Highlights of the Year

Fiscal Stewardship

• 2004/05 Balanced Budget: The ministry oversaw the achievement of government's plan to balance the budget beginning in 2004/05. Final results for 2004/05 included a record surplus of $2.6 billion. This improvement resulted from stronger taxation, natural resource and federal government transfer revenues, as well as sound expenditure management.
• On-going Balanced Budgets: The ministry maintained government's commitment to balancing the budget on an on-going basis. The fiscal plan tabled in the Legislature on February 15, 2005¹ forecast a $220 million surplus in 2005/06, followed by surpluses of $200 million in each of 2006/07 and 2007/08. These surpluses were accomplished in conjunction with significant increases to funding for health care, education and social services.
• Credit Rating Upgraded: The three major credit rating agencies (Moody's Investors Service, Standard and Poor's, and the Dominion Bond Rating Service) upgraded the province's debt rating based on the province consistently meeting its annual budgetary targets, solid economic performance, transparent financial and budgeting and reporting practices, and relatively low debt to GDP ratio.
• Debt Reduction: Government made a record debt paydown of $1.94 billion in 2004/05 through prudent management of the fiscal plan and forecast surpluses.
• Debt to GDP ratio: Reduced debt levels and a relatively strong economy reduced the taxpayer-supported debt as a percentage of GDP from 20.6 per cent last year to 18.3 per cent this year and according to Moody's, we ranked second among the provinces (Moody's calculations, April 2005).
• Effective Debt Management: Interest expenses for provincial government direct debt in 2004/05 totaled $677 million versus the budgeted amount of $800 million. Savings of $123 million were due to reduced borrowing requirements, lower-than-forecast interest rates, a stronger-than-expected Canadian dollar and rating upgrades from three major domestic and international credit rating agencies.

Comprehensive and Transparent Financial Reporting

• Full Compliance with Generally Accepted Accounting Principles (GAAP): Fiscal 2004/05 is the first year in which government is fully compliant with GAAP, as established by the Public Sector Accounting Board of Canada. Accordingly, the province leads the country in the expansion of government reporting entity to include Schools, Universities, Colleges, Health Authorities and Hospital Societies (SUCH sector) providing a more accurate and comprehensive understanding of government's financial responsibilities and fiscal performance.
• Accurate Financial Reporting: 2004/05 is the first year since 1995/96 that the Auditor General has not placed a reservation on government's Financial Statements.

Cross-Government Financial Leadership

• Efficient Public Administration: More than 97 per cent of the recommendations provided to ministries through Internal Audit reviews are either implemented or planned for implementation. Internal Audit reviews identified more than $22 million in potential savings available to ministries through the adoption of improved business practices.
• Innovative Business Processes: Significant progress has been made in supporting the implementation of an electronic procurement system (iProcurement) across government. Achievements include review and updating of government's financial policy and the financial control framework as well as the delivery of training to more than 1,500 Expense Authority officers detailing their new responsibilities under the amended Financial Administration Act.

Intergovernmental Fiscal Relations and Federal Funding Achievements

• Secure Federal Health Care Funding: The ministry, in conjunction with the Premier's Office, Intergovernmental Relations Secretariat (IGRS) and the Ministry of Health Services, negotiated an agreement which will provide the province with an additional $5.4 billion in federal funding for health care over the next ten years (2004/05 – 2013/14). The new funding will help ensure our health system is sustainable, and will be invested in enhancing health services to meet the priority needs of British Columbia.
• Predictable Federal Equalization Payments: The ministry, in conjunction with the Premier's Office and IGRS, negotiated a new framework for Equalization, which includes substantial increases in federal funding to the province in 2004/05 and 2005/06. Compared to Budget 2004, equalization payments were $578 million higher in 2004/05, and $170 million higher in 2005/06. These higher amounts allowed the province to make some much needed investments in infrastructure and contributed to our record debt pay down in 2004/05.

Support For A Competitive Business Environment

• Supported a competitive tax environment:
• Maintained the 25 per cent reduction in personal income taxes. As a result, British Columbia has the lowest tax rates in the country for the bottom two-income tax brackets and the second lowest for individuals in the top personal marginal tax rate.
• Introduced the BC Tax Reduction to reduce or eliminate provincial personal income tax for low and modest income taxpayers earning less than $26,000 annually.
• Maintained the 18 per cent reduction in the general corporate income tax rate.
• Provided targeted tax relief including property tax for small hydroelectric projects, increased incentives for film and television production and increased the threshold for the small business tax rate.
• Streamlining and Deregulation: Completed the ministry's three-year deregulation initiative that eliminated unnecessary regulations, improved responsiveness to the needs of stakeholders and maintained appropriate controls. Key reforms included:

• Significant amendments to the Financial Institutions Act and the Credit Union Incorporation Act and related regulations to eliminate unnecessary restrictions and requirements, streamline regulatory responsibilities, and expand enforcement tools available to regulators.
• Enactment of the new Real Estate Service Act and the Real Estate Development Marketing Act to ensure that the real estate sector can more quickly respond to changes in the marketplace, serve consumers better, streamline the process for developers' marketing activities and maintain consumer protection.
• Technological Innovation: Expanded electronic incorporation, corporate filings, business registration and business address change services available to the private sector. Benefits include streamlined processes, reduced costs, expanded access and improved timeliness of service for clients. These solutions were recognized with the Technology in Government Award for both project management and best systems development initiative over $1 million as well as runner-up in the Premier's Award For Innovation.

• Continuous Improvement: The ministry has undertaken a comprehensive review of its planning processes and has established an Integrated Planning Framework that centrally coordinates all of the organization's critical planning functions (budgets, service planning, Enterprise-wide Risk Management, Information Resource Management and Human Resource Management). This initiative was developed with the participation of all areas of the ministry and will provide improved strategic, operational and program level information to management and staff.
  Areas of the ministry that directly support development of the budget conducted an annual assessment of the process to identify opportunities for future improvement. Activity Based Management and Internal Audit reviews were also utilized by a number of areas, including corporate services, to improve efficiencies and monitor financial controls.