The House met at 2:00 p.m.

MR. SPEAKER (Snow): Order, please!

The hon. the Minister of Finance.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Mr. Speaker, I move, seconded by the Premier, that this House approves in general the budgetary policy of the government.

MR. SPEAKER: The Motion is that this House approves in general the budgetary policy of the government.

The hon. the Minister of Finance.

MS J.M. AYLWARD: Mr. Speaker, the budget last year put forward an ambitious action plan. Significant new measures were announced for youth, education, health and helping those most in need, as well as infrastructure and jobs and growth. This budget builds on that foundation.

We have been fortunate in the aftermath of September 11 that our economy has remained strong and our economic outlook positive. I heard during pre-budget consultations that part of government's role is to help create the right economic climate for investment and growth.

I also heard that we should sustain social programs, even if that means running a modest deficit. The view expressed by most Newfoundlanders and Labradorians was that they preferred this alternative to reduced social programs.

We have avoided reductions to programs by taking this advice.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: We believe the most responsible course is to incur an affordable deficit. The stability this creates contributes greatly to supporting a positive economic climate. At the same time, we are using the financial flexibility we do have to undertake some important initiatives.

Our economy is expected to continue to grow strongly, which is what this Province needs to sustain social programs. We share in the optimism many express about the economic future of this Province. This allows us in this budget to maintain the course set last year and build on this with new initiatives.


Our Economic Climate

2001 Review

Mr. Speaker, despite the international economic slowdown, our economy grew in 2001 by 1.3 per cent in real terms. This is a solid performance in comparison to other provinces and follows three years when real GDP growth exceeded 5 per cent each year. Almost every other economic indicator for the Province out-performed its 2001 budget forecast.

Consumer and business confidence remained high, and this is reflected in the strong retail gains and capital investment. Employment grew to a record high and the unemployment rate declined to its lowest level since 1989.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: First in 1999, and now again in 2001, we led all provinces in employment growth. Notable is that 63 per cent of the new jobs created since 1996 have been outside the greater St. John's area.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Capital investment remained above $3 billion for the third straight year. Housing starts were up 22.5 per cent. Non-resident tourist visits were up again in 2001, an excellent performance considering this comes on top of the high growth generated by major celebrations beginning in 1997.

The value of exports did drop marginally. Newsprint production still reached the second highest level ever recorded, only exceeded in 2000. A shutdown in the inshore shrimp fishery constrained fish landings, but the landed value of all fisheries was still the third highest on record. This Province is now the largest producer of cold water cooked and peeled shrimp in the world.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Iron ore production declined in part because of the slowdown in the steel industry. Manufacturing shipments, however, remained stable.

Oil production at Hibernia was up 3 per cent and the Terra Nova production vessel took up position offshore, boding well for further production growth in 2002. As well, government approval was granted in December for White Rose, which could add a third major offshore project to contribute to future economic growth.

2002 Outlook

For 2002, employment is expected to reach a new record high and the unemployment rate could decline further, possibly to its lowest level since 1989. This will contribute to a higher personal income and real disposable income. For the first time retail sales are expected to surpass $5 billion. Our cumulative growth in retail sales since 1996 is second only to Alberta and this reflects confidence all over the Province in our economy and in our future.

Most forecasters are calling for a global economic recovery in the second half of the year. We should lead all provinces in 2002 with expected real GDP growth of 3.7 per cent. This would mark the third time in five years that we top all provinces. It would be the fourth time that we exceed the national average.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Fish landings are expected to be up in 2002. Newsprint and lumber production should exceed 2001 levels. Capital investment could be spurred on by the White Rose project. The special tourism celebrations planned for Labrador and the film exposure this Province has received from The Shipping News, Random Passage and Rare Birds should allow us all to proudly build on the tourism gains achieved in recent years.

With Terra Nova on stream, the offshore could see a 60 per cent increase in oil production. Onshore production on the Port au Port Peninsula is expected to begin in 2002. A successful conclusion to Voisey's Bay negotiations, as well as Lower Churchill power discussions, would only add to business and consumer confidence and our future economic prospects.

Our Fiscal Framework

2002-02 Performance

Mr. Speaker, our solid economic performance over the past year contributed to a sound fiscal performance. For five consecutive years prior to 2001-02, we not only met, but we improved upon, our targets. We could have achieved this again for the sixth year. Instead, we are following the same successful strategy we have utilized for several years of shifting some flexible revenues from one year to the next in order to stabilize the fiscal situation. This stability allows us to protect public services and to foster economic growth. The alternative is dramatic year to year swings from large surpluses to big deficits that serve no purpose except to bring uncertainty to social programs important to the public, like health and education.

Our original deficit target for 2001-02 was $30.5 million. This increased to $80 million at midyear because of public sector wage settlements, indications federal transfer payments would be lower and fluctuations in exchange rates. We instituted a hiring freeze and restricted travel to help in controlling the deficit. A month ago new federal transfer estimates reversed the $13 million shortfall we expected at midyear. Our solid economic performance through to year end results in revenues being $30.8 million higher than budgeted. On the year, expenditures were $49.9 million lower than anticipated, and in large part some collective agreements will not be concluded prior to year end. These factors brought us to a surplus of $13.7 million before year end decisions. We made investments of $25.5 million in health and education, and we deferred $51.7 million in revenues budgeted for this year to next year. The net effect is that we are recording a deficit for 2001-02 of $63.5 million.

By moving some revenues forward, we are able to avoid a current account deficit in either year. This means that for 2001-2002, as well as for 2002-2003, we will not borrow to pay for the day-to-day operating expenses of providing public services. Our only borrowing for either year will be to cover some capital account expenditures, which are the long-term investments we make in things like hospitals, schools and roads.

If we look at one of the most common statistics used by other governments and the credit rating agencies to assess ability to carry debt, the public sector debt to GDP ratio, we see that for this Province it has been getting progressively better. This means that our debt has become a smaller percentage of our GDP, which is viewed quite favourably by financial markets. Over the past ten years, our ratio has fallen in percentage terms from the mid 60s to the low 50s, about 15 percentage points. It has been our management of the fiscal situation and contribution to the economic climate that has allowed this to happen.

2002-2003 Forecast

Like other provinces, we need strong economic growth provincially, nationally and internationally to provide the revenues we need to sustain and enhance social programs. In times like these, when the global economy falters, all provinces suffer fiscally, and most are at risk of slipping into deficit. Some provinces are experiencing severe fiscal shocks much greater than we are experiencing. We have worked diligently in preparing this Budget to keep the deficit for 2002-2003 to an affordable level, while ensuring enough flexibility to undertake some very important initiatives. We have conducted pre-Budget consultations throughout the Province. I have spoken with the credit rating agencies.

We believe this Budget strikes the right balance between fiscal prudence and funding needed public services, even if the deficit has to rise in 2002-2003 to accomplish this. We began the budget process facing a deficit of $330 million. We have taken a series of measures to bring this figure down substantially. Revenues deferred and investments made at year end account for $77.2 million. Savings within government from the continuation of the hiring freeze and operational efficiencies, as well as eliminating the contingency reserve, lower the deficit by $31.4 million. We are taking some measures to augment revenues by $117.5 million. Other measures totaled $10.6 million. Together, these actions allow us to forecast a deficit for 2002-2003 of $93.3 million.

If we compare this to the past thirty years, we do find lower deficits for the last seven years. But for the other twenty-three years prior, right back to 1972-1973, the deficit fell below $100 million only once, in 1980-1981. The average deficit in those twenty-three years was $196.6 million, more than double the deficit we are forecasting for 2002-2003. Looked at in this historical context, setting the deficit target well under $100 million for next year is a prudent response to the fiscal uncertainties facing the entire country today. We are optimistic that an economic recovery this year could bring the deficit down even lower. And our deficit target can be achieved with no cuts in social programs, no major public sector layoffs or wage rollbacks and only minor tax adjustments.

Revenue Measures

One way we could have brought the deficit down is by increasing taxes. But we are not willing now to risk the gains we have made to achieve a better economic climate. Tobacco taxes do not have a direct impact on our economic drivers. They do, however, have a direct impact on tobacco consumption, particularly on our teens who are sensitive to price increases. Tobacco taxes have not been increased by our Province since 1992. This is changing as of midnight tonight. The tobacco tax is increasing by 3.67 cents per gram on fine cut tobacco and by 2.5 cents per cigarette. This measure will contribute $14.5 million to deficit reduction and hopefully much more towards a healthier population.

Public Sector Collective Bargaining

Another component of managing the fiscal affairs of the Province is to come to fair settlements with our unionized employees. Over the past year, we have successfully concluded negotiations for twenty-four of our thirty-three collective agreements. These agreements cover about 30,000 bargaining unit employees representing 82 per cent of the unionized public sector workforce. We are optimistic a final agreement with the teachers will be concluded shortly.

Succession Planning

Like other employers, we are faced with an aging workforce. We are taking steps to plan for succession to be able to replace retiring employees, especially in hard to fill occupations. This year we will prepare a government-wide human resource plan that will focus on targeted recruitment, retention and employee development strategies to respond to succession concerns.

This Province also needs workers who can adapt to the skills requirements of a changing economy. This issue is not just a provincial priority, but a national one. We have commenced discussions with the federal government in response to the recently released Innovations Strategy, conveying our interest in partnering to address areas of common interest. We also will be announcing shortly a labour market development strategy for the Province. The strategy will be guided by the Strategic Partnership and Labour Market Development Council. The aging of our workforce presents challenges, but also unprecedented opportunities for our young people now and in the future. We will also increase our focus on sound career planning and the better preparation of our youth for post-secondary education and the transition from learning to work.


Mr. Speaker, in this Budget, we are maintaining our priority on people, and the programs they tell us matter most to them: health, education and helping those most in need. Placing a stronger focus on the youth of the Province remains a key priority.

Greater Priority on Youth

Our greater priority on youth is reflected in the initiatives we undertook when we established a new Department of Youth Services and Post-Secondary Education. At the same time, the Department of Education was strengthened with an intensified mandate to concentrate on the K to 12 system and literacy, as well as responsibility for early childhood education. A new Provincial Youth Advisory Committee was created to give our youth a stronger voice on issues that affect them.

More Per Pupil in K to 12

Mr. Speaker, our initiatives continue to increase the level of spending per student in the K to 12 system. As of September 2002, school enrolment over the last five years will have declined by 17,700 students, or by 17.4 per cent. Yet, over the same period, our spending per student will have grown from $5,557 to $6,672, an increase of 20 per cent.

Maintaining School Board Grants

Part of the increase in spending per student has come because we have permitted school boards to retain savings from education reform that normally would revert to government. In 1996-1997 we gave a commitment that school boards could retain for three years the savings from school reorganizations for one-time capital improvements. Including this year, this initiative will have seen $25.1 million reinvested in our school facilities.

But this government has gone even further. Rather than take back the savings at the end of the three years, government has allowed all the savings from school reorganization to remain with the boards.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Even though our fiscal situation now is not as robust as the recent past, we believe extending this policy is in the best interests of our students. This policy will see $8.4 million reinvested for the coming year in school board operating grants. This means that despite enrolment declines and fewer schools there will be no reductions in operating grants. Including this year, there has been no reduction for seven consecutive years.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Following the Ministerial Panel

The report of the Ministerial Panel on Educational Delivery in the Classroom, developed in consultation with all education stakeholders, recommended a formula for determining the number of teaching positions that should be available to school boards based principally on student enrolment. That formula would have seen a reduction last year and this year of a total of 426 teaching positions. Last year, for the first time we did not reduce the number of teachers although enrolments declined. This means that there are 218 more teaching positions currently in the system that would have been lost had we applied the formula. The decision represents an $11 million reinvestment in education that will continue this year.

As a result, more than half the teaching positions that the formula would have removed will stay in the system.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: With over 400 expected retirements this year, it is likely school boards will have to hire new teachers for the upcoming year.

Maintaining the Best Pupil-Teacher Ratio

Our pupil-teacher ratio has improved steadily for more than a decade and for several years now has been the best in the country. The national average is one teacher for every sixteen students. Using exactly the same methodology to calculate the ratio for our Province, we have one teacher for every 13.4 students.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: We expect to again lead the country this year in teaching resources per student.

We want to have not only the best ratio, but the best teachers. This requires investment in teacher professional development. We are extending for the third year an additional allocation of $900,000 that brings the professional development budget for teachers once again up to $4.4 million.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Improving School Facilities

Since 1998-99 we have allocated $160 million to address priority school construction and renovation projects, mostly outside the St. John's region. To date, eleven new schools have been constructed and work is progressing on fifteen others. Another thirty-six schools have seen major renovations or extensions. This year, a further $10 million is being provided. A significant portion will be used to address priority needs of the Avalon East School Board. We will also be making the final $4 million instalment this year on our three-year $12 million commitment to fund maintenance projects for school buildings.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Increasing Literacy Levels

In support of the Strategic Literacy Plan, and for the third consecutive year, in addition to our regular annual funding, a further $1 million is allocated for the purchase of library books. This is another investment in education, as well as our library system, because accessibility to reading is a major factor in improving literacy.

Supporting Post-Secondary Education

For public post-secondary institutions, our funding has increased by 26.6 percent over the past five years. This is only part of the what we provide for students. A greater priority on youth means that we will take steps to reduce student debt for post-secondary education students and graduates.

Reducing Tuition

We began in 1999 by providing funding so that Memorial University and the College of the North Atlantic could implement a tuition freeze for two years. Last year, we provided $3.3 million to Memorial University to fund a 10 per cent tuition reduction. As well, students at the Faculty of Medicine, the Marine Institute and the College of the North Atlantic had a tuition freeze for the third consecutive year.

This year, Mr. Speaker, we are making a $3.5 million available amount so that university education will be more affordable. Government will hold a roundtable discussion with MUN students and administration to determine together whether these funds should be invested in a further 10 per cent reduction on tuition or if other actions to reduce student debt should occur.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Furthermore, tuition rates at the Faculty of Medicine, the Marine Institute and the College of the North Atlantic will remain frozen for the fourth consecutive year. Our public college fees are already substantially lower than the university and will remain the second lowest in Atlantic Canada.

Our grant in aid to Memorial University will increase this year by $13 million. When we compare the support other provinces give to their universities, we find that our grant to Memorial is the highest per student in the country.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: At the same time, students attending Memorial already pay the lowest university tuition rates in Atlantic Canada.

Lowering Student Debt

While tuition levels are important to educational affordability, this is only one of the components that contribute to student debt. Taking action to reduce the burden of student debt on our graduates is also a priority of this government. This budget provides funding for additional staff and program resources for the Student Aid Program to better respond to student needs. Government will announce details of a Student Aid restructuring plan within the next two weeks.

Student Investment and Opportunity Corporation

Last year, we created the Student Investment and Opportunity Corporation to generate employment opportunities for students, particularly those in rural areas. Funding for the youth employment programs will be maintained at $4.8 million. Jobs supported by the corporation give students the opportunity to save more for their education, reducing their need to borrow, as well as to provide valuable work experience.

Investing in Facilities and Research

Acting again this year on our commitment to match private donations to the MUN Opportunity Fund, we are making a $3 million payment. This brings our total contribution to date to $24.3 million, supporting scholarships for students and capital improvements at the university.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: The university will also receive an additional $1 million for priority capital projects.

Access by Memorial and the College of the North Atlantic to research and development funding available through the Canada Foundation for Innovation will be facilitated for the second year by an allocation of $500,000. Last year, our investment levered a total of $2.6 million in Research and Development funding for projects carried out in the Province.

Maintaining Priority on Health

Mr. Speaker, there is an ongoing national debate about the future of health care in this country. Several provinces and the federal government have appointed commissions to study this issue. Premiers met in January to put in place a joint health action plan. Provinces are united in calling on the federal government to increase its declining share of social program funding. Increased federal cash support for programs delivered by provinces like health is crucial if Canadians are to have sustainable public services. While there is a wide consensus that there is no crisis in health care, real challenges do exist that require a coordinated national effort to address.

In this Province, we conducted consultations last year through regional Health Forums to get the benefit of public input. This spring, government will release a new Strategic Health Plan for our Province.

Last year we brought in the single largest increase in the health budget ever made by any government of our Province. We forecast an increase of 9 per cent, but when the final figures are tallied the increase should be almost 12 per cent. According to the Canadian Institute for Health Information, per capita public sector spending on health in this Province has exceeded the Canadian average every year since 1997.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: In the new fiscal year, not only is the health budget being maintained, but additional investments will be made in important services. The operating budget for health will see a further 3.3 per cent increase this year, totalling over 15 per cent in two years. The increase in annual operating expenditures for health over the past six years will reach 46 per cent.

In addition, when monies allocated in this Budget are included, over $500 million in capital investments in new facilities, renovations and equipment will have been made in the Province over the same period. Our record shows that we continue to give high priority to health.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Wellness Strategy

When the Strategic Health Plan is released, one of the key priorities will be a Wellness Strategy. The need for this was highlighted at the Health Forums. This will focus on preventing disease by promoting healthy living, as well as early detection and intervention. To provide for implementation of the Strategy beginning later this year, $1.1 million is allocated. Among other things, this funding will permit the extension for another year of our anti-smoking tobacco strategy.

Increasing Nursing Enrolments

To increase the number of nurses admitted to the Bachelor of Nursing program this year, an additional $300,000 is allocated. This is in response to retirements anticipated in future years. This funding will allow at least thirty-two new students to begin nursing studies in September.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Personal Care Homes

For the third consecutive year, the subsidy for personal care homes will increase. An additional $1.3 million will bring the total to $13 million annually. Our contribution to monthly rates is increasing, as well as the number of individual clients receiving subsidies. Our plan is to see over time more portable subsidies, rather than subsidizing facilities.

Health Care Facilities

Health care facilities around the Province will receive $36.9 million for construction and renovation projects. Of this amount, $31 million will fund major construction projects ongoing at Gander, Stephenville, Grand Bank and Fogo.

The balance of $5.8 million will assist various facilities with planning, renovations and repairs. This includes $800,000 provided to develop a psychiatric assessment/short stay unit at the Waterford Hospital. This new unit will enable the health system to respond more effectively to clients requiring immediate attention and it fills a very important gap in mental health services. Government is awaiting the results of a review of mental health services which will assist in identifying future priorities.

Government is supportive of ongoing planning by boards to upgrade their nursing home facilities. Our objective is to ensure the delivery of care to our elderly population will be responsive to their expectations. Government is open to considering various financing options, including public/private partnering.

Modernizing Equipment

Investments in new equipment have totalled $120 million in the last five years. This includes $15 million in this Budget to continue modernizing diagnostic and therapeutic equipment at facilities all across the Province.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Of this amount, $14 million is being provided before year end to ensure timely purchases of priority equipment. Purchases will include x-ray and ultrasound equipment, as well as therapeutic equipment for acute care and equipment for residential care needs in nursing homes.

Stabilizing Health Board Budgets

After very significant increases to the base budgets of institutional health boards over the past few years, government believes boards now have sufficient funding to deliver their service mandates. However, additional funding of $5 million is being added for utilization increases and inflation. Further funding is also being provided for negotiated salary increases, group reclassifications and pay equity settlements. With these increases, boards are expected to balance their budgets in 2002-2003. Over the past six years, on a cumulative basis, government has contributed an additional $427 million to the base budgets of these boards.

Government commends the institutional boards on the progress they have made to operate with balanced budgets. Projected deficits for 2001-2002 have been reduced from around $18 million to as low as $3 million. Government will continue to work with all the boards so they can achieve efficiencies, as well as service improvements. There will be new initiatives to encourage primary health care reform as a part of the new Strategic Health Plan, for which $2.5 million is provided.

Home Support Workers

Most home support workers received a 20 per cent salary increase last year. Home support rates will increase further this year by 4 per cent; 2 per cent in June and 2 per cent in December. This increase is in accordance with a study on home support. The annualized cost of the increases for both years is $10.1 million. This recognizes the valuable contribution of home support workers and will contribute to stabilizing the workforce.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Population Floor for Federal Transfers

Mr. Speaker, an appropriate level of federal transfers for social programs is vital to sustainable public services in our Province. We advocate reform of transfers to better reflect the cost realities of delivering social programs in this country. Among the improvements that could be made to the federal transfers is the implementation of a population floor.

When population declines, the cost of public services does not adjust immediately. Adjustment can be a very lengthy process. Yet transfers drop as if the population decline and the service cost moved in lock step. They do not. Transfer payments should not drop; they should phase down, in response to population decline, giving a province like ours the opportunity to rationalize services in a reasonable manner. At one time an all-province consensus recommended a population floor for transfer programs be implemented by the present federal government, along with other reforms, as the mechanism to moderate this type of decline. We believe this would still be a good public policy.

Helping Those Most in Need

Strategic Social Plan

Mr. Speaker, the Province is receiving national and international attention as an innovator in bringing social and economic development together, facilitated by the Strategic Social Plan. To further advance the Strategic Social Plan in making a difference in the lives of people and communities to improve long-term outcomes and better service coordination, funding of $2 million is maintained. A key step under development is a social audit report to examine the social progress of the Province five years after the Plan's implementation. We are moving closer to our to our ultimate objective of creating one integrated social and economic plan for our Province.

Lower Social Assistance Caseloads

We have underway an ongoing series of initiatives to redesign programs that assist persons on social assistance. One thrust is to place increasing emphasis on providing employment and career supports. In recent years, we have extended drug card benefits for those returning to employment and increased the earnings exemptions while receiving social assistance. The transition to employment is supported through innovative programs such as NewfoundJobs and the Linkages Youth Employment Program, which focus on the link between social and economic development. We have achieved notable results.

Over the past five years, the social assistance caseload has dropped by about 8,500, or about 23 per cent.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: A major initiative this year will be the revamping of the Social Assistance Act, which dates from 1977. The Act presently does not reflect many of the objectives of the income support program, including easing the transition from social assistance to work. Consultations are underway to seek public input.

Newfoundland and Labrador Child Benefit

For the second year, we are increasing the eligibility thresholds for the Newfoundland and Labrador Child Benefit. The income threshold this year will determine the families who quality for the maximum benefit being raised $653 to $17,397. Families with incomes above this threshold but below $22,397 will receive a partial benefit. This means that in two budgets we have increased the threshold by almost 10 per cent.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This provides more financial support to low income families with dependent children.

Domestic Fuel Tank Replacement Program

This year, $2 million is allocated for a new program to assist low income homeowners offset 50 per cent of the cost of replacing domestic fuel oil tanks, up to $300. The program comes into effect April 1, 2002 for a term of five years. Households with net income of less than $22,397 who rely primarily on home heating fuel can receive assistance.

Occupational Health and Safety

The Task Force on the Workplace Health, Safety and Compensation Commission recommended government increase substantially its compliance, monitoring and enforcement of the Occupational Health and Safety Act. This budget provides an additional $1.3 million to support the reorganization and the expansion of the occupational health and safety responsibilities of government, including the hiring and training of more inspectors.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This will contribute to safer workplaces and better protection for workers in all sectors throughout our economy.

Hazardous Material Response Initiative

A Hazardous Material Response Initiative, cost shared by the federal and provincial governments, will see about $1 million used to establish eight to ten regional response teams throughout the Province. These teams will be provided with equipment and training to respond to incidents involving hazardous materials.

Local Government

Debt Relief Program

Mr. Speaker, this year $12 million is being made available to complete the municipal Debt Relief Program.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This last instalment brings our total commitment over six years to $47 million. Since we brought in this program, 139 municipalities have been assisted in either reducing or refinancing their debt. We expect fifty municipalities will receive assistance this year. Because of the program, municipalities are enhancing their long-term financial stability, allowing them to realize cost savings that they are able to reinvest in their communities.


Municipal Capital Works Program

For municipal capital works and infrastructure, we have a plan in place that will see $260 million invested over the next three years.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: The program will be made up of three components.

Under the Canada-Newfoundland Infrastructure Agreement, cost shared by federal, provincial and municipal governments, $90 million over three years will be invested primarily on green municipal infrastructure projects. Over the full five-year term of the agreement, the combined investment in green projects will total $153.7 million.

A traditional Municipal Capital Works Program of $63 million over three years will be cost shared by the Province and municipal governments. This component will assist communities with smaller, short term projects.

This year we also are renewing our commitment to a Multi-Year Municipal Capital Works Program, with the provision of $108 million over three years.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This will bring our total commitment to the multi-year component since its inception to $214 million. The Multi-Year component will permit municipalities with the capacity to take on multi-year commitments to undertake larger municipal infrastructure projects.

The variable cost sharing guidelines introduced last year will continue to be utilized in determining the municipal share. This ensures that even the smallest communities in our Province can access funding for infrastructure -

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: - and it allows them to undertake projects that they would otherwise not be able to afford.

Safe Drinking Water Initiative

As part of the Safe Drinking Water Initiative announced last year, government funds the full cost of water disinfection projects up to $100,000 for communities under boil water advisories. Last year, the Province invested $8 million in drinking water disinfection projects through the program. A further $10 million will be spent this year to complete the program.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Once new and upgraded infrastructure is installed we expect a significant drop in boil water advisories.

In addition, under the Canada-Newfoundland Infrastructure Agreement $32 million was spent last year for water disinfection or water and sewer projects, more than 90 per cent in rural areas. A substantial portion of the $30 million to be spent this year will also go to water projects, particularly water quality and drinking water projects, which are given the highest priority.

A further $1.5 million is being shared by several departments as part of our Safe Drinking Water Initiative. This funding will increase the water testing capacity of the Public Health Laboratory, as well as hire additional environmental health staff and inspectors. We anticipate an almost 25 per cent increase in water system sampling. We are implementing phase two of a training program aimed at upgrading the skills of water system operators in communities throughout our Province. Part of the overall initiative is to implement a safe drinking water public health promotion strategy.

Roads and Highways

Our roads and highway construction program for the new fiscal year could total $82.2 million.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This follows the last two years, which saw the largest and second-largest annual programs since Confederation. The provincial roads component is maintained this year at $22 million, reflecting the priority this government gives to local roads.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Mr. Speaker, we are approaching the end of the Roads for Rail funding that has seen some of our highway infrastructure upgraded. We call on the federal government to partner with us to continue much needed investment in our road and highway transportation network.

This year, $23.4 million will be spent for highways and roads in Labrador. Included in this figure is $17 million to complete Phase II of the Trans-Labrador Highway. At the end of this construction season the highway will be finished from Red Bay to Cartwright -

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: - and, Mr. Speaker, this also includes access roads to other communities. To upgrade local roads in Labrador, $2.6 million is being invested this year.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Marine Transportation

In addition to road work in Labrador, $2.2 million will be invested in wharf and ferry terminal upgrades. A further $1.8 million will be spent on the Island, of which $1.3 million will be for improvements to the Bell Island wharf.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: To enhance the provincial ferry fleet, we will move forward with a vessel replacement and refurbishment program. The first initiative is to complete the refurbishment of Hull 100 -

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: - which will be a significant addition to the fleet.


Mr. Speaker, our commitment to fostering economic growth and job creation will always be a priority. Under this government the Province has led the country in GDP and employment growth several times. The number of people employed has grown to a record high and is forecast to rise even higher. We have cut sales tax, income taxes and the payroll tax to propel growth. Confidence in our economy and our future has seen the value of retail trade increase by almost 40 per cent over the last five years. And we have an aggressive economic plan for the future, the Renewal Strategy for Jobs and Growth. We are funding several initiatives today in support of this plan.

Renewal Strategy for Jobs and Growth

The Renewal Strategy for Jobs and Growth outlines an agenda of over 130 action items, two-thirds focused on rural Newfoundland and Labrador. Of the jobs created since 1996, 63 per cent have been outside the greater St. John's area. This government is creating economic opportunities and growth in rural areas.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: The Department of Industry, Trade and Rural Development, created last year to lead implementation of the Strategy, is allocated $2.8 million to act on specific Jobs and Growth priorities.

New International Business Attraction Initiative

As well as support for the Strategic Partnership Initiative launched in January bringing together business, labour and government, this funding will allow us to put in place a new international business attraction initiative. This new initiative will be designed to emulate the success achieved by Network Newfoundland and Labrador in attracting new jobs to the Province. Details of the initiative will be announced early in the new fiscal year.

Small Business Advisory Council

Mr. Speaker, a new Small Business Advisory Council will also be established in 2002 to provide government with advice on appropriate new measures to continue to grow this important sector of our economy. To encourage new business start-ups and expansions in all areas of the Province, funding of $2.6 million is renewed for the Strategic Enterprise Development Fund.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Sectoral Initiatives

Government continues to fund a wide range of programs across many economic sectors that contribute to the success these industries are enjoying. Through sustained support for these programs we assist in creating the positive business and investment climate needed for sustainable long-term growth. Most often these programs translate into a host of many small successes that build incrementally on entrepreneurial spirit so evident all over our Province. Although fiscal times are more restrained now, none of these programs are being cut back or eliminated. Some, in fact, will see enhancements.

Silviculture and Spray Programs

An example is our silviculture program, a partnership between government and the pulp and paper companies. During the Jobs and Growth consultations the importance of investing in silviculture was highlighted. This year we will be expanding our capacity to product tree seedlings by almost 30 per cent, from 7 million to 9 million seedlings a year.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: We also cooperate with the industry to protect our timber resource from insect infestations. This year the insect spray program will see a 50 per cent increase in the number of hectares sprayed over last year. An additional $2 million has been allocated to undertake this, a 30 per cent increase over the existing budget. These measure will contribute greatly to the long-term sustainability of our forests and our forest products.

Forest Access Roads

As part of forest management, government facilitates controlled access to forest resources through its resource roads program. This program also assists our agricultural sector. Both these sectors will benefit from a $600,000 increase in this budget to provide for resource roads.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This new funding brings the resource roads budget to $3 million, an increase of 50 per cent in two years.

Reducing Foreign Overfishing

Funding is provided for a new initiative this year that will see a more proactive approach by the Province to reduce foreign overfishing. We will work with all industry stakeholders to ensure adherence to strict conservation practices by foreign countries.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Tourism Marketing

One of the ways we support the tourism industry is through tourism marketing. Our campaigns have won a dozen international awards in recent years. Promotion is key to reaching our core markets and capitalizing on the successes we have enjoyed in recent years. This year we are increasing our funding for marketing by 25 per cent.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This extra $1 million will be used to lever additional promotional value through the Canadian Tourism Commission and other partners. The marketing budget will be further supplemented by one-time funding of $1.3 million from a federal/provincial agreement, bringing the total marketing budget before leveraging opportunities to $6.2 million.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Mr. Speaker, early indications are already pointing to a very good year for tourism in 2002.

Natural Heritage Stewardship

Our economy has evolved into an interesting blend of technology and natural resource based industries. For the people of the Province, our natural environment is both a place of work and of play. We must strike the right balance in our national heritage stewardship between economic development and environmental protection. We are taking a number of steps to ensure we get the right balance.

We are building up our own capacity within government by enhancing the Science Division to complement the work of the existing divisions of Inland Fish and Wildlife, as well as Parks and Natural areas. This initiative will foster best practices in environmental science, as well as enhance the position of this Province as a leader in resource management and sustainable development.

Government is also planning to establish with Memorial University an Institute for Biodiversity and Ecosystems Science.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: The Institute will allow the university and its academic community to work along with government in enhancing our expertise in the Province on resource conservation issues.

In addition, a Natural Heritage Stewardship Secretariat is being created to facilitate raising funds from sources outside the Province to further enhance our research capabilities. To support these three initiatives, $1.8 million in new funding is allocated this year, $2.8 million on an annualized basis.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Commitment to Lower Taxes

Mr. Speaker, to foster a positive climate for business investment, this government has taken a number of important initiatives to reduce taxes. In 1997 we implemented the largest tax cut in the history of the Province when we converted the retail sales tax to the Harmonized Sales Tax. This eliminated sales tax on business inputs and lowered the tax rate on consumer purchases from 12 per cent to 8 per cent. In the five years since, we have seen our retail trade grow by record numbers and our economy become one of the leaders in the country.

Over four previous budgets, better fiscal times allowed us to reduce the payroll tax by changing the threshold from $100,000 to $500,000. This removed over 2,000 businesses from the tax roll and reduced the tax for thousands of others, in the process eliminating the tax for virtually the entire small business sector. Employment has grown strongly over this period and has now reached a record level, and should go even higher. Further payroll tax reductions, and the eventual elimination of the tax, are one of our priorities for the future.

We implemented the first two years of a three year plan that reduced personal income tax for all the taxpayers of our Province. The new income tax system which changed the tax calculation has made it difficult for some people to compare. We modeled a large number of different scenarios for taxpayers and in all cases, given the same amount of income, real reductions in provincial personal income tax were delivered. While we remain commited to tax reductions, because of our higher deficit we have had to defer further reductions or thresholds increases until our financial and fiscal circumstances improve.

Our record on taxation also includes introducing the Direct Equity Tax Credit and the Film Tax Credit. In the past year, we announced Double EDGE, which reduces income taxes further for new businesses, with more attractive reductions for businesses in rural areas. As well, we implemented several tax credits supporting social programs, like the Seniors Benefit and the Newfoundland and Labrador Child Benefit.

Living Up to the Atlantic Accord

Mr. Speaker, in the budget last year, we stated that this Province considers achieving a better deal on federal-provincial revenues sharing from natural resources projects a priority. It still is a priority. We do not accept that the revenue sharing we now have fulfills the "principal beneficiary" status the federal government stated we would achieve under the Atlantic Accord.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: As offshore oil production increases, a greater and greater injustice will be done to this Province if the revenue sharing arrangement prevents us from capitalizing on the fiscal benefits of these developments. This Province should be the principal beneficiary, as agreed to, and achieving this should be facilitated by the federal government.

We need greater financial resources to grow our economy. A Province like ours must be able to reap the benefits from our principal asset, our natural resource endowment. The federal government is instead taking our place. We are not asking for anything unreasonable. After we close some of the gaps with the rest of the country, the federal government can increase its share. The people of our Province are united and entitled, I might add, in calling on the federal government to live up to the terms of the Atlantic Accord -

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: - and see us become the true principal beneficiaries of our own resources.


Mr. Speaker, the name change of our Province to Newfoundland and Labrador is symbolic of our shared identify, but most important recognizes that this government is solidly committed to address the needs of Labrador and the people who live there.

Access North - Labrador 2002

This year the Province is placing a special focus on Labrador celebrations. Access North - Labrador 2002 brings a year of special events and the opportunity to raise awareness about Labrador, particularly as a tourist destination. The celebrations will be a catalyst for a longer term industry driven marketing strategy for Labrador tourism. Access North will commemorate the 250th Anniversary of the Moravians in Labrador, promote winter tourism highlighting the extensive snowmobile trail network and support local celebrations in every community. Government is providing $700,000 through its Special Celebrations Corporation, which is being supplemented by $1.3 million in federal partnership support.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Gateway Tourist Centres

Mr. Speaker, we want all tourists to have all the information and services they need to maximize their vacation experience. Funding is provided this year for the Labrador Straits Visitor Information Centre to expand its focus to encompass the broader tourism region of Coastal Labrador.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Through cost shared federal funding, the Gateway Project is being developed in Labrador West. Together, these two centres will become important gateways to Labrador for tourists and will contribute to developing the great potential of tourism for all of Labrador.

Trans Labrador Highway Phase III

The South Coast of Labrador is already realizing significant benefits from the Trans Labrador Highway, an initiative of this government. This is opening up more of Labrador to the outside world, as well as making the world more accessible to the residents of communities along this highway. This year will see the completion of Phase II of the highway. Money for the Labrador Transportation Initiative has been held in a fund since 1998. With completion of Phase II, it is no longer prudent management to retain this money in the fund earning much lower interest rates than our cost of borrowing. Therefore, $97 million of the fund will be taken in as general revenue this year. For the people who still rely on the ferry service, government gives its assurance that the Province will continue to meet all its obligations for that service, just as it meets its obligations now for ferry services in other regions of our Province.

SOME HON. MEMBERS: Hear, hear!

MS. J.M. AYLWARD: Users know of the very significant improvements already made in the Blanc Sablon-St. Barbe marine service, improvements that soon will be matched by upgraded services for the rest of Labrador.

The Labrador Transportation Initiative never included any funding for Phase III of the highway from Cartwright to Goose Bay. Government, however, believes that Phase III is very important, not just to Labrador, but to the whole Province. We are announcing today a multi-year commitment to finish Phase III.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Yes, Mr. Speaker, we are announcing today a multi-year commitment to finish Phase III. Funding of $800,000 is provided to continue the Environmental Impact Study for Phase III. Construction will commence after the environmental assessment process is completed, which include consultations with the Innu Nation and other highway stakeholders. This would complete the Great Circle Route, which would contribute to an integrated transportation system for Labrador, and enhance transportation linkages for the Province to the rest of North America. It would generate significant economic and social benefits for our Province and permanently reduce the cost of marine services.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Mr. Speaker, we are committing $17 million a year for the six years estimated to complete the highway. This commitment of $17 million a year is not contingent on federal funding.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: We approached the federal government to partner with us on this project, but have not yet received a favourable response. The opportunity for federal participation still exists and we call on the federal government to give this priority, and we ask that they give it the priority it deserves. The people of Labrador have waited long enough for a highway.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Labrador Roads

In addition to the $17 million that will be spent this year to complete Phase II of the highway, $3 million is allocated to a two-year project for a road to connect Pinsent's Arm to the Trans-Labrador Highway.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: In addition to the highway, funding this year will see improvements to roads in southern and northern Labrador, as well as continued upgrading of the Northwest River Road. An increase of $394,000 is provided for winter maintenance of newly opened sections of the Trans-Labrador Highway.

Marine Service

The marine service is being reconfigured to meet the needs of communities not connected to the Trans-Labrador Highway as a result of recommendations from coastal Labrador communities. Tenders will be called shortly for 2003-2004 and beyond to improve ferry services for coastal Labrador. This year will see wharf and terminal upgrades on the Labrador coast.

Snowmobile Trail Grooming Grants

In addition, $100,000 in new funding will go towards snowmobile trail grooming grants for Labrador.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: This funding means, for the first time, residents of Rigolet and Postville will travel on groomed trails.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Northern Coastal Labrador Strategic Initiative

We are entering the third year of the $23 million Northern Coastal Labrador Strategic Initiative. Work ongoing in five Inuit communities is addressing housing needs, community infrastructure and policing. To date, the housing component has seen forty-three new homes constructed, and renovations to another ninety. An awaited extension to the federal/provincial Labrador Inuit Communities Agreement would facilitate continued general improvement within Inuit communities.

Aboriginal Cadet Development Program

We are continuing to fund for a second year the Aboriginal Cadet Development Program. This allows Aboriginal young people interested in a career in the RCMP to upgrade their skills so that they could be considered for RCMP training.

Court Facilities

We are taking action this year to improve the court facilities in Happy Valley-Goose Bay. Funding is provided to expand the Provincial Court at its present location.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: A tender call will be issued for a new location for the Supreme Court.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: Transition Houses

Mr. Speaker, an additional $250,000 is provided for the Transition House Program. A significant portion of this funding will go to enhance services in Labrador West and coastal Labrador. In recognition of the challenges of providing safe housing and support for women in small isolated communities, government is working with the Provincial Association Against Family Violence and community stakeholders to look at alternative models for shelters in northern and Aboriginal communities.

Royal Commission On Renewing and Strengthening Our Place in Canada

The Throne Speech announced a Royal Commission on Renewing and Strengthening our Place in Canada. The Commission will have a broad mandate, with details and its Terms of Reference announced in the near future. Funding is provided to support the activities of the Commission in carrying out its mandate, including the necessary research and public consultations.

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: It is timely at this point in our history for us to focus on our position within Canada and the global community, drawing on a critical analysis of our strengths and weaknesses to provide direction for the future.


Mr. Speaker, this Budget strikes the right balance between genuine economic optimism and present fiscal realties. Economic predictions are for an international recovery this year. We also would benefit from a national recovery, and should make a leading contribution to it. We do face fiscal challenges next year. But we have dealt with a series of fiscal challenges over our term. Dire financial predictions were made by some about the fiscal year just ending and the new one now beginning. We have maintained a responsible fiscal plan for both years.

For certain, growing the economy is the best plan for our Province -

SOME HON. MEMBERS: Hear, hear!

MS J.M. AYLWARD: - and under this government, our economy has prospered. We now have a record number of people employed. And of the new jobs created, 63 per cent are outside the greater St. John's area. The Province has real economic momentum going which we must continue to build on. This government is contributing to a positive economic climate by maintaining a responsible fiscal position. Yet we have again made major investments in health, in youth, in education and in helping those most in need, as well as infrastructure and jobs and growth.

This Budget, Mr. Speaker, gives stability while the global economy sorts itself out. The Budget maintains funding for all of our important social programs. As well, it contains a number of important new initiatives. It responds to advice we received from people all over our Province, and we listened to their advice. We believe this Budget represents sound, practical government: Striking the Right Balance.

It is my pleasure, Mr. Speaker, to present it today, the first Budget of the newly named Province of Newfoundland and Labrador.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Minister of Finance.

MS J.M. AYLWARD: Mr. Speaker, I move that the debate be adjourned until tomorrow.

MR. SPEAKER: The Motion is that debate be adjourned until tomorrow. You have heard the motion.

All those in favour, ‘aye.'


MR. SPEAKER: All those against, ‘nay'.


Motion carried.

MR. SPEAKER: The hon. the Minister of Finance.

MS J.M. AYLWARD: Mr. Speaker, I wish to inform the House that I have received a message from His Honour the Lieutenant-Governor.

MR. SPEAKER: All rise.

The following message is addressed to the hon. the Minister of Finance and the President of Treasury Board:

"I, the Lieutenant-Governor of the Province of Newfoundland and Labrador, transmit estimates of sums required for the public service of the Province for the year ending March 31, 2003, in the aggregate of $3,463,899,300 and in accordance with the provisions of the Constitution Act, 1867, I recommend these estimates to the House of Assembly."


A.M. House, Lieutenant-Governor

The hon. the Minister of Finance.

MS J.M. AYLWARD: Mr. Speaker, I move that the Message, together with the Estimates, be referred to a Committee of Supply.

MR. SPEAKER: It is moved and seconded that the Estimates together with His Honour's Message be referred to the Committee of Supply and that I do now leave the Chair.

On motion, that the House resolve itself into Committee of the Whole, Mr. Speaker left the Chair.

Committee of the Whole

MADAM CHAIR (Hodder): Order, please!

We will take a few moments now to distribute the budgetary documents.

The hon. the Government House Leader.

MR. LUSH: Madam Chair, I move the Committee rise, report progress and ask leave to sit again.

On motion, that the Committee rise, report progress and ask leave to sit again, Mr. Speaker returned to the Chair.

MR. SPEAKER (Snow): The hon. the Member for Burin-Placentia West.

MS M. HODDER: Mr. Speaker, the Committee of Supply have considered the matters to them referred, have made some progress and ask leave to sit again.

On motion, report received and adopted, Committee ordered to sit again on tomorrow.

Notices of Motion

MR. SPEAKER: The hon. the Minister of Finance.

MS J.M. AYLWARD: Mr. Speaker, I give notice that I will on tomorrow move that the House resolve itself into a Committee of the Whole to consider certain resolutions respecting the imposition of taxes on tobacco, Bill 5.

And further, Mr. Speaker, I give notice that I will on tomorrow move that the House resolve itself into a Committee of the Whole to consider certain resolutions respecting the imposition of taxes on income, Bill 6.

MR. SPEAKER: The hon. the Government House Leader.

MR. LUSH: Mr. Speaker, I move that the remaining Orders do stand deferred and that this House on its rising do adjourn and that this House do now adjourn.

On motion, the House at its rising adjourned until tomorrow, Monday, at 1:30 p.m.