Legislative Assembly The increase in the net debt of the consolidated fund is estimated at $2,481,917. and is computed as follows: Net capital expenditures ...........................................................................$ 4,841,068. Less: Surplus on ordinary account ..............................................$ 270,401. Sinking: Fund appropriation .............................................. 1,713,755. Interest on Sinking: Fund Investments 425,000. ---------------- $ 2,409,156. Increase in Net Debt ......................................................................$ 2,481,917. New Borrowing Legislation Before completing: this portion of the Budget Speech , I wish to inform the House of legislation to be introduced in order to authorize the Lieutenant - Governor - in-Councfl to obtain funds by the issue of debentures. "The Prince Edward Island Loans Act , 1967" will be introduced for the pur¬ pose of funding Ten million Dollars ($10,000,000.) unfunded debt for Capital Expen¬ ditures and floating indebtedness, for a term not exceeding forty years. In addition, "The Prince Edward Island Refunding Act , 1967" will be intro¬ duced to authorize the borrowing of Six hundred thousand Dollars ($600,000.00) for a term not to exceed twenty years, to refund the balance remaining after applying sinking fund appropriations to an issue of One million five hundred thousand DoHara ($1,600,000.00) 4%% debentures which will mature on December 1, 1967. SUMMARY The past five years ended March 31, 1967 have seen a rapid expansion of government spending: health and welfare operating programs increased in cost by 150%; the cost of education rose by 156%; and capital spending was 52% more last year than in 1961-62. Today, the results are readily apparent: —The Province's dependence on Federal payments has increased and Provincial control over its own tax base proportionately reduced. —The Province's net debt has nearly doubled since 1961, and on a per capita basis, is the highest in Canada . Moreover, this rate of increase has been alarm¬ ing; from 1961 to 1966 personal income per person increased by slightly over 300, while net debt per person rose by $100, approximately 1/3 of the increase in income. —As a result, debt charges are rising rapidly, and provincial demands on the money market have reached perhaps their upper limit There is no indication whatever that, without restriction, these spending re¬ quirements will decline significantly in the future. Health and welfare costs wfll rise, both as a result of increased quality of services, and greater numbers of persons obtaining them. In addition, the prospect of a Medicare Program confronts us in the immediate future. Education costs will continue along their inexorable upward trend as standards of instruction rise and the numbers of persons increase. Other govern¬ ment operating programs can also be expected to become more costly, even without major additions to the programs. In the face of the current situation and these projected demands, the need for financial responsibility is overwhelming and this is, indeed, Mr. Speaker , the first and most fundamental requirement of sound fiscal policy. At the same time, this sense of responsibility must be tempered by the need to continue the provision of essential services, and to exert fiscal influence bi the direction and rate of econo¬ mic development. Accordingly, we have considered all possible alternatives within the framework of the following priorities: —The need to achieve short-term financial stability of provincial borrowing;