Goal 1: Implementing government's three-year fiscal plan and balancing the budget beginning in 2004/05
A strong and vibrant provincial economy remains a key goal in the government's three-year strategic plan. The ministry worked throughout the past year to achieve this goal by maintaining a competitive tax regime and assisting ministries to meet their budget and service plan targets, thereby eliminating the structural deficit and balancing the budget. The ministry has also played a central role in coordinating the management of labour relations policies and practices in the public sector in support of a stable, efficient and effective workforce.
The introduction of a balanced provincial budget for fiscal 2004/05 in February 2004, represented a significant achievement on the part of government that will revitalize the province's economy, restore sound fiscal management and direct resources to health care and education. Ministry stewardship of this process in partnership with other ministries and public sector entities was critical and represented the culmination of three years work.
Objective 1.1: Balance provincial budget annually beginning in 2004/05
The development of a balanced budget beginning in 2004/05 represents a significant shift from the structural deficits that characterized provincial budgets during the 1990's. Creation of balanced budgets based on sustainable spending and revenues will help position British Columbia once again as one of Canada's leading economies. Balanced budgets are also beneficial in that they help avoid simply passing the burden of today's costs on to future generations.
| Key Strategies |
Core Business Area |
| 1. Implement three-year planning framework for all ministries |
Financial and Economic Performance and Analysis |
| 2. Restructure policy and advisory resources to provide targeted advice on strategic risks and opportunities |
Achievements
- A balanced budget for 2004/05 along with a sustainable fiscal plan for 2004/05 to 2006/07 was introduced in February 2004.
- Despite significant disasters (forest fires, BSE and floods) the provincial deficit for 2003/04 was $1.339 billion, $961 million lower than expected.
Results
| Performance Measure |
2001/02 Actual |
2002/03 Actual |
2003/04 Target |
2003/04 Actual |
2003/04 Variance |
| Achieve annual targets for provincial budget |
$1.299B Deficit |
$3.199B Deficit |
$2.300B Deficit |
$1.339B Deficit |
Beat budget target by $961 million |
| Selection Rationale: Government's ability to achieve balanced budgets requires adherence to specific budget targets. Financial and Economic Performance and Analysis (Treasury Board Staff) worked closely with the respective ministries' executives on an ongoing basis to monitor progress in meeting the approved spending and revenue targets. |
| Variance: Higher energy revenues, improved Crown corporation finances, lower debt service costs, and the unneeded forecast allowance helped reduce the deficit for 2003/04. |
Objective 1.2: Effective cash and debt management
In 2003/04, government managed cash flows totaling more than $100 billion. Debt service cost for the total provincial debt in 2003/04 was $2.2 billion. Of this amount, $738 million relates to the Management of Public Funds and Debt vote (central government operating debt). Accordingly, improvement in the oversight and delivery of cash and debt management on behalf of all government and client programs offers an important opportunity to reduce costs and redirect resources to priority services.
| Key Strategies |
Core Business Area |
| 1. Provide comprehensive support for credit rating analysis and expand investor relations activities |
Treasury |
| 2. Develop models and systems to maximize investment returns on surplus cash and to minimize borrowing costs and requirements |
| 3. Utilize technological advancements (e.g., e-banking services) to create financial and administrative efficiencies and savings within ministries |
Achievements
- Two international rating agencies upgraded the outlook for the province's credit rating from stable to positive. This improvement reflects a growing awareness of the province's responsible and sustainable fiscal framework.
- Coordinated and supported the Minister's North American investor tour in March 2004 including Vancouver, Toronto, Montreal and New York. The tour helped to reinforce the province's positive credit fundamentals with institutional investors.
- Completed the long-term borrowing program of $2.9 billion, which was $2.9 billion less than forecast in Budget 2003.
- Achieved debt service cost savings of $425 million on total provincial debt. Of this amount, $188 million represents savings on the Management of Public Funds and Debt vote. These savings resulted from effective management of the province's debt portfolio, a reduced borrowing requirement and lower than expected interest rates.
- The return of 2.9 per cent on surplus cash investments matched the return on the Scotia Capital 30 day T - Bill Index, a public benchmark for assessing the performance of short-term investments in Canada.
- Ten electronic payment applications were implemented for ministry clients reducing their administrative costs and improving client payment options. An electronic payment function was also added to the province's BC Bid system that provides open tendering of government's procurement opportunities on the Internet. The overall annual value of the transactions processed through the ten applications is estimated to exceed $67 million, representing 433,000 payments.
Results
| Performance Measure |
2001/02 Actual |
2002/03 Actual |
2003/04 Target |
2003/04 Actual |
2003/04 Variance |
| Debt to GDP Ratio (Provincial ranking — Moody's) |
2nd Lowest |
2nd Lowest |
In the Lowest 3 |
2nd Lowest1 |
Ahead of target |
| Selection Rationale: Maintaining a relatively low taxpayer-supported Debt-to-GDP ratio signifies a healthy balance sheet and means affordable debt levels. Rating agencies rely on this balance-sheet measure as one among a number of important credit rating considerations. |
| Performance Measure |
2001/02 Actual |
2002/03 Actual |
2003/04 Target |
2003/04 Actual |
2003/04 Variance |
| Debt service costs (Provincial ranking — Moody's) |
2nd Lowest |
2nd Lowest |
2nd Lowest |
2nd Lowest1 |
On target |
| Selection Rationale: A relatively low ratio of taxpayer-supported debt service cost to taxpayer-supported revenues or "interest bite" demonstrates fiscal prudence and an affordable debt burden. Rating agencies rely on this measure as one among a number of important credit rating considerations. |
| Performance Measure |
2001/02 Actual |
2002/03 Actual |
2003/04 Target |
2003/04 Actual |
2003/04 Variance |
| Provincial credit rating (Moody's) |
Aa2 |
Aa2 |
Aa2 |
Aa2 |
Upgraded to positive outlook |
| Selection Rationale: 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. Among other credit rating considerations, rating agencies evaluate debt as a percentage of GDP, and the significance of interest owing as a percentage of gross receipts. |
Objective 1.3: Effective management of public-sector labour relations and human resource strategies
Compensation costs are a significant component of the provincial budget. Accordingly, effective management of the provincial fiscal plan requires the establishment of appropriate and sustainable compensation levels. Labour market analysis and frameworks are also critical for attracting and retaining those highly-skilled workers that remain critical to the delivery of many public services.
| Key Strategies |
Core Business Area |
| 1. Develop a framework for executive compensation and for bargaining mandates that incorporate fiscal goals, policy, program decisions, and labour market considerations |
Public Sector Employers' Council |
| 2. Develop a long-term strategy for effective management of labour relations, including related performance measures |
| 3. Supply a strategy for reducing shortages of critical skilled occupations in the public sector |
Achievements
- Within the fiscal year 2003/04, PSEC coordinated collective bargaining activities that resulted in 22 collective agreements negotiated within the public sector mandate of net zero. This brings the total number of collective agreements negotiated under the current mandate to 41 since January 2002.
| Performance Measure |
2001/02 Actual |
2002/03 Actual |
2003/04 Target |
2003/04 Actual |
2003/04 Variance |
| Compensation cost changes over 2002/03 compensation base1 |
N/A |
Baseline
$17.43 Billion
|
0
$17.43 Billion |
($1.34 Billion)
$16.09 Billion |
($1.34 Billion) |
| Selection Rationale: Incremental changes in compensation cost are an indicator of government's ability to control costs and continue to provide vital services. An understanding of compensation cost changes also provides a basis for comparison with the private sector labour market and the growth of the provincial economy. |
| Performance Measure |
2001/02 Actual |
2002/03 Actual |
2003/04 Target |
2003/04 Actual |
2003/04 Variance |
| Days lost due to labour disruption in the BC Public Sector1 |
105% greater than National Average
(0.634 Days)
|
30% greater than National Average
(0.584 Days) |
+/– 10% of Canadian Average days lost |
5.7% greater than National Average
(0.448 Days) |
Target achieved by 4.3 percentage points |
| Selection Rationale: Days lost due to labour disruptions from strikes or lockouts is a measure of the stability of the public sector labour relations climate. A stable public sector labour relations climate contributes to a favourable external analysis of the investment climate of a jurisdiction. |
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