Spending Program

         Government will achieve a surplus on its Current Account Budget.
         The Current Account surplus is forecast at $61,350,300;          Capital   Account   net   expenditures
                                                                          are   forecast     at         $76,121,700.
         The projected gross Current Account expenditure is estimated to be $3,207,351,600; the gross
         Capital Account expenditure is projected at $200, 453, 000 for a total Current and Capital
         Account expenditure of $3,407,804,600.
         The Province will have a budgetary borrowing requirement of $44.8 million in 1996-97.
         The structural deficit has decreased slightly to $87 million from $90 million last year.
         The Budget contains a contingency reserve of $30,000,000 to guard against unfavorable budget
         variances which may arise during the year.

    Health Care

         The Health Care sector's operating budget has been increased by $2.2 million to $903.3 million.

         This increased funding will be directed towards cardiac surgery and for community based health
         programs.

         Government has committed to maintaining this level of funding for three years.


    Other Budgetary Initiatives

         No increases in retail sales tax, gasoline or other consumption taxes.

         No increase in corporate income tax.

         No general increase in personal income tax.

         A high income surtax levied on taxable income in excess of $60,000 will be introduced
         commencing in the 1996 taxation year.

         Effective June, 1996, the rate of the financial corporations capital tax applied to banks and trust
         companies will be increased from 3 percent to 4 percent.

         There are no unilateral wage rollbacks or benefit reductions for public sector employees.

         over 20 Boards, Agencies and Commissions will be abolished in 1996-97.

         Significant restraint measures on all Government funded operations will continue during 1996-97.  Total current and capital account gross expenditures will decrease by $80, 964, 000
         compared to the 1995-96 revised spending levels.

         Newfoundland and Labrador Hydro will continue to remit dividends to the Province.

         Continued restructuring and reorganization to achieve efficiency of Government operations without
         impeding service to the public.

         Health and Education reforms and restructuring will remain high priority items.

         Salary costs, supplies, travel and telephone expenses in Government Departments will decrease by
         6%; Purchased Services will decrease 9%; Professional Services will be reduced by 10% and
         Property, Furnishings and Equipment expenditures will be lowered by 29%.




    Economic Initiatives

         Although Government spending must be reduced, Government will continue to pursue policies that
         will promote economic development.

         The Province has one of the most competitive corporate income tax systems in the country.  Sales
         tax harmonization and EDGE incentives will continue to create new business ventures and
         employment.

         The Canada-Newfoundland Economic Renewal Agreement will provide $100 million to the
         Province over the next 5 years.

         $23 million of this Agreement will be spent in 1996-97 to encourage growth in key sectors such as
         aquaculture, advanced technology and tourism initiatives.

         The 1997 celebration of John Cabot's voyage will provide a tourism    investment     opportunity
         of international significance.

    Employment Initiatives

         A 35% increase in funding to $895, 000 for Women's Employment Programs.

         Funding for the Youth Employment Strategy will be virtually unchanged   at   $1,634,100.    The
         program provides for educational, training and work opportunities for youth.

         A 13% increase in funding to $1,700,000 for a wage subsidy program to encourage employers to hire
         recent graduates, the unemployed and the underemployed.