House Business
Hon. Jim Ernst (Government House Leader): Madam Speaker, on a couple of items of House business, I would like to advise the House that the meeting of the Standing Committee on Public Utilities and Natural Resources called for Tuesday, October 31, 1995, at 10 a.m. to consider the 1994 Annual Report and Five-Year Operating Plan of the Workers Compensation Board will be cancelled due to the ill health of the chair of the Workers Compensation Board.
Madam Speaker, the meeting of the Committee of Municipal Affairs scheduled for this evening at 8 p.m. to consider Bills 18, 34 and 36 has also been cancelled.
I propose to call the Committee of Municipal Affairs to consider those bills, that is 18, 34 and 36, at 10 a.m. tomorrow, Tuesday, October 31.
Madam Speaker, just for the information of the members of the House, I would propose this afternoon, shortly, to move into Committee of the Whole to consider Bill 28, followed then by Report Stage of the bills as listed in the Order Paper, and then following that, by third reading on the balanced budget legislation, Bill 2.
Madam Speaker, in light of significant events going on elsewhere in our country today and the results of which will be reported earlier this evening, I believe there may be a will of members of the House to call it 10 p.m. at 6 p.m.
Madam Speaker: Is it the will of the House to call it 10 p.m. at 6 p.m. [agreed]
Mr. Ernst: I move, seconded by the Minister of Culture, Heritage and Citizenship (Mr. Gilleshammer), that Madam Speaker do now leave the Chair and the House resolve itself into the Committee of the Whole to consider and report on Bill 28, The Statute Law Amendment (Taxation) Act, 1995 (Loi de 1995 modifiant diverses dispositions législatives en matière de fiscalité), for third reading.
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Motion agreed to and the House resolved itself into a Committee of the Whole to consider and report Bill 28, with the honourable member for St. Norbert (Mr. Laurendeau) in the Chair.
COMMITTEE OF THE WHOLE
Bill 28--The Statute Law Amendment (Taxation) Act, 1995
Mr. Chairperson (Marcel Laurendeau): The Committee of the Whole will come to order to consider Bill 28, The Statute Law Amendment (Taxation) Act, 1995 (Loi modifiant diverses disposition législatives en matière de fiscalité). Does the honourable Minister of Finance have an opening statement? No. Does the Finance critic for the official opposition have a statement?
Mr. Leonard Evans (Brandon East): Mr. Chairman, no general opening statement except to say that we appreciate the notes the minister has given us on some specific clauses, but we will have to ask him to elaborate on them so that we have a better understanding of the specific sections.
Mr. Chairperson: We shall now proceed to consider Bill 28 clause by clause. Shall Clause 1 be passed?
Mr. Leonard Evans: As I understand, we are on Part 1, The Gasoline Tax Act.
Mr. Chairperson: That is correct.
Mr. Leonard Evans: We have no major problem with this proposal, Mr. Chairman, but I wonder if the--
Mr. Chairperson: Order, please. Could I ask the honourable members who want to carry on their conversations to do so out in the hall or in the loge? I am really having difficulty. In this position down here, all your noise is coming straight to me.
The honourable member for Brandon East, to continue.
Mr. Leonard Evans: Mr. Chairman, well, we would support the government's initiative in this respect, because exemption from aviation fuel tax on international cargo flights does, hopefully, support employment creation in the air cargo business, the air cargo transportation. As the minister informed us, this has been in effect since July 1 of 1993, and what this bill does is expand on the exemptions.
I am wondering if the minister could tell us just what has been the impact of the exemptions to date and what will be the impact of this particular change. Could he talk in terms of the volume of cargo, for instance, or the volume of flights as is impacted by this particular amendment?
Hon. Eric Stefanson (Minister of Finance): Mr. Chairman, the member is correct that this amendment expands the tax incentive program which was implemented in 1993 to assist the development of a major air freight distribution centre in Manitoba. My understanding is that to date it has had a very negligible impact on revenues. This expansion certainly is expected to have a very negligible impact on revenues, because it really expands the definition to include carriers that include both people and cargo.
But in terms of the specific numbers, I can certainly undertake to provide the member for Brandon East (Mr. Leonard Evans) with specific impacts of the existing legislation.
The expectation is that this amendment will have a very negligible impact on revenue.
Mr. Leonard Evans: Mr. Chairman, I do not know whether I heard all of the answer because of certain noise in the Chamber. Nevertheless, I presume it is rather difficult to note just what impact an additional exemption will make. Perhaps one has to wait until time passes to see what has been the change.
I was wondering if the minister could explain to the House or advise the House how these exemptions compare with exemptions, let us say, in neighbouring prairie provinces, Alberta, Saskatchewan. Is he aware of what these other provinces are doing? To some extent they are in competition in with us. Has he any comparison information?
Mr. Stefanson: Mr. Chairperson, we would have those comparisons--I do not have them with me, and I would not want to start going by memory to provide them to the member. So, again, I will undertake to provide him with that comparison with other Canadian provinces.
Mr. Leonard Evans: I look forward to getting that information.
Generally speaking, then, we have no difficulty--assuming we are getting that information--in passing Part 1, and to go on to Part 2.
Mr. Chairperson: Clause 1--pass.
I would remind the committee that as we proceed clause by clause, may I suggest to the committee that we block the clauses. Is that agreeable?
Mr. Leonard Evans: What is the impact of that, Mr. Chairperson? I guess I am more concerned with specific parts, but sometimes you get into a subcomponent of a part.
Mr. Chairperson: If the honourable member would like to give me the list of areas that he has, I will make sure we stop at those specific clauses.
Hon. Darren Praznik (Deputy Government House Leader): Mr. Chairperson, as acting House leader of this committee, I appreciate the concern of the member for Brandon East (Mr. Leonard Evans) and the willingness of all of us to expedite this process.
I would suggest that we just show some latitude as we move through it. If there are particular parts that the member for Brandon East has questions on or clarifications, as long as he stops, we will ensure that his questions are met.
Mr. Chairperson: Clause 2--pass; Clauses 3, 4 and 5.
Mr. Leonard Evans: Mr. Chairperson, these clauses deal with The Health and Post Secondary Education Tax Levy Act.
As I understand it, this provides for some technical changes to clarify the wording of the payroll tax exemption with regard to trucking firms. Again, I am not clear what the impact is of the this particular amendment, so I wonder if the minister could elaborate to the House, to the committee, just what impact does he see this particular change having.
Mr. Stefanson: Again, the member is correct. This is to clarify that the relief under this section is for the transportation industry to enable them to compete. It is not meant to apply where hauling of goods is just one element of a particular industry or business because they are obviously not competing in the transportation industry. It is only one component or a small portion of their business.
I am assuming the member is looking for the financial quantification of what this could mean, if I understand that. Again, those are very, very difficult to determine, but the principle is clearly to allow this legislation to provide relief for companies or organizations that are in the field of transportation, so when they are competing with other similar companies from other provinces they are on a level playing field as it relates to the payroll tax or the health and post-secondary education levy.
In terms of the financial quantification, again, I can undertake to attempt to provide the member with some additional information on that issue, Mr. Chairman.
Mr. Leonard Evans: Mr. Chairman, again, I appreciate it is very difficult to forecast impacts although I note that past budgets, budget documents from time to time do estimate the impact of the taxation adjustments. In the case of the aviation fuel tax, incidentally, I gather there is either no estimate or no impact known immediately, but there is nothing with respect to this particular one on health and post-secondary education taxes.
I was probably more concerned--well, I was more concerned with the impact on the industry. The name of the game is to presumably stimulate the economy, and the argument is, well, if you reduce these kinds of taxes you have a stimulative effect on this particular industry. So this was really the nature of my question and, of course, there were exemptions provided previously. This is just a clarification. So I guess this is my main concern, not so much the revenue impact to the Treasury but what is the impact on the economy.
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Mr. Stefanson: Mr. Chairman, again, as the member knows, we have approximately I believe six or seven of the head offices, the headquarters for the major interprovincial trucking firms right here in Manitoba. I think that is six or seven out of 11 I believe or a number somewhere in that range. So it certainly is a very significant part of our economy. The Minister of Industry, Trade and Tourism (Mr. Downey) has provided numbers in terms of the job opportunities today in the transportation field. I know they are looking for literally hundreds of employees to meet their requirements.
So, again, the transportation sector is a major employer within our economy. There continue to be more and more job opportunities. Certainly, one element of that--besides our central geographic location and other aspects of doing business--that allows those firms to compete on a level playing field is the fact that companies that are in the transportation industry and sector are relieved from paying the health and post-secondary education tax levy.
So I think those kinds of numbers, the fact that they continue to be headquartered here, to continue to keep their presence here, the fact that they are looking for hundreds of additional employees, shows that through initiatives like this they are able to compete from right here in Manitoba as they should be able to, Mr. Chairman.
Mr. Leonard Evans: Just by way of clarification, Mr. Chairman, I would ask the minister: Was there never any attempt to collect such taxes from firms who were not necessarily headquartered in Manitoba but who operated in and through Manitoba as interprovincial-international firms?
Mr. Stefanson: Mr. Chairman, in terms of how those firms were treated prior to this original amendment, which goes back some period of time, which goes back prior to 1990, I would have to again determine how they were treated, but I would believe, as it would relate to services in Manitoba, that there is a strong possibility that we are subject to the tax for payroll here in our own province.
But, as I said, we have many of these companies that are interprovincial, so they are competing into these other provinces that do not have a payroll tax. They are providing services into provinces right across Canada. So the levelling of the playing field is not so much the levelling in our own province; it is the levelling of the playing field in the other nine provinces across Canada, Mr. Chairman.
Mr. Leonard Evans: Well, I just make a comment, Mr. Chairman. While we do not oppose this amendment, I would just comment that we still have this levy. When we were in office back some many years in the early to mid-'80s I guess we took a lot of criticism from the then opposition and the then opposition leader who is now the Premier (Mr. Filmon) about the very existence of this levy referred to by many as the payroll tax.
Of course, no government likes to implement a new tax. No government wishes to increase taxes--that is not a way to win popularity contests for sure--but one does have to take responsibility to obtain sufficient revenues to ensure that deficits either are minimized or deficits do not occur. Of course, this was one area of obtaining revenue. We were not trailblazing in this, because I believe Quebec at least had a similar tax, and there were shades of it in Ontario as well because many companies did pay towards medicare premiums, health care services and in effect had something in the nature of a levy for health and, if not, for education.
I do recall distinctly that the then Leader of the Opposition, now Premier, stated categorically that a government that he would head would totally eliminate this levy. I know it is stated often by the Minister of Industry (Mr. Downey) and others, that while we have raised the level of exemptions, so we have caused many thousands of small firms from being exempted.
I just might point out, we did that as well. Through a couple of years, we increased the exemption level so that fewer small businesses would have to pay this tax. Indeed, I know we would have increased the exemptions further, but that is not what was promised by the Premier at that time. He promised categorically--in fact, one would only have to take a few minutes to look up Hansards from back at that time to see where there were various speeches made, when members on this side who are now on the government side--that this tax would be totally eliminated, not just amended, not just tinkered with, so to speak, but totally eliminated.
I remember shouting across at that time, an interjection, I suppose, that no way will you get rid of this tax, because it brings in too much money for you to ignore. Indeed, last year, 1994-95, according to this year's budget document, the tax brought in, the levy brought in $194 million, and this year it is estimated to bring in $193 million even with the exemption. This is one of the most significant revenue sources; it exceeds many other areas of taxation, including tobacco taxes, gasoline taxes, corporate capital taxes and so on. It is one of the most significant areas of taxation.
Regrettably, the fact is that I do not see this levy ever going. We would like to see it go. I know, as they say, no government, no party, wants to impose additional taxes or increase taxes, but I do not see it going in the near future, because the government needs the money. Even though this government is squeezed on its expenditure side, the fact is the revenues have not flowed in to the same extent that they would have liked to have seen, or we would have liked to have seen.
As a result, we have had many a year, year after year, of deficits. I am not going to go over the whole argument of the Dominion Bond Rating Service and its comments, but even just looking at the minister's own budget document, we could just see year after year after year of deficits. Without this near $200 million, those deficits would be significantly higher.
I do not know whether the minister wants to respond or not, I am sure he will not be getting up to suggest that this tax will be eliminated in the near future.
Mr. Stefanson: I think the member for Brandon East is trying to drag me into debate here. In terms of the payroll tax or the health and post-secondary education levy, as the member knows, the rate has not been increased since 1987, since our entire term in office, and, as well, the threshold has been consistently increased.
Today, the basic threshold I believe is $750,000, with an additional element over and above that. Today, in excess of 90 percent of the businesses in Manitoba no longer pay this payroll tax, so very significant improvements have been made in terms of the impact of this tax on businesses here in our province.
The member is correct. Even with less than 10 percent of businesses paying the tax, it still generates a significant amount of money, $193 million. Our objective will be to continue to work towards the ultimate elimination, but in a fairly short period of time, with governments coming through difficult times, recessions right across Canada, I believe we have made very significant inroads in terms of improving the situation relative to the exemption levels and the number of businesses that no longer pay that tax. Obviously, I believe it has had a very important impact and positive impact on our economy.
I could go on at length explaining why to the member for Brandon East, if he so wishes, but I will leave my remarks at that for now, Mr. Chairperson.
Mr. Chairperson: Shall Clauses 3, 4 and 5 be passed?
Mr. Leonard Evans: Just very briefly, I agree we do not want to burden small business, but I think the minister will have to acknowledge, one of the attractions of the particular tax was that it did allow us to obtain significant revenue from federal Crown agencies, from the federal government and also from some fairly large corporations that operated in this province and are still operating in this province in spite of the tax. So the tax has benefited this Minister of Finance and other Ministers of Finance in bringing in revenue he would not have otherwise.
Having said that, I do not want to carry on a debate on this. I am prepared to pass this section.
Mr. Chairperson: Clauses 3, 4 and 5--pass.
Shall Clauses 6, 7 and 8 be passed?
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Mr. Leonard Evans: Mr. Chairperson, Clauses 6, 7 and 8 deal with mutual fund trusts, and I do not know whether I understand all of it but I wonder if the minister--and I do appreciate the minister's note on it--is prepared to make any further comment on what he sees as the impact of these Clauses 6, 7 and 8.
Mr. Stefanson: Mr. Chairperson, the member is right. The notes are fairly comprehensive and this is really a technical area, but what we have today is an element of double taxation where the mutual fund trust pays net income tax and surtax on allocated taxable dividends to them, and then any unit holders may ultimately also pay net income and surtax on capital gains realized when they redeem their units. So we, in effect, have a double taxation which is in part unique to provinces like Manitoba because of the net income tax here in our province and the applicability of surtaxes. So what this does again is put the treatment of this kind of income on a level playing field with most other jurisdictions in Canada.
Obviously, again, it is important to Manitoba in terms of this type of income generated, particularly with the presence of trust companies and so on here in Winnipeg and Manitoba. Again, it is to eliminate really what is an unfair double taxation because of the tax treatment in the mutual fund trust and then the ultimate tax treatment when that is allocated to individual Manitobans.
Mr. Leonard Evans: I thank the minister for that explanation, and we have certainly no difficulty in supporting this.
I would just like to take the opportunity to offer a suggestion here with regard to--since we are talking about RRSPs, whether the minister has ever considered attempting to classify Manitoba bonds, our provincial bonds, as RRSP eligible? Now maybe I am off base here, but I do not think they are RRSP eligible to date. I believe the federal government is now seriously looking at the possibility of federal government bonds being eligible for RRSP purposes, and I would think that, if this could be arranged, then it would certainly help the sale of Manitoba government bonds. Again, I wondered if the minister had any comment on this.
Mr. Stefanson: Mr. Chairperson, I do stand to be corrected, but I think Manitoba bonds may well qualify under a self-administered RRSP. I will certainly undertake to get more information on that issue and follow up with the member for Brandon East.
Mr. Leonard Evans: I wonder if I could ask the minister: Has he noted the news accounts of the federal government looking at this matter of allowing federal bonds automatically on their purchase to be registered as RRSP eligible?
Mr. Stefanson: Mr. Chairperson, that might just be. The technical difference is you need a vehicle like a self-administered RRSP to then invest in a Manitoba Builder Bond or a Canada Savings Bond, as opposed to buying the unit direct and qualifying for an RRSP. I believe through the mechanism of a self-administered RRSP that they do in fact qualify, but as I say, I have not practised accounting now for five or six years in the public sense. I will certainly undertake to get more details and discuss that further with the member for Brandon East.
Mr. Chairperson: Clauses 6, 7 and 8--pass; Clauses 9 and 10--pass.
Shall clauses 11, 12, 13, 14 and 15--
Mr. Leonard Evans: Mr. Chairperson, this amendment allows, as I see according to the notes, a taxpayer to appeal an assessment or reassessment to the Tax Appeal Commission.
I am wondering whether the minister could tell us, just who is on the Tax Appeal Commission, and how does it work?
Mr. Stefanson: Mr. Chairperson, if I recall correctly, we discussed this at length during my Estimates here in this Chamber, and I would encourage the member to read my comments and subsequent information that I did provide him after that with the name. It is one individual. I provided the name to the member for Brandon East. I apologize, I cannot recall the individual's name here today. I did provide some additional information, but it is the same commission that currently considers appeals under The Sales Tax, The Payroll Tax and The Corporation Capital Tax Acts. So I think we have provided a fair degree of information during the time of our Estimates for the Finance department back in June.
Mr. Leonard Evans: Mr. Chairman, I did not recall whether this was the same Tax Appeal Commission that we were discussing at that time during the Estimates, and as I understand now, the minister says it is one individual who does this. The minister talks about a level playing field in his previous remarks, so what we are doing here is allowing an appeal mechanism in this area that has not been available to date but has been available in other forms of taxes.
For just a matter of information, has the commission now received--I imagine the word has been out in the mining industry--have there been many inquiries made of the Tax Appeal Commission or applications to that commission to date?
Mr. Stefanson: Mr. Chairman, again, in terms of any recent or current requests, I will have to take that as notice, and I will provide that information.
Really this change came about in part as a result of representation we had from the mining industry. They made the point that the member just did that when they look at the other statutes, the sales tax and payroll tax and corporation capital tax, there is an appeal mechanism as part of the process, and this really levels the playing field in terms of allowing mining companies who are affected by The Mining Tax Act to follow the same process. Whether or not we have had any indications of any potential appeals, I would have to take that specific question as notice, Mr. Chairman.
Mr. Chairperson: Clauses 11, 12, 13, 14 and 15--pass. Clauses 16, 17 and 18--pass.
Shall Clauses 19 and 20 be passed?
Mr. Leonard Evans: Mr. Chairman, this is a change with regard to sales tax remittances, I guess, rebates at the time of selling a used vehicle. I gather this is to facilitate or simplify immediate tax credit on a private sale of a vehicle being replaced. Does this have some bearing or does the change in the motor vehicle legislation regarding people selling used vehicles having to have inspections before they can sell their vehicles, the safety inspection that we were talking about--is this somehow or other linked with that particular legislation?
Mr. Stefanson: No, it is not, Mr. Chairman. It really is a convenience issue to the public--maybe in part to the Autopac agents, as has been pointed out--that when individuals are both buying and selling a private vehicle, they can net the provincial sales tax at the time that they make the transaction when they register their automobile.
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Instead, right now, they have to pay the provincial sales tax when they register their new vehicle and they apply for a refund to the Department of Finance to get their money back on vehicles they have sold. Sometimes that can take several days or weeks and obviously requires an application process as opposed to being able to go into an Autopac agency and do it all at the same time. So it really is a service delivery function to the public.
Mr. Chairperson: Clauses 19 and 20--pass; Clause 21--pass; Clauses 22 and 23--pass.
Clause 24.
Mr. Leonard Evans: Mr. Chairperson, I guess we wanted to talk about deductions in respect of bad debts.
Again, am I correct then by reading this note that it is a budget commitment to forgive retail sales taxes and tax on electricity and natural gas which has not been collected on bad debts. Have I got the right reading of this particular clause or section?
Mr. Stefanson: Mr. Chairperson, the member is correct; that is what this will allow: the nonpayment of the retail sales tax and revenue tax as a result of any bad debts. Again, it is a fairness issue; it is one that was brought to light by various individuals and organizations. What we are now proposing to do in this area is similar to tax adjustments allowed in many other provinces across Canada.
The fundamental principle that if the business does not collect the amount owing them and the tax on that transaction, they should not ultimately be held accountable for paying that tax to government.
Mr. Chairperson: Clause 24--pass; Clause 25--pass; Clauses 26, 27, 28--pass.
Clauses 29 and 30.
Mr. Leonard Evans: The item here is regarding the transfer for benefit of an Indian band. We are talking about land transfer tax.
Again, this is presumably mainly an administrative matter, I understand, to simplify land claims settlements. Is this correct or is there any revenue implication for the Crown in this respect?
Mr. Stefanson: Mr. Chairman, the revenue implications would be to us that this is actually a new exemption from land transfer tax, and, really, where it applies is where land is transferred to a transferee for the use and benefit of an Indian band as part, as the member has said, of a treaty land entitlement settlement. Under those kinds of situations, no land transfer tax will be charged on the transfer if an agreement between the government of Manitoba and the Government of Canada provides that that land transfer tax would normally be payable. So it is in only those situations.
Mr. Leonard Evans: Mr. Chairman, we have no problem with that, but I would ask the guidance of the Chair or the minister with regard to one item that we wanted to touch on, and we may have passed it by because I think we are pretty well at the end of the bill.
I wanted to ask about the rebates for first-time buyers of new homes. There are notes on that, but I am trying to quickly find out where that is in the bill. I think we may have slipped by that one. I wonder if the minister or the Chair could guide us.
An Honourable Member: Twelve.
Mr. Leonard Evans: Clause 12? No, that is not it.
Mr. Chairperson: Is there leave of the committee to revert to Section 22?
An Honourable Member: Leave.
Mr. Chairperson: Leave. Leave has been granted.
Mr. Leonard Evans: Section 22, is this--I am not so sure whether I am still following you. I wonder if the minister or the Chair could indicate what page.
An Honourable Member: Twelve.
Mr. Leonard Evans: Page 12. There is a reference to rebates of up to $2,500 of retail sales to first-time buyers of new homes, and you are extending it to December of this year, 1995. You note that almost 340 families have received rebates totalling over $737,000.
I wonder if the minister can update this at all. Does he expect to get considerably more people interested in buying homes, because it seems to me, Mr. Chairman, as I pointed out in the House by way of questions to the minister in Question Period, this is one industry that is relatively weak. Our housing starts in Manitoba have fallen, and the amount of starts we are having today is quite a small fraction of what was normally achieved about 10 years ago.
It is really amazing how the housing starts in this province have fallen off. Now, there can be various reasons for that. One reason, of course, is the mortgage interest rates that are available to first-time buyers or to buyers of new homes, period, and also, of course, what is happening to personal disposable income. That has a great bearing on the ability of Manitobans to buy new housing. But, for whatever reason, we have a very serious situation.
We have a very weak housing industry that nobody wants to see. I just find it very surprising that we are at a very low level and we have been for the last several years compared to what we used to realize in Manitoba in the '80s and way back in the '70s and '60s. I go back even to the '50s when I worked as an economist for CMHC. We used to have far more housing starts then than we do today. It is just a wonder.
At any rate, I wonder if the minister could comment then or respond with regard to any future potential of this particular rebate?
Mr. Stefanson: As the member knows, this was introduced in our 1994 budget on April 21, 1994, and was again extended in our 1995 budget to the end of this year, to the end of December 1995. The total approvals to the end of September of this year are now 416 for total rebates of $908,481. There obviously were still some in process at the end of September. In fact, there is a major campaign going on now.
This has been a program that certainly the homebuilders, in terms of meetings and representation made to me, have been very positive about. They have suggested that it has been very helpful and beneficial in terms of stimulating additional activity in the new home building and buying area.
The member for Brandon East and I have discussed the whole issue of housing starts during Question Period in this House. The performance in 1995 is not that great right across Canada. But again if you look at Manitoba's relative performance over the last few years and the projection for 1996, we certainly fare amongst the best in all of Canada in terms of our performance in housing starts and the housing industry.
The briefing note that I provided earlier showed the information to the end of May. Now to the end of September there are 416 applications approved.
Overall I would say it has been a very successful program. Obviously any future determinations all become part and parcel of our next budget process, Mr. Chairman.
Mr. Leonard Evans: Certainly we are not opposing this. I am a little surprised that there has not been more take-up than is shown here. Even though the minister may be correct in saying that Manitoba does not look that bad compared to some of the other provinces, the fact is that the level of housing activity, new housing construction in Manitoba, is considerably below some of the previous historic levels that we have achieved.
So you can talk about how we compare with the rest of Canada and so on, but we are way down in the valley, so to speak, in terms of new housing starts, and we do not seem to be able to really come out of it. We might say, well, our percentage increase is better than most other provinces and so on, but we are still way in the depths of the valley, Mr. Chairman. So, obviously, this particular amendment does not hurt. It does stimulate. I am simply saying I am rather surprised that it has not had more impact than the minister indicates.
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I note, too, that there is no reference to it in the 1995 summary of tax changes. I presume it was in last year's, but it is certainly not noted in this 1995 tax changes. So I imagine the department or whoever has looked at this does not figure that it is not going to be a very significant item because normally you list these changes in the budget document.
Mr. Chairperson: Clauses 29 and 30--pass; Clause 31--pass; Clauses 32, 33, 34, 35--pass; Preamble--pass; Title--pass. Bill be reported.
Committee rise. Call in the Speaker.
IN SESSION
Committee Changes
Mr. Edward Helwer (Gimli): Madam Speaker, I would like to make some committee changes.
Madam Speaker: The honourable member for Gimli, with committee changes.
Mr. Helwer: I move, seconded by the member for St. Vital (Mrs. Render), that the composition of the Standing Committee on Law Amendments be amended as follows: the member for Springfield (Mr. Findlay) for the member for Arthur-Virden (Mr. Downey); the member for Morris (Mr. Pitura) for the member for Brandon West (Mr. McCrae); the member for Gimli (Mr. Helwer) for the member for River East (Mrs. Mitchelson); the member for St. Vital (Mrs. Render) for the member for La Verendrye (Mr. Sveinson); and the member for Pembina (Mr. Dyck) for the member for Fort Garry (Mrs. Vodrey).
I move, seconded by the member for Morris (Mr. Pitura), that the composition of the Standing Committee on Municipal Affairs be amended as follows: the member for Emerson (Mr. Penner) for the member for Assiniboia (Mrs. McIntosh).
Motions agreed to.
Committee Report
Mr. Marcel Laurendeau (Chairperson of Committees): Madam Speaker, the Committee of the Whole has considered Bill 28, The Statute Law Amendment (Taxation) Act, 1995, and has directed me to report the same without amendment.
I move, seconded by the honourable member for Morris (Mr. Pitura), that the report of the Committee of the Whole be received.
Motion agreed to.
Hon. Jim Ernst (Government House Leader): Would you call report stage, Madam Speaker, for the bills as listed in the Order Paper.
REPORT STAGE
Bill 4--The Real Property Amendment Act
Hon. Jim Ernst (Minister of Consumer and Corporate Affairs): Madam Speaker, I move, seconded by the Minister of Environment (Mr. Cummings), that Bill 4, The Real Property Amendment Act (Loi modifiant la Loi sur les biens réels), as amended and reported from the Standing Committee on Law Amendments, be concurred in.
Motion agreed to.
Bill 9--The Wills Amendment Act
Hon. Rosemary Vodrey (Minister of Justice and Attorney General): I move, seconded by the Minister of Environment (Mr. Cummings), that Bill 9, The Wills Amendment Act, Loi modifiant la Loi sur les testaments, reported from the Standing Committee on Law Amendments, be concurred in.
Motion agreed to.
Bill 10--The Development Corporation Amendment Act
Hon. Harry Enns (Minister of Agriculture): On behalf of my colleague the Minister of Industry, Trade and Tourism (Mr. Downey), I move, seconded by the honourable Minister of Highways and Transportation (Mr. Findlay), that Bill 10, The Development Corporation Amendment Act (Loi modifiant la Loi sur la Société de développement), reported from the Standing Committee on Law Amendments, be concurred in with amendment.
Motion agreed to.
Bill 11--The Trustee Amendment Act
Hon. Rosemary Vodrey (Minister of Justice and Attorney General): Madam Speaker, I move, seconded by the Minister of Urban Affairs (Mr. Reimer), that Bill 11, The Trustee Amendment Act; Loi modifiant la Loi sur les fiduciaires, reported from the Standing Committee on Law Amendments, be concurred in.
Motion agreed to.
Bill 12--The Louis Riel Institute Act
Hon. Harry Enns (Minister of Agriculture): Madam Speaker, I am privileged to move, seconded by the Minister of Highways and Transportation (Mr. Findlay), that Bill 12, The Louis Riel Institute Act (Loi sur l'Institut Louis Riel), as amended and reported from the Standing Committee on Law Amendments, be concurred in.
Motion agreed to.
Bill 13--The Split Lake Cree Northern Flood Implementation Agreement, Water Power Amendment and Consequential Amendments Act
Hon. Darren Praznik (Minister of Northern Affairs): Madam Speaker, I would move, seconded by the honourable Minister of Agriculture (Mr. Enns), that Bill 13, The Split Lake Cree Northern Flood Implementation Agreement, Water Power Amendment and Consequential Amendments Act; Loi concernant l'accord de règlement de la première nation crie de Split Lake relatif à l'application de la convention sur la submersion de terres du Nord manitobain, modifiant la Loi sur l'énergie hydraulique et apportant des modifications corrélatives, reported from the Standing Committee on Economic Development, be concurred in.
Motion agreed to.
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Bill 14--The Mines and Minerals Amendment Act
Hon. Darren Praznik (Minister of Energy and Mines): Yes, Madam Speaker, I would like to move an amendment to this particular bill. It is with respect to a particular Clause 84(4). We had some extensive discussion in committee and we agreed to amend it at this stage to allow the official opposition party an opportunity to review the amendment, and I believe there is an agreement to see this passed.
I would move, therefore, seconded by the honourable Minister of Highways and Transportation (Mr. Findlay),
THAT Bill 14 be amended by adding the following after the proposed subsection 84(3), as set out in subsection 15(2) of the bill:
Holder may be exempted from acquired work
84(4) The director may, on application by the holder of the claim on or before the anniversary date of the recording of the claim, grant an exemption from performing some or all required work where the director is satisfied by the holder that the holder is unable to gain access to the claim to perform required work owing to a forest fire or other special circumstances beyond the control of the holder.
[French version]
Il est proposé que le projet de loi soit amendé, au paragraphe 15(2), par adjonction, après le paragraphe 84(3) qui y est énoncé, de ce qui suit:
Exemption
84(4) Si le titulaire en fait la demande au plus tard à la date anniversaire de l'enregistrement de son claim, le directeur peut l'exempter en tout ou en partie des travaux obligatoires s'il le convainc qu'il ne peut avoir accès à son claim pour faire les travaux en question en raison d'un few de forêt ou de circonstances spéciales hors de son contrôle.
Madam Speaker: It has been moved by the Minister of Energy and Mines (Mr. Praznik), seconded by the honourable Minister of Highways and Transportation,
THAT Bill 14 be amended by adding the following after the proposed subsection 84(3), as set out in subsection 15(2) of the bill:
Holder may be exempted from acquired work 84(4) The director may, on application by the holder of the claim on or before the anniversary date of the recording of the claim, grant an exemption from performing some or all required work where the director is satisfied by the holder that the holder is unable to gain access to the claim to perform required work owing to a forest fire or other special circumstances beyond the control of the holder.
Agreed?
Some Honourable Members: Agreed.
Madam Speaker: Agreed and so ordered.
Mr. Praznik: Madam Speaker, I move, seconded by the most honourable Minister of Agriculture (Mr. Enns), that Bill 14, The Mines and Minerals Amendment Act; Loi modifiant la Loi sur les mines et les minéraux, as amended and reported from the Standing Committee on Economic Development, be concurred in.
Motion agreed to.
Bill 25--The Real Property Amendment Act (2)
Hon. Rosemary Vodrey (Minister of Justice and Attorney General): Madam Speaker, I move, seconded by the Minister of Labour (Mr. Toews), that Bill 25, The Real Property Amendment Act (2) (Loi no 2 modifiant la Loi sur les biens réels), as amended and reported from the Standing Committee on Law Amendments, be concurred in.
Motion agreed to.
Bill 26--The Liquor Control Amendment Act
Hon. Harry Enns (Minister of Agriculture): Madam Speaker, I want to inform the House that there is an amendment to this bill. I would like to move that amendment, seconded by the honourable Minister of Northern Affairs (Mr. Praznik)--oh, there is no amendment. I was going to move another amendment, but I will scratch that from the record.
I simply move the bill. That Bill 26, The Liquor Control Amendment Act (Loi modifiant la Loi sur la réglementation des alcools), reported from the Standing Committee on Economic Development, be concurred in.
Motion agreed to.
Bill 33--The Statute Law Amendment Act, 1995
Hon. Rosemary Vodrey (Minister of Justice and Attorney General): Madam Speaker, I move, seconded by the Minister of Government Services (Mr. Pallister), that Bill 33, The Statute Law Amendment Act, 1995; Loi de 1995 modifiant diverses dispositions législatives, reported from the Standing Committee on Law Amendments, be concurred in.
Motion agreed to.
THIRD READINGS
Bill 2--The Balanced Budget, Debt Repayment and Taxpayers Protection and Consequential Amendments Act
Hon. Darren Praznik (Deputy Government House Leader): Madam Speaker, I would move, seconded by the honourable Minister of Agriculture (Mr. Enns) once again, that Bill 2, The Balanced Budget, Debt Repayment and Taxpayers Protection and Consequential Amendments Act; Loi sur l'équilibre budgétaire, le remboursement de la dette et la protection des contribuables et apportant des modifications corrélatives, be now read a third time and passed.
Motion presented.
Mr. Leonard Evans (Brandon East): Madam Speaker, I rise to speak in third reading on this particular piece of legislation, which I presume the government considers to be one of its most important pieces of legislation brought forward in this session. Certainly a great deal was made about it during the election.
Madam Speaker, we heard many representations in the Standing Committee on Economic Development. There were many groups that presented some very insightful presentations, briefs, some professors, some people representing teachers, the Manitoba Teachers' Society.
We had people from the Government Employees' Union. We had the people from other teacher organizations, some unions. We had some business organizations representing their interests as well. We had the Manitoba Taxpayers Association and others.
So we heard a range of testimony. Some, particularly one or two, I might point out, were very insightful with regard to the consequences of this kind of legislation.
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But as I have said in discussion of this bill in second reading, unfortunately it is not in keeping with our democratic parliamentary traditions. A democratic parliamentary tradition is where the Minister of Finance, where a government, brings in a budget in a given year based on the economic and financial circumstances facing the minister and the government at that time.
What this purports to do is to set out a framework of budgeting which is not in keeping with our traditional practices. What it attempts to do is to, in effect, put a straitjacket on future governments who are dealing with fiscal matters. It purports to impose a certain debt repayment regime on people--10, 20, 30, 31 years from now--and I say it is up to the people who live at that time, up to the MLAs who are in this House in the future 10, 20 years, to make decisions as to how they want to tackle the fiscal challenges facing the government of that day.
Many of the briefs provided some insight that all of the members of this Legislature should be made aware of. There was one brief, in particular, from an individual who talked about the fact that it would be a burden on small business and middle- and lower-income families who would likely be the first to suffer increases in the tax burden. He mentions that the bill requires a referendum to increase tax rates, but no referendum is needed, Madam Speaker, to decrease or eliminate tax deductions, credits or exemptions which he referred to in his brief as TDCEs for short; T-D-C-E, namely, tax deductions, credits or exemptions. What we have done here is allow the government--constrain the government with regard to major tax increases, such as income taxes or sales taxes, but allowing it to be able to decrease or eliminate the tax deductions, credits or exemptions which could have a significant impact on taxpayers including small business.
This person, who presented this brief, was particularly concerned about the negative impact on small business, and he pointed out, for example, the rate of provincial tax on corporate income as 17 percent. However, there is an 8 percent provincial small business deduction on active business income earned in Manitoba by Canadian-controlled small business corporations. He points out that this deduction, Madam Speaker, is the cornerstone for tax planning and tax fairness for small and family-owned businesses in the province. Also, the $750,000-exemption on remuneration under the health and post-secondary education levy protects small business from this tax.
Well, there is nothing preventing the Minister of Finance (Mr. Stefanson), his colleagues in the cabinet, for making these changes. They can impact negatively on small business by changing these levels, and they do not have to have a referendum, as is required for the other tax changes, for income tax or sales tax changes. So these tax credits and deductions are very, very important to a small business; they are very important to middle- and low-income families.
Individuals with net incomes of $30,000 or less are protected from the 2 percent surtax, for example. The tax reduction program, which provides nonrefundable tax credits and the property tax credit program provide tax relief to middle- and low-income families, these can be reduced or eliminated. The property tax credit could easily be eliminated without any referendum, without any consultation with the public at large. So that is something that is worthy of note.
There were some other excellent briefs pointing out some of the features that we had mentioned in our debate in second reading. They point out that, back after World War II, there was the Liberal Progressive government of Douglas Campbell, between 1949 and 1958, which gave overriding priority to reducing the debt, indeed, that had accumulated during the Depression. Honourable members will remember the Great Depression; provincial governments across the land built up quite a bit of debt, and it was Douglas Campbell's concern that that debt had to paid down. Of course, it meant balancing budgets, operating in capital, it meant having surplus. Of course, he wanted to maintain taxes at a low level.
Madam Speaker, the problem with the approach that was taken by the Campbell government was that it had the effect of retarding Manitoba's economic development. It has been estimated that the provincial economy grew much more slowly than the Canadian average during that time. Manitoba's share of national income was reduced from 6.1 percent in 1945 to 5.1 percent in 1958.
The interesting thing is that it was a Conservative government that came along, the Conservative government of Duff Roblin, which opposed the fiscally restrictive policies of the previous Campbell government and called for public investments to modernize Manitoba's economic and social infrastructure. So this was a change in philosophy, a change in philosophy brought in by a former Conservative premier, Premier Duff Roblin.
It was neatly summarized in one of Roblin's first budgets, one of the first budgets of the Roblin government, and I am quoting here from that budget: We have consistently maintained that inadequate capital investment in recent years has handicapped the growth of the province. Parsimony is rarely true economy. When such parsimony operates to inhibit normal growth, it can become the very opposite of true economy. That is a quote from one of the early Roblin budgets.
In effect, historically, you can observe that the defeat of the Campbell government marked the beginning of a period of modernization. During the Roblin years, 1958-67, and also in the Schreyer years of '69-77--which I had the pleasure of being active in cabinet at that time--as well as the Roblin government, made major public investments in this province in education, in health, in hydro and other major capital projects. I have maintained that without these investments Manitobans would not enjoy the standard of living and access to services which we now take for granted today.
They did incur a significant amount of provincial government debt, but it is misleading to just look at the debt burden without taking account of the public assets acquired by borrowing. Indeed, Madam Speaker, estimates had been provided and are available, really, from Statistics Canada on the public assets that we have in this province, and I can tell you without having the numbers before me that they far exceed the accumulated public debt of this province. Yes, we have public debt but we have also accumulated public assets. These public assets provide us with good education, good health care, good highways, provide us with services that we take for granted, as I said, today. We take them for granted but they were only possible because of these previous investments.
So there is a role, there has been a role and historically this role is there to be observed, and that is that the provincial debt utilized for investments has accounted for the major development in health, education, electrical energy and other services that are vital to maintain a good standard of living.
In fact, again, I would like to quote Premier Duff Roblin who very eloquently said, and he made this statement in this Legislature: Who can say what the monetary cost is of not building a road, a school or a hospital? Must we assume that investment for growth can only be justified when it can be supported by a settlement of profit and loss. Nevertheless, this factor is as real as any reflected in a profit-and-loss statement. All factors must be weighed and the direct and indirect benefits offset against the costs.
So as I said, no government, unfortunately, keeps a comprehensive record of the value of our public assets. Our practice is only to report our liabilities, not our assets, and really this does give a lopsided view of the situation.
There was another period of balanced budget orthodoxy which we experienced under Sterling Lyon, the Sterling Lyon government from 1977 to 1982. Actually it changed, I believe, November 30, 1981. Again, the Lyon government's theory was that we had to cut back seriously on spending. They were committed to reducing the size of government. Unfortunately, they made no distinction between borrowing for current consumption and borrowing for investment, and like this government, Madam Speaker, they regarded all debt as dead weight. As a result, in the way the budgets were prepared, the Lyon government inflated the reported deficit by raising the distinction in government counts between current and capital expenditures.
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Bill 2, unfortunately, likewise treats borrowing for capital purposes as though it was a current expenditure, a move which I believe is contrary to the business practices we see across the country, the standard business practices.
Like the present government, Premier Lyon also attempted or aspired to reduce taxes by cutting government spending. He cut civil service jobs; he held up capital spending on public hydro and housing; he cancelled spending on job creation; welfare benefits were reduced by over 20 percent during the term of the Lyon government. Lo and behold, Madam Speaker, these measures deepened the downturn in the economic cycle that we experienced at that time.
By 1979 Manitoba had the worst economic record of all Canadian provinces. What we saw was a very serious exodus of people from this province. The provincial population, the total population, even fell by 7,000 between 1978 and 1980. That is because the loss on interprovincial migration exceeded the natural rate of increase. That is, when I refer to the natural rate of increase, I mean the births over the deaths which normally give us a steady, natural rate of increase.
We have some foreign immigration, but then we have this interprovincial migration that goes up and down. It is very volatile. It is impacted by the business cycle, and because Manitoba did so poorly around 1978 to 1980 we actually had our total population fall. In other words, the interprovincial law superseded and more than cancelled out the natural increase in the population. As a matter of fact, while we were dropping, Saskatchewan's population increased.
I suppose you might say Manitobans at that time were voting with their feet because they were leaving the province. But at any rate the Lyon government was distinguished by only serving one term. It is very unusual for governments to only have one term in this province, but indeed the Lyon government experienced that.
So we are facing great challenges today to stabilize our provincial economy. Everyone in this House wants to see the provincial economy expand. We want to maintain our standard of living, but regrettably this Bill 2 does put us in a straightjacket. It causes us to be inflexible. We need the flexibility to cope with financial and economic matters that challenge government and unfortunately this bill does constrain and limit the ability of governments to be flexible.
I do not know what is going to happen when we get the next major North American recession which some economists are saying we might get by about 1997. These are forecasts of economists in the United States predicting an American recession in 1997 which will unfortunately spill over into Canada and have a negative impact on Manitoba. Last spring both government and private forecasters were predicting the provincial economy would grow at a rate of 3 percent in both '95 and '96, but there has been a weakening of U.S. demand, and the dollar strengthened, which does not do our exports any good in the first half of 1995. As a result, one bank, at least, the Toronto Dominion, revised its forecast down to 1.2 percent for this year and 1.9 percent for 1996.
In other words, what I am suggesting, Madam Speaker, is that this province may not achieve the revenue that it needs to obtain the surpluses that are required to help pay down the debt. What this is going to mean, of course, is that the government, because the government will not be able to increase major taxes, will look at expenditure cuts. What will happen, of course, is, if the government attempts to cut expenditures at a time of economic recession, this government will make that recession even worse.
Instead of having sort of the built-in stabilizers that we do have here--that is whereby we have automatic deficits in terms of recession and these deficits help to offset the recessionary forces--what we are going to have now is a situation where we exaggerate the recession, where we contribute to the recession, just like governments contributed to the Great Depression in the 1930s, by cutting back at a time when private spending was cutting back.
It seems that we have learned nothing from the 1930s. We have learned nothing from the great economist John Maynard Keynes who himself was a great capitalist. John Maynard Keynes was a millionaire. He was a capitalist. He was very much in favour of private enterprise, but he also said that governments had a responsibility to offset the business cycle by increasing spending in times of recession in order to bring the economy out of the recession and to bring about more prosperous times when everyone benefits, including businesses.
Madam Speaker, I do recognize that there is another problem on the horizon, and that is the federal government offloading, which adds some importance to the provincial government measures to support stable economic growth. I understand that the cuts to federal-provincial transfers could cost us well over $240 million in the next two years. I do not know the precise figures, and there are different estimates around, but that is one number that has been suggested.
What I am talking about is the elimination of federal cost sharing for provincial welfare and social service programs, as well as other transfer cuts. This is, without question, as the Minister of Health (Mr. McCrae) keeps on reminding us, putting great pressure on the government. I suggest, Madam Speaker, that all provincial governments are going to suffer because of these cutbacks by the federal government.
As a matter of fact, Madam Speaker, I would say that regrettably this may be one of the issues underlying the current referendum in the province of Quebec, that the people in Quebec say, well, why worry about staying with the federal government or with the Canadian nation because all we are going to get is major federal cuts and other cost-sharing measures which will be diminished? People in Quebec look at this and recognize this for what it is, and, I would submit, on that account are more likely to vote yes, regrettably, in this referendum. The federal government is cutting back on UI, denying eligibility to a lot of people and all in all this is going to contribute to our unemployment problems in a time of recession as well.
I am suggesting that the austerity policies of this Bill 2 will impose that these policies could have more disastrous effects than we realized during the Lyon years. As I said, I do not know whether we learned anything from the Great Depression of the 1930s because what we should allow is the operating budget, we should normally allow it to balance out over the business cycle. We would have a deficit in times of recession, hopefully offset by revenue increases in times of buoyancy so that, in the long run, yes, we will have a balanced budget, but the balance would be achieved over the entire business cycle and not year by year by year.
As I said in previous debate, Madam Speaker, what is so magical about balancing each year anyway? There is nothing magical about balancing your books in a given fiscal year. As I have suggested before, if a year is so great, why not every quarter or how about every month? What is so magical about balancing in a year? I suggest that the more realistic method of balancing a budget is over the entire business cycle. That makes sense and that is achievable.
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I would also add, while the government is wanting to talk about financial goals in Bill 2, and that is mainly the goal to cut back on debt, it is regrettable that the government sets no clear targets for economic development, for social development, apart from the fiscal targets, and I believe that the budget should contain more information so that we can monitor the government's performance in relation to these particular targets.
As I said, there were a lot of insightful comments made at these hearings, even references to the adequacy of the fund, going along with the proposal of the minister. They wonder whether the monies the minister is attempting to put aside in the debt reduction fund is sufficient in order to achieve the objectives set out in that schedule. These concerns have been raised by more than one economist in this province.
Concern was also raised specifically about the bill allowing the government to include the sale of Crown assets in revenues. We believe that this is bad accounting practice. We just do not agree with it. As a matter of fact, Madam Speaker, one of our members, the member for Crescentwood (Mr. Sale), did bring forward an amendment to the bill in committee stage whereby the sale of public assets would not be allowed for the purpose of balancing the budget. We say that because it is misleading because it portrays extraordinary income as if it were current revenue. As a matter of fact, you get criticisms from bond-rating agencies, such as the Dominion Bond Rating agency for this kind of practice. Indeed, I would suggest that the Provincial Auditor would have some comments on this as well.
Speaking about the Provincial Auditor, we attempted in committee to have the Provincial Auditor come forward to give us her comments on this particular bill from her particular point of view as the Provincial Auditor. Regrettably, the government would not allow this. The government, in its wisdom, on the committee, refused to allow us to have the advice and wisdom of the Provincial Auditor, particularly because of the fact that this is a new approach
I realize that the Provincial Auditor is to be called in to review the debt repayment and so on--there is reference to the role of the Provincial Auditor in the bill--but nevertheless, I think that in order to ensure that the government for its own reasons has the best possible legislation from its point of view, we disagree with it wholeheartedly. But from their point of view, you would think that they would want to have the benefit of the Provincial Auditor.
That opportunity was denied when they turned down our suggestion to have the Provincial Auditor come to the committee and state her views on the technical aspects, not wanting to draw the Auditor into policy matters because that policy matter is rightfully the purview, rightfully the responsibility of the cabinet, of the government, of the Legislature. Nevertheless, there are technical matters that she could be asked to speak on quite freely and which would have been very useful.
As I said in earlier debate, this legislation is bad legislation from that point of view, also, that it is not necessary legislation. I say that because I am convinced that there is nothing that the government wishes to achieve that could not be obtained and achieved without the legislation. In other words, there is nothing preventing the government from having surpluses year after year to pay down a debt. There is nothing preventing the government from saying they are going to hold the line on income tax increases or sales tax increases.
As a matter of fact, the government continually brags about how it has not increased income tax rates and that it has not increased sales tax rates. We know that it has extended sales taxes to the tune of about $100 million, but it has not increased sales tax rates. So it can withhold action on tax increases, rate increases. It can do whatever cutting it wishes in various programs, and it can do that without this legislation.
Therefore, I would say that this legislation is more in the nature of an ideological statement than it is of being absolutely necessary for the government to be able to have surpluses to pay down the debt.
The editorial page of the Winnipeg Free Press, which I do not always agree with, had some very critical remarks to make of this legislation. This is in an editorial of the Free Press on September 23, 1995, quote: The bill is full of stupidities. Fiscal prudence is important. So is the capacity to govern with flexibility and creativity. The bill should be withdrawn. Unquote.
Of course, they are referring to the flexibility that I referred to. Also, on April 7 in an editorial the Free Press said, quote: The Filmon government's fiscal games never really fooled anybody. Wouldn't clever politicians have figured out that it was better to come clean in the budget than to be found out in the middle of an election campaign? Unquote.
Also, there is another source I would like to refer to, Madam Speaker, namely the International Monetary Fund, which has never been known as a hotbed of socialism or radical thinking. As a major international agency dealing with many, many countries who are wrestling with debt and deficit problems and some of them enacting various forms of balanced budget legislation, it is interesting that the IMF, that is, the International Monetary Fund, recently commented on this trend of this balanced budget legislation.
This is a quotation from staff papers published in March 1995 under the headline: The political economy of budget deficits. This is the quote from the IMF: The costs of a balanced budget law are the loss of fiscal stabilization over the cycle and the loss of flexibility in reacting to shocks on expenditure or revenue. The enforceability of a balanced budget law is also a complex question. Any law can be changed by a sovereign. Unquote.
I think that quotation is very insightful. That observation is very insightful and is a major condemnation of what the government is doing here. As I have said also before, I do not often agree with the federal Minister of Finance, Mr. Paul Martin, but he too is opposed to balanced budget laws. He is saying, and I am quoting a statement made by Finance Minister Paul Martin in a recent Winnipeg Free Press story of September 22, 1995, about balanced budget laws, quote: Not the way to go. Apart from limiting the choices of newly elected governments, this legalistic approach simply encourages ingenious politicians and bureaucrats to spend time looking for ways to get around the rules through accounting hocus-pocus and subterfuges of various kinds.
So, Madam Speaker, I agree with that. What I am advocating, what we are advocating on this side is not balanced budgeting, except through a business cycle, but we want responsible budgets. We want governments to take the responsibility that they must take year by year in bringing down their budgets, and they must do the right thing in dealing with the economic problems that are facing the province.
We are concerned that Bill 2, putting the government in a budgetary straitjacket, is going to end up in major cuts in health care and education in this province that we cannot afford to see being reduced. It is going to transfer a major burden onto the lower- and middle-income groups in this province. There is no question, Madam Speaker, that this is built into this particular piece of legislation. We say the legislation was brought in--
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Madam Speaker: Order, please. When this matter is again before the House, the honourable member for Brandon East (Mr. Leonard Evans) will have 10 minutes remaining. As previously agreed, the hour being 4 p.m., time for private members' hour.