PUBLIC ACCOUNTS FOR FISCAL YEAR ENDED MARCH 31, 2007

Surplus

The Province ended fiscal year 2006/07 with a surplus of $4,056 million, $3,456 million higher than budget, reflecting robust economic performance and higher-than-anticipated federal transfers and earnings from self-supported Crown corporations. Compared to the previous year, the 2006/07 results were $966 million higher.

Economic Growth

British Columbia’s economy grew by 3.6 per cent in calendar 2006, the second strongest growth among provinces and above the national average of 2.7 per cent, according to preliminary results from Statistics Canada. The estimated 3.6 per cent growth last year exceeds government’s February 2006 budget forecast of 3.3 per cent.

Economic growth was fuelled by robust domestic activity. Business investment grew by 9.5 per cent and consumer spending, which accounts for about two-thirds of all economic activity in the province, grew by 5.3 per cent in 2006.

Revenue

Total Provincial revenue reached $38,504 million in 2006/07, up $2,531 million (seven per cent) from 2005/06. The increase was mainly due to strong economic activity, including personal and labour income growth, resulting in a $1,589 million increase in taxation revenue. Contributions from the federal government increased by $561 million, mainly reflecting the one-time payment received from the federal government to fund capital projects in British Columbia.

Natural resources revenues decreased by $585 million, due to declining natural gas royalties, partially offset by higher forestry revenues from the Softwood Lumber Export Tax and higher metal prices. Average prices for natural gas declined 29 per cent in 2006/07, resulting in a $714-million decrease in royalties compared to 2005/06 and $1,070 million lower than forecast in the 2006 budget.

Commercial Crown corporation income increased by $465 million over the prior year, due to lower energy costs for BC Hydro, lower claim costs and higher premium revenue at ICBC, and stronger revenues in the BC Lottery Corporation.

Expense

In 2006/07, provincial operating expense totalled $34,448 million, a $1,565-million (five per cent) increase over 2005/06. Omitting the one-time impact of Negotiating Framework signing incentive payments, the increase related to ongoing operating expense was $2,011 million (6.3 per cent).

Omitting the one-time impact of signing incentive payments, ongoing health expense increased $820 million in 2006/07 compared to 2005/06 due to increases in salaries, operational costs and additional staffing. Similarly, ongoing education expense increased $582 million in 2006/07 compared to 2005/06 due to increased salaries for schools, universities and colleges, operating costs related to new research facilities for universities, increased staffing to fund smaller class sizes in schools, and 4,394 new student spaces for colleges and universities.

Debt

As of March 31, 2007, the total provincial debt was $33,347 million, $1,038 million lower than 2005/06. This includes $25,874 million of taxpayer-supported debt, which is $1,311 million lower than 2005/06.

Capital Infrastructure

Taxpayer-supported capital spending increased to a record $3.4 billion in 2006/07, up $265 million compared to $3.1 billion in 2005/06. This capital spending, reduced by annual amortization and disposals totalling $1,496 million, results in the Province’s total capital stock reaching a value of $26,626 million, a net increase of $1,870 million over the prior year.

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Media contact:	Public Affairs Bureau Ministry of Finance 250 387-5013

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