Winnipeg Free Press

Winnipeg Free Press (Newspaper) - September 22, 1981, Winnipeg, Manitoba Wifi Flieg free september focus Federal deficit is fuelling i Tion Ottawa finance department officials Are putting together the pieces of a new budget to be delivered about the end of october and clearly hop ing they have better Luck than last eleven months ago they developed a budget geared for the recession is nearing its finance minister Allan Maceachen stated in the 28 but the recovery is Likely to be rather gradual in face of the world economic continued High rates of inflation and the recent increase in interest rates Stem Ming from the United Maceachen went on to say the level of output in 1981 might be Only one per cent higher than in real growth in the four per cent Range was expected to commence in the latter part of 1981 and to continue for some time the minister would average about per cent in 1981 while inflation would be in the 10 per cent and the finance depart could hardly have been farther off economic growth in the Early part of 1981 far surpassed unemployment has remained Well below the level projected by the minister and at last was running at about 13 per As a result of miscalculations a year ago the fiscal stance adopted by the government in the last budget has been inappropriate at Best and a disaster at with its huge deficit the government has been fuelling inflation and High interest rates at a time when a More Neutral fiscal stance would have been in but that was last the problem now is to develop Levels of spending and borrowing for 1982 that will suit the Maceachen is getting plenty of and the conference Board of Canada last week reflected a discouraging Outlook for the Economy Over the next six investment decline in its Survey of business attitudes and investment intentions the conference Board noted the majority of senior business executives indicated that the current investment climate has be come increasingly Conse an increased proportion of Survey respondents suggested that their capital investment expenditures would weaken Over the next six senior executives expected higher slower sales and weaker profit performance and a majority anticipated an acceleration of inflation in six months the Canadian manufacturers Asso in a pre budget submission to the finance insisted that fighting inflation must continue to be the governments top the Cha opposed tax increases and called for reduced taxes on Industry to help Canadian manufacturers compete with Industry after tax reductions in that the association said personal income tax revenues grew 22 per cent last year and Are growing at 30 per cent this other revenues such As from the sales tax Are also growing very in this environment the Cha objects to recent attempts to condition canadians to accept a greater tax Burden and finds it incredible that the government is considering increasing its revenues More focus on Page 8 Peter Thomson Ottawa editor at an even greater the Cha rather than increase taxes the Cha suggested the government undertake a serious review of current and projected spending on All major programs to restore a better fiscal the Cha questioned whether attack ing inflation solely through High inter est rates was not a Case of the cure becoming worse than the the association stressed that fiscal policy and a wide Range of other poli cies must be brought to Bear in a coordinated fashion to support Mone tary policy in fighting one Point that is not stressed by government officials is that Over the next few Are going to be subjected to enormous tax increases All coming from Petroleum savings possible a second Point is that if the govern ment would reduce its deficit signify there could be an enormous saving on interest costs which now take More than 20 per cent of tax reve Maceachen is in a position to parlay these two facts into a budget that would at least Start Canada Back on the Long Trail toward fiscal in the last budget Maceachen projected a deficit of million for 198081 which has since turned out to be billion less because of greater tax revenues than a deficit of million in 198182 of million in 198283 and of million in with increased wealth springing from Albertas Oil Wells Federal reve Nues Are going to be significantly in creased in the next few if the government could avoid costly new programs and direct its extra revenues toward reduction of the Defi Cit at a much faster rate than envisioned last it would go a Long Way toward restoring Confidence in the Ca Nadian Economy the Canadian it should be possible to reduce the deficit sharply without enormous in creases in corporate or personal and certainly without anything Asse vere As de indexing of tax the upcoming budget should provide a Clear indication of whether or not Ottawa intends to take the responsible route in deploying its Windfall Oil reve there is a limit to that it exists on old conventional not on Frontier tar Sands heavy Oil or offshore the latter Are recovered at a Cost that is very close to the world there is Little room for heavy taxation on nonconventional As might be indicated by the fact that neither Shell Canada nor Imperial Oil Are Quick to resume development of the Al Sands or cold Lake and the Frontier and offshore exploration is moving ahead largely be cause of enormous Federal because it is Only conventional Oil that is producing Windfall revenues for Alberta and the Federal the end of the Windfall is in by the end of this decade there will be Little conventional Oil and there fore Little Opportunity for the Federal government to reduce the National debt except by imposition of onerous fiscal responsibility does not appear to be High on the Federal there is much greater interest these Days in cutting off payments to the provinces on shared Cost such As health care and pos secondary j education As a Means of saving Federal j such action would require the prov inces to raise taxes to fill the void by the feds and would free Feder Al funds to launch into new spending that is not a prescription either for economic health or National Well but think Back 11 months to the last budget and recall just How wrong i government can Windfall Oil revenues will give Allan Maceachen an Opportunity to practise fiscal responsibility in coming Why mortgage funds have been hard to get by Anthony Westell special to the free press Ottawa so you Are going to have to renew your mortgage you Are outraged by interest rates and you think the government should do some thing about let me ask you this suppose i had some Money to invest for a what do you think would be a reasonable rate for me to charge you i am sure you will agree that at the end of the year i should be Able to get my Money that Means that As a Start i have to charge you the rate of so that the you pay me in a year has the same purchasing value As the i lend you so there is about 13 per now you certainly Are not going to begrudge me a reasonable profit for letting you use my for a How about five per cent that is not Doug is it so now the rate is 18 per but i have a problem with when you repay me at the end of the year plus to cover inflation and real the government will tax me on the whole i am not so i will pay at Only 33 per cent on that part of my or so now i have but that will not buy As much As the i Lent you a year although you Are paying me 18 per which sounds i am losing so my conclusion is that i am not going to lend you mortgage Money at 18 per and As i do not know what the rate of inflation is going to be next even 21 or 22 per cent does not sound i might be Wiser to buy a House for myself and Hope it will Rise in value and make me a tax free capital As your House has Proba Bly done for or maybe i should Send my Money to a country where rates Are higher than they Are i admit that the calculation of profit to be made from lending Money is More complicated than i have just depending on the tax circumstances of the but it re Mains absolutely True that High interest rates Are the result of High and when prices Are rising Only a fool lends Money at Low or medium rates of so it makes Little sense for Home owners and others to demand lower interest or for politicians to Promise lower without also Dis cussing what is to be done about the larger problem of what can be done about and therefore about interest rates prime minister Margaret Thatcher is drag Ging Down inflation in Britain by slow ing the forcing firms into bankruptcy and putting millions out of if she hangs Tough Long some britons will be Able to buy houses cheap and get Low interest but it is probably not what you had in and anyway the pm May be dumped by her own party or Defeated in an election before her policies Suc president Ronald Reagan is try ing a different approach in the United he is slashing social spending and cutting taxes in the Hope that there will be a business which will lower prices by increasing american businessmen Are not yet con Vinced inflation and interest rates Are but so is the Stock Market which is forecasting a lean Here in the Federal govern ment is trying to devise a new so let us try to be we need a strategy that promises to bring Down inflation and interest rates Over while stimulating new investment and growth More than the strategy has to be so persuasive that people will be confident it is going to and will act now to invest and spend and it has to show positive results before too Long so that people will maintain their Confidence and government can be steadfast in its poli such a strategy is far beyond the Power of Ottawa to impose on the it would demand the cooperation of provincial and Munici pal governments in setting taxing and spending limits it would require the cooperation of business in restraining prices and and in setting investment priorities it would need the help of organized labor in holding Down wage increases in return for Progress toward full with such United we might at last get the country working together to turn the around and one result would be lower rates on your Toronto Star Syndicate nip is committed to Limestone resumption where does the nip stand on various issues when Howard Pawley has said his party intends to obtain Public input first and the official platform will not be released until the election writs Are therefore a great Deal of attention has been focussed on gathering information and relatively Little on the party final As the election moves closer Many of their policies Are becoming an integral part of the plan is a willingness of the nip to participate in the Economy when As the Leader stated during his budget and his government would help turn around the Economy in times of Stagna Tion and would plan orderly develop ment of Public instead of the three years of drought under the followed by a reelection spurt of a major problem has been soaring interest rates and the present govern ment has not fought hard maintaining it is primarily a Federal Pawley said at the last nip unlike the he insisted his group would be committed to assisting people in that there would be a temporary abatement of Small business interest similar to the program in Saskatchewan and a debt moratorium the time for provincial inaction and piecemeal re under the dome Arlene Billinkoff spouses would he one of the activities severely hit in recent years has been Pawley has and his government would give that Industry a shot in the Arm by expanding programs such As Home nonprofit personal care and senior citizens housing and North Ern Road the ill and elderly in personal care Homes would not Only receive More accommodations under the he has but would also be relieved of the Burden of inflation with Assurance that rates charged would not Rise faster than the rate of other groups would also be for the nip intends to work with the Indian and Metis to provide opportunities for employment and involvement of their own because employment is a crucial prob Pawley has promised Job training and productive employment would be a goal for Northern Manitoba and other areas hit by joblessness and Dep Pula there would be a realistic Job Strat egy to provide those areas where unemployment exceeds 20 per with employment and better Lon term prospects through a coordination of training programs to meet needs of new new industries suitable to local conditions and assistance when plants Are in the event of such an nip government would seek better Protection for workers and would study meth ods of maintaining a Plant which May be but does not fit the plans of some there would also be a strengthening of the work safety and health Pawley said the devastation of that program was one of the tories cruellest matters involving labor have divided the nip in the past and in an attempt to defuse the Pawley said after an executive meeting in april that the nip would not introduce legislation to prevent employers from hiring non Union workers during a labor it would Campaign for a voluntary Law permitting the labor Board to impose a collective agreement if the two sides cannot agree on a first while intrinsically tied to an nip government would show its con Cern about Farmers through a More effective Law to preserve land for Manitoba who has said land resources Are being gobbled up by outside foreign speculators at rates and prices exceeding 20 per cent a promised his administration would close the loopholes which had been opened by the preservation of provincial riches for residents of the province is also a goal in Mineral the nip would not throw out private mining Pawley has but the free ride would be instead of conservative resource an nip government would Only allow a continuation of exploration and development if the people received a just and would be willing to take an Active equity to ease con doonesbury he has indicated that did not mean a demand for a 50 per cent but rather consideration of a More flexible Means of investing in future however the nip would not share its hydroelectric a title the tories agreed to give the aluminium company of Canada part ownership of a Hydro generating station in Exchange for a smelter Pawley insisted his government would rather lose the project than give up a share of its valuable his administration would also be committed to resuming construction on the Limestone generating station at the earliest possible of the new democrats wish the election was under Way so they could present their judging by various they will talk about an open along with promises about Public investment in order to create More social and eco nomic Well being and a partnership of Public and private during his budget Pawley said it will require a great Deal of Energy and fresh approach and new ideas to repair some of the damage caused since 1977 and he believed his party had the Only after the writs Are issued will he learn if the Public 6oop today in by the news that Hap to Spray local of fumed preppy saw Itsou Mottus there in in giant of men Imit to 1w the Tion us the socially is a White House spokes Mah Muffy blah vol dismissed such speculation As ;