Nova Scotia Budget Address, June 1, 1999

Text of the Nova Scotia budget address delivered by Finance Minister Don Downe on June 1, 1999:

INTRODUCTION

Mr. Speaker, I rise today to present a budget that will carry Nova Scotia into the next century. A century where, more than ever, our young people will need the resources to learn new skills. A century where our seniors will live longer and have new priorities for health care. A century where our economy will be built on the efforts of our workers and entrepreneurs. So, at a time like this, it makes sense to stop for a moment and think about where we are and where we hope to be.

In Nova Scotia today, I see people who know we are on the threshold of new prosperity. People who look to the world and say we can compete. People who see new industries in energy and information technology and know we can lead. People who look to their children and think what a bright future they will have.

But, Mr. Speaker, I also see people who are in despair. They look at the world and fear for their jobs. They see new technology and say I cannot learn. They look to their children and worry about their future.

Mr. Speaker, we must address these concerns. And we will.

The task of this government is to let our confident entrepreneurs, educators and citizens achieve their dreams. We must celebrate their progress, their achievements. But, we must also replace fear with hope. Our education system must offer opportunities for our young people to realize their potential. Our social policies must offer people a way to manage the change in their lives -- to turn disadvantage to advantage. Our economic polices must encourage people to be creative and take chances on new ideas.

This, then, is our vision for the future. But, Mr. Speaker, our vision includes one more vital element -- a strong and sustainable health care system for the 21st century, a system that deserves the confidence of every Nova Scotian.

A caring health system, where one telephone call will bring quality long-term help for our seniors. A community system, with clinics to mend the broken arms of adventurous young boys. An efficient system, where your doctor can call up your test results in the time it takes you to walk from the waiting room to her office. A healthy system, where preventing illness is just as important as curing disease. A balanced system, where the right care is delivered in the right place, by the right provider at the right time. And, Mr. Speaker, I see a dependable, accountable, and sustainable system that is, and always will be, universally available to every Nova Scotian.

Mr. Speaker, this is the right time to build this system. After years of federal cuts, Ottawa is finally putting money back into the national health care system. But it is not enough, and so as Nova Scotians we must do more ourselves. Now is the time. As we get older, our health care needs change. As the baby boom generation ages, we will have an unprecedented increase in need. We must start now by putting the right health care system in place for today and tomorrow.

To achieve this, we are announcing a significant new investment in our health care system. We are wiping the slate clean for hospitals and health boards. We are providing the funds to meet the changing needs of our people. We are making preventing illness a priority.

A healthy, well-educated people is a fundamental requirement of a healthy society. We believe it is the foundation of a healthy economy and a healthy future.

OUR ECONOMIC FOUNDATION

Mr. Speaker, for many Nova Scotians the prosperity of the next century has already arrived. Our forest industries are adding value. Wood is being turned into furniture. Our agriculture and seafood industries are also specializing in high-value-added products. Our manufacturers are producing more and selling around the world.

Our information technology sector continues to expand rapidly. Our tourism and hospitality industries continue to break new records. This all reflects a growing Nova Scotia economy.

Our Economy 1993 99 The most recent statistics show a remarkable picture. In April of this year our unemployment rate stood at 9.2 per cent. The last time we had a month with a lower rate was in 1976; that was 23 years ago. This number underpins the very real optimism in many parts of this province. People see their children coming home to work; their neighbours succeeding; their friends starting new businesses.

What is driving this growth? One important element, Mr. Speaker, is private sector investment.

Every year the private sector invests billions of dollars in Nova Scotia. These new investment dollars modernize existing operations and increase productivity. They also reflect real economic expansion as new businesses start up and existing businesses grow.

Forecast vs. Actual Mr. Speaker, I want to note that our economy grew last year very much as we expected. We believe the final numbers to be released this fall are expected to show a growth rate in 1998 of 3.3 per cent. That is above the national average, and we are forecasting that this year Nova Scotia will once again surpass the national standard. Our forecast calls for a 2.9 per cent growth rate in 1999.

Sable Is Helping to Drive Our Economy Mr. Speaker, one major reason for our stellar performance is the Sable Offshore Energy Project. This two-year project is on budget and on time. Gas starts flowing in November. To achieve the target, 3,000 Nova Scotians will be working directly on this project this summer. Another 2,000 jobs will be created indirectly.

Mr. Speaker, this is only the beginning. Sable also puts in place the infrastructure to make other reserves of natural gas easier to develop. Nearly $600 million is committed for exploration spending over the next five years. That is confidence: confidence in Nova Scotia, confidence in the royalty regime this government created.

Mr. Speaker, the impact of Sable goes well beyond this one project. As we saw at an offshore conference in Houston recently, Nova Scotia now has an international profile that we only dreamed about a few years ago. Our companies are becoming partners with internationally experienced firms.

This will result in more Nova Scotian content in future projects. It will result in Nova Scotian bids for projects all over the world.

Growth Is Uneven Mr. Speaker, this is the positive side of our economy. It is good news. But we need to do more. Our economic growth is not even. Some parts of the province outside the Halifax area are doing well. Port Hawkesbury, Isle Madame, Trenton, Bridgewater, Wolfville and Cornwallis are but a few examples of this. But, for the most part, we have two economies in Nova Scotia: one inside metro Halifax and another outside.

More than half of the new jobs created last year in Nova Scotia were created in metro Halifax, a region with only a third of the population. Unemployment in the Halifax area is about seven per cent, well below the national average. In Canso, Parrsboro, Dominion, Glace Bay, and in many other parts of the province the unemployment rate is double that or more.

Mr. Speaker, an economy so divided creates very difficult problems. The population, history, and geography of Halifax give this area opportunities. Building on opportunity, people have created prosperity. We cannot equalize prosperity. But, we can equalize opportunity. In a few moments I will explain how this budget will help do that.

MEETING OUR FISCAL CHALLENGE

But, first Mr. Speaker, I want to turn to the fiscal challenges we faced in 1998 99. It was not an easy year.

A Record-Low Canadian Dollar Last summer the world economy hit a pocket of turbulence. An economic slowdown in Asia spread to Russia then to South America. Lower world demand led to lower prices for commodities. Foreign exchange markets assumed lower prices would lead to a weak Canadian economy. That assumption then led to a tremendous drop in the value of the Canadian dollar.

With the fall in the dollar came a rise in the cost of servicing our foreign debt. Some people panicked. They wanted immediate and drastic action. We rejected that option and set our course for the longer term. We placed our confidence in Canada, and the Canadian economy.

In the short term we looked for some administrative belt-tightening. We trimmed spending. As it turned out we were successful. Seven departments and most of the public services votes ended the year under budget.

By year's end, the dollar recovered a fair bit. Time proved our decisions were correct.

Revenues Change Mr. Speaker, another challenge we faced over the course of the year was a significant swing in revenue estimates. About 80 per cent of our revenue sources are now based on economic modelling rather than simple accounting. The data come mainly from Ottawa and are often adjusted later on. In times of economic stability, this is not an issue. But in times of sudden unanticipated economic change, the model can get out of step with actual events. In the long run we are working with the federal government to help us anticipate such swings, or at least smooth them out.

We also have to be responsible in our revenue forecasts. Indeed, Nova Scotia is the only province in Canada to hold them up to the scrutiny of an auditor general.

Health Care Needs Rise The other major challenge we faced in 1998 99 was the rising demand for health care. Outside of this area, we were able to hold program spending to within one per cent of target. As a result, when the revenue increases did arrive, we were able to balance the budget and eventually forecast a surplus of some $22.6 million.

But, we recognize this state of affairs cannot go on. We must act, because at its current growth rate, health care expenditures are growing faster than revenues.

And an aging population will require even more help in the near future. By the year 2012 13, a far greater proportion of our population will be over the age of 65. There is no question that the kind of health care you need changes as you get older. It is time to address these issues. It is time for action and a lasting answer to our health care concerns.

SECURING A HEALTHY FUTURE

Mr. Speaker, I want to say very clearly that we examined many alternatives. We looked at stretching our resources. We looked at cutting every service but health and education to the bone. We looked at trying to find the investment dollars inside present budgets.

Health Status Quo Alternative Rejected The easy choice was to stand pat here today with a budget that ignores the real health care challenges of tomorrow. Such action, Mr. Speaker, while perhaps politically expedient, would be a disservice to Nova Scotians.

People are speaking clearly on this issue. I hear it every day. My cabinet and caucus colleagues hear it every day. People tell us they want significant investment in health care. They want investments in new medical equipment. They want us to manage the system more effectively. They want more nurses hired. They want a more responsive health care system that better meets the needs of all Nova Scotians.

So, we have a challenge and we have an opportunity. Investing in health care today will mean a dependable, sustainable system, today and for generations to come. To turn away from this challenge is to jeopardize Nova Scotia's health care system and risk the health of every Nova Scotian. Knowing this, how can anyone deny a commitment for new investment in health care?

Health Investment Fund With this budget, Mr. Speaker, I am proud to say that this government is taking a bold new investment initiative -- one that will put a solid and lasting foundation under our entire health care system.

The initiatives we are announcing today will:

• give our hospitals and regional health boards a clean slate, by removing their debt
• provide funding that ensures our hospitals and health boards meet their commitments
• allow strategic, targeted investments in health services in communities right across this province

These strategic investments are at the heart of this budget.

Today, we are announcing creation of a $600-million Health Investment Fund. For Nova Scotia, this is the largest single new investment in health care since the inception of medicare three decades ago. Mr. Speaker, this measure holds the key to better health care for all Nova Scotians. It is separate and apart from the regular $1.7-billion budget administered by the Department of Health.

This three-year program will improve the quality of care to Nova Scotians by strengthening primary and continuing care.

Mr. Speaker, this is crucial. By strengthening primary and continuing care, we will relieve the burden on our acute-care hospital system. This investment means Nova Scotians who need hospital care will have easier, better, and faster access. The whole system will be more responsive to the needs of Nova Scotians.

Briefly, Mr. Speaker, let me put this investment in terms that are easily understood. It means more nurses in our hospitals, nursing homes, and home care system. It means more emphasis on prevention of illness and promotion of healthy lifestyles. It means a single access point -- one phone call -- for people who need home care or a nursing home bed. It means more money for training. It means better tracking of costs and better decisions by our health care managers.

Better management decisions are critical. By investing in the tools to manage health care properly, Nova Scotians realize we can deliver better health care. We also know that better management will lead to health care costs we can afford in the future.

But, all of this will take some time. So the Health Investment Fund will also provide a limited amount of money for hospital and health board operating budgets over the next two years while they put this new plan in place. What we are recognizing is that we need to finish building a new home for our health care system before we move in.

Hospital and Health Board Debts Mr. Speaker, our plan announced today means that debts already incurred by our hospitals and health boards are assumed by the province. All health costs in Nova Scotia are now consolidated on the books of the province. Hospitals and regional boards can now move forward, confident that appropriate funding is in place. We will also begin discussions with the boards on appropriate safeguards to prevent future debts.

Investments from the Health Investment Fund will be transparent to all Nova Scotians. Criteria for investment decisions will be clearly laid out in regulations. There will be a report card every year. It will tell Nova Scotians where the money has been spent and the results of the investments. Communities will be empowered to determine their own health care priorities. The principles established in 1994 by the Blueprint Committee on Health will guide the process.

Health Investment Fund Fiscally Responsible Mr. Speaker, these investments will be made in a prudent fashion. Our Health Investment Fund will operate like a mortgage. It will not permanently increase the debt of the province. Legislation will be introduced to ensure every penny borrowed to invest in medical equipment, nurses' training, or better management systems will be paid back. No government will be able to simply refinance this special borrowing. They must pay it off.

Mr. Speaker, this is an absolute priority for our government, and in this regard I am announcing several important measures that will ensure that we will repay this $600-million Health Investment Fund as soon as possible.

Firstly, beginning in fiscal 1999 2000, we will require that budget surpluses be used solely for debt reduction. Tax cuts may be budgeted for, but budget surpluses will be treated as opportunities to repay our investment in health.

Secondly, we will require all of the net royalties from Sable Gas to be directed toward debt repayment. This amendment alone is expected to fund more than half the required repayment by the year 2012 13. Once the health investments are repaid, half of the net royalty payments will continue to be used for general debt reduction, as previously announced.

Thirdly, we will introduce legislation to require a schedule of principal repayments to be included in the budget starting in the year 2003 04. This repayment schedule will take into account the impact of the expected Sable royalties and any budgetary surplus to that date and then set a repayment schedule to allow for a complete paydown of the Health Investment Fund as quickly as possible, and no later than the year 2012 13.

Each of these measures to repay the health investments is designed to ensure that we remain on a path of financial as well as social responsibility. That has been the hallmark of this government and we will not stray.

Mr. Speaker, currently we have a growth rate in health care spending of 11.3 per cent annually. Without this investment, the costs of our health care system would quickly exceed our ability to pay. At its current rate of growth, within five years the system would cost an estimated $2.7 billion. In other words, today we spend almost $200,000 every hour of every day on health care. At the rate we are going, that would be more than $300,000 every hour within four years. Even with the most optimistic revenue projections we could not keep pace with that.

We face a choice: we deal with the problem head on today or end up with a health care system we can't afford and very little else. We cannot postpone this decision. We only have a few years before an aging population puts another wave of pressure on health care. We must slow the escalation of costs. We must have a system that is truly sustainable.

By investing wisely today, we can improve health care and slow down these escalating costs. We have chosen this path because we believe it is the right one -- the only one for Nova Scotians. We are prepared to defend this decision in any forum, at any time, anywhere in Nova Scotia.

Further details on the operation of these health initiatives and the Health Investment Fund will be provided by my colleague, the minister of health, over the next few days.

Health Budget Increases Support for Professionals Mr. Speaker, I also want to spend a few moments on the main health care budget. This government understands that health care in Nova Scotia depends on the dedicated, professional people who deliver that care. It is our responsibility, first and foremost, to ensure they have the tools to do their jobs. We have increased the basic health budget by $107 million for 1999 2000 compared with last year's budget estimate.

Nurses and doctors are the front line in health care delivery. This budget addresses the fundamental concerns of those professionals. This budget recognizes the current and pending shortage of nurses in our health care system. Indeed, many of the primary and continuing care programs we see will mean an expanded role for nurses right across our province.

Today, Mr. Speaker, we are announcing an additional 400 full-time nursing positions in our system. Up to 200 of these positions will be converted from casual to full-time within five months. The other 200 positions are new. One hundred of those will be created immediately. They will accommodate new graduates and nurses currently in the system who wish to convert to full-time employment. This budget includes a commitment of $10 million for nursing initiatives this year.

Mr. Speaker, this government has forged a new relationship with doctors. As a measure of our success, look no further than the doctor recruitment record. We reversed the decline in doctor numbers. Doctors have been found for 26 of the 29 under-served areas identified in 1997. Nova Scotia now has a better per capita ratio for both family doctors and specialists than the national average.

Mr. Speaker, this budget includes funding for cancer detection programs, for the recruitment and retention of specialists, and for better public information. It includes more funding for medical research, for home care, for nurses, for doctors, for long-term care workers.

Mr. Speaker, by increasing the budget of the Department of Health, and through the additional resources in the Health Investment Fund, our government has made its absolute commitment to the health and well-being of Nova Scotians absolutely clear.

COMMITTED TO OUR CHILDREN

Mr. Speaker, our government's commitment to our families and our children is also clear. Providing a good education for our children is fundamental. Last year we made promises on how those commitments would be met. Today I am able to tell this House, we have delivered on our commitment to our children and our families.

Last year we committed $82 million more for the public school system. In addition this budget provides $38.8 million more for public schools. We promised more money to reduce class sizes. This budget offers an additional $300,000 over last year to help school boards reduce class size.

We told municipalities their contribution to future educational funding growth was limited to 10 per cent. That is what we have done.

In last year's budget we promised a significant start on a new school construction program. New schools mean new centres for learning, healthier buildings, and more economical operations. I am pleased to say that a total of 55 new schools will be opened across this province by the year 2005 2006.

As well, a total of $25.1 million is earmarked for school construction and technology initiatives.

School boards will also see a change in a portion of the funding formula, so that students across the province have access to the same high-quality programs. With a portion of their funding based on program requirements, rather than student enrolment only, smaller boards will be better positioned to offer their students the programs they will need to be ready for the opportunities ahead.

Programs for our young people are improving. A $2-million investment is being earmarked for textbooks, learning resources, and professional development for teachers. This investment will support new courses in areas such as mathematics, language arts, science and entrepreneurship.

We are also rapidly putting more new technology into junior and senior high schools. Within one year, 6,000 new computers will be delivered to 181 schools throughout Nova Scotia. Mr. Speaker, we believe each child deserves every chance for success. To help us reach that objective, $2 million is being added to programs and services for students with special needs.

Children in Need Mr. Speaker, our commitment to our children goes beyond their public education. Many parents are well-positioned to help their children. But others are not. We have a responsibility to close that gap, to equalize the opportunity to learn. The first step is to improve family resources.

National Child Benefit Mr. Speaker, we believe families across this province want employment income, not social assistance. Too often though, the system works against taking a job. You gain self-esteem when you gain a job, but too often you lose support. The National Child Benefit program provides benefits to families with low incomes, regardless of where they get their cheques. The second year of the National Child Benefit program will see the total reinvestment for Nova Scotia increase to $20.4 million.

We will also provide more funding for our Healthy Child Development Initiatives. These initiatives enhance early-intervention programs.

Child Residential Placement Centres This budget provides the funds to open new facilities and services for children and youth who have behavioural or emotional problems. We want to provide options for children close to home. The Ralph Allen Centre is open in Dartmouth. A new facility in Dayspring, Lunenburg County, will be officially opened next month. Services and facilities are also planned for Cape Breton and Stellarton. Through these initiatives, children will be able to stay close to home, where they have families and friends.

Secure Treatment Now that these regional placement options are in place, we will proceed with a secure treatment facility. We will proclaim the remaining sections of the Children and Family Services Act. This will allow judges to order children into this type of care. Nova Scotian children with special needs can be served here. It may also help bring some children with special behavioural problems back home.

Foster Care and Child Welfare The year 1999 2000 will see significant changes in our foster care programs with the introduction of a new training model. This will allow for different levels of payments for foster parents.

We will be adding at least 20 new staff across the province to the child welfare system. These people will focus on child protection, placement and prevention.

Supporting Women Strengthens Everyone Mr. Speaker, this budget almost doubles the funding for the women's centres across Nova Scotia. The extra funding recognizes the important contribution they make to deliver services to women and their children -- services that include crisis intervention and problem solving, support assistance for self-help and support groups, and development programs such as literacy and skills upgrading.

Measures to Help Those with Low Incomes Mr. Speaker, our government is proud of its track record in giving those in need a helping hand, not a handout. We have introduced a series of measures that have effectively eliminated the provincial income tax for many low-income families. This measure was enhanced when we introduced the harmonized sales tax system in 1997.

Direct Assistance Program to be Administered Through Tax System At the same time, we introduced a companion program for those who made so little that they paid insufficient tax to receive a credit. This measure was called the Direct Assistance Program. For the past two years people have had to apply for it. This will continue for 1999. However, I am pleased to announce today that this requirement will soon be removed. Starting in the spring of 2000, those who qualify will automatically receive the help simply by filing an income tax return. This revised HST credit should benefit many more Nova Scotians.

COMMITTED TO OUR COMMUNITIES

Mr. Speaker, who we are and what we can do are largely based upon the influence of our families and our communities. My father always tells me, "You are a product of your environment." The lessons and values learned in our childhood form the foundation for our future. Our government believes it is critical to strengthen the community values of shared voluntary effort and co-operation. One way we are able to do this is by giving greater recognition to the rural emergency volunteers -- the people who are the backbone of the community volunteer effort -- the volunteer firefighters.

Motor Vehicle Registration Fee Exemption No one exhibits a greater sense of caring, community pride, and potential heroism than volunteer firefighters. First on the scene, it is their job to turn fire and similar emergencies away from a path of possible tragedy. Today I am announcing a provincewide recognition related to a critical part of their job. Effective July 1, renewal of motor vehicle registrations by properly accredited firefighter volunteers will be done at no cost to them.

HST Provincial Rebates Extended Mr. Speaker, I also want to mention two areas where we have been able to build upon existing provincial tax rebate programs.

Another critical organization in our rural communities is the voluntary Emergency Measures Organizations. The strength of these organizations and the dedication of their volunteers were amply demonstrated in the aftermath of the Swissair 111 tragedy off our shores. Today, I am pleased to announce that effective April 1, 1999, these groups will qualify for the same provincial tax rebate currently available for volunteer fire departments when it comes to the purchase of new vehicles.

Across this province, our veterans also play an important role in community life. Their contribution to this country is universally recognized in the many veterans' war memorials. Our government believes it is only right that this province provide some assistance in the repair of these monuments. Therefore, I am pleased to announce that effective April 1, 1999, repairs to veterans' war memorials will qualify for the same provincial tax rebate treatment currently extended to heritage properties.

Fisheries Early Retirement Program Mr. Speaker, the strength of our coastal communities depends upon people having a secure livelihood. Many fishing communities prosper because they have a variety of seafood sources. But, others depended upon groundfish and are not so fortunate. Equally unfortunate are those near retirement who cannot easily learn a new trade. For them, we are helping to provide a bridge to retirement. This budget provides $5 million toward the federal-provincial Fisheries Early Retirement Program.

Support for Municipalities Last year the province made a major commitment toward municipal-provincial financial fairness. The commitment means municipal payments for social services will be phased out over the next few years. Fiscal 1999 2000 will provide $8.8 million more toward this goal. It is the second year of this five-year program to shift costs from the municipalities to the province.

Supporting Community Accessibility Mr. Speaker, I am very pleased to announce that this budget also includes funds to improve access to public facilities for people with disabilities.

STRENGTHENING OUR ECONOMY

Mr. Speaker, I now want to return to the subject of the economy. I come from rural Nova Scotia. People in my area understand the importance of the natural resource sectors like forestry, agriculture and the fishery. They understand the importance they play in the economy of this province. I am pleased to say this budget supports their efforts. I am pleased to announce an additional $1 million for silviculture. I am proud of our record of support for our beef farmers, our hog farmers, and all those hit by drought. Our commitment for research and development in aquaculture is shown in this budget, as well. I am pleased to say that the long-awaited aquaculture facilities at the agricultural college should be completed this fall.

Mr. Speaker, the difficulties in Cape Breton deserve special mention. The coal industry on the island faces a major crisis. Our government is determined to help the people of industrial Cape Breton through these troubled times. We are working with Ottawa on a four-year $80-million Community Economic Development Fund. The direction of this money will come from the community. It represents a very significant source of hope. It will also be a source of funds to help lever some of the other initiatives I am about to announce.

Tax Credits Mr. Speaker, our government has encouraged economic growth through the use of the tax system. Over the past few years, tax credits have represented an investment of $71.8 million by the government in the form of forgone tax revenues. The most significant is the manufacturing and processing investment tax credit, but the equity tax credit, the small business tax holiday and the film industry tax credit have also helped many small businesses raise necessary capital for important reinvestment in Nova Scotian businesses.

Giving Rural Communities an Edge Mr. Speaker, all the measures I have just discussed work to strengthen critical industries, especially those in rural Nova Scotia. But more is needed. I believe that a strong rural economy means a strong provincial economy. We know that growth outside Halifax has a positive impact on our capital city too. More people working from one end of this province to another means the commercial, retail, entertainment and business support services in Halifax all do better. Our policy is to give rural businesses additional development opportunities.

To assist in their economic growth, we believe the area outside the urban Halifax region needs an edge. Outside metro, enterprises need a financial advantage to overcome population and distance to market. This budget provides that advantage through the creation of an Enterprise Zone.

Enterprise Zones The concept of Enterprise Zones builds on generally available programs to raise capital and encourage production in designated areas. It is designed to assist small businesses raise capital for investment and growth. Enhanced tax advantages under the following programs will be offered inside the Enterprise Zone: the equity tax credit, the tax holiday for small businesses, the film industry tax credit, and our labour-sponsored venture capital funds.

Mr. Speaker, this means new benefits for business growth. We are extending the current small business corporate tax holiday from three to five years for businesses starting up inside an Enterprise Zone. Film and video productions inside the Enterprise Zones will qualify for a 37.5 per cent credit on their labour costs rather than the normal 32.5 per cent. Investors using the equity tax credit for a small business inside the Enterprise Zone will receive a 35 per cent credit instead of the regular 30 per cent credit.

The Enterprise Zone is initially defined as all areas of Nova Scotia except for the urban areas of the Halifax Regional Municipality. Regulations will also allow us to define parts of HRM if the unemployment in that part has above-average unemployment.

As a result of these new initiatives, high-unemployment areas such as industrial Cape Breton, Yarmouth, Amherst and Shelburne will all have better opportunities to attract key investment dollars. An increase in equity investments will enable these businesses to leverage those dollars with additional conventional loans. We expect more business growth, and more jobs as a result.

BUILDING A NEW ECONOMY

Mr. Speaker, it is not enough to simply support the existing economy of this province. Everyone understands that we are entering a new era. Our open borders, the knowledge economy and our resource wealth are creating opportunities that we have not seen in this province since the 1800s. The opportunity, for example, of working and raising a family here in Nova Scotia rather than moving away, as our young people have done for generations.

A Community College for the New Century To give our young people these choices, we need to redouble our efforts in skills development and training. We must improve the ability of our community college system to match the talents of our young people with the jobs of tomorrow.

Already our community college is recognized nationally for ground-breaking new programs, and partnerships with business. Our government values its key role in economic development, and we have honoured our previous commitment to preserve and enhance the college's current operations with a $5.3-million increase in funding, an increase of 11 per cent.

However, Mr. Speaker, the demand for new training is outstripping the ability of the college to offer seats to Nova Scotians who are eager to join the workforce, whether the field is digital animation or the natural gas industry.

Today, this government is announcing a three-stage plan to expand the capacity of the college and address its infrastructure needs. First, we will support the growth of an exciting new part of the college -- its virtual campus for apprenticeship training -- by providing a new investment of $250,000 in this budget. Second, in high-demand programs with immediate strategic benefits to the economy, the government will invest additional funds to modify classrooms and labs, and run extra shifts that will create new spaces for Nova Scotia students this fall.

Mr. Speaker, these measures will address some immediate pressures, but this government is also committed to a long-term vision for the college. Today, I am pleased to announce that we are asking the board of governors of the college to consult with stakeholders and bring forward a plan that will increase the total number of seats by 50 per cent over the next four years. We are committing $100,000 in funding to create this plan, and we are asking that it be brought forward by the end of the year.

We are determined to build a community college for the new century, one that will open new doors and opportunities for Nova Scotians, especially our young people.

Our Universities Mr. Speaker, in 1998 99, our government made a commitment to increase our investment in universities by $24 million over the next three years. Our budget today keeps that promise. As a result, we expect any tuition increases to be kept to a minimum, and the university's contributions to the economic development of this province will continue to rise. Much progress is already being made.

Nova Scotia Film Industry Mr. Speaker, the growth of the computer industry is now blurring the boundaries of another growth industry. Film and video production in Nova Scotia is expanding rapidly. The industry has reached its present state with help from our film industry tax credit. Today, I am pleased to announce that this credit will be extended for another year. I will also be introducing amendments to the tax credit so that it may continue to be used by large Nova Scotia-based production companies. We plan to consult widely in the coming months on how to continue to support this industry in the most up-to-date, effective and competitive way.

For example, we are finding that more and more often our film and video companies are branching out. They record their images and stories in digital form. The end result is often a computer screen rather than a movie screen. The delivery system is no longer a projector but instead a CD-ROM or a file downloaded from the Internet. Technology is redefining the medium. So we will redefine the message.

Multimedia Tax Credit Effective April 1, 1999, we will allow firms combining traditional media and digital output a 15 per cent tax credit on the salaries and wages paid to employees of a qualifying corporation in Nova Scotia. We already have tremendous creativity in art, music and writing in this province. In Halifax and in Sydney, the multimedia industry is finding its wings. We already have a strong base of computer education. This tax measure will help pull all these elements together to encourage new businesses to grow here to serve the world.

FISCAL RESPONSIBILITY 1999 2000 AND BEYOND

Mr. Speaker, I want to mention another aspect of economic development and support: our general tax rates. This government is committed to responsible tax reduction.

I am pleased to announce, effective July 1, 1999, Nova Scotians will see the impact of an annual $20-million reduction in provincial personal income taxes across the board as we follow the recent federal initiative. This effectively represents a two per cent reduction in provincial income taxes.

Mr. Speaker, this decrease follows a provincial income tax cut in 1997. Over a two-year period then, Nova Scotians have seen their provincial income taxes reduced by a total of approximately $60 million. We are proud of our responsible record on tax reduction.

Effective this fiscal year, we also ended the transitional tax on motor vehicle purchases. All these measures encourage consumer spending and economic growth by leaving more money in the hands of taxpayers.

Increasing Accountability and Responsibility Mr. Speaker, we have a well-established track record on taking a balanced approach. In 1993, nothing was in balance. Everything was in the red. The hospitals and schools were in debt. The provincial budget was borrowing money to pay the interest on the money it had borrowed the previous year. The roads were paved with good intentions and IOUs.

Consistently we made the necessary changes. First we balanced the day-to-day spending. That came in 1995. Then we moved to a higher standard. We raised the bar and balanced the entire budget: on current and capital. All the budgeted spending, from road construction to civil service wages, has been in balance since 1997. Now it is time to move the bar again. It is time to set a new goal.

It is time to reach full balance across the public sector in Nova Scotia.

I laid out our plan to increase financial responsibility a year ago in our document entitled Financial Accountability: A Blueprint for Success. This document anticipated our assumption of responsibility for the full health care sector. We acknowledge financial responsibility for the finances of the health boards, the four non-designated hospitals, including the QEII, as well as our Crown corporations and our departments and agencies.

Today, we reaffirm our commitment to fiscal responsibility. Yes, we must invest significantly in Nova Scotians' health care system, and yes, that investment requires us to finance it outside current revenues. But that financial decision is justified because we must bring greater long-term financial accountability, predictability and stability to the health sector. In addition, we are committed to repaying the dollars borrowed for this special investment by no later than the year 2012 13. Even when the need is urgent, we are not prepared to throw away the fruits of our hard-won battles.

Administrative and Program Savings Needed Mr. Speaker, in every department and agency of government except Health and Education, this budget holds the line on spending. Increases in the other departmental estimates reflect only long-overdue wage increases for the public service and the very few new programs specifically mentioned in this speech.

In fact, Mr. Speaker, the budget explicitly requires us to find significant productivity gains in our operations. The people of Nova Scotia would insist that we look into every corner of government for every dollar to see where we can save. We started that process last year. A team of senior deputies and officials in my department looked at many areas for savings. This year we will build on their work.

Programs will be reviewed to see if they still serve the original purpose. Our payments for travel and accommodation are higher than they should be. We are working across the public sector to get better value for our travel dollars inside and outside the province.

Other areas for cost reductions include printing, telecommunications cost including the use of cellular telephones, and the purchase of office supplies. We are also launching a long-term review of office space rentals, government warehouses, and vehicle purchases. Surplus buildings, machinery and equipment will be liquidated.

In each case our message is clear: Nova Scotians work hard to earn a living. People are prepared to pay their taxes and allow us to invest on their behalf to create a better future. But in return, the government must respect the trust we are given by managing those tax dollars wisely.

CONCLUSION

Mr. Speaker, in concluding my remarks I want to offer the following observation. Today, we on the threshold of a new century, but our values are timeless.

Throughout history, societies have been measured by how well they serve their people. Whether creativity and learning flourish. Whether wealth increases broadly. Whether a particular society has respect for the resources of the land and the air. Whether they tolerate and even encourage dissenting opinions and values. And whether their children are born with the prospect of a long and healthy future.

Today, we must ask if our children will say we passed those tests. A confident and creative people achieve good futures. I believe the budget before this House today gives our people the tools to do that.

In this budget our young people are better able to realize their potential. Our communities and entrepreneurs have better ways to make opportunities become realities. And all of us can have the confidence that our health care system is dependable and secure.

Mr. Speaker, more than anything this budget is an investment in Nova Scotia and an investment in Nova Scotians. This budget is the right budget for our province and our people: right now and into the future. I ask all Nova Scotians to support the choices we have made.

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