Ministry Role and Services

Ministry Overview

The Ministry of Finance plays a key role in establishing, implementing and reviewing government's economic, fiscal and taxation policies. The ministry provides a variety of functions and activities including banking, accounting, financial and economic reporting, risk and debt management, capital project oversight, regulating the financial and real estate sectors, and serving as the registrar of corporate entities, personal property and manufactured homes. Through the Public Sector Employers' Council, which is chaired by the Minister of Finance, the ministry also helps to co-ordinate labour relations policies and practices across the public sector.

The ministry's clients include Treasury Board, Cabinet, Government Caucus Committees, ministries, agencies, boards, commissions, Crown corporations, businesses, investors and financial-sector agencies. Through its support of the government's New Era commitments, the ministry also supports a range of social and economic programs and initiatives.

Ministry Vision, Mission and Values

Vision

To be a responsive organization that is a model for leadership in promoting sound fiscal management and governance in an open and accountable public-sector environment.

Mission

To develop a sustainable fiscal plan, to prudently manage government finances, and to create a sound policy and regulatory framework that supports the creation of a strong and vibrant economy.

Values

All of the activities conducted by the ministry and its staff have been guided by the following values:

Over the course of the past year, ministry staff have consistently exercised the highest standards of professionalism in their day-to-day operations. Building upon this capacity ministry executive, program managers and staff have continued to integrate these values into the organization's culture and service delivery model by adopting several strategies including:

• Ongoing staff orientation, development and training
• Open and direct communication between the Deputy Minister and the Finance team
• Regular customer and employee surveys
• Enhancement of performance management and accountability frameworks.

Ministry Operating Context

The Ministry of Finance identified various financial and other risks and opportunities in last year's plan that could affect achievement of its goals and objectives. Over the course of the past year, a number of these risks have impacted the service plan. Several other risks that the ministry had been monitoring were also found to have influenced the way the ministry conducted its business and the results it achieved.

Many of these risks cannot be eliminated. However, the ministry and its partners have been working to reduce the likelihood of risks occurring, mitigate adverse consequences and realize potential opportunities. Significant risks and opportunities included:

Provincial Economy

The British Columbia economy grew 2.2 per cent in 2003, tied for fourth among provinces with Alberta, after growth of 2.4 per cent in 2002. Domestic activity was the main driver of economic growth last year. Consumer spending, which accounts for about two-thirds of all economic activity in the province, benefited from continued low interest rates, tax cuts and robust employment growth. In 2003, housing starts recorded significant growth of 21 per cent and the British Columbia economy posted average annual job growth of 2.5 per cent. Overall, growth in business investment accelerated to 8.2 per cent, mainly reflecting strength in the residential construction sector. The Canadian dollar appreciated rapidly in 2003 and the higher value of the currency had a significant impact on the trade sector. As a result, export growth was limited to 0.5 per cent growth in 2003, while imports grew a stronger 4.3 per cent.

Globalization

The trend toward greater integration of economic and financial markets has increased national and international competition for the investment upon which the province's economic prosperity depends. Individual and business investors constantly review the province's competitive position in terms of the changing tax structures and initiatives of the other jurisdictions requiring an investment strategy that is both long-term and responsive to change.

The Ministry of Finance has been tasked with leading the introduction of a comprehensive set of tax and regulatory reforms focused upon reducing barriers to investment and economic growth. These reforms include targeted personal, corporate and industry specific tax reductions that have positioned British Columbia as an attractive place to invest and create jobs.

Softwood Lumber Dispute

The lack of resolution in the Canada-United States softwood lumber dispute has continued to have a significant impact on the province's forest industries and the communities and families they support. The ongoing uncertainty has also resulted in losses to the provincial government due to reduced forest revenues, personal and corporate income taxes and other revenues.

In order to prudently manage the uncertain effects of this dispute, realistic assumptions were used in determining the budget revenue projections. The province has also worked closely with other affected governments to work towards a negotiated agreement.

Commodity Pricing

Commodity prices fluctuated considerably over the course of the year. In response, the Ministry of Finance worked in partnership with the Ministry of Energy and Mines, the oil and gas industry and northeast communities to develop an investment climate that supported development of the province's vast energy resources. Among the initiatives undertaken was the implementation of a competitive royalty structure, the elimination of unnecessary regulations, support for infrastructure development and promotion in international markets.

Natural Disasters

It is extremely difficult to forecast the effect of any natural disasters that may occur from year to year. 2003/04 was a record year for natural disasters, which included forest fires, floods, BSE (Mad Cow Disease) and drought. Costs for the year approached nearly $500 million with the largest portion reflecting costs in the ministries of Forests and Public Safety and Solicitor General. Despite these significant costs the government was able to offset these impacts by improvements in other areas including lower than budgeted spending in ministries and improvements in revenues and Crown corporations finances.

Demand-driven Program Spending

The Ministry of Finance worked to ensure that prudent assumptions were used in the preparation of the budgets for all ministries and program areas. The ministry also worked closely with public sector entities to anticipate and respond to any potential program pressures throughout the year. Government funds a variety of demand driven programs like Pharmacare, kindergarten to grade 12 education, student financial assistance, income assistance, children-in-care and care of disabled adults.

Budgets for these areas reflected the best estimates of demand and other factors such as labour costs and price inflation. If demand is higher than assumed this could result in spending pressures to be managed. During 2003/04, most areas were below budget as a number of pressures in some areas were either actively managed early or offset by realized savings in other areas. Further, the ministry continues to lead and facilitate adoption of Enterprise-wide Risk Management practices to improve services and target resources in ministries and the broader public sector through education programs and advisory services.

Full Implementation of Generally Accepted Accounting Principles (GAAP)

Since the release of the service plan, the ministry has finalized the necessary frameworks for the full implementation of GAAP beginning in 2004/05. Currently, British Columbia is the only province within Canada to legislate adherence to GAAP in the preparation of its financial documents. In order to clarify accounting interpretation, the ministry has, and will continue to, work closely with the Office of the Auditor General and the Accounting Policy Advisory Committee.

Technology

Government as a whole has actively leveraged existing and new technologies. Staff workstations and the introduction of new financial management, procurement and registries systems have resulted in improvements in service quality, productivity, cost-effectiveness and enhanced decision-making.

While this adoption of technology has provided significant advantages they remain vulnerable to interruptions resulting from catastrophic events and malicious viruses. Over the course of the past year, the ministry has experienced several service interruptions due to viruses affecting non-critical ministry applications. In response to these risks the ministry has undertaken a systematic information technology security review and business continuity planning evaluation. Mission critical applications will also continue to be supported by disaster recovery plans that ensure continuity of service applying back-up systems, alternative processing sites and utilization of multiple external service providers.

Human Resources

The provincial public sector workforce has begun to undergo a staffing change as a number of staff approach retirement age. The loss of key staff with substantial knowledge and experience in delivering public services represents a significant succession and recruitment challenge to government as a whole.

Ministries and public sector entities have been working collaboratively to support the professional and career development of interested staff members. Initiatives undertaken include formal skills and leadership training as well as job assignments to improve staff capacity. Succession plans have also been established for staff identified as critical to the operation of their respective program areas.

Ministry Structure and Core Business Areas

The ministry provides a wide range of functions related to our mandate of promoting sound fiscal management and governance in the provincial government. In order to efficiently and effectively deliver these functions, the ministry has been structured into seven core business areas. Each of these core business areas has specific responsibilities for the provision of programs and services and contributes directly to at least one of the ministry's goals. The core business areas include:

1. Financial and Economic Performance and Analysis

2. Financial Governance, Accounting and Reporting

3. Treasury

4. Financial and Corporate Sector Services

5. Public Sector Employers' Council

6. Risk Management

7. Executive and Support Services

The resources dedicated to the operation of each of these core business areas are provided in the following section with additional detail available in the Report on Resources table. The ministry has worked to establish linkages between our core business areas, the resources provided and our goals and objectives. However, meaningful allocations of the resources utilized in pursuing a specific goal or objective, are not available given the frequent collaboration and complementary activities that occur between the seven core business areas.

Core Business Area 1: Financial and Economic Performance and Analysis

Purpose:

• To provide fiscal and tax policy analysis and advice that supports the achievement of balanced budgets, improves the province's competitiveness and sustains cost-effective public services.

Key Client/Stakeholder Groups:

• Minister of Finance, Chair of Treasury Board, Treasury Board, Cabinet, Government Caucus Committees, government ministries, Crown corporations, agencies, the SUCH sector, and other stakeholders.

Core Activities:

• Develop the government's three-year fiscal plan and identify, assess, monitor and manage significant risks and opportunities relating to the plan.
• Provide financial, economic, revenue, capital, taxation, and intergovernmental fiscal relations advice including economic and financial forecasts.
• Assist government in implementing key fiscal, taxation and intergovernmental policy decisions.
• Manage the government budget and estimates reporting process.
• Produce the budget, estimates, quarterly reports, and the budget consultation document; as well as internal reports and related analysis.

Core Business Area 2: Financial Governance, Accounting and Reporting

Purpose:

• To assure the accuracy and integrity of provincial public sector financial reporting and maintain a framework of best practices for financial management. Over the course of the past year, additional responsibilities related to the establishment and management of procurement governance frameworks have been included.

Key Client/Stakeholder Groups:

• Ministries, Crown corporations, agencies, the SUCH sector, Legislative Assembly, Public Accounts Committee and the Office of the Auditor General.

Core Activities:

• Provide accounting policy advice and analysis resulting in financial information that is consistent with Generally Accepted Accounting Principles.
• Provide accounting advice on public-private partnerships (P3s) and financing proposals.
• Provide financial and procurement governance by establishing policy, procedures and legislation that define the framework for government, and provide assurance using a risk-based approach that the framework is operating as intended.
• Provide internal audit services to support ministry and cross-government performance, risk management, and control activities.
• Provide financial reporting by preparing and publishing the Public Accounts and contributing to other financial reports for timely reporting, decision-making, and financial transparency, and by working with the Auditor General and accounting standards organizations on appropriate accounting standards and their application to the province.

Core Business Area 3: Treasury

Purpose:

• To provide British Columbians with the benefits of cost effective cash and debt management and banking services, resulting in lower expenditures and to improve online government services through electronic banking support.

Key Client/Stakeholder Groups:

• Ministries, Crown corporations, government agencies, international investment community and credit rating agencies.

Core Activities:

• Deliver cost effective banking, cash management, and electronic banking services.
• Ensure the borrowing needs for the provincial government and its agencies are met cost-effectively, provide support for corporate and project finance initiatives, and efficiently manage debt, settlement operations, and reporting.
• Manage investor relations initiatives and act as the primary liaison with domestic and international credit rating agencies.

Core Business Area 4: Financial and Corporate Sector Services

Purpose:

• To ensure that the province's financial services sector is reliable, competitive and enjoys the confidence of British Columbians and to provide personal property and corporate registry services that meet the needs of the marketplace.

Key Client/Stakeholder Groups:

• Ministries, Crown corporations, government agencies, members of the public, business and real estate community, financial and insurance institutions and pension plans, non-profit organizations and co-operatives.

Core Activities:

• Oversee the financial services and real estate sectors including:

— operation of the Financial Institutions Commission (FICOM) and the Credit Union Deposit Insurance Corporation;

— regulation of credit unions, trust companies, pension plans, insurance companies, captive insurance companies, and insurance licensees;

— regulation of real estate licensees and mortgage brokers.

• Operate registries services including:

— registration of all business entities, non-profit organizations, and co-operatives that operate in British Columbia;

— maintenance of registries of security interests (liens) in personal property and of the ownership and location of manufactured homes in the province.

• Provide policy analysis and advice to government in support of legislative frameworks for the regulation of the province's financial services and real estate sectors, as well as the governance of the province's corporate and commercial sectors.

Core Business Area 5: Public Sector Employers' Council

Purpose:

• To foster an efficient and effective workforce through the coordination of public sector labour relations policies and practices.

Key Client/Stakeholder Groups:

• Minister of Finance, Treasury Board and Cabinet.

Core Activities:

• Set and coordinate strategic directions in human resource management and labour relations and advise government with respect to labour relations and pension and benefits issues in the provincial public sector.

Core Business Area 6: Risk Management

Purpose:

• To reduce accidental and business losses in the provincial public sector through the development of comprehensive risk management and self-insurance programs.

Key Client/Stakeholder Groups:

• Ministries, Crown corporations, agencies and the SUCH sector.

Core Activities:

• Provide risk management services in the areas of risk identification and assessment processes, risk transfer, risk financing, risk mitigation, claims/litigation management, and security and business continuity planning.
• Develop and manage comprehensive risk management programs that seek to minimize the risks the provincial public sector faces by virtue of its programs, operations and assets.
• Lead and facilitate adoption of enterprise-wide risk management through training and advisory services.

Core Business Area 7: Executive and Support Services

Purpose:

• To provide strategic leadership and corporate support services that contributes to the success of all core business areas.

Key Client/Stakeholder Groups:

• Minister, Deputy Minister, internal core business areas and supported government ministries and entities.

Core Activities:

• Executive and administrative support to the Minister and Deputy Minister's offices.
• Strategic support to ministry operations, programs, and external clients including the Ministry of Management Services, Ministry of Provincial Revenue, Office of the Premier, BC Public Service Agency and other public sector entities. Service areas include finance, human resources, information management, and information access and records services and reflect a shared services model that offers cost-savings through economies of scale and pooled expertise.
• Development of enterprise-wide risk management frameworks to identify and cost-effectively manage the ministry's key risks and opportunities.
• Funding in support of Government House.
• Funding in support of Partnerships British Columbia.

Strategic Shifts and Significant Changes in Policy Direction

The Ministry of Finance has not undergone any significant strategic shifts or changes in policy direction since the release of our Service Plan 2003/04 – 2005/06. The ministry's mandate remains focused upon the New Era commitments and the results of the Core Services Review that was finalized in 2001.

Update on New Era Commitments

In 2001, the Ministry of Finance was directed by government to pursue a number of New Era commitments related to revitalizing the economy, restoring sound fiscal management and ensuring funding for government priorities that put patients, students and people in need first.

The following provides an update on the ministry's ongoing New Era Commitments and supporting initiatives pursued over the past year.