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April 28, 1989 News 985-2131 Classified 986.5222 Distribution 986-1337 100 pages 25¢

cebreaker survives

OTTAWA CUTS SPENDING

BUT POLAR 8

GOES AHEAD

THE $350 million Polar Class 8 icebreaker contract has
sailed unscathed through Finance Minister Michael Wilson’s

leaky budget.

Released Wednesday night fol-
lowing an unprecedented leak of
budget details, the $142.9 billion
budget will hike taxes and chop
spending in an attempt to reduce
Canada’s $320 billion national
debt by $5 billion this year and $9
billion in 1990,

The deficit, which was $28.9
billion in the 1988-89 fiseal year, is
predicted to rise to $30.5 billion
this year, due mainly to interest
tates on the national debt, before
dropping to the $28 billion forecast
by Wilson for next year,

Though the Conservative gov-
ernment’s proposed multi-billion
dollar nuclear submarine program
was shelved in the budget, the
Polar & contract, which has been
awarded in a letter of intent to
North Vancouver-based Versatile
Pacific Shipyards Ine., will sur-
vive, contrary to speculation prior
to release Of the budget.

Transport Canada spokesman
Marie Josee-Lapainte said) Thurs-
day: “The Polar 8 is not referred
to in the budget, therefore it pro-
ceeds."

Marine Workers and Boiler-
makers (industrial Union president
John Fitzpatrick said, ‘We're
glad. It would have been a dumb
move politically if they had
cancelled it."’

Other highlights of Ube budget
include a two per cent tnerease
(from three to five per cent) in the
surtax on personal income beginn-
ing July 1, and, alt the same time,
an additional three per cent surtax
on the incomes of people earning
over $70,000 per year.

Taxes on cigarettes (up $4 per
carton), alcohol (an additional one
per cent rise) and gasoline (up one
cent per litre, two cents per litre
for leaded gas) were also raised
immediately.

The tax on gasoline will increase
an additional one cent per litre
Jan. 1, 1990.

The federal government will stop
contributing to the unemployment
insurance fund, thereby making
workers and employers responsible
for supporting the entire program.

As a result, employees earning
over $20,000 annually will pay an
additional $74 per year; employers
will pay $3.15 for every $190 earn-
ed by each of their employees,
which is up from $2.73 in 1989,

Ry TIMOTHY RENSHAW
New, Reporter

The government's proposed $4
billion, child-care, cost-sharing
program with the provinces to
speed creation of child-care spaces
over the next seven years has also
been put on hold.

Transfer payments to the pro-
vinces will be reduced by one per
cent next year, which will translace
to a $23 million loss for B.C. in
1990,

In addition to shelving the nu-
clear submarines program, the
budget will cue VIA Rail subsidies
by $100 million annually over the
next five yeass and reduce foreign
aid to $2.4 billion this year from
$2.8 billion.

Wilson, whose resignation was
called for by opposition MPs fol-
lowing revelations of the leaked
budget details, forecast that tay
increases will raise $3.7 billion in
revenues this year and $7 billion in
1990-91, while spending cuts would
save the government $1.5 billion
this year and just over $2 billion
next year,

He said the governmeni's ac-
tions to control the natignal debt
“*ceflect the seriousness of the sit-
uation we face. We have made
choices, difficult choices. We have
worked hard to ensure that the
total package of measures is
balanced, reflecting regional cir-
cumstances and placing the greater
burden on those who are better
able to carry it."”

But the NDP’s David Schreck,
who plans to run in North Van-
couver in the next provincial elec-
tion, said, ‘The substance of the
budget is consistent with how it
was released: both demonstrate in-
competence."’

Schreck pointed out that last
year’s budget projected the na-
tional deficit would be $28.6
billion this year, ‘‘but after an 58
billion tax grab, slashing UIC and
cutting transfer payments to the
provinces...we end up with a $30.5
billion deficit. So after playing
meanie, the government leaves us
$2. billion worse off than pro-
jected. You have got to ask, What
is going on?”

The Tories, he said, had also
failed to deal with the vital issue of
controlling interest rates.