 4, 845 1.2 r 20 , 000- 25 , 000 1, 731 0.4 Over 25 ,0 00 I 2, 543 0.6 TOTAL 414 , 348 100 .0% SOURCE : DEPARTMENT OF FINANCE

RESI DENTIAL DWELLING STARTS IN MANITOBA (Dwelling Units) 'Si ngle Perce nt Two Percent Percent Apartment + Percent Period De tached Chan2e Famnv · Chan2e Row · · Chan2e ·· other Chan2e 19 60 3, 539 392 52 1,1 49 19 61 3, 759 6.2 256 -34 .7 51 ;...i.9 1,61 2 40 .3 19 62 3.279 -12 .8 17 4 -32 .0 345 576 .5 891 -4 4.7 19 63 3,7 94 15 .7 182 4.6 264 -2 3.5 2, 148 14 1.1 19 64 4,2 70 12 .5 230 26 .4 412 56 .1 1.740 -19 .0 19 65 3, 621 -15.2 232 0.9 162 -60 . 7 1,9 54 12 .3 19 66 3.200 -1 1.6 19 6 -15.5 129 -2 0.4 1, 727 -11.6 19 67 3, 374 5.4 216 10 .2 367 184 .5 118 80 8.9 1968 2,64 9 -2 1.5 237 9.7 274 -2 5.3 3,2 96 75 .3 1969 3.3 15 25 .1 416 75 .5 707 158 .0 7.406 12 4.7 19 70 3, 068 -7 .5 889 113.7 93 5 32 .2 4, 053 -45.3 SOURCE : DEPARTMENT OF FINANCE

APPENDIX D LETTER FROM THE HONOURABLE SAUL CHERNIACK, Q.C., MANITOBA MINISTER OF FINANCE TO THE HONOURABLE EDGAR BENSON, FEDERAL MINISTER OF FINANCE DATED MARCH 23, 1971 RE : TAX REFORM The Honourable Edgar J. Benson , Minist er of Finance , Government of Canada , Confederation Building , OTTAWA, Onta rio . Dear Mr . Benson : Since the scheduled meeti ng of Finance Ministers did not take pl ace , I am writing to express deep concern about the for th coming fe deral tax legislat ion which I now unders tan·l will be introduced in the House of Conunons some time at the end of April or the begi nning of May .

Recent fe deral government sta temen ts appear to place li ttle emphasis on the removal of present regres sive features and the need for equity and fairness in our new tax sys tem based on abi lit y- to-pa y . In view of this , it may be usefu l to briefl y summar ize the leng thy de bate on tax reform that has taken place in Canada in the las t deca de and the positi on taken by the Government of Manitoba. You will recall no doub t that the repor t of the Car ter Royal Conunission on Taxation in 19 67 was a sti nging indict ment of half a century of Canadian tax polic y.

It concluded tha t the pres ent Canadian tax sys tem was not fair , was not based on abilit y- to-pa y , bears too heavily on the low and middle income groups , has restric ted economic growth and has resulted in a misallocation of our resources . Not only did it find the tax sys tem inequita ble , it also branded it as ineff icient and no t suffi cientl y shielded from politi cal influence .

With the publication of the Wh ite Paper on Tax Reform in November , 1969 , the fe deral government st ate d its intention to create a re fo rmed tax sys tem for the people of Canada - a system ba sed on "f airness in taxa tion" .

The Government of Manitoba jo ined with your government in agr eement with the worthwh ile intent ions prese nted in these st at ements althoug h init ially , we st rongly felt that many of the specific proposals in the Wh ite Paper could have been put forward with greater recognition for the principles of equit� and abilit y-to-pay and for the many regional variations exis ting across Canada. . . • • • • 2

- 2 - Accordingl y , Manitoba undertook a de tailed examination of the Wh ite Paper proposals to develop further improvements and al ternatives. Inlt l.;1ll y , this examination took the form of raising q1u•:: t i •'I\:: :m,I '" '�� l.:1 l'l' r lng concerns with the federal government as t�� th.� .. � (i .. �.; t:; oi th e federal proposals -

part icularly as these rela ted to the pe ople of Manitoba. More deta iled examinat ions st ressing con.cept s and tec hniques rather than dollar revenue amounts were summarized in the Manitoba paper "Specific Proposi tions in Respect of Tax Reform" which was tabled at the June 1970 Ministers of Finance meeting and later tabled in the Manitoba Legis lature . I will not .attemp t to summarize these examinations here , al though I have att ached a lis t on our main conclusions and recommendations .

However, I think it impor tant that the views of the Mani toba Government on the ma tter of equity , abili ty-.to-pay and ec onomic growth in relat ionship to the refor med tax sys tem be res ta ted in view of your comments and those of ot hers during the pas t weeks . Since the begi nning of the tax reform de bate , Manitoba has st riven to achieve real disc ussion and di alogue with your government on the principles and tec hniques for achieving the best refo rmed tax sys tem for Canada. We have refrained from competi tive st atis tic al exercises and arbitrary st ate ments .

However , 0las t December , we drew the at tention of the Ministers of Finance to the change we sensed in the texture of the fe deral tax refo rm dis cussions - specific ally fo llowing the release of the Commons Committee Rep ort on the proposed tax sys tem . At that time , cert ain federal st atements could not help but alert cer tain apprehe nsions . Aga in, rece ntl y , your st atements on the White Paper have raised certa in.d oubts . You have cont inued to st ress the willi ngness of the fe deral government to respond to change and to seek be tte r al ternat.ives to the Whi te Paper proposals .

Howeve r, this wil lingness to alter the · original proposals st ill appears to be geared toward changes which critic s say will promote economic growth in Canada ; there is less and less assurance that changes promo ting equity among taxpayers will be considered . In fa ct , there is the implicati on that the principle of equity should be sacrificed whenever it appears to be in conf lict with the promoti on of economic growth within the reformed tax syste m. The Government of Manito ba rej ects this false trade- off in cho ices be tween ec onomic growth and equit y .

As st ate d in the Carter Royal Commission on Taxa tion , equity and economic growth , and how they relate to the tax sys tem, are to tall y indep endent cho ices . There is no conf lict betw een fairness in the tax syste m and the promotion of economic growth des igned to serve the people of this country . • • • • 3

- 3 - I hope tha t the above comments and the pos ition taken by the Government of Manitoba will be re�onsidered prior to the introduction of your tax legisla tion . Tax reform is of critical import ance to the Manitoba Government and to the citi zens it represe nts . For this rea� on , I have taken the liberty of passi ng copies of this le tt er to members of the Manitoba Legisl atu re , to my colleagues in ot her provinces and to the press . att ' d Yours sincerely , Sa ul Cherniack , Miniater of Finance •

MAIN RECOMMENDATIONS OF THE GOVERNMENT OF MANITOBA RE: TAX REFORM

(1) The new legisla tion to be based on tax credits instead of tax exemp tions . Since exemp tions provide greater benefits to those in higher incomes , a sys tem of tax credits , with at tention to marital st atus , depende nts , day-care services , would be more equita ble .

(2) Comprehensive income concep t to be adop te d with all forms of income to be included and subj ecte d to a graduated scale of income tax based on the abili ty-to-P,a y .

(3) Capit al gains to be taxed at full rates in the same way as salaries and wages and ot her forms of income , with exemp tions and parti cular arrangements to prevent undue hardship for the family farm and the homeo wner.

(4) St rict limits on corporation capit al cos t al lowances � adver tising , entert ainment and convention expens es.

(5) Adequate assurances of sharing revenue increases with provincial governments , with es tate and corporation taxation levied and administered across the country by the federal government .

(6) The same treat ment for employment expenses to be allo wed for wage and sal ary earners as is now allo wed for the self employed .

(7) Natural resource indus tries to be taxed on the same basi s as. ot her industries .

(8) The continuation of progressive top rates in the income tax

schedule which should enable the lowering of rates at the bott om of the scale .

Document details

Collection	Manitoba — Debates (Hansard)
Citation	29-3-39
Type	hansard
Volume / chapter	29th 3rd hansardpdf 39.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	cdb429527e7ee4f495a95960d36b49af848d38bb

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