Hon. Darren Praznik (Government House Leader): Madam Speaker, with respect to Estimates, I would like to table the sequence of Estimates as agreed to by myself and the opposition House leader (Mr. Ashton).

Secondly, I would ask if you could please call for second reading Bill 22, The Statute Law Amendment (Taxation) Act, 1999.

Hon. Harold Gilleshammer (Minister of Finance): I move, seconded by the honourable Minister of Highways and Transportation (Mr. Praznik), that Bill 22, The Statute Law Amendment (Taxation) Act, 1999 (Loi de 1999 modifiant diverses dispositions législatives en matière de fiscalité), be now read a second time and referred to a committee of this House.

Mr. Gilleshammer: Madam Speaker, on April 29 it was my pleasure to deliver the 1999 Manitoba Budget Address. This budget marks the fifth consecutive year that revenues and expenditures are in balance, the first such occurrence in a quarter-century. The budget provides for increases in key services of prime importance to Manitobans: $194 million more for health care; over $49 million for education; another $25 million for programs that will benefit children and families. The budget also provides a payment of $75 million towards the debt.

These measures, along with the tax reductions I will now recap, are the government's response to the recommendations of the thousands of Manitobans who participated in prebudget consultations. Bill 22, The Statute Law Amendment (Taxation) Act, 1999, provides specific legislative authority for the tax rate changes and initiatives we announced on April 29 as well as some technical amendments to certain taxation statutes.

Today I will briefly describe the contents of Bill 22, and I invite members to express their position on its content during the subsequent debate. I will also provide opposition critics with detailed explanations of the provisions of this bill prior to the committee stage. In fact, I have already done so. In many of the consultations we had with Manitobans, the priority for tax reductions identified by participants was the personal income tax rate. Again and again we were told the rate was too high, that it made living in Manitoba more expensive than it needs to be and made it difficult to maintain and attract the highly skilled labour force necessary to keep Manitoba competitive.

Manitobans asked us to follow on last year's reductions and to complement the reductions introduced in the federal budget with additional relief from personal income tax. I am pleased that Bill 22 will amend The Income Tax Act to reduce Manitoba's personal income tax rate to 48.5 percent of basic federal tax for 1999 and to 47 percent for the year 2000.

This reduction will provide proportional reductions for all Manitoba income tax payers. Approximately 520,000 Manitobans will benefit from this measure beginning July 1 of this year. For a single employee at $40,000 of income, the rate reduction means savings of $93 this year and $184 next year. When added to the reduction in Manitoba tax due to change in basic federal tax, that taxpayer saves $112 this year on Manitoba tax and $254 next year.

As announced last September by my predecessor, the Honourable Eric Stefanson, the share purchase limit of labour-sponsored funds is increased from $3,500 to $5,000 per individual in respect of 1998 and subsequent years. This increase has contributed to an extremely successful selling period this year for Manitoba's two registered labour-sponsored funds.

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This bill also provides the legislative framework for the Manitoba equity tax credit our government announced on April 29. The program provides individual Manitoba investors with up to 15 percent income tax credit over three years to a maximum annual amount of $1,500. This credit will provide an incentive for Manitobans to invest in small and medium-sized Manitoba companies which issue new common shares on the Winnipeg Stock Exchange. The ability of companies to obtain equity financing in the local market strengthens both their ties to the community and to the local stock exchange.

I would like to add that since the Budget Address we have heard from several industry representatives on this measure. They have recommended a modification to the program guidelines which will focus the benefits of the program more exclusively on smaller Manitoba companies. To that end, I would like to advise members that I will introduce an amendment to Bill 22 at the committee stage of debate. The amendment I propose will reduce the maximum lifetime eligible share issue from $10 million to $5 million per eligible corporation.

In respect of small businesses, I am pleased that Bill 22 reduces the Manitoba rate of corporate income tax on businesses eligible for the federal small business deduction from 9 percent to 8 percent of taxable income on July 1 of this year. The rate will be further reduced by 1 percent at the beginning of each of the three succeeding years to settle at 5 percent on January 1, 2002.

Madam Speaker, the Film and Video Production Tax Credit that our government introduced in 1997 has been extremely successful in expanding Manitoba's film and video industry. The number and value of film productions in Manitoba have grown more than tenfold since the introduction of the credit. Bill 22 extends the credit for a period of two years to the beginning of March 2002 to ensure this sector has an opportunity to develop, grow and mature into a sustainable industry with the infrastructure and local labour market necessary to continue to thrive.

Bill 22 extends the Manufacturing Investment Tax Credit for a further three years from June 30, 2000 to June 30, 2003. Since 1992 when our government introduced this credit the manufacturing sector in Manitoba has created almost 10,000 new jobs and continues to outperform Canada and other provinces in this sector. Extending the credit at this time will allow manufacturers sufficient planning time to develop further enhancements to their production capacity in Manitoba.

Madam Speaker, Manitoba provides a large array of personal and corporate income tax credits. Bill 22 also amends The Income Tax Act to incorporate and parallel new penalty provisions in the federal act which apply in cases where a taxpayer or a third party provide misleading or false information to claim or increase the value of income tax credits.

Among the other changes to Manitoba's taxation system that I announced on April 29 were two measures which strengthened the competitive environment for certain sectors or areas of the economy currently underperforming their potential. Bill 22 reduces the mining tax rate from 20 percent of mining profits to 18 percent for taxation years commencing after 1998. This reduction provides a clear signal to mine operators and developers that Manitoba is and will continue to be one of the most attractive places to develop and operate mines in years to come.

In order to support the development of Churchill as a port which attracts not only cargo but also tourist ships, the motive fuel tax will be removed from sales of diesel fuel to international ships which refuel at Churchill after April 29, 1999. To date, without this measure, ships have avoided fuelling in Churchill.

The Budget Address also contained two important exemptions under The Retail Sales Tax Act. Bill 22 provides that, effective from April 30, the exemption limit for children's clothing is increased from $100 to $150 per item.

As well, to enhance production of livestock and protect Manitoba's environment, an exemption from the retail sales tax is provided for manure slurry tanks and lagoon liners purchased after April 29, 1999, and before January 1, 2001, for farm use.

Bill 22 also extends the first-time homebuyers' sales tax rebate program for an additional year. First-time purchasers of a new home are eligible for a rebate of the retail sales tax paid on materials used on the construction of their home to a maximum rebate of $2,500.

Finally, I would note that last year the retail sales tax was removed from the modification or purchase of custom computer software. As a complement to that measure, as announced in the budget, Bill 22 removes the sales tax from custom software which is sold in the sale of an ongoing business or which is sold to a wholly owned subsidiary. In addition to these measures, Madam Speaker, Bill 22 introduces technical adjustments to The Retail Sales Tax Act regarding the application of tax on maintenance and warranty service, contracts, and it clarifies the list of sales tax exempt telephone numbers to ensure that related toll free numbers other than 1-800 also qualify for the exemption.

Changes included in this bill to The Corporation Capital Tax Act clarify a receiver's responsibility where a corporation ceases to exist in Manitoba and makes certain provisions for policy reserves consistent between resident and nonresident insurance companies.

Madam Speaker, the measures contained in this bill will continue to stimulate Manitoba's expanding economy and help create more jobs and opportunities for our children in Manitoba. I commend Bill 22 to all members.

Thank you, Madam Speaker.

Mr. Steve Ashton (Thompson): Madam Speaker, I want to put a few brief comments on the record. I know our Finance critic will also be addressing this bill. I anticipate that we will be able to deal with this bill in separating this afternoon and proceed with Estimates discussion later on, and I want to indicate that I recognize that this bill is essentially a companion piece of legislation to the budget, that essentially puts into place much of what was announced in the budget.

I want to indicate, Madam Speaker, that what we want to point out as we debate this is the fact that this bill, in particular, shows that while there were some positive initiatives in the budget–most importantly on health care–the government has ignored a very critical area for many Manitobans, an area which we intend to deal with through this bill, and that is in the area of property taxes. I was quite astounded, quite frankly, that this government in its polling–now publicly available–did not even ask the question about property taxes. It was not even on the agenda. I realize the sensitivity of members opposite, because in many ways it is a problem they have created. Since the government came into power, the burden on local taxpayers, especially in terms of school taxes, has doubled. The level of property taxes, especially for schools, has virtually doubled in the last 11 years.

I point out that if you talk to people in my community in Thompson or people in the city of Winnipeg or people in rural Manitoba, you will get much the same message. In fact, I find it amazing that the minister talks about tax relief, did not even ask the question about property tax. Now I suspect it is because of two reasons: one is it is directly a result of their actions, their underfunding of education, in particular. But I also suspect, Madam Speaker, it is a result of the changes that were made in 1993 whereby they actually reduced the property tax credit by $75 and instated a minimum tax of $250. Before if you had a tax level that was of a certain level and you had the equivalent property tax credit, that property tax credit will be applied fully against the amount of tax payable. But what this meant was many people I know in rural Manitoba on very limited incomes, ended up all of a sudden going from zero property taxes to $250. The bottom line is that that is not acceptable.

I want to stress that we will be moving an amendment to this legislation in committee that we feel would deal with that, that would provide a balanced approach to the tax issue in this province. I think we all recognize that many working families in this province, many lower- and middle-income people in particular have been hard hit the last number of years. There has been a small percentage of people who have benefited very significantly from this government, but the irony is they are the ones, according to the government's plan in this budget, who will be the biggest beneficiaries. Some of the people who have gained the most will be some of the biggest beneficiaries.

We believe there needs to be a balanced approach that recognizes the need to do something fairly significant on property tax. That, by the way, will benefit many people on a lower- and middle-income level far more than the proposals put forward by the government for essentially a two-part income tax relief. I say to the minister that we were, quite frankly, very surprised that this was not even considered by the government.

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I think that when we are dealing with the finances of this province, we need a balanced approach. We all, I think, recognize one of the main reasons we did support the budget yesterday was certainly the money that has been put forward into health. We have been arguing this for quite some time. I think it would have been very hypocritical of us to say spend money on health care and then turn around and say, well, whatever. I acknowledge, too, that it is not usual that you end up with an opposition party supporting a budget, but it did happen in 1989, as the minister knows, and did happen in 1973, as well, the member for Brandon East (Mr. Leonard Evans) was a member of the NDP government at that time, the Conservative opposition did vote for it.

But our approach is essentially that we can do better. This is one of the significant areas we will be pointing to that this is a far better approach, rather than having everything focused on income tax, to have at least some relief focused in on property taxes. We will be moving an amendment on that, Madam Speaker, and I believe it is something that is needed.

I also want to focus on another aspect that we will also be moving an amendment on. We have expressed concern about the clawback of the child tax benefit. This clawback is on the lowest income people in our society, and they are people on welfare. I find it ironic that we see a situation in which we are providing what we would call corporate welfare. To use the words of David Lewis, we have enough corporate welfare bums who have been receiving corporate welfare, but when it comes to people on social assistance, they have been specifically denied the child tax credit. That, by the way, takes approximately a thousand dollars a year out of their income, a thousand dollars a year.

We will be moving amendments both here and also in Estimates to put our position very clearly, that we believe that the child tax credit should go directly to all families regardless of the source of their income. We believe in this. The province that has ironically the highest level of child poverty in the country, that we, of all provinces, should be applying that money from the child tax credit and saying something that I think is equitable across the board, that says basically we will provide that child tax credit to all Manitobans.

I want to put on the record that our approach is far more balanced and equitable than the approach taken by this government. While we certainly, as I said, do not honestly believe the intentions of the government in spending the money on health care, we did support that component of the budget. I think what we are saying is that our position yesterday was yes, but–yes, there are elements in the budget that we support, but we can do a heck of a lot better in this province.

Our plan, by the way, which we believe is affordable and sustainable, is balanced, would provide for the first step of the income tax cut that has been outlined, that would be in place by July and would provide an alternative approach for the second step, Madam Speaker, which would focus on property taxes rather than on income tax. I stress again that that is how we can ensure that there is equity across the board and that we do not only provide some relief to people that have certainly a benefit. I guess I always think of the brokers who made the millions of dollars on the sale of MTS, for example.

This bill will give them the biggest benefit. They will be the biggest beneficiaries of the Tory taxation policies. I am proud, by the way, of the NDP tradition in this area. The Schreyer government brought in the property tax credit system, brought in a system that did recognize that and specifically for seniors in this province, who are often in the ironic position of paying significantly increased property taxes for schools when they are well past the time in their family's life where they have kids in school. Seniors are quite willing to contribute, I know, towards our education system, but, you know, I think there has to be some recognition of the fact the burden has gone too far.

That is our approach, a balanced approach. I want to stress, as well, that we very much view this as a way of putting forth our agenda for government.

We are obviously disappointed that the government chose not to call an election today. I must admit I was ribbing the government about whether they were going to be wearing a chicken suit today. We will see if they are wearing their chicken suit next Tuesday. I will not make a prediction on that other than the notice that they certainly seem to be trying on the proverbial chicken suit. I can understand their concern because, quite frankly, a lot of people out there have had it with this government. They see a government that is long, not only passed its prime, but long in the tooth, a party that has run out of steam, that, in particular, is relying on cynical recycling of election promises on health care.

One of our messages to the people of Manitoba, one of the reasons on the budget vote that certainly we did what we did is that we want to say exactly not just what we are opposed to but what we support in terms of initiatives, obviously more resources for health care. We have been arguing that for four years, mostly to deaf ears on that side, but now they have come around. They would have you believe they are born-again defenders of the health care system. We have some doubts about that, but we are building on that by making specific proposals in this bill, proposals that will be part and parcel of our campaign and our agenda for government.

I want to stress by the way, Madam Speaker, that I believe strongly that you will see in this bill some of the key differences between this Conservative Party and the New Democratic Party. Let us not forget that in addition to eroding property tax credits, this is a party that has increased the tax burden significantly on low- and middle-income people. Let them not kid you. In addition to the overall growth of revenues, the billion dollars, quite apart from that, they did extend the sales tax base. It is interesting, by the way, because in Saskatchewan now, they not only have under the NDP a lower sales tax, but they have a lower sales tax base than here in Manitoba. A very regressive move on their part, and there have been only minor adjustments to that.

We have seen similar changes by the way that have affected Manitobans in terms of user fees. I want to stress as well, by the way, that we are also ahead of our time in terms of small business taxation. I note in fact in Saskatchewan some of the moves that were made there to ensure that small businesses are productive. British Columbia as well. We, a year ago, proposed that. We feel this is an appropriate way to proceed. We are pleased to see the government respond on that.

I want to put one other item on the record, an area that I think needs some focus right now. It is in mining. I know from my own experience in my community, we are in a situation where northern Manitoba, unlike the puffery and the rhetoric of the Conservative government opposite, believe you me, we are having difficult times. I recognize that governments only play so much of a role. Obviously, one of the key factors, the main factor is the price of basic metals. But the reality is that we are in significant danger of being uncompetitive with our other jurisdictions.

I would point to the minister, specifically the recent tax changes and treatment of mining in Saskatchewan, something the government chose not to follow through on here. I am concerned that we are in an environment where, in the mining industry, we need to be competitive not just nationally but internationally. We are dealing in the case of nickel, for example, with nickel in Australia, nickel in Russia, nickel in Greece, nickel in various countries throughout the world. I do not believe the government has listened to the mining industry. I certainly know the proposals that they put forward.

I want to say to the minister that he should look in conjunction with the Minister of Energy and Mines at some of the steps that were taken by Don Orchard when he was Minister of Energy and Mines, steps that I fully supported and advocated as Energy and Mines critic at the time, which did update our mining tax regimen and make it more competitive. I want to stress, that took place, as the minister will know now, in '93-94. I would suggest, strongly suggest that he sit down with the Minister responsible for Energy and Mines and come up with a tax and royalty structure in the mining industry that is competitive.

I want to stress that, Madam Speaker, because our approach certainly in the election and our agenda in government would be very much aimed at a number of things. I think it is important to stress this. A lot of times you hear us talk about health care in this House. I think our commitment to health care is well known. You will hear something about social policies; our commitment in terms of social policies is well known. But I also believe that there is an economic agenda that the people of Manitoba expect from any party, that the wish is to put itself forward as a potential government.

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I found interesting yesterday the comments from the First Minister, still years later has not learned the reality of the fact that when the NDP has been in power, it has proven its ability in terms of economic development. I cite Limestone, which he criticized yesterday. I mean, the great thinkers on the Conservative side in the 1980s, their proposal was what? Their proposal was to buy power from the United States. The Liberal leader called it Lemonstone. The Conservatives echoed it. I want to put this on the record, because we built that dam for a billion dollars under budget–a billion dollars under budget. It is interesting, by the way, because I often like going to party events, NDP events, and what my favourite question to ask people is, quickly, name me one Hydro dam that the Conservatives built in the last 30 years. It is a trick question. The answer is none. None. Not a single development. This party, when it is in government, tends to rely on a number of things to drive its economic development policies.

One is sort of a good dose of ideology. I find it ironic now that the minister talks about the role of balanced budgets and creating jobs. It is interesting, because they did not balance the budget for seven years. They had the highest deficit in Manitoba history. It interesting in dealing with that. The bottom line here is that we are in a situation where we do not need any lessons from this government on economic policies. The bottom line is that we will be putting forward an economic plan, and our economic plan, by the way, is aimed at all Manitobans and will result in both commitment to health and education and social policies, social and economic justice for all Manitobans.

We put this forward in this budget. I challenge the government to listen to us, and to listen to many Manitobans who were saying that they want a balanced approach, and that they want some relief. They want to start the process of giving them some relief on the incredible levels of property taxation we are seeing in this province.

Mr. Leonard Evans (Brandon East): Madam Speaker, I just have a few words to add to the debate on this bill in second reading, The Statute Law Amendment (Taxation) Act, 1999, Bill 22, and echo some of the comments made by my colleague the MLA for Thompson (Mr. Ashton), the opposition House leader, regarding some of the elements that are before us, particularly in regard to income tax changes.

Madam Speaker, I just want to point out at the beginning that many people in Manitoba may not understand this, but this legislation is absolutely necessary in order to put the tax changes into effect. We may pass the budget, but the budget is simply an outline of general policy. Legislation is needed in order for any kind of a tax change to take effect, even if it has been announced saying retroactive. I know some of the miscellaneous retail tax cuts were made retroactive or effective at a date prior to the implementation of this bill.

So the fact is, we have to recognize, people have to realize that if there were an election called before this bill was passed, the government really is offering them nothing, because there would be no tax cut put in place. All we would be doing is promising the people of Manitoba that this was an intention, but there was no legal basis for the income tax cut or, indeed, any of the other tax changes. So we have to recognize that a budget is really an outline, a document, giving a general indication of taxation and spending.

Madam Speaker, I want to put it on the record that, as my colleague the MLA for Thompson indicated as well, the New Democratic Party agrees on certain kinds of tax cuts that should take place. I think it is true that many people in this country believe that they have been overtaxed, and there are complaints from many groups in our society. But it is really important that, when you decide that you can have a given level of tax reduction, you do it in a way that is going to be equitable and fair and help the people that really need the help the most.

Therefore, Madam Speaker, there is no question that a reduction in a progressive income tax means that it is regressive. This is the irony. It is a progressive type of tax. The rate goes up as you increase your incomes, but when you cut the tax, it has the regressive effect. So this income tax cut that is being proposed, there is no question, is going to benefit wealthier Manitobans more than the people at the lower end of the income scale.

We made an argument, Madam Speaker, that far more equitable would be to look at the property tax burden and to implement some form of additional property tax credit, which will reinstate the property tax credit that was eliminated a few years ago under Mr. Manness when he was then Minister of Finance. I can note why people are concerned about the burden of taxes in the province because I have noted by looking at the tax revenues received by this government since 1988-89 when it first came into office that the income tax revenue to the year 1988-89 increased 38.8 percent whereas inflation in this same period was only 32 percent. So there is no question that the rate of revenues that this government has received from income taxes has far superseded the rate of inflation so that there was a real increase in the burden on Manitobans collectively paying income taxes to the provincial government.

One of the reasons for this, of course, is the system that we have got in conjunction with the federal government that is often referred to as bracket creep which automatically gives governments more and more money. I note, even with this rate reduction proposed by the Minister of Finance (Mr. Gilleshammer), that in his Estimates he shows, even so there is a three-point reduction being proposed, there is going to be another increase in the revenues for income tax. I see him sitting there smiling about this because he does need money for some certain expenditures. But the income tax will go up from $1.48 billion in 1998-99 to $1.646 billion in '99-2000. In other words, Manitobans are going to continue to pay more income taxes to the Province of Manitoba.

One could argue that even a retail sales tax cut would be far more progressive than a cut in income taxes. I realize one point in retail sales tax is much more than this government is giving up now by way of a rate reduction. I am looking at the summary of the 1999 tax reductions and tax credit measures and see that what the government is offering with its personal income tax rate reduction is approximately $81 million, although we are also seeing a reduction due to federal changes of $31 million. I realize if you bring in a one-point tax cut on retail sales, you are well in excess of a hundred million. I am not sure what it is, $120 million, $130 million, around there, so it is more. Although I suppose you could say, well, let us add the income tax rate reduction to let us say the corporate income tax cut and some of these other credits, and you may be getting close to one point in sales tax.

I guess you could even argue that a one-point cut in sales tax is just as stimulating and maybe more stimulating than corporate income tax cuts which brings me to the point to ask: to what extent do these credits, these rate reductions, that the minister is proposing in this budget, the small business rate reduction and the Manufacturing Investment Tax Credit extension, will they have a buoyant effect on our economy? I am not suggesting they have a negative effect, but what I am going to propose is that they really affect a transfer. It is a transfer of income to that particular sector, to those particular owners, those particular manufacturers or business establishments. That is essentially what this is doing, it is transferring money to them, and they will be glad to receive it.

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But whether this is going to stimulate the economy, this is the reason why our economy will be stimulated, why the investment level will go up, you can debate, Madam Speaker, because I would argue that there is no correlation between the Manufacturing Investment Tax Credit and what happens in the real world of investment. In fact, reading the minister's 1999 budget document, there is reference made to manufacturing investment dipping slightly in 1998. There had been a higher rate of increase prior to that, but in 1998 actually the level of manufacturing investment dipped. In 1999, this current year, manufacturing capital investment is projected to decline by 22 percent based on a Statistics Canada survey of investment intentions. The information is charted here on page 115 of the economy section of the budget. So what I am suggesting is the evidence itself shows that there is no direct correlation between any type of manufacturing investment credit and what happens to the level of investment, whether you are talking about manufacturing investment or indeed even if you are talking about private investment in total, because private investment in total is also projected to decline this year by Statistics Canada. Quite a substantial decline is being projected in the private sector by Stats Canada.

Madam Speaker, there is no question in my mind that a property tax cut of some nature would be most welcome by the people of Manitoba. It would be far more equitable, and it is a serious area that governments have to look at. I am pleased that the Premier (Mr. Filmon) has finally acceded to the urgings of the Leader of the Opposition (Mr. Doer) to include property taxes in the Lower Tax Commission's mandate, in its terms of reference, because that is a big issue, and it affects the economy in so many ways. I believe someone in the real estate industry today was commenting on the burden of property taxes and how it was affecting his industry, how it was affecting the development of urban areas. This is a big area. It goes beyond just property tax credits, of course. It goes into the whole question of education financing and so on.

I have long felt that the burden of property taxes was excessive in this province and that the province had a responsibility to address this particular problem if we were going to look at ways and means of developing our urban centres and indeed some of the rural areas. So, while we like to talk a lot about the stimulative benefits of income tax cuts, we often forget that property taxes play a very real role in the burden the people see imposed upon them by governments.

I just want to conclude, Madam Speaker, by noting that, over the years, the people of this province have been paying more taxes, even though the government boasts about no major tax increases. There has been the bracket creep phenomenon that I mentioned so that people are paying more anyway. There has been the reduction of the property tax credit and there has been offloading by the government onto municipalities, offloading of certain responsibilities. There has been an increase in fees; the whole Pharmacare program has been scaled back so that the average Manitoban has to pay more, the user of pharmaceuticals, prescription drugs has to pay more by way of fees and costs for those needed prescriptions.

Certainly, another example is the fees that have gone up in the nursing homes. They have gone up tremendously, so much so that some people who are in nursing homes, some of the elderly who are depending on pensions, find that they can qualify for provincial social assistance because the rates are so high. They have taken all of their pension money to the point that they have insufficient for personal needs and basic needs, even in accordance with their social assistance rules, so that they can indeed, residents in my constituency, elderly in my constituency who live in nursing homes who have had so much money taken from them that they could qualify and have qualified for social assistance payments. This is ridiculous, but it does go to indicate the point I am making, that is, there are all kinds of user fees that have gone up, and these in the real world are a burden as well to citizens.

So, Madam Speaker, I just want to conclude by noting that, while the budget does have some impact on the Manitoba economy, it has an impact whether it has a deficit situation–if it has a deficit situation, it is stimulating the economy, as a matter of fact. For all the criticisms that deficits get, the fact is that deficits are stimulative. On the other hand, surpluses tend to have a negative impact. They reduce the aggregate demand in the economy, so we can recognize that.

But, having said that, Madam Speaker, I believe the more important factors that affect the state of the Manitoba economy are beyond us, one of which is the national interest rate policy. Fortunately, we have a lower level of interest rates than we had certainly back in the mid-'80s. Maybe they should even be lower than they are, but the fact is that a relatively low interest rate regime has benefited economic expansion across this nation, including Manitoba.

Certainly we have been beneficiaries of a cheap Canadian dollar. There may be some elements in our economy that are unhappy with the lower dollar vis-a-vis the American dollar, but basically and generally speaking, that cheaper dollar has caused our exports to greatly increase, to the United States in particular, and that in turn has created jobs. I dare say that if our dollar became more expensive vis-a-vis the American dollar, our level of exports to that country would drop and we would feel the impact in this province.

The third point, of course, that we have to recognize is the U.S. economy itself. The U.S. economy has been booming for the last few years. It has had a positive impact on the Canadian economy, including the Manitoba economy, but if the American economy should slow down in any serious way, we would soon feel it, regardless of what our budget said at that particular time. So let us call a spade a spade and realize, while the government likes to take credit for job creation, likes to take credit for economic growth, let us recognize, let us face the truth, that these are the fundamental factors that are affecting it. In fact, I know of some conservative economists who would say the same thing as myself. I think Mr. McCallum, it was stated not long ago in the paper that as far as predictions of the Manitoba economy are concerned, it may be rosy, but if interest rates should rise, if the dollar should rise in value vis-a-vis the American dollar or if the U.S. economy should falter, all bets are off as to what is going to happen in the future to the buoyancy of the Manitoba economy.

So, Madam Speaker, on this side we will have more to say about the bill and the specifics of the bill as we get into the committee stages where we are going to discuss this clause by clause. I would just point out that many of the features, many of the items referred to in the bill deal with very miscellaneous things, very miscellaneous things that do not really involve much money. Even the fact that the minister talks about a custom software exemption on sale of ongoing businesses, well, you are only talking about $200,000 in this case, or indeed the exemption to farmers for manure slurry tanks, we are talking in total $1 million. As the budget goes, this is not very much money indeed.

The biggest cut is personal income tax, $81 million followed by a reduction due to federal changes of $31 million, and that followed by the small business rate reduction of 24 and then the next most significant is the manufacturing investment tax credit extension of 13, but all the rest are very, very tiny, very miscellaneous of nature and will not have any impact of any significance on the economic situation in the province. It may have an impact on one or two people who are directly affected, of course, and they will welcome it, I am sure.

There are some areas of this budget, some areas of specifics, specific areas that I can agree with. I just want to comment before sitting down, and that is the Film and Video Production Tax Credit extension. That is something that I agree with a hundred percent. I think it has been beneficial in the past. This is one area that I would support a hundred percent. No problem. I want to go on record again for myself and for our side saying: we are not opposed to tax cuts per se, but any tax cuts that we do bring about should be as equitable, as fair as possible, recognizing the social, economic situation that we face in this province.

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Mr. Kevin Lamoureux (Inkster): It is with pleasure that I stand to rise to speak on Bill 22. I appreciate the fact that the Minister of Finance (Mr. Gilleshammer) actually gave us some of the committee reading notes, which give a little bit more detail on it and assists in our vast research department in their abilities to be able to do a good, thorough job on this particular bill. I think that in principle it is a bill which can be supported. In fact, last week I had a call from one of the Free Press reporters. The Free Press reporter had said that the government was wanting to see a taxation bill passed before the election. I guess the Premier (Mr. Filmon) had talked to the reporter, and he says: So what do you think? Part of the response goes: Well, this is the first time I heard anything of the government, the Premier, actually wanting to see this bill passed, but who are we in the Liberal Party to deny something that Manitobans have been calling for, and that is to get some tax relief–

An Honourable Member: Maybe the two House leaders conferred and they have already agreed.

Mr. Lamoureux: No, I do not know. I do not think they had–the opposition and the government–come to an agreement. What I can say, Madam Speaker, is that we were not consulted as a party in regard to getting some sort of a speedy passage, but I had indicated to the reporter at the time that the party would in fact be very receptive to having this bill passed in order to even accommodate an election today. So we were quite prepared.

I do not know if the 35-day–it might be that time line is actually passed, but if this is the only thing that is preventing the government from calling the election, I would appeal to members to let me know. I will cease and stop, and let us call the election.

I am a little bit sceptical, you know. We were having a discussion earlier today within our caucus room, and there were all sorts of jokes. The common theme in the jokes happened to be an animal called the chicken. In fact, some had suggested that maybe what we have in the Legislative cafeteria would in fact be chicken soup for next Tuesday. So, if in fact there is no election call next Tuesday, we will at least be able to go and have some chicken soup. You can just see now all of the debates and the chanting. I think the animal of the chicken, the great Manitoba chicken, will in fact be in appreciation on that particular day.

An Honourable Member: The provincial bird.

Mr. Lamoureux: We will speculate–at least the provincial bird for a day, as the member for The Maples (Mr. Kowalski) makes reference.

But, you know, Madam Speaker, I guess if you are here long enough, no doubt the Minister of Agriculture (Mr. Enns) will be able to tell you how things kind of make circles. There has been a very interesting circle that I witnessed yesterday. This particular bill, which talks about taxation, deals with revenues coming in. This government has been very, very tricky in the way in which it portrays things, the way in which it takes things into account. I recall back in '88 when the government of the day–and to their credit they did take a mess of a budget, the '88, that was forecasting hundreds of millions of dollars in debt. They were able to somehow turn that budget into a surplus. But, not wanting to show Manitobans that they had a surplus budget, what they did is they borrowed money in order to create the Fiscal Stabilization Fund. Lo and behold, you had the New Democrats supporting the government in that fiscal stabilization, in that fooling or attempt to manipulate and fool Manitobans back then. Well, yesterday the circle has been completed. The New Democrats, who like to perceive themselves as an opposition party, once again hold hands in solidarity with their brothers and sisters in the Conservative Party, thereby completing that full circle.

You know, the uniting factor again in the Liberals was in our motion of substance, saying that this government has lost the confidence of Manitobans because of the way in which they trick or attempt to trick people in terms of the financial accountability. That was the central motion that I and the member for The Maples (Mr. Kowalski) brought forward. What do they do? They voted against. I think that is the first time where an official opposition was against a motion that we put forward that just suggested that this government has lost the confidence of Manitobans.

One has to ask: where have they been? Do they not recognize the problems in our health care system? Do they not recognize the problems in education? It was a complete and absolute surprise that they would have, in fact, bought into what the government is doing, that full circle. As I say, before they borrowed in order to create a debt. This budget, they are borrowing money from the Fiscal Stabilization Fund in order to create a surplus, and, again, the New Democrats are supporting it. First you say you do, then you say you do not, if I quote the one minister today inside the Chamber–absolutely totally amazing how things have unfolded over the last couple of days.

But, Madam Speaker, while I will wait until the election is called, if the election is called–we do not know. I speculate that if the election is not called on Tuesday, you know, we could be seeing at least the potential of Clayton Manness coming back or someone else in terms of seeking the leadership of the Conservative Party as they attempt to change the leadership in order to try to get the popularity of their party back into the polls where they feel comfortable enough in order to go into an election.

But, Madam Speaker, it is really and truly amazing as I sat inside the Chamber, and the question was called, and you hear–well, I like to think my voice was somewhat strong at the very least–one individual saying no on behalf of the Liberal Party and then forcing the issue. I trust the message that I will be sending to my constituents, the constituents of Inkster, the message I will be sending is that in Manitoba there is only one alternative because the Conservatives and the NDP are proposing the very same budget. Both the member for Wellington (Ms. Barrett) and the government members voted for a budget which we in the Liberal Party could not support. We cannot support this budget, in part because of a major gap in this piece of legislation, that this legislation does not take into consideration the greatest injustice in terms of taxation and that being property tax.

The member for Wellington does not recognize that what the people of Inkster really want is to see some relief on property tax, and that member, along with the New Democratic Party, voted for this budget, unbelievable. As the current MLA, part of my responsibility is to ensure that the constituents I represent today are very much aware of the position, of the lack of responsibility that the New Democratic Party demonstrated yesterday as an official opposition, Madam Speaker. You know, at times I like to think that I am somewhat generous in my comments, but I do not believe Manitobans as a whole were provided good, solid opposition to the budget.

I really believe that, Madam Speaker. I believe that as an opposition party, you have a role to provide an alternative to Manitobans, to the government that is in power, and that is something which we in the Liberal Party take very seriously. We believe that there is a better way to govern Manitobans, and we will, in due course, provide a budget proposal that will, in fact, address some of the shortcomings, huge shortcomings in this particular budget. We will bring in the legislation that is necessary in order to make this bill that we have today a better piece of legislation.

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We will bring in the legislation that is required. [interjection] We, as in the Liberal Party, will bring in–the real opposition today will, in fact, bring in legislation, Madam Speaker, that will address the issue of taxation, of fairer taxation, and deal with property tax. We are not going to leave on the side what is a huge, huge issue to so many Manitobans.

We challenge the government as to why it is. We asked the question today in regard to polling. Does this government have any idea on how Manitobans are upset with the way in which the property tax is being brought in or collected? If you look at the comparisons of property tax, if you talk to what people have to say, and when you start paying $3,000 for property tax on a house of $100,000 of value, you have to start questioning in terms of, is that not too much?

Why is the provincial government not recognizing it? You go into some areas, and the fluctuations are so great. You compare St. James to Winnipeg 1, or the constituency which I represent which, I will argue, probably pays the highest property tax in the province of Manitoba. That is why it is an important issue not only because of my constituents but for all Manitobans.

I am telling you, the Liberal Party will take a very strong stand in terms of addressing this issue. We recognize that we cannot continue to allow the growing reliance of funding public education on property tax. That has got to stop, and the Liberal Party will ensure that that will occur, that we will see a decrease in property tax. We are not going to play the games of the New Democrats who, while in government, again watched property taxes grow in funding education while at the same time the general revenues were again freezing or nowhere near increasing in comparison to the amount of revenue coming into government or in terms of the economy and the economic performance of our economy.

You know, the member for St. Norbert (Mr. Laurendeau) says: how? A good question. My best guess is that, had the Premier (Mr. Filmon) called the election today, I would be able to tell very specifically to the member for St. Norbert how the Liberal Party proposes to do it. I will even go a little bit further. Hopefully, some time next week I might be able to have an enlightening conversation with members of the government and share with them a way in which it can be done not only in the long term but also in the short term. That is something in which the Liberal Party is committed to doing.

But, when we look at this bill, I challenge the Minister of Finance (Mr. Gilleshammer) to demonstrate any gestures from the government that address through their polling, through their canvassing, through the meetings that the Minister of Finance had throughout the province, any gesture whatsoever where this government attempted to either get feedback from Manitobans or try to promote feedback from Manitobans on the issue of property tax. I challenge the Minister of Finance to be able to be very clear and concise with all members of this House as to what this government did to try to ensure that that particular agenda item was in fact dealt with. I do not believe it was, because if it was, I believe that the government disregarded that because there is absolutely no indication, whether it is in this particular bill or the budget of this government, that they were prepared to deal with this issue.

I started off by saying that it is, in fact, a positive bill. I do believe that it provides tax incentives. We have seen some very strong areas where the government has done reasonably well on its taxation policy. We look at the film industry as an example, and we have seen a significant growth. Part of that is because of some of the tax relief, which is a positive thing.

Madam Speaker: The honourable Minister of Finance, to close debate.

Mr. Gilleshammer: Madam Speaker, I appreciate the comments put on the record by members of the Legislature. I do sense there is a sense in here to pass the bill and look forward to dealing with it in committee.

Madam Speaker: Is the House ready for the question?

Some Honourable Members: Question.

Madam Speaker: The question before the House is second reading of Bill 22, The Statute Law Amendment (Taxation) Act, 1999. Is it the will of the House to adopt the motion?

Some Honourable Members: Agreed.

Madam Speaker: Agreed and so ordered.