June 29, 2004
B.C. closed the books on the 2003/04 fiscal year with a deficit that was nearly $1 billion lower than forecast in Budget 2003.
Finance Minister Gary Collins announced the positive results when releasing the budget's audited financial statements saying,
“For the third straight year, we outperformed our deficit and debt targets and continue to deliver on our commitment to restore sound fiscal management. B.C. is emerging as an economic leader and we can expect sustained surpluses in the years ahead that will give British Columbians greater choice on how we can continue to build our province.”
The 2003/2004 Public Accounts show that the deficit came in at $1.3 billion, $961 million lower than the $2.3 billion deficit originally forecast in Budget 2003. Despite a number of unforeseen circumstances, including a $1 billion reduction in B.C.’s equalization revenues, the effects of SARS, BSE, floods and a record forest fire season, the Province did not use any of the $500-million forecast allowance and only used $107 million of the $170-million contingencies budget.
Total provincial debt increased by $798 million. Debt was $3.6 billion lower than forecast, due to the smaller deficit, lower debt balances at the start of the year, reduced working capital requirements and lower than forecast capital spending. A growing economy and lower than expected borrowing led to an improvement in the province’s taxpayer-supported debt-to-GDP ratio which came in at 20.8 per cent, down from 21.5 per cent in 2002/03 and well below the 25 per cent ratio forecast for this year in Budget 2002.
“The numbers in the Public Accounts tell the story of how British Columbians met the challenges of an unparalleled string of natural disasters in 2003,” said Collins. “Not only did the people of British Columbia show fortitude in the face of those challenges, they deserve credit for getting B.C. on the move again.
“For the first time in more than a decade, B.C. is positioned to take its rightful place as an economic leader among provinces. Premier Campbell’s commitment to tax competitiveness, deregulation and government efficiency is producing newfound optimism among B.C. consumers and businesses, and economists are bullish on B.C.’s future.”
B.C.'s economy grew 2.2 per cent in 2003, tying with Alberta for fourth among provinces and exceeding the national average of 1.7 per cent, according to Statistics Canada. Average annual job growth was 2.5 per cent, ahead of the national average of 2.2 per cent. Growth in business investment accelerated to 8.2 per cent, ahead of the national rate of 4.8 per cent. Housing starts posted growth of 21 per cent in 2003, and growth continued during the first five months of 2004, up 48 per cent from the same period last year. Strong economic growth is expected to continue this year and next with average private sector forecasts for growth in 2004 at 2.8 per cent, rising to 3.3 per cent in 2005.
“By sticking to our plan we are now in a position to run surpluses that will allow us to make further investments in health care, education and programs that mean the most to British Columbians,” said Collins. “That’s why you balance a budget.”
As in prior years, the Auditor General, in his report on the 2003/04 statements, has issued a reservation stating that public schools, universities, colleges and health care organizations are not included in the government reporting entity. However, the 2004/05 Budget does include these institutions and next year’s public accounts will be B.C.’s first set of audited provincial financial statements prepared fully in accordance with Generally Accepted Accounting Principles as required by legislation passed by the current government. As a transition, this year's reports contain figures reflecting the old government accounting entity, as well as statements that include the impacts of the schools, universities, colleges and heath care sectors. Inclusion of these entities in fiscal 2003-04 would have reduced the year-end deficit by a further $337 million.
In addition to the Public Accounts, the Province also released reports on ministerial accountability, government's annual strategic plan and annual service plans for ministries and most Crown corporations. For the second straight year, B.C. has produced the most comprehensive set of public disclosure documents in the country, and it leads the nation in the early release of its Public Accounts and related documents.
The Ministerial Accountability Report details the financial targets ministers must meet and the performance targets ministers of state must achieve in order to recover their 20 per cent ministerial salary holdback. This report shows that for the second consecutive year all cabinet ministers met their accountability targets.
The Annual Service Plan reports summarize the progress of individual ministries, as well as the government as a whole, in meeting the performance targets laid out in service plans at the beginning of each fiscal year.
