2004/05 BUDGET FACES FISCAL REALITIES HEAD ON

Finance Minister Harry Van Mulligen delivered Saskatchewan's eleventh consecutive balanced budget today. The 2004/05 budget focuses on health care, education and youth.

"Preparing this budget called for difficult decisions to meet the public's demands for service, particularly in health care," Finance Minister Harry Van Mulligen said. "This budget balances spending cuts and revenue initiatives with increased spending in priority areas."

Health care spending is increasing 6.3 per cent to almost $2.7 billion, an increase of $160 million. The increase will support top public priorities, such as expanding MRI and CT scan services, increasing the capability of the Cancer Agency, expanding renal dialysis capacity, starting a new assessment program for people with cognitive disabilities, and an additional $16 million for the drug plan.

"Saskatchewan people have told us quality health care is their number one priority," Van Mulligen said. "We made tough decisions to maximize our funding for health care. However, even with an increase approximately three times the inflation rate, we will be unable to meet all the funding pressures in the health care system."

Education spending will also rise this year by 3.8 per cent. The Department of Learning's budget will increase to slightly over $1.2 billion dollars. Health care and education, two of the highest priorities for Saskatchewan citizens, account for over 90 per cent of the increase in provincial spending.

The budget also contains several initiatives targeting Saskatchewan youth, including the Youth Entrepreneurs of Saskatchewan Program, a summer student program called the Green Team, the Centennial Student Employment Program and an increased Post-Secondary Graduate Tax Credit.

While health care and education spending increased, 12 departments reduced their budgets. Although both their budgets increased, the Departments of Agriculture and Environment reorganized to redirect funding to high priority areas. Agriculture is focusing on agricultural support programs and Environment on areas posing the greatest risk to the environment and resources.

"It is with great regret that these changes will affect approximately 500 people in government," Van Mulligen added. "Unfortunately, people will lose their jobs today. However, we will do everything we can to help ease the transition for the affected employees, including offering a restricted early retirement program and transfers between departments."

Belt tightening across government was required to maintain essential services. During the budget process a thorough review of administration and program spending was conducted. Post-budget, this review will continue with an assessment of health spending to ensure funding is available in high priority areas.

"In addition to budget reductions and prioritizing spending across government, we introduced a number of new revenue initiatives in this budget," Van Mulligen pointed out. "In many cases the increases are based on cost recovery for programs and services. Other increases were necessary because we cannot continue to finance vital services like health care and education with inadequate federal funding."

Revenue measures that will be implemented include:

· Increasing the tobacco tax by 1.5 cents per cigarette effective midnight
March 31st, 2004; and

· Increasing the mark-up on bottled beer by 26 cents per litre effective
midnight April 24th, 2004.

Tax changes include:

· Effective midnight March 31st, 2004, the Provincial Sales Tax rate will
increase from 6 per cent to 7 per cent;

· The annual farm rebate for retail gasoline and propane purchases is eliminated retroactive to January 1st, 2004;

· Effective April 7th, 2004, the current Fuel Tax exemption on farm
gasoline will change to 80 per cent of all bulk purchases; and

· Beginning in 2005, indexation of personal income tax brackets and
credits will be modified annually to balance inflation protection for taxpayers
with the government's fiscal pressures.

Raising the PST will provide $136 million in revenues this year. Combined, these revenue initiatives will raise an additional $180 million dollars.

This year, the Government is introducing a Summary Financial Plan with the 2004/05 budget. The plan is a consolidated look at all government departments, Crowns, agencies and boards.

"I am very pleased to present the Summary Financial Plan with this budget," Van Mulligen said. "In the Public Accounts we have provided Summary Financial Statements for 10 years. Now, with the addition of the Summary Plan, we have reinforced the government's ongoing commitment to accountability and transparency in our fiscal operations."

In addition, the government-wide performance plan summary is part of the budget documents this year. The summary provides a thorough overview of departments' goals and objectives. Detailed performance plans are available on each department's web site.

"Saskatchewan people have told us that health care and education are their priorities," Van Mulligen said. "This government is committed to delivering on those priorities while maintaining sound finances and strong fiscal policies that will ensure Saskatchewan enjoys a prosperous future."

Other Budget highlights include:

· reducing the dependence on the fiscal stabilization fund by 40 per cent
from last year;

· improving our summary financial results by over $380 million since 2002-
03;

· introducing a new General Revenue Fund four-year financial plan that
will generate a $42 million surplus over the next four years and meet the
requirements of the provincial Balanced Budget Act;

· funding to the KidsFirst program for 60 new families to enter the pre-
natal program and receive support;

· $24 million in capital improvements for K- 12 schools and $16 million for
post-secondary institutions;

· creating 200 new child care spaces;

· increasing the Child Benefit payments for single parents;

· an investment of $295 million to fix the roads, and build better highways;

· resurfacing 325 km of highways, continuing to twin the TransCanada
and Yellowhead Highways ;

· a further $10 million in revenue-sharing grants for municipalities, a 13
per cent increase over last year and the third $10 million increase in three
years;

· $1 billion over five years in provincial support for the Agriculture Policy
Framework and income support program;

· $12.6 million for affordable housing construction under the Provincial
Housing Policy Framework; and

· $211 million in job training and creation.

-30-

For More Information, Contact:

Debbie Clark Finance Regina Phone: (306) 787-6605