Tuesday, April 25, 1967

—The need to provide the long-term base for future economic development on Prince Edward Island.

Essentially, this entails the weighing of short-term problems against the long-term needs of the Island. As such, it is impossible to concentrate on one at the com lete exclusion of the other. Therefore, we have attempted to achieve a balance; a ba nce of spending priorities which reflects heavily, but not exclusively, the requirements as we see them developing over the next few years. These requirements will entail heavy spending in th health, welfare and education fields; a massive comprehensive development program; and constantly risiniestandards and costs amciated with most aspects of public service. To these must added the many imponderables related to construction of the Causeway.

It is therefore important and urgent that we look ahead to the problems, and let our current actions be directed at preparing a firm foundation upon which their solution will depend. This, Mr. S eaker, is what this Budget attempts to do. This government’s fiscal program for t e coming year — a year of preparation — is de- signed to provide a firm base for the progams and policies which will be needed if this Province’s position in the Canadian nation is to improve. Consequently, policies are directed at preparing a solid financial base. a comprehensive program base, and an efficient administrative base upon which will rest the Budget of future years.

An integral part of soundly based financial operations entail a sharp reduction in the rate of debt increase. along with a more appropriate balance between long and short term financial liabilities. Therefore, the Government will move to reduce the extent of its short-term indebtedness as a means of increasing its financial flax- ibiiity. In addition the rate of increase in net debt will be reduced by approximately 50% in 1967-68; by a further 50% the following year: with the aim of a fully balanced capital and operating budget in three year’s time.

There will be considerable discussion arising from the fact that this program necessitates reductions in capital spending. The Government is aware of this: but it was the accelerated expansion of capital spending to abnormally high levels which produced much of the current adverse debt position. It is logical and practical to utilize this same means as a corrective device. In addition. there will be no adverse economic effects resulting from this reduction; overall capital spending is rising and the volume of construction activity will increase substantially as construction of the Causeway proceeds. I must emphasize, however. that should this reduced scale of capital spending not be sufficient to meet the Government's goal, then there will be no alternative but to seek the avenue of increased taxation. To argue against the former is to argue for the latter.

From the above, it should now be clear that this Budget calls for a continuation of the scale of existing operating programs. However, even here the Government has exercised with diligence the application of certain priorities: as a result some types of relatively non-essential spending have been curtailed, estimates have been refined and sharpened, and some needed program expansions have been authorized.

To have done otherwise would have meant impairment of the program base required for the future.

On this basis. the Budget calls for implementation of a comprehensive develop- ment plan, along with the reappraisal of a variety of existing programs to ascertain their role within such a plan. In particular, the Government plans a thorough review and assessment of educational policies and programs within this context.

An efficient and effective base of administrative procedures is an essential requirement for meeting these objectives. The Government has recognized the need for adjustment to salaries in the Civil Service, and has done so. It has also moved to correct certain deficiencies in a range of professional skills. But, more will be required if the policy objectives of the Budget are to be effectively realized. It is therefore proposed to undertake a review of the Treasury Act with a view to incor- porsting into it provisions for a functioning Tress Board, effective budgetary and spending controls at all levels, and for achieving bu getary flexibility.

In future, amounts which ma be required in excess of the appropriations will first have to be approved by the ury Board before any commitment is made. Transfer of ap ropriations within departments will no longer be permitted. Future budgeting shoud then be more realistic.

.495—