VICTORIA – Strong economic conditions, increased federal transfers, and sound fiscal management helped generate a record $2.6 billion surplus and a record $1.9 billion reduction in total provincial debt, Finance Minister Carole Taylor announced today in releasing the Province's audited financial statements.
“Today's release of the Public Accounts is an important milestone,” said Taylor. “It confirms that we achieved our three-year plan to balance the budget. It also demonstrates that our policies and strategies to revitalize B.C.’s economy are generating stronger revenues. As detailed in the February budget, we have reinvested those additional revenues in better programs and benefits for British Columbians.”
British Columbia’s economy grew by 3.9 per cent in 2004, the strongest growth among the provinces. Domestic activity continued to be the main driver of economic growth with strong job creation, business confidence, and investment.
In fiscal year 2004/05, stronger economic conditions and new transfers from the federal government boosted total provincial revenue to $33.2 billion, a $4.2 billion increase over the previous year. Provincial expense totalled $30.7 billion, an increase of $323 million over the previous year. This resulted in a $2.6 billion surplus, a significant improvement over the $1.3 billion deficit in 2003/04.
Total provincial debt fell to $35.8 billion, a record decline of $1.9 billion. The taxpayer-supported debt-to-GDP ratio, a key measure of debt affordability, declined to 18.3 per cent – its lowest level in 12 years.
In 2004/05, Standard and Poor’s, Moody’s Investor Services, and Dominion Bond Rating Service recognized the government's proven track record of sound fiscal management. Each of the three major credit rating agencies upgraded the Province’s credit rating, citing British Columbia’s consistent achievement of annual budget targets. They also cited B.C.’s solid economic performance, transparent budgeting and reporting practices, and low taxpayer-supported debt-to-GDP ratio.
“British Columbians worked hard over the past three years to get our economy and fiscal house in order,” said Taylor. “We’ve built a solid foundation that allowed us to make sustainable investments in health care, education and targeted tax relief. However, it’s important to remain prudent as we move forward. Last year was an exceptional year and exceptional years don’t happen every year.”
Taylor cautioned that the size of the 2004/05 surplus is not likely to be repeated over the next three years. The extra revenues were committed in the February budget toward income tax and MSP premium reductions for lower- and moderate-income earners, funding increases for health care, education, and other priority programs, and larger forecast allowances to cover revenue risks or spending pressures including future public sector wage settlements. As a result, the forecast surplus for 2005/06 is a smaller $220 million and $200 million in both 2006/07 and 2007/08.
British Columbia is a leader in the timeliness of its financial reports and provides the most comprehensive set of public disclosure documents in Canada. It is the only province that is required by law to prepare budgets and financial reports in accordance with Generally Accepted Accounting Principles (GAAP) – the benchmark for accurate financial reporting in both the public and private sectors.
The 2004/05 Public Accounts fulfil an important commitment to fully consolidate information from school districts, universities, colleges, and health authorities (SUCH sector) in the Province’s budgeting and reporting systems. The implementation of GAAP and integration of the SUCH sector was achieved on schedule following a three-year plan to improve fiscal management, transparency, and respond to a long-standing request from British Columbia's Auditor General.
As a result, for the first time in nine years, B.C.’s Auditor General removed his reservation on the exclusion of the SUCH sector in the Province’s financial statements and provided an unqualified opinion that the 2004/05 Public Accounts “present fairly, in all material respects, the financial position of the Government of the Province of British Columbia.”
“I am very pleased with the government's milestone achievement of reaching full compliance with Generally Accepted Accounting Principles for the Public Accounts and the inclusion of the SUCH sector in its financial statements,” said Auditor General Wayne Strelioff. “British Columbia now leads the provinces in complying with GAAP and the inclusiveness of its budget and financial reports.”
In addition to the Public Accounts, the Province also released reports on ministerial accountability, government's annual strategic plan, and annual service plans for ministries and government agencies.
The Ministerial Accountability Report details the fiscal and other accountability targets ministers must achieve in order to recover their 20 per cent ministerial salary holdback. For the third consecutive year, all cabinet ministers met their budget and accountability targets.
The service plan reports summarize the progress of individual ministries and agencies, as well as the government as a whole, in meeting the performance targets laid out in service plans at the beginning of each fiscal year. Service plan reports enhance accountability to taxpayers by disclosing key outcomes and benefits achieved through government expenditures.
Audio clips of Minister Taylor discussing the Public Accounts are available at www.mediaroom.gov.bc.ca/DisplayEventDetails.aspx?eventId=11 online.
The Public Accounts and related documents are available at www.bcbudget.gov.bc.ca/annualreports online.
View the ministerial presentation at http://www.fin.gov.bc.ca/ocg/pa/04_05/PPcharts0405/publicaccounts.pdf online.
Ministry of Finance
Visit the Province's website at www.gov.bc.ca for online information and services.