A STRONG AND VIBRANT PROVINCIAL ECONOMY

British Columbia has a long history of prosperity and leadership. However, the 1990’s were a decade of decline for the province, where British Columbia fell far short of being the leading economic performer in Canada. Over the past year we began to put in place the levers essential to begin economic recovery in British Columbia. We will continue to work to regain our position of strength, and within the next decade return this province to an unparalleled economic success story. When we survey the economic landscape in the years to come, British Columbians will have much to be proud of, and much to look forward to. Our citizens will have confidence in the provincial economy, its social fabric and in themselves to achieve their full potential.

OBJECTIVES & KEY MEASURES

A. BRITISH COLUMBIA WILL HAVE A SKILLED WORKFORCE MEASURE PERCENTAGE OF THE LABOUR FORCE WITH A POST-SECONDARY CERTIFICATE OR DIPLOMA DESCRIPTION: This indicator measures the proportion of the British Columbia labour force (all ages) whose highest level of educational attainment is completion of a post-secondary certificate or diploma program, whether in British Columbia or other jurisdictions. IMPORTANCE: This measure reflects British Columbia’s ability to develop and maintain a strong and vibrant economy because post-secondary education provides the labour force with the knowledge and skills necessary to develop and maintain a competitive edge in the global economy, and to help attract investment which creates jobs that require skilled workers. TARGET Increase percentage from 2001 baseline of 32.4%     LATEST RESULTS YEAR 31.5% 2002     MEASURE PERCENTAGE OF THE WORKFORCE COMPRISING PERSONS EMPLOYED IN NATURAL AND APPLIED SCIENCE RELATED OCCUPATIONS DESCRIPTION: The percent of employed persons in British Columbia who are working in professional and technical occupations in the sciences, including physical and life sciences, engineering and architecture. IMPORTANCE This indicator reflects the degree to which British Columbia is able to employ, attract and keep people with the knowledge and skills necessary for innovation. A certain critical mass of these knowledge workers is necessary to support research and development within centres of excellence, and will affect business location decisions of companies moving from research and development into production. TARGET Increase percentage from 2000 baseline of 6.3%     LATEST RESULTS YEAR 6.1% 2001 5.9% 2002

 

A highly skilled workforce is necessary to ensure British Columbia is economically competitive with other jurisdictions. The level of attainment of qualifications from university and vocational education and training equates to a more skilled and productive workforce for employers, the prospect of high earnings and better jobs for graduates. British Columbia’s skilled workforce measures declined slightly over the 2002/03 fiscal year. However, both these measures under objective (A) are long-term targets and will be impacted by a variety of factors, not all of which are directly related to government policy or service delivery. For example, the percentage of the labour force with a post-secondary certificate or diploma measure includes the number of new certificate and diploma graduates produced both in British Columbia and elsewhere. Our performance will be impacted by such factors as the total number of persons in the labour force with certificate and diplomas gained or lost through interprovincial and international migration, the growth of the overall labour force, and the age composition and differential growth of the labour force between the various categories of educational attainment.

In 2002/03, the number of youths participating in the labour force accounted for a larger than average proportion of British Columbia’s labour force growth, which meant little change in the total number of persons in the labour force with a post-secondary certificate or diploma. In addition, labour market conditions in British Columbia resulted in renewed growth as workers with secondary school education or less re-entered the labour force in 2002. These changes attributed to an overall decrease in the measure to 31.5 per cent.

It is interesting to note that British Columbia is not the only province that experienced a decline in this measure over the previous year. Saskatchewan, Ontario, New Brunswick and Nova Scotia also saw a fall in this measure. The measure has been broadened in the 2003/04 Strategic Plan to consider the percentage of the labour force with a post-secondary diploma, certificate or degree, which is a more comprehensive measure of a skilled workforce. The target has been revised in order to reflect the long-term nature of this measure. The government is continuing to support efforts to achieve its long-term goals.

The percentage of the workforce employed in natural and applied science related occupations was also impacted by the stronger labour market in 2002. There was significant growth in the total number of workers employed in British Columbia, while the number of workers employed in the natural and applied science occupations remain unchanged. As a result, the percentage of the workforce in this occupational group decreased. In comparison, other occupational groups such as professional and technical health workers, contractors and skilled construction trades workers, university professors/researchers and teachers all saw increases in their numbers of employed workers over 2002/03, and realized an increased share in the workforce in 2002/03 from 2001/02.

OBJECTIVES & KEY MEASURES

B. BRITISH COLUMBIANS WILL HAVE A PROSPEROUS ECONOMY MEASURE REAL GROSS DOMESTIC PRODUCT PER CAPITA (GDP) DESCRIPTION: Economic growth (i.e., the change of real GDP per capita) is a key measure of economic prosperity, expressed in terms of output (goods and services produced) per person. GDP is the value added to the economy by current productive activities of individuals, businesses, governments and non-residents. IMPORTANCE: The growth rate of the real GDP per capita is an effective measure of changes in the prosperity of a jurisdiction and its population. Slower growth in real GDP per capita results in lower levels of purchasing power, real personal income, and real wages and salaries. TARGET Increase real GDP per person from 2000 baseline of $30,6641     LATEST RESULTS YEAR $30,587 2000 $30,211 2001 $30,459 2002     MEASURE PRODUCTIVE REAL GDP PER HOUR WORKED IN THE BUSINESS SECTOR DESCRIPTION: This measure indicates the overall efficiency of our labour efforts. The best measure of productivity is real GDP per hour worked in the business sector. Thus, for every hour of labour in British Columbia, workers produce a given amount of GDP. IMPORTANCE: Growth in productivity is essential to improving income levels, public services and the standard of living. If productivity fails to increase, a jurisdiction’s living standards will eventually decline. TARGET Increase from the 2000 baseline of $30.72 / hour1     LATEST RESULTS YEAR $30.67/hour 2000 $31.74/hour 2001 $32.39/hour 2002 1 The latest results for 2000 differ from the baseline target due to subsequent revisions by Statistics Canada or, in the case of accounting information, for subsequent updates or accounting restatements. MEASURE TOTAL AMOUNT OF GROSS FIXED BUSINESS INVESTMENT AS A PERCENTAGE OF REAL GDP DESCRIPTION: This measure reflects expenditure by business on machinery and equipment as well as building, engineering and residential housing construction. IMPORTANCE: Business investment is an important contributing factor to long-term economic growth and higher productivity. Growth in investment results in stronger, more competitive industries, which in turn bring income growth and wealth creation. TARGET Improve upon British Columbia’s gross fixed business investment from the 2000 baseline of 17.2% of provincial GDP1     LATEST RESULTS YEAR 16.8% 2000 17.7% 2001 17.0% 2002 1 The latest results for 2000 differ from the baseline target due to subsequent revisions by Statistics Canada or, in the case of accounting information, for subsequent updates or accounting restatements.

 

The government is committed to building a strong and vibrant provincial economy characterized by increasing prosperity and a higher standard of living for British Columbians. Growth in GDP is a direct indicator of the strength of British Columbia’s economy. British Columbia’s real GDP per capita was the fourth highest in Canada in 2002. However, the level of real GDP per capita was lower in 2002 than in 2000. The British Columbia economy contracted in 2001 as a result of a global slowdown, declining by 0.2 per cent. As a result, real GDP declined $376 per person from 2000 to 2001. Total GDP in British Columbia grew 1.8 per cent in 2002, but the per person increase of $248 was not enough to recover lost ground in 2001.

Improvements in labour productivity, measured by real GDP per hour worked, helps to ensure British Columbia’s international competitiveness continues to improve and the province’s economy continues to grow. Labour productivity in British Columbia increased by almost a dollar an hour in 2001 over the 2000 baseline. In 2002, real GDP per hour worked in the business sector rose to $32.39, the fourth highest in Canada. This target has been met for 2002 and shows that British Columbia’s labour force is producing more for every hour worked.

British Columbia ranked sixth among provinces in terms of total business investment as a per cent of real GDP in 2002. Business investment as a percentage of GDP remained above the 2000 benchmark despite falling to 17.0 per cent from 17.7 per cent in 2001. Although residential construction’s share of GDP increased, the larger decline in non-residential construction and machinery and equipment investment caused the total business investment to GDP share to decline.

The benefits of a robust and growing economy flow to the citizens of British Columbia through the creation of secure and sustainable jobs and an improvement in the social and economic well-being of British Columbians. The new Heartlands Economic Strategy builds on the government’s overall economic plan. It will focus on opening up opportunities in British Columbia’s regions through new partnerships with First Nations, new investments in transportation infrastructure and taking full advantage of the province’s resource base. In addition, the province will maintain a competitive tax regime, further improving the province’s ability to attract and retain investment.

OBJECTIVES & KEY MEASURES

C. BRITISH COLUMBIANS WILL HAVE EMPLOYMENT OPPORTUNITIES MEASURE PERCENTAGE OF EMPLOYED PERSONS IN THE 15 TO 64 AGE COHORT DESCRIPTION: The number of employed who are age 15 to 64 as a percentage of the population 15-64 years old. This measure includes those who are considered "working age". IMPORTANCE: The employment rate is one means of gauging the extent to which available labour is being deployed. In a growing economy, as employers increase production there will be demands for more workers, and the employment rate will increase. This measure also reflects the degree to which those of working age are active participants in the economy. A vibrant economy requires a pool of qualified and available workers. Economic growth and increases in production can create incentives for people to return to the labour market if they have withdrawn, thereby increasing the employment rate. TARGET Improve the ratio from the 2000 baseline of 70.2%     LATEST RESULTS YEAR 69.1% 2001 69.1% 2002     MEASURE REAL PERSONAL DISPOSABLE INCOME PER CAPITA DESCRIPTION: Real disposable income per capita represents total income minus certain taxes and various fees paid to all levels of government, and expressed on a per person basis. It includes income earned by all residents of the province, regardless of where it was earned. IMPORTANCE: Real personal disposable income per capita provides an accurate indication of individuals’ spending power and standard of living. TARGET Growth from 2000 baseline of $19,029 per person1     LATEST RESULTS YEAR $19,283 2000 $19,486 2001 $19,455 2002 1 The latest results for 2000 differ from the baseline target due to subsequent revisions by Statistics Canada or, in the case of accounting information, for subsequent updates or accounting restatements.

 

Employment is the primary source of income for the vast majority of British Columbians and is an important means for people to participate in community life. Employment is also essential for a productive and robust economy. The amount of employment has wide social and economic benefits to the community, such as achieving greater participation in the social and economic life of the province, and building a stronger economy.

The percentage of the working population aged 15 to 64 has decreased slightly from its baseline of 70.2 per cent in 2000 to 69.1 per cent in 2002. Between 2000 and 2002, British Columbia experienced a slow down in the economy, which impacted the number of persons employed in the province. Employment growth did not begin to show substantial recovery until 2002. During this time period, British Columbia experienced population growth, which outpaced its growth in employment, resulting in a dip in the employment rate.

Another important indicator for employed British Columbians is real personal disposable income. In 2002, real personal disposable income per capita in British Columbia surpassed its 2000 level. The drop in real personal disposable income per capita from 2001 results from the 2.3 per cent rise in prices for consumer goods and services, which was more than the 2.1 per cent rise in personal disposable income per capita before adjusting for inflation. After adjusting for price increases, real personal disposable income per capita fell by 0.2 per cent in 2002. The government will continue to maintain public policies that enhance employment opportunities for British Columbians. Provincial personal income tax rates have been reduced an average of 25 per cent and the province has the lowest income tax rates in the country for the bottom two tax brackets. In addition, changes to the Employment Standards Act will benefit both workers and employers by increasing flexibility in the workplace as well as helping to revitalize the economy by recognizing the needs and realities of modern workplaces.

OBJECTIVES & KEY MEASURES

D. GOVERNMENT WILL BE AFFORDABLE AND FISCALLY RESPONSIBLE MEASURE BALANCE THE PROVINCIAL GOVERNMENT BUDGET DESCRIPTION: A balanced budget means that government spending does not exceed annual revenues. Under the Balanced Budget and Ministerial Accountability Act, government is required by law to balance the budget every year beginning in 2004/05. IMPORTANCE: Knowing that government finances are prudently managed is important to all British Columbians, as well as businesses located in the province. A balanced budget means that government debt will be held in check. TARGET Balanced beginning in 2004/05     LATEST RESULTS YEAR Ahead of target 2002/03     MEASURE TAXPAYER SUPPORTED DEBT IN RELATION TO SIZE OF GDP DESCRIPTION: This indicator measures the net public debt burden as a proportion of GDP. Taxpayer supported debt includes government indirect debt, and the debt of Crown corporations and agencies that require a subsidy from the provincial government. IMPORTANCE: Payments to service taxpayer supported debt can consume a large portion of a jurisdiction’s budget, thereby diminishing it’s capacity to provide public services. The debt burden is also an important indication of a jurisdiction’s attractiveness for business investment. TARGET Annually reduce debt burden beginning in 2004/05     LATEST RESULTS YEAR Ahead of target 2002/03     MEASURE PROVINCIAL GOVERNMENT EXPENDITURE AS A PERCENTAGE OF GDP DESCRIPTION: This indicator measures government expenditure as a proportion of GDP. IMPORTANCE: Research indicates that the relative size of a country’s government sector may negatively affect competitiveness and increases in the size of government beyond the optimal point may produce little in terms of social programs. TARGET Reduce the level from the 2001/02 forecast of 19.4% of GDP LATEST RESULTS YEAR 19.0% 2001/02 18.8% 2002/03

 

The government of British Columbia is committed to responsible fiscal management. As a measure of government’s commitment to strong fiscal management, the Balanced Budget and Ministerial Accountability Act was enacted. This Act applies salary penalties to Ministers who overspend their annual budgets.

The government’s fiscal plan to balance the budget beginning in 2004/05 remains on track. For the 2002/03 fiscal year, the deficit was $3.169 billion, $1.231 billion ahead of the budgeted deficit of $4.4 billion. While final results for 2003/04 will not be available for another year, government has updated its fiscal plan for 2004/05 and extended it to 2005/06. Based on current economic and revenue forecasts, and including a prudent forecast allowance for unexpected negative developments, the updated plan forecasts a $2.3 billion deficit in 2003/04, followed by surpluses of $50 million and $357 million for 2004/05 and 2005/06.

Taxpayer-supported debt was 21.6 per cent of GDP in 2002/03, lower than the forecast of 24.3 per cent in Budget 2002. The fiscal plan tabled in Budget 2003 forecasts the taxpayer-supported debt to GDP ratio to rise to 23.0 per cent in 2003/04 before declining to 22.1 per cent and 21.1 per cent in 2004/05 and 2005/06 respectively. In addition, the government has reduced the level of provincial government expenditure as a percentage of GDP. Building a stronger economy and responsible expenditure management both work to reduce the expenditure to GDP ratio.

The updated fiscal plan presented in Budget 2003 reflects the government’s continuing commitment to balance the budget in 2004/05 while protecting health care and education. The government remains on track to balance the budget by 2004/05.

 

STRATEGIC ACTIONS & ACCOUNTABILITY

INNOVATION & ECONOMIC GROWTH STRATEGY ACCOUNTABILITY PROGRESS ESTABLISH LEADERSHIP CHAIRS Advanced Education ON TRACK: The provincial government has fully funded this $45 million commitment. One Chair has been appointed to date. An independent society is responsible for awarding the remaining 19 Chairs by March 2006. ESTABLISH ONE STOP SHOPPING FOR PERMITTING/LICENSING All Ministries ON TRACK: Various ministries have worked together to establish one stop shopping for permitting and licensing. Key achievements include the establishment of one stop business information provided by the Oil and Gas Commission and new corporate guidelines have been put into place for consulting with First Nations. Refer to Ministry Service Plans for further information and examples. REDUCE GOVERNMENT RED TAPE Competition, Science & Enterprise; All Ministries ON TRACK: The government exceeded its regulatory reduction target of 12 per cent for 2002/03 - the actual net reduction was 13.1 per cent. The single business number project is reducing overlap and duplication among governments. DEVELOP A COORDINATED MARKETING APPROACH FOR THE PROVINCE Competition, Science & Enterprise ON TRACK: Following initial planning consideration, there has been a shift to country-specific marketing strategies. An international investment marketing strategy focusing on strategic markets and sectors is being developed. Funding has been committed to regional tourism groups and forest products and practices promotion activities are underway. WORK WITH THE PRIVATE SECTOR TO REMOVE BARRIERS TO BUSINESS Competition, Science & Enterprise ON TRACK: Many specific initiatives that contribute to this objective have been achieved, including improvements to the regulatory, tax, trade, labour and investment climate. As well, major new funding for road rehabilitation and other transportation upgrades was allocated. ELIMINATE BUSINESS SUBSIDIES Competition, Science & Enterprise ACHIEVED: All subsidies to business (23 programs) have been eliminated. Proposed new initiatives have been reviewed to ensure this commitment is upheld. SUPPORT A CULTURE OF INNOVATION THAT TRANSFERS SCIENCE AND TECHNOLOGY FROM THE RESEARCH STAGE THROUGH TO DEVELOPMENT AND THE COMMERCIAL MARKETPLACE Competition, Science & Enterprise; All Ministries ON TRACK: Many initiatives contribute to this objective. The Premier’s Technology Council has released three detailed reports. The Leading Edge Endowment Fund is establishing research chairs, now supplemented by regional innovation chairs. The Life Sciences Initiative and other actions have worked to secure federal innovation funding for provincial priorities and upgrading research facilities. IMPLEMENT POLICIES TO ENSURE PRIVATE SECTOR INVESTMENT Competition, Science & Enterprise; All Ministries ON TRACK: In addition to the new energy policy and major reforms in forestry, the government has worked to provide greater certainty for investors by fast-tracking interim measures and treaty talks with First Nations. Increasing access to Crown land, water and resources and reducing backlogs are encouraging increased private sector activity. The Energy Plan focuses on the private sector for new electricity generation and for major investment in oil and gas. DEVELOP AND IMPLEMENT A LONG-TERM PLAN OF ECONOMIC RENEWAL Competition, Science & Enterprise; All Ministries ON TRACK: This is a long-term strategic action across government. Major initiatives in 2002/03 included legislative reforms to streamline regulations in oil and gas, mining and forestry, implementation of a new Crown land application approval process, the launch of a $10 million-a-year Economic Measures Fund for First Nations’ economic development, and the development of 10 additional tax relief measures announced in Budget 2003. In addition, the government announced the development of a new Heartlands Economic Strategy MAINTAIN A COMPETITIVE TAX REGIME Finance ON TRACK: This strategic action is ongoing. In 2002 British Columbia had the lowest personal income tax rates for the bottom two tax brackets and the second lowest top marginal personal income tax rate in Canada. The province eliminated the corporate capital tax and reduced a number of other business taxes. DEVELOP A PROGRAM FOR REFORMING LABOUR-MANAGEMENT RELATIONS IN BRITISH COLUMBIA Skills Development & Labour ON TRACK: Changes to the Labour Relations Code were passed in the legislature in 2002 with subsequent restructuring of the Labour Relations Board. A Committee of Special Advisors was established under Section 3 of the Labour Relations Code. MAKE THE WORKERS’ COMPENSATION BOARD (WCB) MORE ACCOUNTABLE, RESPONSIVE AND COST EFFECTIVE Skills Development & Labour ON TRACK: Legislation was passed in 2002 to restore the workers’ compensation system to financial sustainability and to restructure the Board’s governance. Legislation also passed to create a revised WCB appeal process to provide fair, timely and consistent decisions.   MANAGEMENT OF GOVERNMENT STRATEGY ACCOUNTABILITY PROGRESS ALL MINISTRIES WILL MEET THEIR BUDGET AND SERVICE PLAN TARGETS All Ministries ON TRACK: Annual Budget targets have been achieved for 2002/03 and Service Plan targets are well under way. Refer to ministry Service Plans for further information. STREAMLINE THE PROVINCE’S FEES AND LICENCES Competition, Science & Enterprise ON TRACK: This is an ongoing process. A new fees and licences policy has been approved and implementation of streamlined fees and licences is well underway. Almost 2,900 fees and licenses have been reviewed and 34 per cent are being eliminated/consolidated or devolved to non-governmental authorities. REFORM THE PROVINCE’S CROWN CORPORATIONS SO THAT THEY FOCUS ON PUBLIC SERVICES, EFFICIENCY AND EFFECTIVE SERVICE DELIVERY Crown Agencies Secretariat; All Ministries ON TRACK: 95 per cent of Crown Corporations have completed their Core Services Review. The key outcome of this review is refocusing the mandates of the Crowns on public service and efficient operations. STREAMLINE THE CAPITAL APPROVAL PROCESS AND SPONSOR THE USE OF PUBLIC PRIVATE PARTNERSHIPS Finance; Premier’s Office ON TRACK: The Capital Asset Management Framework, which reduced administrative controls, was released in May, 2002. Partnerships B.C. was established with the objective of fostering public private partnerships in the delivery of government services. ADOPT GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) Finance ON TRACK: Government financial reports will be fully compliant with GAAP beginning with the 2004/05 fiscal year. INCORPORATING THE RESULTS OF THE FISCAL REVIEW PANEL, DEVELOP A THREE-YEAR FISCAL PLAN WHICH ELIMINATES THE STRUCTURAL DEFICIT AND BALANCES THE BUDGET BY 2004/05 Finance ON TRACK: The government has introduced successive three-year fiscal plans that include balanced budgets by 2004/05. INTRODUCE A COST-SAVING SHARED SERVICE ADMINISTRATIVE MODEL FOR GOVERNMENT Management Services; All Ministries ACHIEVED: Planning for the April 1, 2003 implementation of the shared services provider for the Government of British Columbia and other public sector organizations (Solutions B.C.) was completed. All service offerings were consolidated within the Ministry of Management Services. REVIEW THE FREEDOM OF INFORMATION AND PROTECTION OF PRIVACY ACT (FOIPP) TO INCREASE OPENNESS IN GOVERNMENT AND TO REDUCE COMPLIANCE COSTS Management Services ACHIEVED: Two sets of amendments were passed (one in Spring 2002 and the other in Spring 2003) to the FOIPP Act to address this instruction. INCREASE RECOVERIES OF REVENUES OWED TO GOVERNMENT AND STREAMLINE ACCOUNTS RECEIVABLE COLLECTIONS Provincial Revenue ON TRACK: The incremental revenue target was exceeded during 2002/03. In addition, streamlining efficiencies resulted from consolidation of the accounts receivable function in one ministry and other initiatives. Refer to the Ministry Service Plan for additional information.

 

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