Goals, Objectives, Strategies and Results

Overview

Ministry Goals

The ministry will continue to focus its energy on supporting government's realization of the Five Great Goals. This will be accomplished through the ministry achieving its goals of:

1. A sustainable fiscal environment built on a balanced budget — A sustainable fiscal environment is a cornerstone in maintaining confidence in British Columbia's economy as well as providing a stable foundation on which to sustain and enhance the delivery of public services. It supports a strong and vibrant economy and provides the means to develop excellence in education, promote healthy living, support people at risk, protect our environment and create jobs for British Columbians.
2. A strong, competitive and vibrant economy — The Ministry of Finance plays an essential role in the creation and maintenance of a tax and regulatory climate that supports economic development and employment opportunities. Since 2001, the ministry has delivered a series of tax reductions targeted to individuals and businesses. In addition, several key regulatory frameworks, such as the Business Corporations Act, have been streamlined and modernized. As a result of these steps, the province's businesses can now rely on a tax and regulatory environment that allows them to compete and succeed on the international stage while creating jobs at home.
3. Effective financial, governance, accountability and performance frameworks — The Ministry of Finance is responsible for government's overall financial, management, governance, accountability and performance frameworks. This involves the establishment of appropriate legislation, policies and procedures and reporting at both the corporate and government organization levels to ensure the province's resources and obligations are appropriately managed in support of effective service delivery.

Linkage to the Five Great Goals

Ministry of Finance contributes to the Five Great Goals by creating a sustainable fiscal environment and supporting a strong and vibrant economy that attracts investment, creates jobs and provides government with the means to address its education, health, support system and environmental sustainability priorities as set out in the following Five Great Goals:

1. Make British Columbia the best-educated, most literate jurisdiction on the continent.
2. Lead the way in North America in healthy living and physical fitness.
3. Build the best system of support in Canada for persons with disabilities, those with special needs, children at risk and seniors.
4. Lead the world in sustainable environmental management, with the best air and water quality, and the best fisheries management, bar none.
5. Create more jobs per capita than anywhere else in Canada.

Cross Ministry Initiatives

The ministry plays an integral role in multiple cross ministry initiatives through its overarching fiscal, economic and governance responsibilities. Major cross ministry initiatives include:

Labour Bargaining

Establish appropriate and sustainable compensation levels. In the past year, 98 per cent of all unionized public sector employees have reached settlements under the 2006/2010 negotiating framework. Twenty-nine contracts expiring after June 30, 2006, covering approximately 15,777 employees, must still be negotiated.

New Relationship

The Government of British Columbia is leading the nation in developing a New Relationship with First Nations and Aboriginal people. Guided by principles of trust, and by recognition and respect of First Nations' rights and title, we are building a stronger and healthier relationship between government and Aboriginal people. By working together, we will bring tangible social and economic benefits to Aboriginal people across the Province and narrow the gap between Aboriginal people and other British Columbians.

Provide support to Ministry of Aboriginal Relations and Reconciliation in its review of current practices and new options to support economic development in Aboriginal communities.

Regulatory Reform

British Columbia continues to make regulatory reform a priority across government, making it easier for businesses to operate and succeed in British Columbia, while still preserving regulations that protect public health, safety and the environment. A citizen-centred approach to regulatory reform will reduce the number of steps it takes to comply with government requirements or access government programs and services.

On June 5, 2001, the government made a commitment to reduce the regulatory burden by 33 per cent within three years. As of January 1, 2005, the Ministry of Finance had decreased regulatory requirements by approximately 43 per cent. The ministry's success is attributable to the implementation of the Real Estate Services Act and the Real Estate Development Marketing Act, the new Business Corporations Act, the new electronic filing process at the Personal Property Registry and the elimination of unnecessary requirements under the Financial Institutions Act and Credit Union Incorporation Act. As of May 2006 the ministry has realized a further 7.5 per cent regulatory reduction largely due to further changes to the Financial Institutions Act and the development of a more effective framework for government's financial management policies and procedures.

The ministry is committed to maintaining a zero net increase in regulatory requirements through 2009/10 over the June 2004 baseline, and continuing to identify further regulatory reduction and regulatory reform opportunities. Over the next three years, all legislative initiatives will be monitored to ensure the policies are effective and allow industry, the public, and government to operate in an improved environment of "smart regulation".

Citizen-Centred Service Delivery

Citizen-centred service delivery is a government-wide initiative to coordinate information, programs and services so that they can be presented to citizens in a way that takes their needs into account from beginning to end. The vision is to make it possible for citizens to access the government information and services they need in a simple and timely manner with a phone call, a mouse click or a visit to a service centre, no matter how many programs or ministries are involved in their request.

The ministry supports the achievement of the Five Great Goals by focusing on citizen-centred service delivery. The ministry provides services indirectly to the public by developing regulatory and governance frameworks for the provincial public sector to ensure that services provided are easily accessible and responsive to the needs of British Columbian citizens. The ministry provides services directly to the public through the following:

• e-Commerce provides convenient and efficient banking services;
• electronic Registry Services facilitate and support commerce in a cost-effective manner;
• registration services for business entities, including cooperatives, and not-for profit societies; and
• the Ministry of Finance website informs citizens of the services and publications provided by the ministry.

For more information on the above visit the ministry website at: http://www.gov.bc.ca/fin.

Performance Plan

The service plan goals continue to focus on financial sustainability, competitiveness and accountability. The 2007/08 Service Plan goals and performance measures remain largely unchanged from 2006/07. Objective 3.3 "Timely and transparent information to government and citizens" has been broadened to better align with the existing performance measure. The performance measure "Release of Public Accounts by June 30 with an unqualified audit opinion from the Office of the Auditor General" has been split into two separate measures under Objectives 3.3 and 3.4 "Meet statutory reporting requirements". In addition, the performance measure "Provincial credit rating" under Objective 1.1 has been changed from Aa1 to Aaa, reflecting the Province's most recent credit rating upgrade. The triple A rating is the highest possible rating provided to public and private sector organizations.

The ministry collects and utilizes data from reliable independent and government sources to report on the targets for the performance measures in the service plan. These sources include major credit rating agencies, the Public Accounts and provincial statutes. The ministry's Corporate Planning Secretariat provides quality assurance in the development of all aspects of the Service Plan. The ministry monitors the performance of the measures in the Service Plan and introduces corrective actions as necessary to ensure that the ministry achieves its goals set out in the Service Plan.

To provide a comparative basis for the performance measures, 2004/05 and 2005/06 actuals are included along with the current forecast and three-year targets.

For more information on the above visit the website at: http://www.fin.gov.bc.ca/serviceplan/Methodologies.htm.

Performance Plan Summary Table

A sustainable fiscal environment is a cornerstone in maintaining confidence in British Columbia's economy as well as providing a stable foundation on which to sustain and enhance the delivery of public services. It supports a strong and vibrant economy and provides the means to develop excellence in education, promote healthy living, support people at risk, protect our environment and create jobs for British Columbians. Applying fiscal responsibility today ensures the cost of current public services will not be passed on to future generations.

Government is committed to maintaining a declining taxpayer-supported debt to GDP ratio. Development and maintenance of a prudent and resilient fiscal plan is critical to government's ability to achieve a sustainable fiscal environment. The ministry plays a critical role in overseeing the fiscal plan and works closely with the federal government, ministries and other public sector partners to ensure that government's annual and three-year revenue and expenditure targets are met.

• Full integration of Crown corporations and the schools, universities, colleges and health authorities (SUCH) sector into the fiscal planning process.
• Continual update of government's three-year fiscal plan including monitoring and corrective action as required.

Achieve annual targets for provincial budget: This measure is a comparison of budgeted revenue and spending with the actual results as set out in government's audited financial statements (the Public Accounts). Achieving annual targets demonstrates that government is effectively managing the fiscal plan and meeting legislative requirements.

Taxpayer-supported debt to GDP ratio: This measure is the ratio of taxpayer-supported debt reported in government's annual audited financial statements to gross domestic product (GDP). Maintaining a relatively low taxpayer-supported debt to GDP ratio is a key measure of fiscal sustainability, signifying a healthy balance sheet and ensuring that debt remains affordable. Rating agencies rely on this measure as a key credit rating consideration. Government plans to maintain a declining trend for the taxpayer-supported debt to GDP ratio and will monitor this trend using a three-year moving average.

Provincial credit rating: This measure is the rating of provincial debt by Moody's Investor Services, an independent rating agency.

The interest rate paid by the Province when it borrows in the domestic and international capital markets is influenced by the credit ratings supplied by third party agencies. In determining a credit rating, agencies consider the borrower's ability to promptly pay the interest and principal due based upon the borrower's balance sheet and income statement. In the case of the province, rating agencies evaluate debt as a percentage of GDP, and the significance of interest owing as a percentage of gross receipts. Agencies also consider the government's track record as a prudent fiscal manager, its reporting accuracy and transparency, the economic outlook and business and consumer confidence in the economy.

Moody's Investor Service, an internationally recognized credit rating agency, rates bonds in descending alphabetical order from A to C — highest to lowest. Triple A is the highest possible rating, provided to those public and private sector organizations that offer excellent financial security and are generally considered high-grade entities.

The Ministry of Finance plays an essential role in the creation and maintenance of a strong, competitive and vibrant economy. The ministry reviews provincial tax policies on an ongoing basis to help ensure that British Columbia has a competitive tax regime. Since 2001, the ministry has delivered a series of tax reductions to individuals and businesses. These initiatives include a 25 per cent reduction in personal income taxes and ensuring individuals in the bottom two tax brackets have the lowest personal income tax rates in the country.

In addition, the province has also introduced an 18 per cent reduction in the general corporate income tax rate, eliminated the capital tax for general corporations and provided an exemption from provincial sales tax for production machinery and equipment.

Budget 2006 included initiatives totalling $733 million over the next four years to improve fairness, reduce taxes for individuals and improve the climate for investment and job creation. These initiatives include:

• exemption from the provincial sales tax for service charges related to the maintenance and modification of computer software;
• a three-year extension of the BC Mining Flow-Through Share Tax Credit to December 31, 2008 to provide capital for mineral exploration within the Province of British Columbia;
• broader eligibility for the machinery and equipment sales tax exemption by extending it to businesses that primarily provide manufacturing services to businesses eligible for the exemptions; and
• extension of the eligible uses for coloured fuel to all vehicles that are not licensed to operate on a highway.

In addition the government has set aside $90 million over the next three years for a new program of tax credits to help meet the demand for skilled workers. The program will encourage employers to step forward and create new opportunities for people to acquire the skills they need to fully participate in the economy.

The ministry will continue to streamline and improve the efficiency and effectiveness of regulatory frameworks for the financial services, real estate and corporate sectors to both strengthen consumer confidence and minimize regulatory burden on industry. For example, the ministry is currently conducting a broad review of the Insurance Act, which sets out statutory requirements applying to contracts of life insurance and of property and casualty insurance. The ministry is also embarking on a significant project in coordination with the Alberta Ministry of Finance to identify barriers to trade and develop new provisions relating to financial services, real estate and investment under the Trade, Investment and Labour Mobility Agreement recently signed by British Columbia and Alberta. Other initiatives include an expansion of e-government that will improve, expand and maintain one-stop service, expand accessibility and reduce cost.

The Province's ability to develop a strong and vibrant economy depends on a tax and regulatory environment that is both nationally and internationally competitive. Jurisdictions with competitive tax regimes and regulatory frameworks are successful in attracting and retaining personal and business investment. Taking advantage of these opportunities enhances economic development and creates stable revenues to support critical government services such as health care and education. In addition, a tax system that is perceived to be fair increases the confidence of British Columbians in their government.

• Ongoing review of the Province's tax system in comparison to other jurisdictions.
• Analysis of potential reforms to maintain and improve competitiveness and to enhance the fairness of the system.

Provincial ranking of corporate income tax rates: This is a new measure which compares corporate income tax rates in B.C. against the other provinces in Canada by comparing provincial statutes in effect as of March 31st each year. A competitive tax environment fosters economic growth by encouraging business investment and promoting a business friendly environment. Although measuring the overall competitiveness of the tax system is complex, a comparison of general corporate income tax rates represents a reasonable basis for assessing competitiveness.

Provincial ranking of personal income tax rates for the bottom two tax brackets: This measure compares personal income tax rates in effect as of March 31st each year for the bottom two tax brackets against the other provinces in Canada. British Columbia has the lowest personal income tax rates of any province in Canada for the bottom two tax brackets. Keeping these tax rates low is consistent with the objective of maintaining a fair and competitive tax system.

Fair regulation of financial institutions and effective delivery of regulatory services are important both for protecting consumers and reinforcing British Columbia's attractiveness as a place to invest and create jobs. The ministry supports business development and investment by continuing to minimize regulatory burden, foster business and consumer confidence, and streamline legislative and policy frameworks for the regulation of the financial, real estate and corporate sectors.

• Implementation of the new legislative frameworks for streamlined financial and corporate sector regulation.
• Expansion of electronic registry services.
• Provide policy analysis and advice to government in support of regulatory and legal frameworks for the efficient regulation of credit unions, trust companies, pension funds and insurance companies and the sale of real estate, insurance and mortgages in British Columbia.
• Development and implementation of a workplace to ensure that the government can meet its obligations under the Trade, Investment and Labour Mobility Agreement recently signed by British Columbia and Alberta, effective April 1, 2007.

Evidence of the government's success in creating a tax and regulatory climate that stimulates economic growth is the increase in the number of businesses operating in the Province. In 2005/06, business registrations increased by ten per cent compared to four per cent growth achieved in 2004/05. Strong growth in business activity is forecast to continue in 2006/07.

Over the past several years the Ministry has made significant progress in replacing paper-based corporate and personal registries with electronic services. Recent enhancements underway to Corporate Online include electronic e-mail prompts for filing of annual reports and online voluntary dissolutions. In 2005/06, the percentage of company incorporations filed electronically was 100 per cent and partnerships and proprietorships was 96 per cent.

The Ministry also sponsors the OneStop Business Registry, which provides web-based access to a number of public sector organizations for information, registration and address change services. OneStop Business Registry reached a milestone of 100,000 electronic business registrations in 2006 and continued to add new business partners to support expansion of the federal business number and ongoing management of the BC Business Number Hub. Partnership expansion continues to be a priority in 2007/08, along with completion of projects with Liquor Licensing and Control Branch and other business partners.

The Ministry of Finance is responsible for government's overall financial and management governance, accountability and performance frameworks for ministries and the broader public sector. This involves the establishment of appropriate legislation, policies and procedures and reporting at the corporate level to ensure the Province's resources and obligations are appropriately managed in support of effective service delivery. The frameworks set accountability and public disclosure standards for financial and performance information through release of three-year budgets and service plans, Public Accounts and annual reports to track progress. The frameworks also reinforce individual and corporate accountabilities for outcomes, maintain standards for stewardship of resources, management of liabilities and risk, and the collection and disbursement of public funds.

Key activities include: financial, governance, procurement and accounting policy development; internal audit and advisory services; activity based management services, treasury and risk management; compliance monitoring; and financial and economic reporting.

In 2006/07, government managed cash flows of approximately $100 billion. Debt service costs for the total provincial debt is expected to be $2.2 billion, of which approximately $618 million related to the Management of Public Funds and Debt vote (the central government operating debt). Ongoing improvement in the management of cash and debt activities offers significant opportunities to reduce costs and redirect government resources to priority services.

• Comprehensive support for credit rating analysis and investor relations activities.
• Development of models and systems to maximize investment returns on surplus cash to minimize borrowing costs and requirements.
• Management of the provincial debt portfolio within risk policy parameters set by the Ministry of Finance Risk Committee.
• Negotiation of banking services for government as a whole and utilization of technological advancements (e.g., e-banking services) to create financial and administrative efficiencies and savings within ministries.

Debt service costs (Provincial ranking): Debt service costs relate to the overall cost of borrowing. This measure is the ratio of taxpayer-supported cost of borrowing (debt interest expense) to taxpayer supported revenues as compared to other provinces in Canada. A relatively low ratio, or "interest bite", demonstrates fiscal prudence and an affordable debt burden. Rating agencies also rely on this measure as one among a number of important credit rating considerations.

Creation of risk-based frameworks that reinforce individual and corporate accountabilities provides opportunities to reduce unnecessary constraints, realize efficiencies and improve outcomes. Risk-based practices are adopted only if they can demonstrate consistency with government priorities and add value using an optimal mix of resources and funding.

• Expansion of government's self-insurance program to the broader public sector.
• Assistance with implementation of Enterprise-wide Risk Management practice.
• Risk-based internal auditing and oversight of a comprehensive post-payment review system targeting high-risk transactions.
• Use of activity based management to identify opportunities for performance improvement and cost reduction.

Annual savings from self insurance (five-year rolling average): This measure demonstrates the savings achieved by government by selecting public sector self-insurance programs, rather than insuring through third parties. Self-insurance involves government assuming the role of a traditional insurer by investigating, defending and paying claims.

The Ministry of Finance's coordination of public sector self-insurance programs allows the provincial government to cost-effectively retain selected risks rather than transfer them at a premium to third parties.

Post-payment monitoring, and potential Internal Audit and Activity Based Management savings: This measure demonstrates savings from utilizing a risk-based approach for post-payment monitoring and potential annual benefits (five-year average) from implementing Internal Audit and Advisory Services and Activity Based Management recommendations. Activity Based Management branch provides consulting services that combine costing and process analysis to assist programs in improving performance and reducing costs.

The Ministry's delivery of cross government risk-based financial processing and independent management review services provide a basis for evaluating its adoption of best practices and savings. Savings are achieved through the adoption of audit recommendations and more effective payment review procedures.

The ministry supports a variety of external communications such as preparing the budget consultation paper, budget and fiscal plan, quarterly reports and the Public Accounts, Fiscal and Economic Review, meeting with investors and bond rating agencies, and responding to general and Freedom of Information and Protection of Privacy Act inquiries. In supporting the goal of effective financial, governance, accountability and performance frameworks within government, the ministry plays a key role in development and continuous improvement of these frameworks, providing training and advice and ongoing monitoring of implementation. These areas include financial management and controls, procurement and accounting policies, Crown corporation governance and other outcome-based policies and practices.

Government is undergoing a transition to a model that provides program managers with enhanced financial and procurement decision-making abilities within a defined accountability framework. This shift provides managers with the tools to succeed, and is supported by an updated public sector management framework. The ministry plays an important role in the development of these governance frameworks and works closely with other ministries to ensure appropriate clarification of roles, responsibilities and accountabilities.

• Responsiveness to Minister enquiries is an important measure of accountability for the Ministry of Finance. The Ministry will continue to focus on improvement to meet the target of 80 per cent response within a two-week period to ensure correspondents receive timely and relevant information.
• Review and streamline the current frameworks and process and ensure adequate resources are in place to meet internal and external demand; provide training, advice and monitoring to increase the adoption and effectiveness of outcome-based frameworks within government; review financial legislation; maintenance of a principles-based policy framework; and ongoing monitoring and reporting on ministries' effectiveness with the accountability frameworks.

Percentage of responses to ministerial correspondence within two weeks: This measure captures the percentage of correspondence addressed to the Minister which is responded to within two weeks.

Release of Public Accounts by June 30: This activity measure captures both timeliness and completeness of government financial reporting. Timely release of financial reporting is critical for effective use of the information and helps instil public confidence in government's ability to manage its resources. Recent performance and future targets provide more timely reporting than required in the Budget Transparency and Accountability Act, which requires release of the province's financial statements (Public Accounts) by August 31st, following each March 31st fiscal year end.

The Budget Transparency and Accountability Act (BTAA) requires that all accounting policies and practices applicable to public documents required to be made public under this act (e.g., Budget and Public Accounts), comply with Generally Accepted Accounting Principles (GAAP). Adherence to GAAP requires monitoring of evolving accounting standards, consistent financial practices across government and full transparency for the use of public funds. This transparency is critical for ensuring that British Columbians and the investment community have the information they need to make informed decisions and confidence in government's finances.

• Ongoing monitoring of and adherence to GAAP's evolving accounting standards.
• Adoption of technology to improve the reporting processes.
• Working with the Auditor General and the Accounting Policy Advisory Committee on accounting and reporting issues.
• Greater fiscal planning integration with the schools, universities, colleges and hospitals sector.

Obtain an unqualified audit opinion from the Office of the Auditor General on the Public Accounts: This activity measure captures completeness of government financial reporting. An unqualified opinion from the Auditor General that the public accounts comply with GAAP provides an objective and independent assessment that government has met the GAAP standard for disclosure of its financial information, further increasing confidence in the reliability of that information.

Crown corporations are separate legal entities, other than schools, universities, colleges and health authorities, that are established by the provincial government outside of a ministry. Crown corporations are classified as Commercial (revenue generating entities that obtain fees for goods and services delivered (e.g., BC Hydro)) or Service Delivery (taxpayer-supported entities that deliver goods and/or services based on ministry policies (e.g., BC Housing)). Crown corporations are accountable to the government through a Minister Responsible, and have assigned/delegated authority and responsibility from government, or otherwise have statutory authority and responsibility to perform specified functions or services. The Crown Agencies Secretariat (CAS) is a central agency within the Ministry of Finance with responsibility for developing and implementing a framework for strategically and systematically overseeing Crown corporations. CAS also provides analysis, advice and coordination on governance, accountability, strategic priorities, performance planning, reporting and measurement, mandate reviews and "Whole of Crown Agency Sector" issues and policies. An effective governance system will aid both government and Crown corporations by ensuring Crown corporations focus on the activities necessary to fulfill their mandates while at the same time ensure they are being managed in the public interest.

• Develop and implement an effective framework for government's management of its Crown corporations in British Columbia.
• Provide training and advice to ministry and Crown corporation officials to ensure that their roles under the framework are understood and their responsibilities are discharged.
• Clearly outline government's expectations of Crown corporations through Shareholder's Letter of Expectations and make these publicly available on government's website.
• Provide input on cross Crown corporation policy issues.
• Host workshops for Crown corporations on performance management and reporting best practices.

Shareholder's Letter of Expectations in place for applicable Crown corporations: This measure is the ratio of number of completed and publicly available Shareholder Letters to the number of Crown corporations for which the requirement to have a Shareholder's Letter applies.

The Shareholder's Letter of Expectations is a key component of the Accountability Framework. The Shareholder's Letter is signed by the Minister Responsible as the representative of government (the shareholder), and the Chair of the Board of the Crown corporation as the representative of the Crown corporation. This letter is designed to ensure a shared understanding between the shareholder and Crown corporation on key governance issues, corporate mandate and core services, public policy issues, strategic priorities and performance expectations and serves as the foundation for the development of annual Crown corporation service plans. Crown Agencies Secretariat coordinates the drafting of the Shareholder's Letter by developing guidelines and coordinating the overall process for preparing Shareholder's Letters of Expectations between Ministers and Crown corporations. Ministers responsible work with the Chairs of the Boards of the Crown corporations to ensure that all expectations outlined in the Shareholder's Letters of Expectations are achieved.

Public sector compensation costs comprise a significant portion of the provincial budget. Accordingly, effective management of the Province's fiscal plan requires the establishment of appropriate and sustainable compensation levels. Labour market analysis and frameworks are also critical for attracting and retaining highly skilled workers critical to the delivery of many public services.

• Maintain an executive compensation and negotiating framework that incorporates government's fiscal, policy and program directions.
• Maintain a long-term negotiating framework that is based on relevant labour market considerations.

Public sector cost changes over the 2005/06 compensation base: This measure captures the public sector compensation changes over the 2005/06 compensation base. A four year envelope of $4.7 billion above the 2005/06 compensation base is provided through 2009/10.

This performance measure excludes any growth in the compensation base attributable to the growth in the number of public sector employees.

Compensation related costs in the public sector are a significant component of the provincial budget. As a result, marginal changes in compensation rates can have significant fiscal impacts requiring accurate and timely monitoring.