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The 2001 Provincial Budget Address
Presented March 29, 2001
Keeping the Balance in Uncertain Time
MADAME SPEAKER, Members of the Legislative Assembly.
I am most pleased to present the Budget for the year 2001, whose
theme is Keeping the Balance in Uncertain Times. I believe that
this is a very appropriate message in view of the increasingly
uncertain economic situation that is developing.
At the outset I wish to repeat the message of the 2000 Budget that
our policies have placed the Island in a strong position as we begin
the 21st Century.
We believe that the people of Prince Edward Island want
straightforward, sound government that is cost effective and
maximizes the use of the hard-earned tax dollars for which we are
responsible.
In that respect, managing the Province is no different from
managing the finances of any family household or business. You do
what you can afford and you invest wisely in programs and projects
that you judge will pay off in future years. I believe that we are now
reaping the rewards of that approach.
Madame Speaker, it was not so long ago that Islanders were on the
treadmill of out-of-control spending, rising deficits, rising borrowing
and rising taxes. I wish to assure Islanders, that our Government,
through this Budget, will stay committed to a fiscal strategy that
will not go down that path.
In contemplating this Budget, it became increasingly evident that
financial markets and the economic times have become very
turbulent compared to a year ago.
Madame Speaker, it is the Government's responsibility to keep a
solid financial house.
I believe that our record in moving to a balanced fiscal position,
accompanied by sensible programming and affordable tax
reductions have placed us in a strong position to weather the
potentially harsher conditions that might lie ahead.
Public Input
The Provincial Budget is developed on the basis of the best advice
we can find and draw upon from many sources. But fundamentally
we must interpret the needs and priorities of Islanders. An important
aspect of the Budget process is to hear the views of our taxpayers
directly and to act on ideas on what should be the Government's
priorities. I was most encouraged by the many individuals and
groups who took the time to come to advance Budget meetings to
advise on steps that Government should be taking.
I can assure all Islanders, from all parts of the Province, and from
all walks of life, that my door is always open. We listen and we care
about your concerns and any observations that might be helpful to
us in developing the Budget.
Madame Speaker, in the final analysis, the Provincial Budget
involves use of taxpayers' money and as such it must be
representative of the wishes of the people of the Province.
I believe that the Budget that I have the privilege of presenting this
evening appropriately reflects the priorities of Islanders.
Economic and Fiscal Performance
The past year was marked by three developments: first, by
extraordinary economic growth both nationally and locally; second,
by rising financial pressures and mounting energy costs; and finally
by the chaos created in our potato-producing sector from the closure
of the US border to our products.
I will outline the events of the past year because they are important
in understanding our finances.
The Canadian economy expanded by some 4.7 per cent in 2000,
following significant growth in the previous four years. The Prince
Edward Island economy increased by approximately 2.9 per cent,
which marked three consecutive years of rapid expansion. Most
significantly, employment on the Island was up by 5.2 per cent, the
highest growth rate in Canada.
Madame Speaker, this is the greatest increase in employment the
Province has ever witnessed in its history. There were on average
3,200 more employed persons in 2000 than 1999. The most recent
statistics, for February 2001, show that there were 66,000 Islanders
employed, the greatest number ever.
Madame Speaker, the provincial unemployment rate dropped to 12
per cent in 2000 as a result of the expanding job market and was
11.7 per cent last month. Economic growth was widespread as
housing construction expanded, manufacturing grew and retailing
jumped in value. Exports of Island products to other countries
valued $680 million, up from 1999 by 20 per cent. Retail sales
increased by approximately 7 per cent and are now valued at $1.24
billion.
This good news, however, did not extend to our traditional sectors.
Tourism numbers were off slightly from 1999 consistent with a
region-wide trend. Lobster volumes were up but lobster prices
reduced the value of the catch consistent with a region-wide trend.
But clearly the largest difficulty was faced by Island farmers with
the value of potato sales down by 20 per cent. Even before the trade
embargo, prices for North American potatoes were in a slump and
obviously we are all aware of the consequences of the trade ban.
Given the strength of the manufacturing and services sectors,
personal incomes were up sharply in 2000, and this was augmented
by relatively strong growth in our population. Total labour income
increased by 8.4 per cent on Prince Edward Island, surpassing
national growth of 7.2 per cent.
During 2000, energy costs increased sharply around the world
which impacted on the Island economy because of our dependence
on oil. The price of furnace oil and gasoline increased by 49 per
cent last year. This pushed the consumer price index up to 4.1 per
cent on Prince Edward Island compared to 2.7 per cent nationally.
Madame Speaker, more details on the Island's economic
performance can be found in Budget Paper A.
The result of the strong economy, both nationally and provincially
was that revenues performed well. We exceeded budget in sales tax,
corporate income tax and Equalization entitlements. Personal
income tax is the sole major revenue source that is below budget,
caused by a negative adjustment from prior years. I might note that
this was also impacted by the reductions in personal income tax
rates in each of the past two budgets.
Overall revenues in 2000-01 are up from budget by $64.7 million,
of which $24.8 million was in Equalization, $17.4 million from
Special Projects Fund, approximately $14 million from federal
support for farmers and the balance from other modest revenue
improvements. The Province will have a modest deficit of $6.7
million for 2000-01 which represents less than 1 per cent of total
expenditures. Increased investments in health and education and
assistance to the potato sector were the major sources of additional
spending in 2000-01.
Our deficit would have been larger had it not been for the
cooperation of my colleagues and government staff. In November,
we asked all departments and government agencies to reduce
expenditures by 1 per cent. I wish to express my appreciation for
their ability to respond while not impacting on important services
and programs.
While the Province would have preferred to have maintained a
small surplus in 2000-01 this became increasingly impractical
toward year end in view of the uncertainties created by the potato
crisis.
Economic Outlook
Madame Speaker, looking forward to the new fiscal year, only four
months ago there was a general expectation that continued strong
economic growth would occur in the coming year.
The distinct slow down in the US economy this winter, coupled with
the severe reductions in world stock markets have caused a serious
reassessment of the economy. The economic uncertainties have also
caused a severe drop in the Canadian dollar in recent weeks.
Economic forecasters have trimmed their projections but still feel
confident that economic growth will continue. However, the
Canadian rate of growth will be significantly less, down from the
upper 4 per cent range to the lower 2 per cent range.
Most economists believe that action by central banks to reduce
interest rates will prevent serious economic weakness from taking
hold.
I am confident that by maintaining a balanced approach, the Prince
Edward Island Government is sufficiently strong to move through
these choppy waters without cause for serious concern.
One reason for this confidence is that others view us as a very good
credit risk. I was most proud last summer to receive the upgrade of
the Province's long-term bonds by the Dominion Bond Rating
Service Limited, Canada's pre-eminent Bond Rating organization.
It indicated that the Province's economic and financial management
resulted in a strong fiscal performance, which permitted an
increased credit rating, from BBB high to A low.
Fiscal Outlook
The fiscal outlook is predicated on the belief that the Prince Edward
Island economy will experience modest growth, at about 1.5 to 2
per cent in 2001.
During the Budget preparation, difficult decisions were required to
rationalize our spending commitments, in view of the emerging
revenue picture.
We have been helped somewhat in our fiscal planning by the
commitment of additional dollars by the Federal Government for
Health and Early Childhood Development. In September 2000
Canada's First Ministers secured agreement for the restoration of
funds through the Canada Health and Social Transfer, which raised
our revenue from that source from $75.2 million in
2000-01 to $87.7 million in 2001-02.
But, Madame Speaker, I was most disappointed with the stand of
the Federal Minister of Finance on the issue of the Equalization
program, our largest single revenue source. Whereas Equalization
revenues for the Province have improved, their future growth is
seriously compromised by a ceiling, or cap, that he has imposed. I
have repeatedly told Mr. Martin that this cap should be removed,
as this program must be permitted to fully function to allow poorer
provinces access to adequate funds, to provide public services
comparable to other provinces. That is a Constitutional obligation
of the Government of Canada.
The Government of Prince Edward Island believes that the Finance
Minister is not honouring the agreement between the Prime Minister
and the provincial Premiers of last September, to allow the program
to expand with national GDP.
Budget Paper B describes Federal Fiscal Issues in more depth and
I invite Honourable Members and the interested public to review
this section.
Madame Speaker, I have emphasized in this, as well as our past
Budgets, that the Government would lower taxes when we could
afford it. The buoyant economy allowed us to implement
significant personal income tax reductions in 1999 and 2000. We
also removed sales tax on clothing and footwear. The effect of those
measures will continue in 2001.
Madame Speaker, I have no new tax increases to announce this
evening.
In supporting Island enterprises, we remain committed to assisting
our business sector by narrowing the number of taxable inputs
subject to sales tax. We also intend to carry through with our
commitment to provide tax incentives to encourage business to
locate in West Prince and other rural areas of the Province. A
program will be announced shortly. I should also note that in 2001,
the Province moved to a Tax on Income regime. The provincial
Income Tax Act was amended in the Fall of 2000 to put this into
effect. I should emphasize that the Tax on Income system effectively
lowers our annual personal income tax revenue, resulting in a
further saving of $3.9 million, for Island taxpayers. This is because
we include higher income thresholds for 2001 than were in effect in
2000 and the effective rate for the middle income bracket is reduced
from 14.4 per cent to 13.8 per cent.
The Year Ahead
Madame Speaker, as I emphasized at the beginning of this Address,
we will only undertake new programs that we can afford. It is our
view that the Province must focus on the need for fiscal prudence
and priority-spending needs. This is a budget that reflects the
unpredictable economic circumstances that we now face.
Madame Speaker, I am pleased to report that the Budget for 2001-02 that I am tabling this evening, has a surplus of $1.6 million.
Total expenditures are set at $959.1 million in the coming fiscal
year and it is our firm resolve to hold fast to expenditures in order
to achieve this surplus.
Program Expenditures
Priorities
Reflecting the needs of Islanders, health care, education, jobs and
community development are the priorities of this Government.
Health Care
Madame Speaker, given the importance of health care to Islanders,
this Budget commits more dollars to the Department of Health and
Social Services than ever before. Health and Social Services will
receive $340 million in 2001-02, up $23.3 million from Budget
2000. This department receives 42 per cent of all provincial
program expenditures.
Tenders for the construction of the East Prince Health Facility are
currently being awarded. The new facility will occupy 180,000
square feet, significantly more than the existing Prince County
Hospital. Government contributed $2.5 million in 2000 to
establish the equipment fund for the new facility.
The multi-year Physician Recruitment Strategy is beginning to
produce positive results as ten physicians relocated to Prince
Edward Island to practice in 2000-2001, including seven family
physicians and three specialists. A dedicated physician recruiter
was hired and nine new physician positions were established and
funded by the Government in 2000-2001.
The Province's Nursing Recruitment and Retention Strategy
continues to attract new nurses and retain existing nurses in the
Prince Edward Island health system. Initiatives of the already
announced $9.5 million multi-year strategy include the creation of
27 new permanent registered nurse positions to provide relief
support in hospitals and long-term care facilities. Thirteen new
nurses were recruited to Prince Edward Island last year and an
additional 13 new nursing graduates were hired last year. Through
the new Student Summer Employment program, 28 Bachelor of
Nursing students were employed in Island health facilities.
An integrated Provincial Autism Policy will be implemented to
provide improved access to early intervention for children with
Autism. This is the result of the collaborative efforts of the
Department of Health and Social Services, the Department of
Education and non-government Autism support groups.
As part of this new program, support will be increased for Applied
Behavioural Analysis therapy, recognizing that early intervention
can have a very positive impact for these children.
Child protection services will be enhanced as we prepare for the
proclamation of our new child protection legislation. Funding of
$250,000 will be used to enhance front line staffing requirements,
staff training and policy development.
Madame Speaker, I am pleased to announce on behalf of the
Government a new Prince Edward Island Disability Support
Program. This is the first disability support program in Canada to
remove all financial disincentives to disabled persons entering the
labour market. It is budgeted at $7.4 million, of which $1.5 million
is new money.
Madame Speaker, children in Prince Edward Island will become
tomorrow's successful and enthusiastic parents, caregivers, workers,
leaders and citizens if they are given the opportunity to develop their
capacities to the fullest. Amendments to the Prince Edward Island
Employment Standards Act to allow parents to take parental leave
for up to 52 weeks demonstrates this Government's commitment to
support working parents in balancing work and family life. It
allows parents to spend more time with their new babies or adopted
children, during the critical first year. This reaffirms our dedication
to the development of Prince Edward Island children.
More details on Health initiatives will be forthcoming from the
Minister of Health and Social Services.
Education
Madame Speaker, improved education at all levels is vital to our
future growth and prosperity.
Implementation of the Province's first publicly-funded,
community-based kindergarten system is on track and the first
group of children to enter this program are completing their
programs in the next few months. This budget will invest $3.2
million in year two for the kindergarten program.
The Government's Capital Construction Plan for Schools is a
multi-year strategy to enhance the infrastructure of 10 Island
schools and provide for the on-going capital maintenance of all
schools in Prince Edward Island. This is the most ambitious school
construction plan in the Province's history, once again reaffirming
our commitment to Island communities and our children's
development.
Madame la présidente, le Gouvernement s'associe avec le ministère
fédéral de Patrimoine Canadien pour assurer que les communautés
francophones et acadiennes de l'Isle reçoivent éducation et
programmes culturels de haute qualité.
Nous allons contribuer deux millions deux cents mille dollars vers
la construction de la nouvelle école française à Summerside, ainsi
que la somme additionnelle de quatre cents quinze mille dollars qui
sera dirigée vers l'éducation française à l'Île-du-Prince-Édouard.
Ces fonds vont à aider la continuation des projets-épreuve de langue
française à Prince Ouest et à Rustico, des jardins d'enfants en
français, et des allocations à la Commission scolaire de langue
française.
Madame Speaker, the Government is partnering with the federal
Department of Canadian Heritage to ensure quality education and
cultural programs are offered to the Island Francophone and
Acadian community. We will contribute $2.2 million towards the
construction of the new French school in Summerside, as well as an
additional $415,000 which will be directed towards French
education on Prince Edward Island. This funding will assist with
the continuation of French language pilots in West Prince and
Rustico, French kindergarten and funding to La Commission
scolaire de langue française.
This Government has contributed $1.4 million to cover the
operating deficits of the Western School Board and Eastern School
District, as of June 30, 2000. These deficits were due, in large part,
to the increasing cost of fuel. In addition, we also approved a
further $1.2 million to be directed to school boards to help them
deal with the high cost of fuel in the current school year. An
additional $700,000 is being provided to school boards for staffing
and funding, which includes $140,000 for the classroom program
materials budget.
Madame Speaker, the Department of Education's budget for 2001-02 is $197.1 million, which is an increase of $12.5 million from
2000-01.
Our Island schools are the envy of many provinces as they enjoy full
access to the Internet. Government is increasing the budget for
technology support for the school system by $250,000 and has also
funded a $100,000 computer upgrade in intermediate schools.
Through a cost-shared $1 million partnership with the Labour
Market Development Agreement, 38 user-support specialist interns
will work with the Island's three school boards to assist field
technicians in addressing technology issues in Island schools.
Madame Speaker, the Government has committed $12 million over
three years for increased financial support to Holland College and
the University of Prince Edward Island. This is year two of this
three year committment and this Budget contains the second
instalment of $2 million for each of these important institutions.
Job Creation and Development
The Government continues to be committed to job creation and
economic development.
Madame Speaker, to strengthen development in this Province, our
Government is contributing $6 million to Prince Edward Island
Business Development Inc. to offset the loss of federal dollars from
the Regional Economic Development Agreement.
The Province is initiating the development of a world class facility
to support the Island's high technology industry. The Atlantic
Technology Centre will be a key development tool in retaining and
attracting leading technology partners to Island companies. The
Centre will provide infrastructure and resources to help develop and
grow strong technology companies.
Team Canada is an excellent vehicle to increase business potential
for our Province. Manufacturing exports have soared in recent
years, as previously indicated, in part, because of trade missions.
As a government, we have a responsibility to market Prince Edward
Island directly to the global marketplace. During the recent Trade
Mission to China, Prince Edward Island's major focus was on
education. Holland College entered into formal relationships with
several Chinese colleges which will see Holland College business
technology curriculum delivered in China.
As a result of the Team Canada Atlantic mission to New England,
Atlantic companies achieved $1.85 million of sales, growing to
$15.7 million over two years.
In terms of business expansions, the manufacturing sector continues
to lead the way. Several aerospace companies at Slemon Park are
expanding. Two new neutraceutical operations are coming to the
Charlottetown Airport Business Park. Smoked fish products and
potato chip production will be expanding. Production of fibre optic
cable assemblies and employment in call centres is also rising.
Communities
Madame Speaker, in support of community development, this
Budget provides $4.2 million through the Canada-P.E.I.
Infrastructure Program. In addition, the Government is pleased to
announce a $6 million initiative to support recreational facilities
across the Province over the next four years. We will fund $2
million immediately and the remaining $4 million will be paid in
equal amounts over years 2003 to 2005.
The Community Development Fund, which was established two
years ago, resulted in $2 million going towards community projects.
This budget commits an additional $500,000 towards community
development projects.
The latest Access PEI sites have opened in Stratford, North Rustico
and Crapaud bringing the total number of sites across the Province
to 12. Access PEI offers Islanders one-stop shopping for over 100
government services, including motor vehicle registrations and
permits. Each site offers basic core services such as building
permits, driver's license renewals, marriage licenses, program and
job applications, business registrations and a number of the sites
offer other services, depending on the needs of the area.
Funding of $500,000 has been established in this Budget to begin
the planning for the construction of the new Prince County
Courthouse.
Agriculture
Madame Speaker, we all know that this has been a particularly
difficult period for Island potato farmers. In response to the closure
of the United States border in October of 2000, and voluntary
restrictions on shipments to the rest of Canada, the Provincial
Government quickly committed $15 million of financial support to
the industry. The objective of this program is to provide much
needed cash flow to producers.
Agricultural safety nets are important in ensuring a measure of
stability to producers but contributions to farm safety net programs
were not sufficient to address the disastrous impacts of the potato
wart crisis. After a lengthy and difficult delay, the Federal
Government subsequently announced a contribution of $12.6
million for diversion and an additional $1.5 million to help the
movement of potatoes to food banks across Canada. Further
discussions will be held to ensure federal support is expanded. We
will continue to work closely together until this matter is resolved
and the ban on exports is removed.
In support of the Food Strategy goals, financial and technical
assistance of $3.4 million has been committed to date under the
Agriculture and Environmental Resources Conservation program
for on-farm projects such as manure storage, hedgerow
establishment and soil conservation.
In support of the sustainable management of the Province's forest
resources, the level of seedling production was increased to three
million seedlings over the past year. In recognition of the
importance of our forests to present and future generations of
Islanders, each newborn child in Prince Edward Island is being
presented with a Red Oak seedling. As well, a special ceremony
was held in the past year to mark the planting of the 50 millionth
tree by the Provincial Government.
New funding of $1.7 million will be allocated to the Seed Potato
Quality Strategy and funding of $1 million will be available for the
Agriculture and Environmental Resources Conservation Program.
Fisheries, Aquaculture and Environment
The fastest growing sector in the Prince Edward Island fishery,
aquaculture, continues to have a major impact on rural
communities, creating new opportunities for steady, long-term
employment. To strengthen the aquaculture industry in 2001, the
Government will explore potential for growth in the finfish sector
which builds upon one of Prince Edward Island's natural strengths,
the high quality of our ground water. This Budget will provide
increased funding and will support new initiatives to expand
research and training and explore new technologies in the fishery.
Madame Speaker, water quality problems in many parts of Canada
last year have given all Canadians a greater appreciation for this
invaluable resource. Here in Prince Edward Island, we have seen
evidence of that heightened awareness in the vast increase in the
number of requests for water sampling and laboratory analysis of
drinking water. The Department of Fisheries, Aquaculture and
Environment processed approximately 11,000 ground water
samples in the year 2000; double the figure from 1999.
Last year's budget included an investment of $500,000 for new
laboratory equipment to provide more efficient processing of water
samples. As well, our Government provided additional resources
to meet the increased demand for water testing that developed
throughout the year. A further $270,000 is committed towards a
Drinking Water Strategy for Prince Edward Island.
Research is a key component of economic development. Our
Government is investing $250,000 over five years in the Lobster
Science Centre at the Atlantic Veterinary College. In addition, the
Department of Fisheries, Aquaculture and Environment has hired
a lobster biologist to assist in expanding lobster research initiatives
in Prince Edward Island, in cooperation with the Federal
Department of Fisheries and Oceans, the industry and the Lobster
Science Centre.
Tourism
Madame Speaker, the 2001 Tourism Marketing campaign was
recently announced and will continue to focus on the Island's
primary markets of the Maritimes, Quebec, Ontario and the Eastern
Seaboard of the US. Our emphasis will be on regaining market
share in our traditional markets as we continue to promote the
Island as a great vacation destination.
The Regional Economic Development Agreement between the
Federal Government and the Province will expire on March 31,
2001, which would have resulted in a decrease in tourism funding
of $800,000 in the 2001-2002 budget year. Our Government has
restored this funding, as tourism is a key component of our
economy.
A committee comprised of representatives from Government, the
private sector, the tourism industry and Island municipalities has
been established to review the Province's signage policy and to
make recommendations on future direction. It has been over 25
years since the current policies and programs for commercial
signage were put in place and a great deal of development has
occurred since these policies were first established.
This Government will contribute approximately $625,000 towards
upgrading Provincial Parks waste/water treatment facilities and
$525,000 to construct a new visitor information centre in West
Prince.
This summer, Prince Edward Island will play host to the World Boy
Scout Jamboree, which will be held at Cabot Provincial Park. Also,
the Canadian men's golf tour will return to Prince Edward Island
this year to play at Mill River.
Madame Speaker, we can take pride in the fact that, for such a
small province, we have more than our fair share of world class
sports athletes. I cannot name them all, but Lorie Kane's
performance last year in the LPGA was outstanding. The Lorie
Kane Island Challenge, here at Brudenell, commanded an
international audience last summer. Who can forget the
performance of Eli MacEachern in winning gold in the last Winter
Olympics? The Canadian goal ball team, with Islanders Contessa
Scott and coach Frank MacIntyre, returned from Sydney in 2000
with gold medals. Brad Richards of Murray Harbour is presently
a prime candidate for the National Hockey League's rookie-of-the-year honours. I should note that Steve Edmonds from Stratford
will be representing Canada in judo at the 2004 Olympics.
Now we are home to the World Junior Women's Curling
Champions thanks to the superb performance of the Suzanne
Gaudet rink in Utah.
The world attention that our ambassadors in sports have achieved
can only add to the appeal of Prince Edward Island as a great
vacation destination. We have every reason to believe that tourism
will reach new heights in 2001.
Conclusion
Madame Speaker, a year ago I brought in a Budget that was based
on the theme of a Balanced Agenda. I believe we delivered on that
promise. We have kept to our basic priorities of improved Health
Care, Education, Jobs and Community Development.
A balanced approach is key to sustained economic and social
improvement. It is my belief that the 2001 Budget responds to the
economic and social needs of Islanders in the coming year, while
continuing to provide a foundation for future prosperity.
The strength of the Province lies in all the dedicated people who
share our commitment to make this province a better place to live.
In closing Madame Speaker, I want to thank everyone who had a
part to play in bringing forward this Budget, the staff in Provincial
Treasury and other departments, the members of the Government
and to those Islanders who brought forward their ideas and
proposals in the past months.
Thank You.