April 19, 2004

Budget 2004 focuses on the priorities of the North-renewing infrastructure, investing in vital health care and education programs, and creating new opportunities for northern and Aboriginal Manitobans, Finance Minister Greg Selinger said today.

The budget is balanced with no projected draw from the Fiscal Stabilization Fund and follows through on promised tax cuts and debt repayment. It follows a year of challenges that included the BSE crisis, severe drought in some regions and the second worst forest fire season in Manitoba history-with significant hectares lost in the North.

"Today's budget preserves key services for Manitobans, increases government affordability and takes further steps to build the North where so much economic potential exists," said Selinger, in presenting his fifth straight budget balanced under balanced budget legislation.

Budget 2004 focuses on reforming health care services; creating new opportunities for young Manitobans; investing in vital infrastructure; building safe and vibrant communities; supporting children and their families; and operating an efficient and affordable government.

The budget also continues the government's long-term plan that has won two credit upgrades for Manitoba. A five-budget track record of reducing taxes, paying down debt, upholding the balanced budget law (BBL) and planning for the future has focused on affordability and sound fiscal management. Budget 2004:

• is balanced under BBL and dedicates another $96 million to pay down the debt and pension liability with no draw from the Fiscal Stabilization Fund-a first since BBL was introduced in 1995;
• contains promised tax cuts for all Manitobans-bringing total personal income and property tax reductions to $311 million annually since 2000; and
• orecasts real economic growth at 2.9 per cent.

New Opportunities for Northern and Aboriginal People

Budget 2004 builds on growth strategies developed in partnership with community, business, Aboriginal, labour and education leaders from across Northern Manitoba. Such partnerships are vital to creating new opportunities for northern and Aboriginal citizens, and Budget 2004 supports this approach by providing:

• additional resources for the University College of the North;
• increased training and employment opportunities for northerners and Aboriginal people through a new hydro training initiative;
• college tuition remaining 10 per cent lower than 2000;
• expanded vocational education in high schools and colleges;
• $200,000 for new training for employment opportunities related to the floodway expansion;
• enhanced funding for ACCESS programs;
• an extension of the education tax credit to employees who pursue career-related studies;
• a new deduction for employment and education costs for persons with disabilities; and
• support for an upcoming economic summit on Aboriginal entrepreneurship hosted by the Premier's Economic Advisory Council.

Northern Infrastructure Renewal Continues

Since 1999, the provincial government has made strategic investments in northern and Aboriginal communities-investments designed to improve vital infrastructure in health care, education, transportation, and drinking water and waste water systems. For example, funding for transportation infrastructure in the North has totalled $100 million in the past four years and investments in winter roads have tripled.

Budget 2004 furthers this progress by providing:

• new funding for winter roads, northern airports and other transportation infrastructure;
• support for the third year of Manitoba's five-year $600 million highways program;
• additional funding for the highways program, which will increase by $10 million in 2004 and a further $10 million in 2005-allowing for such projects as a major resurfacing of Highway 6;
• support for a cost-shared federal-provincial plan to improve flood forecasting, prevention and remediation in the Fisher River area, including Peguis First Nation;
• new resources for drinking water and waste water improvements, adding to the 45 projects completed since 1999;
• $6 million for affordable housing in remote communities and continuing support for Neighbourhoods Alive!, which supports housing and community-building projects in Thompson; and
• $6 million for the Northern Communities Capital Grants program.

Health Care Reforms in the North

Budget 2004 notes that federal funding for Manitoba health care is $104 million lower for 2004 than 2003. In light of these funding challenges, Manitoba is making strategic investments in the North-investments that increase efficiency while providing improved health care services closer to home.

This approach has been underway since 1999 and significant health care capital projects have just been completed or are now underway in northern centres including The Pas, Swan River, Wabowden, Garden Hill and Churchill. Today's budget builds on this strategy by supporting:

• nearly $11 million for a new emergency department and improvements at Thompson General Hospital;
• dialysis treatments for patients in the Island Lake region, who will have access to a new $5.2 million renal health and treatment unit at Garden Hill;
• additional resources for the Manitoba wait times reduction plan, which builds on such recent investments as CT scanners in Thompson and The Pas, and an ultrasound in Churchill;
• expansion of the family doctor connection line to include all regions in Manitoba, and the expansion of HealthLinks, a telephone line which provides health information and advice to Manitobans;
• expansion of Telehealth in the North with new sites in Churchill and Norway House to provide patient diagnoses, treatment and consultation via tele-video technology;
• more resources to further expand training for nurses-with the number of nurses in training tripling since 1999;
• an additional $5.6 million for Pharmacare, plus a five per cent increase in deductibles and measures to address spiralling drug costs;
• a new task force to look at youth health and fitness;
• a tobacco tax increase of two cents per cigarette to encourage people to quit smoking and discourage others, especially youth, from starting to smoke; and
• an adjustment to liquor mark-ups.

Strategic Investments in Health and Infrastructure

Recently, the Conference Board of Canada indicated that only Alberta and the federal government will run surpluses over the next decade. Meanwhile, the provinces collectively will struggle to fund health care and education, and local governments will face serious infrastructure deficits. The board said the national health care system will become unsustainable without additional federal support.

In 2004, federal expenditures for Manitoba health care will be $104 million less than in 2003. Budget 2004 stressed that the province's first priority is to seek a new federal funding partnership for health. Once this is in place, Manitoba will work with Ottawa and Manitoba municipalities to further address infrastructure needs.

The budget noted the province currently has a unique tax sharing agreement with its municipalities. Overall in 2004, municipalities outside Winnipeg will receive $35 million under the unique Provincial Municipal Tax Sharing Agreement (PMTS). The province also remains committed to significant infrastructure investments that are either underway or were unveiled in today's budget.

Focusing on Northern Economic Development

The Northern Development Strategy focuses government's efforts on developing the potential of the North. The Northern Diversification Centre in The Pas is a good example of the strategy at work. The centre, supported by government, is responding to a growing demand for wild, natural, non-timber forest products and helps meet the challenge of creating sustainable economic opportunities. Budget 2004 builds on successes such as this by:

• recognizing hydro development as a key economic cornerstone with support for Wuskwatim, currently before the Clean Environment Commission, and for the construction of an east-west power grid;
• providing $1 million in support of the Hudson Bay rail line and the Port of Churchill-Canada's only deep-sea Arctic port facility;
• providing $1.4 million for the Aboriginal Economic and Resource Development Fund;
• extending the temporary mineral exploration tax credit for a year; and
• expanding Manitoba's Film and Video Production Tax Credit to include a northern and rural incentive for productions shot outside of Winnipeg.

"The Northern Development Strategy is based on the belief that the priorities and experiences of northern and Aboriginal residents should guide plans for local economic development," Selinger said. "Today's budget is about building on the strengths of the North and working with residents to create new opportunities for the region and its residents."

Supporting Northern Families and Communities

Supporting Manitobans and their families, and building safer and prosperous communities has been a focus of government for the past four budgets. Recent achievements include funding the RCMP up to full complement, creating 3,500 new funded child care spaces throughout the province and fully restoring grants to the Manitoba Association of Friendship Centres. Budget 2004 builds on these successes by supporting:

• ongoing upgrades in community facilities throughout the province including new and expanded recreation centres in Thompson, The Pas and Dauphin-supported by all three levels of government;
• resources for the expansion of safety aid to provide security equipment to low-income seniors living in northern and rural Manitoba;
• the expansion of the Lighthouses program, an after-hours program for youth in urban centres including Thompson;
• a new northern healthy foods initiative to promote local and traditional food production and encourage healthy choices;
• more funding for libraries in northern centres;
• additional resources for the United Way-ensuring every dollar donated is spent on community services; and
• new resources for provincial policing including Opaskwayak Cree Nation Policing and Aboriginal policing at Nelson House.

New Personal and Property Tax Cuts

Budget 2004 follows through on promised tax reductions, providing for a six per cent middle income tax break that will save Manitobans $39 million this year. With this tax reduction, personal income tax and property tax reductions total $301 million annually since 2000. Budget 2004 provides further tax relief including:

• A further $10 million cut in the residential education support levy-bringing total property tax relief to $92 million annually since 1999.
• In 2005, farm education property taxes will be reduced by five per cent as the first step in following through on the commitment to reduce education taxes on farm land by 20 per cent-since 1999, the farm land portion has dropped from 30 per cent to 26 per cent, resulting in $7 million in savings for Manitoba farmers.
• Education property tax credit delivery to change-starting in 2005. The credits will flow directly to school divisions, resulting in timely payments to school divisions and providing accountability in provincial education funding.
• New personal tax cuts including tax breaks to help persons with disabilities and their families.

Budget 2004 also offers continued business tax reductions aimed at stimulating growth. The budget strikes a balance between continuing broad-based tax cuts for business and shifting other business taxes to help finance general business tax cuts. To this end, the capital tax base for banking institutions will be more closely aligned with neighbouring provinces and the federal government. And in keeping with most other provinces, retail sales tax will be applied to legal, accounting, engineering, architectural and security services.

Business tax cuts in Budget 2004 include:

• Small business taxes decrease again-the threshold will rise again for the third straight year to $400,000 in 2005. The small business rate will also decrease again to 4.5 per cent after 2005.
• Four-year plan to cut general corporation income tax rates continues-with the rate falling from 17 per cent in 2001 to 15.5 per cent in 2004 and 15 per cent in 2005. The rate will decrease again to 14.5 per cent after 2005.
• Research and development tax credit will be maintained.

Maintaining Affordable Government

Budget 2004 noted that the province has the third lowest rate of spending on a per capita basis of all the provinces. Manitoba is committed to maintaining front line services in health, education and supports for families and children, while introducing new measures to reduce administration costs and keep government affordable. The budget:

• eliminates 400 civil service positions through attrition for savings of over $30 million;
• reduces spending or holds the line to inflation in the majority of government departments;
• consolidates the sale and lease of provincial Crown lands into a single agency;
• merges driver vehicle licensing with Manitoba Public Insurance to reduce duplication of administrative services and increase customer service;
• reduces the province's borrowing costs by a further $32.5 million-Manitoba's borrowing costs are among the lowest in Canada; and
• increases penalties on overdue taxes.

Manitoba milestones reached in 2003

The budget noted that while Manitoba faced challenges in 2003, it also reached some significant milestones. Selinger said Manitoba workers, entrepreneurs and communities in Northern Manitoba have proven to be innovative and resilient. Manitoba achievements in 2003 include:

• Population growth of 7,584 persons-the highest since 1986.
• 1,055 more young people came to Manitoba than left.
• Personal disposable income growth of 3.1 per cent, outpacing the national increase.
• The lowest inflation rate in Canada, due to low hydro and auto insurance rates.
• The lowest unemployment rate in the country at five per cent.

"Like all provinces, Manitoba has faced serious challenges recently," Selinger concluded. "But the bedrock of our economy remains solid and the outlook is positive."