Mr. Chairperson (Marcel Laurendeau): Will the committee come to order. At this time, we ask the minister's staff to please enter the Chamber. We are on Resolution 4.1. on page 107.

Mr. Leonard Evans (Brandon East): As a point of order, Mr. Chairman, does the minister have his staff specifically for the computer-type questions, because I have other than computer questions which I could ask. On the other hand, I understood the member for Elmwood (Mr. Maloway) had some more computer-type questions, and if these are the staff to answer those, we should perhaps make an effort to find Mr. Maloway. He should be right around. He knows we are starting at four o'clock. I am just thinking of the staff.

Hon. Harold Gilleshammer (Minister of Finance): Yes, we were informed that the line of questioning today would be similar to yesterday on the Office of Information Technology, so these are the staff from that office, if you want to go ahead.

Mr. L. Evans: I have questions of a more general nature on various aspects of the department that I would like to ask, but perhaps the minister can answer himself, or he may want to have the relevant staff, I am not sure.

Mr. Chairperson: If the honourable member wishes, he could ask the questions, and if the minister cannot answer at this time, he can always let you know and get back to you at a later opportunity.

Mr. L. Evans: I was prepared to proceed from the beginning towards the end, and I had questions, for example, on the in-house training programs of Management Services. There is reference to the development of in-house training programs and educational assistance under the Management Services section of the department. I just wondered what kind of in-house training programs were we talking about here.

Mr. Gilleshammer: Well, in a general sense, it is always incumbent on government to be sure that people are current in what they are doing. With the vast amount of technology that is in place and being used in government, there is a need for ongoing training so that people can use the technology which is now current across government.

I think that one of the increases in expenditures in all of the departments is the amount of training that is being done. Because of the changes that take place in technology that happen very, very quickly, again, people need to be withdrawn from their workstations and be brought in for training so that they can use the technology and interact with one another, so that I think you will find right across all departments there has been an increase in the amount budgeted for the training exercises that go on.

I can tell you that this is certainly similar to what is going on in private industry. I think it is one of the biggest challenges for management to keep their people current with the technology which seems to change every three months or so. So more resources have been devoted to that area. Certainly in talking to other ministers, this is a challenge within every department, and not unlike what is happening in the private sector with various companies that, to be competitive, they have to continue to in-service their staff.

I know I spent a number of years in the school system. While the school divisions allow, I think it is 11 days a year now, for school divisions to take people out of the classrooms and have in-service training, at one time I think it was suspected by many taxpayers that this is the only group that ever faced that kind of training. But it is occurring in the private sector as well as government.

We have to respond to the particular needs identified by specific staff, most often in consultation with the Organization and Staff Development in government. They tend to be the ones who deliver the programs. Our human resources shop often plays a co-ordinating role to see that the appropriate training can take place. I am informed that, in the 1997-98 annual report, under Staff Development, there was training for 40 employees and 13 in-house training and development seminars involving eight different course titles and 16 employees, and 11 outside vendor seminars involving eight different course titles. So this is going to be a challenge for government, not only this year but going into the future, to see that people get appropriate training.

Mr. L. Evans: I thank the minister for the information. I do not have any problem with what he is telling me. But I was wondering, besides in-house training, there is reference to educational assistance programs. He may have partly answered the question, but I was wondering: is there much leave extension that is going on? Is there much time involved in people being allowed to leave their place of work and take a course for a week or two weeks or a month or whatever? Do you have much of that where people are taking education leave to obtain training?

Mr. Gilleshammer: I think, across all government departments, individual employees can bring forward requests to seek outside training, and in some cases, there is the ability to have financial resources set aside, if need be, to do that training. I know that when I was in the Department of Family Services, one of the individuals–and I think he is closely associated with the Social Planning Council–I think the previous government during the 1980s sent him to California to take his doctoral studies, and while that maybe is a bit of an extreme example, there still is some support for individuals who identify specific training and make the case to their managers that further training would be of benefit not only to them but to the department, so this tends to be handled on a case-by-case basis.

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Mr. L. Evans: I wonder if the minister could undertake to get a report from his department. In the last year, how many people took educational leave and for what period of time? Just a general overview of that type of leave.

Mr. Gilleshammer: Well, I am sure I could get some documentation of that, and it probably will take a little bit of time just so that we have it factually correct, but if we can have it next week or the following week, I will be sure that the honourable member gets a copy of it.

Mr. L. Evans: I appreciate the minister undertaking that little bit of research or to have his department do that.

In the area of Occupational Health and Safety, references to not only illness but also injuries to support and assist in the return of people who may be injured on the job, I would not imagine there is much injury on the job in the department, but I want to ask the minister, is this–I mean we are not running a factory here or construction job up North–I was just wondering, I would imagine there would be very little by way of accident or maybe there are some odd or unusual incidents that happen, but can you assure me that there really is not any extent of injury going on among the employees?

Mr. Gilleshammer: Yes, I think I can give him the comfort that, while the job is demanding and people work very hard at what they do, Workers Compensation does not see this line of work as a high risk. I can indicate from the report that I have here, and I think this is the 1997-98 annual report, the formulated Workers Compensation statistics for distribution to various branches within the department, which reported four accident claims, of which one accounted for no lost time injuries and three accounted for 15.5 lost work days. The number of new claims reported was reduced by 20 percent over last year, and as a result, the department experienced a decrease in Workers Compensation costs over the previous year.

So you are right, but I think our annual report does cover these claims and these incidents, but you are absolutely right that this does not account for a very large portion of our workforce. I can tell you that the Workers Compensation Board, I think, has also worked very well with employers in dealing with cases as they are brought forward and that every attempt is to have people treated fairly and have an opportunity to get back to their workplace as soon as possible.

Mr. L. Evans: On another topic, employee equity strategies. Just what is happening here? To what extent does the minister have a program of employee equity? What has been the success? What is the target group? How many people are involved? The reference is to employee equity strategies for target group employees.

Mr. Gilleshammer: The department is, of course, part of a government that has a government-wide policy as far as employment equity is concerned. There are targets for visible minorities and for the physically disabled, for women and for natives. The statistics are part of our annual report. The 1997-98 Finance Employment Equity Committee, with the assistance of the Human Resources management branch, has developed a skills inventory for applicants to positions in Finance. Once the new computer system is in place in Human Resources, and I believe it is now, the department will have the ability to match unsuccessful candidates to position opportunities as they arise. An outreach inventory is in place and is utilized by managers in the department for casual and term opportunities. Secondment and work experience opportunities were offered to employment equity target group members.

In the annual report, the statistics for the Department of Finance indicated that on a statistical basis there were, by percentage, 1.9 percent native individuals on staff, 50.8 percent were women, 3.2 percent physically disabled, and 6 percent visible minority. So those were the actuals and, by and large, in some areas show an improvement over previous years. Again, as every department is conscious of their employment equity statistics, these are reproduced in our annual report.

Mr. L. Evans: I wonder if the minister could indicate how this situation compares with the other departments, just generally speaking. I do not expect him to have all those numbers at his finger tips, but is it pretty well in line with the percentages of other departments or is it out of line?

Mr. Gilleshammer: Mr. Chairman, I do not have the statistics for other departments. I know a previous department that I was responsible for, Culture, Heritage and Citizenship, exceeded the government targets by a considerable amount. I think that was the case in Family Services, as well. In Labour, there was a different workforce, and we were under target, particularly with women staff members in that department.

I am not sure just where in government the statistics are all tabulated to see how we are doing government-wide, but I could attempt to find that out. It may well be in the Department of Labour, I am not sure. I do not recall that, though. The targets that were set a number of years ago are still very much on the table for department managers to keep in mind. Probably the Civil Service Commission, as a matter of fact, would have the compilation of all of those statistics. I am not sure whether the Department of Labour has already been through the Estimates process, but I am sure if it was a special interest of the member he would be able to get that information.

Mr. L. Evans: I gather the minister is suggesting we look up some report, hopefully put out by the Civil Service Commission, that would provide these comparative statistics on hiring of minorities and disabled people, et cetera. I just assume that information is available from the Civil Service Commission, I am not sure. I would think that it should be but I have not seen it. We can look into that.

Just to go onto a different topic, because we do not have that much time, this whole matter of tax appeals and Tax Appeal Commission. There is a small amount of money usually allocated, $20,000, for supplies and services. Has there been much activity in this field at all? This is rulings for taxpayers on appeals of tax assessments independent from taxation officials who issue the assessment in the first place. What is the level of activity in this area?

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Mr. Gilleshammer: We do have a Tax Appeals Commission Act which was proclaimed March 1, 1993. The act permits the appointment of one or more commissioners for the purpose of dealing with notices of objection filed by taxpayers who disagree with assessments under the retail sales tax, payroll tax, corporation and capital tax or mining tax. Prior to March 1, 1993, the task of reviewing and researching the basis of a taxpayer's appeal had been undertaken by the Audit branch of the Taxation Division. The Tax Appeals Commission Act was implemented to address a concern that the review of the appeal could be construed as a conflict of interest since the Audit branch was originally responsible for issuing the assessment being appealed. So to avoid that perceived, or the thought that there was a conflict of interest, this was put in place in March of 1993.

So taxpayers who disagree with a tax assessment are allowed 90 days to file an objection with a commissioner that is appointed by the minister. The notice of objection process is similar to but is less formal than the federal income tax procedures. The commissioner, upon considering the matter appealed, affirms, rescinds or amends the assessment and notifies the appellant, the minister and the director. If the taxpayer or the director disagrees with the commissioner's decision either party may appeal to the minister. Beyond that the taxpayer has recourse to the courts. A review of this process has been recently conducted to better inform the taxpayer of Taxation Division's position on the assessment in order to enable the taxpayer to form a more complete appeal.

The Tax Appeals Commission Act provides taxpayers with a simplified procedure to appeal against assessments. Under the taxes that I mentioned, it enables an objective review of the taxpayer's position independently from the taxation officials who first issued the assessment. The tax appeal commissioner's decisions have generally satisfied taxpayers concerns in that respect.

The Taxation Division's record show the following activity relating to appeals to the commissioner: in 1995-96, there were eight appeals that were carried forward and 25 new ones received, so in total there were 33 appeals being dealt with. The following year, '96-97, there were 11 that were carried forward and 19 new appeals for a total of 30. In 1997-98, there were 13 carried forward and 12 new ones for a total of 25. In 1998-99, the most current one, there were 10 carried forward and six new ones for a total of 16. So there are not a large number and, to some extent, a declining number.

Now I can give you some information on the disposition of those appeals as well. In 1995-96, there were 12 that were denied, five that were partially denied, two referred to Taxation, three were upheld and 22 were withdrawn. In '96-97, 12 were denied, one was partially denied, two were referred to Taxation, one was upheld and one was withdrawn. So, again, not a lot of activity there, but I think the fact that there is the ability to appeal and the perception that there is an independent view taken of the taxation gives comfort to the taxpayer.

Mr. L. Evans: It is an amazingly low number of appeals considering the amount of activity that goes on in all these areas: retail sales, corporate capital tax, et cetera, the mining tax, the health and post-secondary education tax. It is amazingly small, which speaks well, I think, of the system generally. I am assuming people know that they can appeal. I am sure they are told that they can appeal a ruling of the official. So it is not that they do not know that this commission exists or that this avenue exists; it is simply that generally there are not that many problems, which is good.

Mr. Gilleshammer: I agree with the member that it is an amazingly small number. I do get letters from individuals who have particular concerns. If we cannot satisfy them with an answer to sort of a direct question, they are made aware of the Tax Appeal Commission and can be referred there. So I do not think there are a lot of issues in this area, but probably the area of taxation that would attract more attention is property taxes, where, at the municipal level, they have an opportunity to appeal the assessment and appeal the taxation. My sense is that there is a lot more activity there, whereas so many people now have professional tax filers who are working with them and many businesses have their own accounting processes, and I think there can be interaction along the way if there are any questions. There is some back and forth, and, by the time it gets to this stage, a lot of the minor questions have been worked out.

Mr. L. Evans: I agree with the minister that likely there is more action on the property tax assessment. Fortunately, he has not got that responsibility. Talking about taxes, Mr. Chair, just passing on to the Lower Tax Commission, I would like to ask a couple of questions there, and then my colleague from Elmwood (Mr. Maloway) would like to get back into the computer technology questions, and that is this very interesting announcement that the government made, I guess, in the throne speech and was referred to again in the budget speech, I believe, of the establishment of a Lower Tax Commission. The board members have been announced. I believe Mr. Manness, the former minister, is to be the chair, and there are one or two others on the committee.

I believe the commission is now at work, and my specific question is: when does the minister expect to get a report from the Lower Tax Commission?

Mr. Gilleshammer: Mr. Chairman, yes, the Lower Tax Commission was announced in the throne speech and referred to in the budget speech as well. It is chaired by Clayton Manness, the former Finance minister, and the members on that commission are Professor Cameron, from the University of Manitoba, possibly known to the member, and Evelyn Jacks, who is a tax preparer, who has, I think, not only provincial but national recognition for some of the work she has done and some of the books that she has published.

They have been announced, and they have started work. They are in the process, I believe, of developing some discussion papers which will be circulated widely. Then there will be an opportunity for public consultation so that average citizens and organizations and people who are generally interested in the whole topic of taxation will have a chance to respond to the papers that have been published and also have a chance to make their thoughts known to the Lower Tax Commission.

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I am told that that activity probably will take place in September or October, and we anticipate a report from that group probably towards the end of this calendar year. Hopefully, that will give us some direction towards the construction of our next budget. The member will note that it was specifically called the Lower Tax Commission. We believe very strongly that, compared to some of the other jurisdictions that we interrelate with in terms of trade, our taxation regime is too high and that it needs to become more competitive. There are, I think, lots of examples of how lower taxes do stimulate the economy and do give businesses an opportunity to expand and create more jobs and become more successful.

I am not really an expert on what has happened in Ontario, but there we have seen a dramatic decrease in the personal income taxes in the last four years. It was certainly an election issue that was part of the discussions that went on in Ontario recently, and the party that was successful again was promising further dramatic reductions in taxes. That is seen by some as one of the reasons for the tremendous activity in Ontario and the economy of Ontario at the present time. I also make the observation that they still have not balanced their budget, and they do have a formidable debt load ahead of them, but they have certainly encouraged business activity within Ontario.

I think also our particular way of tax reductions has been more measured. Some people might even call them small steps that have been taken. In the last two budgets–[interjection] I am just being distracted here for a minute. I will have to catch my thoughts. In the last two budgets, there has been a reduction of five points, and by the time we come back with our next budget, it will be at 47 percent of federal tax. I think also part of the taxation regime that was addressed in the last budget was the small business income tax, which, at budget time, had a rate of 9 percent and will be reduced to 5 percent.

So these are less dramatic, but I think over the course of time it shows the direction that we are going and that we have seen a tremendous amount of business activity in Manitoba over the last number of years. In fact, I did a couple of interviews this morning dealing with some of the reports that have come out recently. I do not know whether the member was in attendance yesterday when I referred to a couple of the wire stories, the first from the TD Bank which indicated that Manitoba's economy, which is less reliant on resource-based industries, is expected to be the strongest of the western provinces in 1999 and that the provincial economy is scheduled to grow at a rate of about 3 percent. While it is not as dramatic as that of southern Ontario, it still outpaces what is happening in Saskatchewan, Alberta and British Columbia.

So we think that part of the reason for that is the lower taxes. At the same time, I referred yesterday to a report from CIBC which talked about the debt-to-GDP ratio, with Manitoba's being the second lowest in the country. As well, there are a number of third-party reports out from the Investment Dealers Association, from Nesbitt Burns, from CIBC, Wood Gundy, the Conference Board of Canada, all talking about the Manitoba economy. It is reflected in the number of people working. It is reflected in the very low unemployment rate that we have in Manitoba at the present time and which will continue into the foreseeable future.

So we think that the work that is going to be done by the Lower Tax Commission is important. I think it is also important to note that part of their review is going to deal with property taxes, which I mentioned before. This is an issue not only in the city of Winnipeg but right across the province of Manitoba, and part of being competitive does include the level of property taxes that Manitobans are experiencing.

So with the people on the Lower Tax Commission, with the work that they are doing, with the input of Manitobans, I am sure that we will get some good advice and direction. I know that this has been our experience when we have had the prebudget consultations that were put in place by my predecessors. Last year, we were able to talk to over 1,200 Manitobans, and the directions that they put forth in 11 meetings across the province or that they put in letters and information sent forward was used to craft our last budget. We think it was very successful, and I know members opposite share that feeling.

Mr. L. Evans: Well, the minister makes a lot of interesting observations and expresses hopes, et cetera. I just might add that the Investment Dealers Association and these various groups, they always seem to come out with favourable reports no matter who is in government. I remember when I was in government, we used to receive these very complimentary statements and reports–

An Honourable Member: And we quoted from them regularly.

Mr. L. Evans: Yes, we quoted from them, too. So I never get too excited about those kinds of statements.

But the minister seems to be assuming that there is some sort of a simple relationship between tax cuts and economic activity. I am afraid our economy is a little more complicated than that. I think the minister, if he thought about it for a moment, would realize that there are many, many factors that influence the rate of economic growth, that influence the rate of business activity or levels of employment and unemployment. I mentioned some of those yesterday, the interest rate regime, the value of the Canadian dollar vis-a-vis the American dollar, the state of activity in the United States and so on.

Mr. Harris, the Premier of Ontario, is certainly benefiting, as we are, from an enormous amount of economic activity south of the border. I know he has gone in for big, deep tax cuts. I think the minister made some slight reference to deficits, I am not sure. Maybe he did not use that term, but it seems to me Mr. Harris is going into some deficit spending in order to provide the tax cuts. Now, if he is doing that–I stand to be corrected if I am wrong, but I thought I read that somewhere–the irony, of course, is that, if governments do go into deficits, that does stimulate the economy, but when governments are in surpluses, that tends to have a contracting influence on the overall macro-economic level of activity. I suppose if you are in balance you might say you are more or less neutral. If it were only that simple: if we cut taxes, then we get economic growth. If our markets in the United States suddenly fall off or become more subdued, I am afraid it does not matter what we do with taxes, the level of activity in this province is going to fall off. If Flyer Industries cannot sell as many buses, it does not matter what the tax regime is for Flyer Industries if the United States markets slow down or dry up or whatever, their level of activity will lower.

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I am not suggesting that tax cuts do not stimulate. I am not saying that at all. I am simply saying that is only one factor, and it is very difficult really for any economist or statistician to figure out precisely what a tax cut will do to the overall level of economic activity in any particular economy. What I am concerned about with this particular–and indeed Professor Norman Cameron, I think, would agree with me if he were here; he is on this commission. At any rate what I am concerned about here is that the implication is that the Lower Tax Commission will come up with recommendations for lower taxes of some type, although I notice in the description of activity identification, it says that, finally it will advise on the relative merits of targeted and general tax reductions. To me, that sort of sounds as if we are hedging a bit, that may be there are not merits in simply cutting taxes because I do not know how any government of any party can expect to cut taxes without cutting services unless there is a considerable expansion of the overall provincial economy.

If there is an expansion of the economy, good. We will get the best of both worlds. We all want to cut taxes, and nobody really wants to cut services. We do not want to cut our educational system drastically or want to cut health care–that has been debated here. We want efficiency. Certainly we want efficiency; we do not want waste. There is always a degree of cost in there that could be some cost savings in that, but I do not think this commission is going to come up with that. So I think that the government has to realize that, if they do want to engage in any significant tax cutting exercise, they are going to have to identify which service areas they are going to cut unless they can predict forever and ever that they are going to have expansions of revenue. That is not going to occur because the minister only has to look at this own budget documents and see that four or five years ago we were not in that favourable position in Manitoba, in fact, revenues–I have forgotten what year it was, 1994?–actually diminished in this province. It was quite serious, and that is the same year, I believe–again I have to look at the book to refresh my memory, but I believe that is the year that we had our all-time record deficit.

An Honourable Member: '92.

Mr. L. Evans: Was it '92? My colleague from Elmwood (Mr. Maloway) says he believes it was 1992, but whichever year, it was the result, this huge deficit, the all-time largest deficit in the province's history, that was related to the recession, which caused the drop in revenue. So I am saying that, unless you can forecast continuing increases in revenue, government revenues, I do not see how you are going to cut taxes to any extent and at the same time not reduce services I believe that the people of Manitoba want.

So I am certainly looking forward to what they are going to come up with because they are mandated to advise on the merits of general tax reductions, and maybe they will come back and tell you that there may not be that much merit in certain tax cuts. I think, though, it is worthy to have such a commission in terms of our tax structure. I am not opposed to looking at the tax situation. I would rather see it called a fair tax commission whereby we stress equity to ensure that the burden of taxes is shared fairly among the people of this province and among the businesses of this province and among the areas of this province. We are all for fair taxes, and I think that would have been a better name, a fair tax commission, because then that does not preclude lower taxes but it puts more emphasis on the equity side of it. To call it a Lower Tax Commission seems to predestine it to bringing in recommendations to cut taxes.

As I said–I am just repeating now–fine, let us cut taxes, or not so fine, let us cut taxes, just tell me what services are you going to eliminate. Are you going to go back squeezing the hospital system again? Because that is where the big money is, 35 percent or whatever it is, well over a third, or the education system which takes a large amount of money. Education and Health probably get us close to 50 percent of our total spending, so that is where the big bucks are.

An Honourable Member: Mike Harris is still running deficits.

Mr. L. Evans: Yes, as my colleague from Elmwood says, Mike Harris has been cutting taxes, but he has also been doing it while he is running deficits. I mean that is the other solution too. If you want to get back into big deficit spending, sure, you can do it for one or two years, but surely you cannot do it forever.

I want to make this point too. There is nothing so-called left wing or right wing about deficits or surpluses. Those are neutral. I mean a provincial government does not have its own bank. Ultimately it has to balance, I would say, certainly balance over the life of a business cycle. There is nothing magical about balancing in any one year, but it is not left wing or right wing to have a deficit.

We know of right-wing governments. The Devine government of Saskatchewan was infamous for its huge deficits. Mulroney went into deficits and so on. We have Tommy Douglas and Allan Blakeney who always ran balances or surpluses. They just did not believe–that was a sin to have a deficit. Tommy Douglas believed in paying his way, and so did Allan Blakeney. They were very, very careful.

To have a deficit does not mean that you have engaged in a left-wing type of policy, by no means. It is neutral in terms of ideology, as far as I am concerned. I know a lot of very good people, very intelligent people on the left side of the spectrum who are totally opposed to any kind of deficit spending, particularly at the provincial level. They are totally opposed to it. There is no merit. None of us should welcome deficits, but as I say, there may be times in a recession that we get into that, and that helps to offset the recession. We should get out of it as soon as we can subsequently with a surplus to pay off the deficit. Having said that, I agree it is more easily said than done.

So I just say that this Lower Tax Commission has its work cut out for it. I certainly look forward to getting the report or reports that they will be forthcoming with. I am sure they will come up with a lot of interesting information, and I am sure it will be of use to the government, to the opposition, and to anyone in Manitoba who is concerned about public policy.

Mr. Gilleshammer: The first part of my honourable friend's comments I can agree with. Lower taxes, in themselves, do not an economy make. Certainly I recognize that the interest rate is a big issue.

I know I was recently in the United States, and there was talk about–I forget his title now, but the gentleman who directs the central bank there on interest, the federal reserve. I mean just the thought that he might schedule a meeting tended to make people speculate on what was happening with interest rates, so obviously a very powerful individual. Interest rates are certainly part of that, and I recognize it.

Similarly, the relationship of the Canadian dollar to the American dollar hovering around 67, 68 cents makes our manufactured goods exported to the United States worthwhile and profitable. The Free Trade Agreement, all of these things contribute to the economy. I do indicate that I think the tax regime is also a major factor in companies deciding whether they are going to expand or not or relocate in a particular province.

I know my honourable friend would have some experience with the ethanol plant in Minnedosa, that governments, through the 1980s and 1990s, have given a tax break for the production and sale of ethanol. It has varied. I think it is 2.5 cents now, but at one time it was over 6 cents.

An Honourable Member: Is there one for Izzy Asper right now?

Mr. Gilleshammer: Well, I am not sure, but as people across the world get more concerned about pollution and the targets that were set at Kyoto, there is great interest in the production and the use of ethanol. Again, major companies that look for expansion or the creation are very interested in the tax regime there. I think I said earlier that business, industry looks for certainty.

The member, I think, was in the House when the payroll tax was born and designed and put in place. I mean I do not know whether I have ever said it, but it had a tremendous negative impact on businesses that wanted to expand and hire more people. [interjection] Well, the member for Elmwood (Mr. Maloway) wants to get into the debate. He was bragging yesterday, I think, that he was the tax fighter over in the NDP caucus. He has all of these people making comments about taxation, and I think I have a few comments that I might get to later from the member for Elmwood. But he talked about believing in surpluses. He must have been badly bruised within that caucus with the comments made by your colleagues on taxation.

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At any rate, I did not say anything about left-wing governments, but for sure the left-wing government that Manitobans knew best did create new taxes and did raise all of the existing taxes that they could. I think it did have a negative effect on business expansion and development in Manitoba. I do recognize what the member for Brandon East is saying, that there is more to a business environment than just the tax regime, and I accept that.

The member talked about the Lower Tax Commission and the fact that we used the word "advise" in there, and that is all it is, is advice. Ultimately the government of the day has to make that decision, that that is the way it always has been and always will be, that governments can set up commissions or go to outside sources for advice. But the final decision is made within government. The member mentioned that unless the pie gets bigger and there are increasing resources available, it is difficult to keep up the expenditures on priority departments. I would mention to him that, through the time when the federal government was making a major withdrawal of support for the provincial governments, some $240 million, some $260 million annually, we always worked very hard to find resources for health, education and social services.

At times, when we needed to look at ways of spending less money in government, we did to some degree downsize government, and I think all governments have looked at that, through the 1990s, without affecting services. There are fewer individuals working for the Province of Manitoba at the present time than there were at one time, and I think the level of service is still quite adequate. We have also looked at other ways of doing things more efficiently through the system of special operating agencies. I think they have been very successful, have been emulated in some other jurisdictions as seen as a better way to offer those services in a competitive environment. As a result, we are able to, in some ways, downsize government and spend less. Also, the use of the work week reduction, while it was not universally accepted, it was a way of saving, I think, around $20 million a year when that was in effect with the 10-day work week reduction. It was Fridays taken off during the summer months and three days at Christmas. Again, other governments across the land, to a large extent, followed that lead. So there have been ways of assisting when government revenue has taken a bit of a downturn.

But I think one of the things that has happened is that we now have a very diversified economy in Manitoba, and we are less susceptible to some of those ups and downs that happen. I mention particularly in the area of agriculture, with the loss of the Crow rate, the potato production plants in Carberry and Portage la Prairie have helped. The hog facility that is being built, I am not sure whether it is in Minnedosa constituency or Brandon East, but it is very close to the political boundary there.

Anyway, the value-added agriculture has been very important, and the fact that we do not rely on wheat crops to the extent perhaps that Saskatchewan does puts us in a little better position. This is not maybe a good year to talk about that with the disastrous conditions in the Westman area, but I know last year the number of acres sown to canola exceeded the number of acres of wheat for the first time. I think people who look at specialty crops and friends and colleagues who farm in the Portage, Winkler, Morden area are into a lot of specialty crops in terms of lentils and peas that they can sell directly, very profitable crops.

So that diversification I think will always be an advantage in Manitoba, and I expect we will see more of that. I know that meeting with Keystone Agricultural Producers and the AMM executive recently, and again not a good year to talk about water, but if we had more irrigated acres, it would be good for Manitoba producers. Maybe in the following months and year or two is a good time to look at more water retention, always a controversial issue in terms of building big dams, but maybe there are other ways of doing it. I know the zero till, for instance, has been very successful in moisture retention in fields and the prevention of erosion. This year it was a negative, because those were the last fields to get planted and some of them did not because the zero till practices that left the crop residue on the field retained that moisture, and those fields were very soft. A lot of them did not get planted.

But there are a number of things that can happen within the Manitoba economy. I know that here in Winnipeg industries like the aerospace industry and the call centre industry and others have been major employers and will continue to be into the future.

Mr. L. Evans: I do not want to drag on this particular item, but it is an interesting topic. We are talking about some basic economic factors here in the future of the province. I sort of smile when the minister was telling us how balanced our economy was, and it has become even more balanced, but I remember many years ago in the '60s I worked for CMHC, Canada Mortgage and Housing Corporation, as regional economist for the prairies. I had a boss by the name of Pickersgill. He was the brother of the famous Jack Pickersgill. A very bright fellow, I remember him impressing upon me, he said: Well, you are the regional economist, but you should know that Manitoba is a very balanced economy–this is 35, 40 years ago–and saying how, because we had all the data on housing starts and so on, and Manitoba was never necessarily at the head of the pack, but we were never at the bottom of the pack.

We had a fairly even level of housing activity. He related that to the fact that we had a fairly balanced economy, some manufacturing, some mining, some freshwater fishing, some forestry, some agriculture and different kinds of agriculture, and so on, and that is good. That is one of our advantages. In fact, I recall making many speeches when I was Minister of Industry and Commerce for eight years about our balanced economy in Manitoba and how fortunate we were to have that kind of an economy. Yes, we may not have had the great big booms that they sometimes have in B.C. or Alberta or wherever, but we did not have the busts either.

At any rate, Mr. Chairman, as I said, I do not want to belabour this. We certainly look forward to extending the discussion on this. We certainly look forward to the report of the Tax Commission, and we hope that there will be some interesting information forthcoming.

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The minister brought up a number of points, and I suppose we could debate them for a long time. Because our time is limited, I do not want to take an excessive amount of time on the debate, even though it is very interesting. So I would like to turn it over to my colleague from Elmwood (Mr. Maloway) who wants to carry on and complete his work on the technology and computer area and also ask if there is permission of the committee for the MLA for Elmwood to sit alongside of me where he is.

Mr. Gilleshammer: Mr. Chairman, certainly, the member for Elmwood can sit wherever he wants and wherever he is comfortable.

But I would like to just maybe comment on the member for Brandon East's last comments. I did not have the benefit of hearing those speeches during those eight years, but I have no doubt that the member made many of them during those years when he was in Industry, Trade and Tourism or whatever it is called. I guess that through the wonders of Hansard, we could always go back and have a look at those. Perhaps, if I have time some day I will do that.

One of the things that has changed in the last few years, which I think has a dramatic effect on the direction Manitoba is going to go, is doing away with the Crow rate benefit, which always was there. It was historic. I am not sure, I remember listening to speeches from colleagues who talked about it being put in place–and my honourable friend can maybe help me–but maybe it was the 1930s, or was it earlier than that that the Crow benefit was put in place.

An Honourable Member: It was back in the 1890s.

Mr. Gilleshammer: The 1890s, okay. What that did, of course, was–[interjection] I recognize that my honourable friend did not speak to that at that time. What that did was, I think, greatly distort the economic activity in Manitoba.

I remember when the announcement came–and we were in the House here–that the Crow rate was going to be taken away by the federal government, and there was some funding put in place to transition a bridge to the new way of doing business. The speeches that happened in the House, I think there might even have been emergency debates at the time and people making statements about this being a terrible thing. Ultimately, I think it has turned out to be quite positive in that Manitobans have responded and found economic activity where we have an advantage here. Instead of shipping grain continuously to port, now people are finding ways to use it here in Manitoba.

I think with that new way of doing business and with that freedom, we are seeing the diversification that has occurred and the value-added, and I mentioned the strawboard plant at Elie, the hog plant coming on stream in Brandon and the potato processing, and there are others. So what seemed like a dark day a few years ago when that Crow rate was abolished, has turned out to be very positive, I think. The other night when we met in Brandon with the coalition that is meeting to deal with the flood issues there, Marlin Beever from Rivers, who was the past chair, I think, of the Manitoba Cattle Producers, made the point that one of the changes in agriculture has been the tremendous growth in the cattle herds that are out there. I have a number of friends who were strict grain farmers and did some off-farm work who now are diversifying their own operations and going back into cattle. It is very hard work, but it tends to in some ways recession proof you against the vagaries of the market, and it gives you diversification on your own farm.

So I think that is one of the changes that has taken place that has been ultimately very positive. When we see that plant open in Brandon in seven or eight weeks and you have 1,100 people employed there and the hope of a second shift and 2,200 people finding work there, that is not going to only add to the economy of Brandon but the whole Westman area and indeed to all of Manitoba.

So there have been changes, and I think through a lot of the scientific research that is going on, we are going to see more and more specialty crops. I was recently at Wawanesa in a new part of the constituency that I am going to run in, and one of the producers I was talking to was telling me that he grew some hemp last year, but the downside was he never got it harvested because it got too wet. But I had never seen what a hemp plant looked like, so he took me down to this field, and I was amazed at the stand that was there. He was ultimately going to have to burn it to get it off the field. It was very wet in there. But I understand that there are entrepreneurs coming forward to build a hemp-processing plant in Dauphin.

So all of these things, some of them very small, but as we get more and more of these activities going on, it tends to add to our diversification. I read recently where the Isobord plant is looking at perhaps putting up two additional plants in southern Manitoba, again taking a problem that was there when we used to burn that straw and create tremendous problems for other people and turn it into a value-added activity.

So I think that diversification, even though I accept that it did exist when the member was Minister of Industry and Trade, we are seeing more of that and some more strategic developments which will be good for our province.

Mr. Chairperson: Before the honourable member for Brandon East gets going, is there leave for the honourable member for Elmwood (Mr. Maloway) to ask questions from any seat in the House or just from the front row of the opposition? The honourable member has leave. [agreed]

Mr. L. Evans: Just a couple of comments. The minister made some interesting remarks, most of which I do not disagree with. I was just going to point out that what he is saying about the influence of the Crow rate, he makes the point that I was making maybe yesterday, and that is what happens to our economy in many ways is beyond our control. I do not care which party is in power. I mean, the provincial government can do a certain amount, can have certain policies, but we are influenced by the interest rate regime, by the value of the dollar but also by federal transportation policies, and here is where the Crow rate comes in.

Certainly, there is no question that it is contributing to the value-added production in the province, which is good. It is providing more jobs and hopefully more economic activity. But the problem with the abolition of the Crow rate, of course, was that certain farmers at that time felt that they were being hurt, that there was going to be an additional cost that they would have to bear in transportation and that therefore their income was being negatively affected.

There was some compensation, and I do not know enough about it to say whether that compensation was adequate and also whether enough of those farmers, or most of them, were able to diversify a bit to get into some of the other crops that the minister referred to or the other types of agriculture the minister referred to, such as livestock and so on.

But that was the real problem. The problem, as often, is equity. You change some major policy or some tax, and there are some winners and there are some losers. You just hope on balance, at the bottom line, there is more of a positive result than a negative result.

Just on the other interesting comment he made about zero till, maybe I should not do this, but my son-in-law has been president of the Manitoba Zero Till Association and is still a very active member on the executive. He and his father, who farm near Isabella, which is near Birtle, I can tell you have been able to put in a crop okay this year, even though they are still well into zero till, and even though there has been a lot of rain. So hopefully many farmers using that type of technology will be okay. But they were subject to a lot of wind erosion, and this is a way to overcome wind erosion.

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I appreciate also it is not that easy to bring that system in to every part of the province because the soil conditions are different. I think the Red River Valley, with very heavy clay, it is a little different situation. But this is where the straw comes in and the use of straw as a material for another product.

At any rate, I do not want to continue this, although it is very interesting, and I turn it over to my colleague from Elmwood.

Mr. Gilleshammer: I already agreed with my honourable friend earlier that there are other factors besides lower taxation. I did agree on the interest rates and on the American dollar and trade patterns. I would agree, too, that federal government policy does have a tremendous impact on a province's ability with the transfer payments that have been historical that are changing, and also, in this case, the loss of the Crow rate.

You know, it always amazes me that the federal government sends up signals, and a number of those things come to pass. They often will say: We will continue this for another two years, but after the third year you are on your own. It is a classic form of downloading on the provinces that, because they put that lag time in there, there is sort of a delayed effect before that comes into effect, but ultimately it hurts, and you do have a chance to adjust, but, you know, at the end of the day, those changes are made.

I recall when I was Minister of Family Services and the federal government paid social assistance for aboriginal folks who lived off reserve. They unilaterally made that decision, and I think it cost us $20 million that year. It is money that has to be found within the system. So I do agree that federal government policy is also a factor in budgeting and in the way that a province develops.

Even today, the gasoline tax is an annoyance that I think is getting more and more publicity. The gasoline tax that the federal government takes out of Manitoba is over $150 million, and none of that is put back into our road system. It is used as a transfer payment often to the eastern provinces to help build roads. I was down there last fall and could not help but notice the number of signs on highway construction projects that said: This is a federal-provincial initiative. I know that they are getting additional pressure to look carefully at that to put some of that money back into the highway system here in western Canada. All of the western provinces are saying that, as well as all of the municipal governments. It is something that just has to happen. We are falling further and further behind in our abilities to keep that infrastructure in place as highways are used more, as the trucking industry grows. Again, it is a lever the federal government has that we do not feel they are using wisely. In fact, how you can extract a gasoline tax and not dedicate it to the rebuilding of roads and infrastructure is beyond me. I think that debate is going to get louder and louder in the coming years, because all of the western provinces have the same concern and complaint, and we all have deteriorating road systems that have to be addressed.

Similarly, the UI or the EI system, we are net losers in Manitoba of, I am told, about $350 million that leaves our province. I know that they spend this in other parts of eastern Canada. We lost the Crow benefit here, and we are adjusting to it. I mean, it is a sad thing that there are no fish in the ocean, but there has to be other economic activity taking place, or, in a free country, people have to relocate to where the jobs are. We have said here in Manitoba that we have the lowest unemployment in the country. We have many jobs going wanting. I know you cannot tell people they have to move, but maybe there should be some incentives to get people to move.

When I was Minister of Culture, Heritage and Citizenship and had some relationship with the federal government on immigration issues, we desperately were looking for more people to work in the garment industry here in Manitoba. There were hundreds and thousands of jobs going wanting. We eventually went to the federal government and said, listen, we think immigration is part of the solution. Before they would give us any special dispensation to attract people from outside the country, we had to advertise across the country to see if there were garment workers. There were plants that had closed down in Ontario and Quebec, but as far as I recall there was not one of those people who were prepared to relocate to get a job. Whether you do it by policy or whether you do it by incentive, there has to be a way in this country to have people move to where the jobs are.

I am not sure whether I have ever heard the member speak about social assistance and policies related to that, but I know when once I talked about workfare in the early 1990s there was quite a loud outburst against it. And it was not until Bill Clinton mentioned it in the United States that people became more concerned, I think, and more ready to say we have to have training for people who do not have jobs; we have to give them incentives; we have to be able to get them to move to where the jobs are. So this is a problem. I agree that the federal government does have levers at their disposal that they can play either a positive role or a negative role in the economy of different provinces. I have just cited a few examples where those policies can have an effect on Manitoba.

This whole issue of transfer payments and equalization payments is such a large part of the work we do in building a budget. You would like to have more certainty in knowing what the rules are for a longer period of time so that you can do that planning. But they do have the ability to make those changes and have an impact on our policies and our budget. So I do agree with the member that there are things other than lower taxes.

But we were talking about the Lower Tax Commission, and we do think it makes a positive change in the economy of our province. Something I meant to comment on earlier, the member talked about surpluses and deficits and debt not necessarily being a right-wing or a left-wing idea. Certainly he gave examples of governments that have done both, balanced the budgets or run deficits. But it has been our commitment since 1988 to work in that direction, to balance the budget and not run deficits and not create new taxes. I think there was a time when the member was part of a government that always looked at ways to create new taxes, particularly during the 1980s. I noted, just before I brought this budget down on April 29, there was a social activist group in Winnipeg and probably some of them in Brandon as well who got together and brought down what they called the budget of choice, and it was just full of new taxes. I would be interested to know where the member for Brandon East (Mr. L. Evans) is on that.

They were talking about increasing personal income tax on the highest income earners by creating an additional 2 percent surtax. They were talking about creating consumption taxes that were going to raise another $115 million. They talked about a gasoline tax on larger vehicles, and they were going to increase the gasoline tax by I think seven cents. That was going to raise an additional $40 million. They were going to tax overtime hours.

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So when I say that lower taxes will stimulate the economy, create jobs and economic activity, I believe that they will. But when you have taxation initiatives–and I reference the payroll tax that was brought in by the member's government in the 1980s being very damaging in terms of expansion of business and creation of jobs–these ideas are still around, and I think still around the NDP caucus room, that there are people who want to create a higher personal income tax and additional gasoline tax and green taxes and the overtime tax. I think there are a number of others here on pesticides and fertilizer. These are the people that the member for Brandon East has been identified with in the past, and I have not heard anybody over there come out and say they no longer believe in those things.

There was a report from the Canadian Centre for Policy Alternatives last week that said that the Manitoba economy is a flawed experiment. I think there were a couple of university professors who are very closely associated with the member for Brandon East who spoke very negatively about the Manitoba economy. It was counteracted in the Winnipeg Free Press on Saturday, and it talked about the weak logic and socialist diatribe. So there still is, I think, various schools of thought on taxation. I think that we believe very strongly here that lower taxes are one of the things that influence business and industry in the creation of jobs.

Mr. L. Evans: Well, Madam Chair, I was not intending to continue this debate, but the minister brings up a few points. I just want to make a couple of rebuttals, and I do not want to spend a lot of time, but he makes reference to the payroll tax, which originally has been called and I guess still officially is the Health and Education levy tax, and it was brought in simply because of the need to pay our way. There were a lot of additional expenses incurred, and we noted there were other provinces such as Quebec and I believe Ontario where they levy premiums that obtain certain monies. But the idea always was to be able to get some money out of federal corporations or the national corporations and so on that we would not otherwise be able to obtain.

The fact that this government continues with that tax speaks volumes, Madam Chair. The Premier (Mr. Filmon), then the opposition Leader, was categorical in his statement that he would eliminate it, not cut back on the companies that had to pay it but would totally eliminate it. It would be gone from the face of this earth. But that tax has continued to be a very significant source of revenue.

I do not want to accuse anybody of hypocrisy, which means pretending. Let us not pretend. That is a very valuable source of revenue, and this Minister of Finance (Mr. Gilleshammer) cannot do without it. If he really does not like it, bring down the budget and eliminate it, but he cannot because we do not have that fiscal strength in this province to do that. No government of any stripe wants to bring in new taxes, but from time to time you have to if people are requiring certain services. Let us face it, there was an expansion of services back in the '80s, various kinds of social services, housing and so on.

Having said that, I want to remind the minister, in fact, I get him to look back at the NDP years under Mr. Schreyer, for eight years. We were not plagued with any huge deficits. In fact, and this is from memory, I have to go back and look, I think most of our years we were in surplus and certainly balanced, and we brought in a lot of new programs, including very significant reduction in taxes. Let me put it this way. It was a more equitable tax system that we brought in when we eliminated medicare premiums, which was a flat rate tax. Whether you were a widow of 90 years of age or a very wealthy businessman living in Tuxedo, you paid the same amount for health care.

So this was the flat rate premium tax which we eliminated, and we made no bones about it. We put a couple of points on income tax because we thought that was a fair way of going, but generally speaking, I think we lived within a tax regime that we originally had and because of buoyancy of the economy and so on, we were able to bring in a lot of new programs. You can look at the numbers, and you will see that the debt problem was very minuscule.

I just want to make one other point. I agree with the minister when he talks about the need for mobility in this country. I think that may be the ultimate solution for a lot of people living in Atlantic Canada, although I know many people do not wish to leave. I know it can be very disruptive and so on, but in terms of pure economics that may have to be a solution or the major solution.

I am one who believes that everyone who is capable of working should be given a job and be able to work. I would go beyond just people working who are on the welfare roles. I would go to everyone who is unemployed, who is looking for a job. There are more people looking for a job than there are on welfare. We were hoping to move more dramatically in that direction when we set up the Department of Employment Services and Economic Security, the department of which I had the honour of being the minister, and we brought the welfare money in the same department as all the job programs. We identified people on welfare and others who were unemployed, and gave them jobs through the Manitoba jobs program. Those jobs were not government jobs. They were in small business and nonprofit or not-for-profit organizations, and we got federal welfare money.

I attended a meeting of our ministers, and I suggested–Flora Macdonald was then the minister–that the provinces be allowed to use welfare money to apply to job programs and to training on the job, and we got that agreement from the federal government. The minister can check with the various provincial officials who were involved at that time, and some of them may still be around, and they will confirm that we were able to do that. That was our major thrust in the late '80s, and that is to be able to identify the unemployed in this province and to give them training and to give them an opportunity to be hired, and to work towards the ultimate ideal which would be zero unemployment. This is the ultimate ideal, which we can never achieve, but as they said: man's grasp must exceed his reach or what is a heaven for?

At least we have to move towards a direction of getting everybody off welfare and getting everyone who is competent and capable of working in this province to a job. There are various ways of doing it. I thought we were doing it in a very positive way where people were getting jobs, where there were real jobs, not just sweeping the streets or moving stones around, real jobs in small enterprise and nonprofit organizations. We were talking about thousands of people. We did not get zero unemployment because there were a lot of other factors at work but at least we were moving in that direction.

So I have no problem and I know our party has no problem in having work for people. We all believe in work, not welfare. Work is far better than welfare, but the point is you have to bring about the programs in a very, hopefully, progressive and positive way where you give people a chance to get off of welfare into work opportunities that are meaningful and are productive, that we need, that are jobs that we need in this province that will add to our standards of living as opposed to putting people into sort of work activities just for the sake of activity. I mean, that is a very negative way. There are so many good things that have to be done, important jobs that have to be done for which there may not be money through the private market system but which could be legitimated through some form of public expenditure, which is going to happen anyway through any kind of workfare program. It has to happen that way anyway, but that is a challenge for all of us.

The ideal world in Manitoba, as far as I am concerned, or any economy is to have zero unemployment. That is the ideal, but it just cannot happen through the market system itself. Governments have to be involved. If we just left it to the market system we would have perpetual thousands of people, not Manitoba, I am not trying to pick on the particular present government or confining my remarks to Manitoba, I am just saying in any economic zone or any sector or any province or any nation, if you leave it to the market itself, ultimately, from my experience in economic history, you always have a fair amount of unemployment.

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Mr. Gilleshammer: Mr. Chairman, the member indicates that the payroll tax was okay because it was a way to tax federal corporations and that the government of the day needed the money. Part of the problem is that the government of the day was more apt to look on the revenue side than on the expenditure side for ways of balancing the budget. If he thinks taxing federal corporations does not have an effect on the economic activity in the province, I would say he is wrong. These are corporations that provide jobs here and often have the ability to expand anywhere else in Canada. It was very detrimental towards job creation and the economy of Manitoba when you take money out of the economy for government by creating a new tax.

The member talks about zero unemployment and that government has a major role in creating jobs. I think this is where we differ. I think government's role is to create the conditions where jobs are going to be created by private enterprise. If I recall, the solution of the government of the day was to create the Jobs Fund, my understanding that $200 million was spent by the government of the day creating these jobs, none of which exist today, and that the Jobs Fund was a failure.

Now, the current Leader of the party the member belongs to was the president of the MGEU at that time and I think was very, very critical of the government. The member for Brandon East was probably largely responsible for the Jobs Fund at that time, so it must make for some difficult discussions in talking about job creation in the 1980s where the government felt that the only jobs that would be created should be government jobs.

But he leaves the impression that the only tax that was raised during the 1980s was the payroll tax. I would point out to him that between 1982 and 1987 the retail sales tax increased from 5 percent to 7 percent; the payroll tax, as I indicated, was introduced. There was also the introduction of the personal net income tax and surtax at that time; increased corporation income tax from 15 percent to 17 percent; increased corporation capital tax from .2 percent to .3 percent; also introduced a .2 percent surcharge; increased the bank rate to 3 percent; increased the gasoline tax from 6.4 cents to 8 cents per litre; increased the diesel fuel tax from 5.7 cents to 9.9 cents per litre; increased the railway fuel tax from 3.8 percent to 13.6 percent per litre; introduced the land transfer tax; and increased the tobacco tax significantly.

So it was not just the creation of the tax we were speaking of, the payroll tax. There was a general desire to increase all taxes, and the record from 1982 to 1987 was of major tax increases. That is why, I think, Manitobans wonder if, when the Choices group come out with their budget suggestions–I think the member for Crescentwood (Mr. Sale) is a charter member and probably a sustaining member of Choices. This is not part of the thinking of the NDP caucus as we go into the future, that these taxes will be increased and created. I did not hear the member for Brandon East (Mr. L. Evans) comment on that, and it would lead me to believe that perhaps he is supportive of these endeavours that Choices brought forward in their budget.

At any rate, taxation I agree is only one of the issues, that interest rates, the value of the Canadian dollar, international trade all are part of what makes the economy what it is in Manitoba today. Again I go back to the whole idea of diversification, that Manitobans, I think, have responded well in this area and will continue to respond well.

Mr. Jim Maloway (Elmwood): I wanted to begin by making a few comments on the Lower Tax Commission that the Conservative government has set up recently. You know, Mr. Chairman, it appears to me that this is merely window dressing around an election campaign. I mean the government has had 11 years to bring in a Lower Tax Commission. Did it do that in the last 11 years while it was increasing the tax burden of Manitoba citizens? No, it waits until it finds itself in electoral trouble just before an election to do it. So I think that there would be some credibility in this move if this government had set up this Lower Tax Commission a year or two ago and not to create false expectations around an election campaign.

Back just before the last election, they promised the balanced budget legislation to entice voters to support them at that time. What they are hoping to do this time, without actually doing it, is to just hold out that carrot, hold out that hope so that enough of the voters who have slipped away from their clutches over the last couple of years will be attracted back to it with the hope that they are going to have reduced taxes.

But, as the member for Brandon East (Mr. L. Evans) pointed out before, you cannot have it all. You cannot have reduced taxes, improve health care, improve education, balance the budget, do all of these things unless you have an expanding economy. That is the only way that can happen. We have gone through now eight solid years of expansion, and if you look through the history, you will find that expansions normally last maybe three years. They certainly do not last eight years, and we are running on a good string of luck right now, and it is bound to run out at a certain point in time.

You know in Ontario, the government there just won re-election, announcing further tax cuts, but all the while that it is doing this, it is running deficits. This government, this minister would not agree with that approach. I know he would not, and I do not think we would over here.

So let us recognize this for what it is. It is just basically election posturing, and whether we are going to see any tax reductions out of this is really highly unlikely and speculative at best. Having said that, I personally would favour tax reductions. But that has to be understood, that that is an unlikely proposition at this point in time.

So this is all designed for the Conservative election campaign and their advertising campaign, much the same way that this workfare legislation they are bringing in right now and other legislation they are bringing in are designed to create some momentum, because they do not have any momentum at the current time. They are an old, tired government, 11 years old, and they do not have that crispness and sharp image that they had even as late as 1995. It is just not there. So this is what they are trying to do.

We all know how Conservatives operate. Essentially, this last budget, they make a lot about the NDP voting for the budget. The fact of the matter is what they do not point out is that it is practically an NDP budget that they brought in. They increased health care by a couple of hundred million dollars, exactly as we had been demanding over the last year. So what are we supposed to do when they actually do what we have been asking for the last couple of years. They actually do it, and they expect us to vote against it.

So there is a certain consistency, and the member for Brandon East (Mr. L. Evans)–who, by the way, celebrated his 30th year as an elected official five days ago–did mention that he was making speeches when he was in government that sounded very similar to what the Minister of Finance's speech today is. There seems to be a bit of a consistency there that when you get on that side of the House, you begin to defend the status quo, and when you are in opposition, it is our job to suggest improvements and criticize the government wherever required.

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Now I know we are running desperately short of time today, because I was counting on a couple of hours here on the IT section. So I would like to get into that right now.

The minister is aware that so far–to try to construct the picture here–we know that there are 65 Y2K projects costing roughly $70 million. We also know that under Government Services is the desktop project which amounts to around $162 million currently, and that deals with the whole government. What we do not know, what we are missing is the computer costs, the computer software consulting costs associated with the hospitals and also the Crown corporations. That is what we are missing. The minister told us yesterday that the $70 million for Y2K includes the whole picture, that Y2K costs include the hospitals, include the Crown corporations, include the whole works. That is what he said yesterday.

The Government Services minister fills in the hardware, software consulting for the government itself, the 9,200, I believe it is, units. We are missing the hardware, software, the consulting for the WHA, all the hospitals across the province and the Crown corporations. I wonder if the minister could provide us with that total now.

Mr. Gilleshammer: Well, before I get into that, I would like to comment on some of the preamble that the member for Elmwood has put on the record. He calls the Lower Tax Commission an unlikely proposition, that we are not going to do anything. But it reminds me of the comments made by the member for Elmwood and his colleagues when we announced the balanced budget legislation in 1995, and between mid-September and mid-October most of the members of his caucus had an opportunity to talk about the balanced budget legislation.

The Leader of the Opposition (Mr. Doer) at that time said: I know it is a cynical pre-election ploy. Now the fact is we did bring in the balanced budget legislation. It was approved, and we have had five consecutive balanced budgets. So the rhetoric coming from the member for Elmwood is the same today as it was in 1995. In fact, the member for Elmwood was quoted as saying: This is very much a public relations exercise on the part of this government.

We did pass the balanced budget legislation. The members opposite spoke against it, voted against it and have never supported it. The member for Radisson (Ms. Cerilli) said: I think it is really a political gimmick. The member for Crescentwood (Mr. Sale) said balancing a budget every year cannot be defended on any economic grounds. The member for Thompson (Mr. Ashton) said: this bill will not work. The member for Flin Flon (Mr. Jennissen) said that it was created for election purposes; this bill is not based on common sense.

The member for Dauphin (Mr. Struthers) said it is good window dressing, but when you look right into the bill it becomes a sham. The bill is nothing more than a gimmick.

The member for Swan River (Ms. Wowchuk) said no government needs balanced budget legislation. The member for Wolseley (Ms. Friesen) said it is one of the more unthinking pieces of legislation. The member for Brandon East (Mr. L. Evans) said it is unnecessary legislation, an election gimmick, an election ploy. The member for St. Johns (Mr. Mackintosh) said this silly bill and this silly public relations stunt. The member for Elmwood (Mr. Maloway) said what this government is doing is very cynically responding to the current flavour of the month. So my point is, the criticism–[interjection]

What did the member for Broadway say? Just give me a minute, and I will see if you are on the record here. Oh, yes, the member for Broadway (Mr. Santos) said the principle of balanced budgets, the principle of debt repayment and the principle of taxpayers protection, they are like three enticing bottles of perfume which give Manitobans pleasures to behold and to smell but if they swallow it, it will be deadly for them.

So I make the point that the criticism that the members bring about the Lower Tax Commission sounds an awful lot like the criticism that was displayed here on the balanced budget legislation. They were not believers and we did pass that legislation. It has been extremely effective, and it has been copied by many other jurisdictions in Canada. It is seen as a template for other governments to balance their budgets and to move forward and strengthen their economies as we have in Manitoba.

The member for Elmwood (Mr. Maloway) said he voted for this budget because it looked like an NDP budget. I would have to give him more credit than that, because an NDP budget between 1982 and 1987 displayed the following characteristics. It increased the retail sales tax from 5 percent to 7 percent. It introduced and increased the payroll tax to 2.25 percent of payroll. It introduced personal net incomes taxes and surtaxes.

So, when the member talks about this being like an NDP budget, I do not know where he is coming from. I do thank him for standing in his place and being counted as a supporter of the budget. In fact, it is the first time in my 11 or 12 years in the House that I can recall him standing and supporting the budget, and any similarity to an NDP budget, I do not understand. I would like him to rethink that, and maybe he would make further comments on it, because this last budget had tax reductions in terms of provincial income tax. It had tax reductions in terms of small business tax, and we also created the Lower Tax Commission.

The member is saying it is a sham, it is a gimmick, that it is not going to produce anything. Now he is already at odds with the member for Brandon East (Mr. L. Evans) who indicated that he felt there would be some good ideas brought forward, and he looked forward to the results of a Lower Tax Commission.

Mr. Maloway: Mr. Chairman, on a point of order, I asked the minister a question about IT. He can use up the rest of the time if he wants just engaging in debate because that is I think what his intent is, but I would ask you to call him to order and ask him to answer the question that was asked.

Mr. Chairperson: Order, please. The honourable member was given an opportunity to put forward a number of points during his initial question that the minister has been working on. It is a dispute over the facts at this time.

Mr. Chairperson: The honourable minister, to conclude his remarks.

Mr. Gilleshammer: Well, I know when the member for Elmwood makes his introductory remarks and then wants to go to somewhere completely different that he surely expects me to respond to the things he said. In fact, I wrote them down, and I am only part way through it.

Your observations on the Ontario budget I think are correct. While they have put tax reductions in there, they have not yet done away with their deficit. It is not a balanced budget. He is correct there.

I would take some exception with the remark he made that it is just a string of good luck that has allowed us to balance the budget. [interjection]

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Well, I would urge him to look back at Hansard. I may be not quoting him directly, but he did say it was a string of good luck. I think it takes more than good luck to balance a budget. It takes some real commitment. It takes some discipline, and the balanced budget legislation that the member criticized and all of his colleagues criticized, the member for Broadway (Mr. Santos) in a very colourful fashion, that balanced budget legislation was passed, and it was more than a gimmick or an election ploy. It was the foundation of the budgets that we have brought in over the last five years.

Now the member was asking, I believe, about the Y2K projects. We did indicate yesterday that there were some 65 projects, and that over, I think, three budgets there was a cost figure for that. We are living within that budget.

I am informed that the Y2K efforts for the WCA, the WHA and the RHAs include hardware and software replacement or refurbishment. The medical equipment, the cost of that was some $19 million-plus, and the Y2K IT efforts in the RHA and the WCA showed an expenditure of over $20 million.

Mr. Maloway: I wonder if the minister could repeat that information. I missed one of the figures.

Mr. Gilleshammer: Sure. Did you want me to start with the Lower Tax Commission and the–

Mr. Maloway: If you could break it down between the hardware and the software.

Mr. Gilleshammer: I am told that the Y2K efforts for the WCA, the WHA and the RHAs include hardware and software replacement or refurbishment. The medical equipment was upwards of $19 million, and the Y2K IT efforts in the RHA and the WCA were a little over $20 million.

The member had also asked about the Crown corporations. Crowns are only supported from a co-ordination point of view, and they fund their own equipment and refurbishment, both the hardware and the software.

Mr. Maloway: Mr. Chairman, when the minister referred to 20 million in Y2K, that figure, was that in addition to the 70 million or is that part of the 70 million for the hospitals?

Mr. Gilleshammer: Mr. Chairman, I am informed that is part of the 70 million that was referenced yesterday, which, I think, spans–is it two or three budgets?–three budgets.

Mr. Maloway: Mr. Chairman, I wonder if the minister could endeavour to get us the information for the next sitting on Monday or Tuesday of the information from the Crown corporations as to what their breakdown is between Y2K expenditures and–I cannot see it as being a really difficult job for him to do, considering that the reports are all available to his staff and he can make the inquiries. I mean, surely his department will know what the global picture is for Y2K and hardware and software IT expenditures in advance of the year 2000. I would expect him to know those costs. I would not expect us to have to chase around after these figures.

Mr. Gilleshammer: That is information that we do not have lodged within our department. I know the Crown corporations put out annual reports, and I would refer my honourable friend to the annual reports. I think that he would glean some information from those.

I know that, when I was responsible for the Workers Compensation Board, they were underresourced as far as IT equipment goes, and they were looking at not only having paid their debt off and achieved a surplus and reduced rates considerably, but they did have a surplus and they were going to dedicate some number of millions of dollars to IT equipment.

Of course, bringing that on stream at this time, it would by Y2K compliant, but I am sure either in the Estimates of other departments and other ministers or going through those annual reports might be a good source of information. If the member for Elmwood does not have them, maybe we could locate some of those annual reports for him and get him that information.

Mr. Maloway: Mr. Chairman, I understand that the computer-equipment, software-consulting Y2K expenses, if there are any under the Legislative Building Information Systems, are not included in all of the information he has provided at this time. Is that true or not true?

Mr. Gilleshammer: Yes, I am informed that the equipment used in the Legislature is Y2K compliant.

Mr. Maloway: That is not the question at all. The Legislative Building Information Systems, I understand, is separate from everything else. This is just another component that has not been offered to me in terms of information. It is something I have to search around for. There are 400 units or something like that involved in this. I would want to know, is that included in those global figures you already gave me?

Mr. Gilleshammer: Mr. Chairman, I am informed that the Y2K component is.

Mr. Maloway: So the Y2K component of Legislative Building Information Systems is included in the $70 million, but the hardware and software component is not included in the $162 million that Government Services gives me as a cost of the desktop project. Is that correct or not correct?

Mr. Gilleshammer: I am informed that it is contained within the Legislative Assembly's budget.

Mr. Maloway: But, when I asked the original questions, I was asking for global figures that the Finance department would have for the total costs to the taxpayer for computers, Y2K and software, all associated with the changeover to the year 2000. I was wanting the minister, if not for his own purposes, he should have this information, to know what the total costs are. So these costs for the Legislative Building have not been included in this cost that I have right now before me.

Mr. Chairperson: The hour being six o'clock, committee rise. Call in the Speaker.

Mr. Deputy Speaker (Marcel Laurendeau): The hour being six o'clock, this House now adjourns and stands adjourned until Monday, 1:30 p.m.