Province Of Manitoba 18-K/A Annual report (foreign governments) (amended)

PROVINCE OF MANITOBA

2005/06 QUARTERLY FINANCIAL REPORT
APRIL TO SEPTEMBER 2005

NOTES TO THE QUARTERLY FINANCIAL REPORT

This report presents the unaudited financial results of the Province of Manitoba for the second quarter of the 2005/06 fiscal year.

The report is based on the organizational structure of departments established in the 2005/06 Estimates. The comparative data provided for the 2004/05 fiscal year has been restated to reflect the current organizational structure of departments.

SECOND QUARTER – ACTUAL TO ESTIMATE

The second quarter result of a net expenditure (excess expenditure over revenue) of $76.6 million was $116.6 million less than the six month estimate. The improvement reflects actual expenditures being $84.4 million lower than estimated, primarily due to differences in the timing of payments, while revenue was $32.2 million higher than estimated. The increase in revenue is primarily due to the signing of the Early Learning and Child Care Agreement with Canada and an increase in revenue from Water Power Rentals due to higher water flows.

SECOND QUARTER COMPARED TO PREVIOUS YEAR’S RESULTS

In total, the second quarter net expenditure was $171.3 million lower than for the same period last year.

Total revenues were $433.5 million more than the same period last year, reflecting budgeted increases in both own source revenue and transfers from the Government of Canada.

Total expenditures were $262.2 million higher than the previous year primarily reflecting budgeted increases. Program expenditures were $237.1 million higher while public debt costs were $25.1 million higher. The largest increases in program expenditures occurred in the departments of Health, Education, Citizenship and Youth, Family Services and Housing, Intergovernmental Affairs and Trade and Justice.

CAPITAL INVESTMENT

Departmental expenditures for tangible capital assets were $82.6 million, $15.9 million less than estimated primarily due to timing variances. Expenditures were $18.8 million higher than for the same period last year, consistent with budgeted increases for infrastructure assets in 2005/06.

DEBT/PENSION REPAYMENT

The 2005 Budget provides for a $110.0 million contribution to the Debt Retirement Fund. As required by balanced budget legislation, an allocation committee determines the share of those funds directed to pension or general purpose debt. In the 2005 Budget plan, the 2005/06 allocation is $87.0 million to the pension liability and $23.0 million for general purpose debt.

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PROVINCE OF MANITOBA FINANCIAL REPORT APRIL TO SEPTEMBER 2005

YEAR END PROJECTION

As indicated in the first quarter report, the impact of unanticipated emergency expenditure costs, including those related to agriculture income support, combined with continuing pressures in health care and social programs have resulted in projected expenditures for the current year being higher than budget. While revenues are also forecast to be higher than budget, current year projections include a draw from the Fiscal Stabilization Fund.

Unanticipated expenditures associated with flooding, heavy rains and wind storms during the spring and early summer throughout much of the province are estimated to be $53.5 million for disaster assistance programs and $52.3 million for the Canadian Agricultural Income Stabilization (CAIS) program, double the current year budget, based on current estimates from the federal government. Health expenditures are forecast to be $93.9 million higher than budget including $9.4 million for wait time reduction programs, an expanded vaccine program and collective agreement costs for doctors and other health professionals that were not known at the time of the 2005 Budget. Other costs pressures include the Department of Family Services and Housing ($19.7 million) primarily for services for persons with disabilities and funding for universities ($10.0 million). Incremental expenditures of $18.4 million and offsetting revenue result from the signing of the Early Learning and Child Care Agreement. In total, expenditures are projected to be $274.2 million higher than budget.

Own source revenue is forecast to be $85.0 million higher than budget levels, primarily due to an improvement in Personal Income Tax and revenue from water power rentals. These increases are partially offset by lower forecasts for mining and tobacco taxes. Transfers from Canada are forecast to be $81.1 million higher reflecting partial recovery of expenditures under the disaster financial assistance agreement as well as $20.6 million related to the signing of the child care agreement. In total, revenue is expected to be $166.1 million higher than budget.

The year end positive balance for 2005/06 is forecast to remain at the budgeted level after a draw from the Fiscal Stabilization Fund of up to $98.7 million for general requirements and $9.4 million for wait time reduction programs. Efforts to manage discretionary expenditures continue in the second half of the year to reduce the required draw from the fund. An update on the province’s financial position will be provided in the third quarter report.

On a summary basis, the 2005 Budget projected a surplus of $196 million. While updated information is yet to be received from all provincial entities, the improved financial position at Manitoba Hydro, although partially offset by significant losses anticipated for crop insurance, is expected to achieve the projected year-end budget surplus.

FISCAL STABILIZATION FUND

The fund is projected to have a balance of $394.9 million at March 31, 2006, including $207.1 million for health programming that was pre-funded by Canada in the previous fiscal year. The status of the Fiscal Stabilization Fund is provided on page 13.

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PROVINCE OF MANITOBA FINANCIAL REPORT APRIL TO SEPTEMBER 2005

BORROWING ACTIVITY

The estimate of borrowing requirements identified in the 2005 Budget was $2,526.2 million of which $2,084.4 was required for refinancing existing market debt for Manitoba Hydro, capital investment and Health’s capital program. The remainder was required for new capital investment including the Red River Floodway Expansion and self-sustaining programs including Manitoba Hydro.

The borrowing requirement has increased to $2,823.9 as a result of various program debt being called prior to maturity which will require refinancing. For the period April 1, 2005 to September 30, 2005, $105.5 million was raised through the issue of Builder Bonds and $1,527.4 million was raised in the public market.

NOTE TO READER:

The information presented on the following pages has been changed in format to improve readability. Content remains unchanged from previous years.

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PROVINCE OF MANITOBA FINANCIAL REPORT APRIL TO SEPTEMBER 2005

OPERATING FUND
STATEMENT OF REVENUE AND EXPENDITURE
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2005

(UNAUDITED)
($000s)

	2005/06			Comparison to 2005/06						Comparison to 2004/05
	ACTUAL			Estimate			Variance			Actual			Variance
Revenue
Own Source Revenue		2,558,128			2,542,691			15,437			2,351,662			206,466
Government of Canada		1,390,941			1,374,166			16,775			1,163,908			227,033
Total Revenue		3,949,069			3,916,857			32,212			3,515,570			433,499
Expenditure
Program Expenditure		3,906,632			3,998,772			(92,140	)		3,669,489			237,143
Debt Servicing		119,060			111,364			7,696			93,955			25,105
Total Expenditure		4,025,692			4,110,136			(84,444	)		3,763,444			262,248
Net Revenue/(Expenditure)		(76,623	)		(193,279	)		116,656			(247,874	)		171,251
Interfund Transfers
Debt/Pension Repayment		—			—			—			(96,357	)		96,357
Fiscal Stabilization Fund		—			—			—			—			—
Total Interfund Transfers		—			—			—			(96,357	)		96,357
Balance Under Balanced Budget Legislation		(76,623	)		(193,279	)		116,656			(344,231	)		267,608

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PROVINCE OF MANITOBA FINANCIAL REPORT APRIL TO SEPTEMBER 2005

OPERATING FUND
STATEMENT OF REVENUE
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2005

(UNAUDITED)
($000s)

	2005/06		Comparison to 2005/06					Comparison to 2004/05
	ACTUAL		Estimate		Variance			Actual		Variance
Taxation:
Finance
- Individual Income Tax		943,821		947,335		(3,514	)		886,848		56,973
- Corporation Income Tax		175,846		176,915		(1,069	)		174,067		1,779
- Corporation Capital Tax		90,815		88,647		2,168			79,917		10,898
- Gasoline Tax		66,747		66,457		290			65,687		1,060
- Insurance Corporations Tax		29,065		27,407		1,658			27,186		1,879
- Land Transfer Tax		18,353		14,437		3,916			13,257		5,096
- Levy for Health and Education		118,935		117,502		1,433			113,945		4,990
- Mining Tax		31,605		29,986		1,619			15,800		15,805
- Motive Fuel Tax		33,173		32,676		497			32,762		411
- Retail Sales Tax		506,153		507,880		(1,727	)		470,061		36,092
- Revenue Act, 1964, Part 1		26,906		25,581		1,325			25,193		1,713
- Tobacco Tax		87,426		87,841		(415	)		91,085		(3,659	)
- Environmental Protection Tax		1,403		1,394		9			1,399		4
		2,130,248		2,124,058		6,190			1,997,207		133,041
Industry, Economic Development & Mines - - Oil and Natural Gas Tax		1,842		1,735		107			1,252		590
		2,132,090		2,125,793		6,297			1,998,459		133,631
Other Revenue:
Justice		17,410		17,027		383			15,674		1,736
Transportation and Government Services		62,331		61,683		648			56,918		5,413
Water Stewardship — Water Power Rentals		61,914		55,967		5,947			46,835		15,079
Manitoba Lotteries Corporation		135,000		135,000		—			112,000		23,000
Manitoba Liquor Control Commission		92,300		88,700		3,600			73,300		19,000
Other Departments		57,083		58,521		(1,438	)		48,476		8,607
		426,038		416,898		9,140			353,203		72,835
Total Own Source Revenue		2,558,128		2,542,691		15,437			2,351,662		206,466

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PROVINCE OF MANITOBA FINANCIAL REPORT APRIL TO SEPTEMBER 2005

OPERATING FUND
STATEMENT OF REVENUE
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2005

(UNAUDITED)
($000s)

	2005/06		Comparison to 2005/06					Comparison to 2004/05
	ACTUAL		Estimate		Variance			Actual		Variance
Government of Canada:
Equalization		800,509		800,509		—			675,830		124,679
Canada Health Transfer (CHT)		363,180		363,180		—			247,824		115,356
Canada Social Transfer (CST)		160,056		160,056		—			153,192		6,864
Child Care		25,612		—		25,612			—		25,612
Health Reform Fund		—		—		—			27,492		(27,492	)
Other Health Funds
- Diagnostic Medical Equipment Fund		—		7,371		(7,371	)		1,259		(1,259	)
- Medical Equipment Fund		—		1,651		(1,651	)		1,368		(1,368	)
- Primary Health Care Transition Fund		157		2,002		(1,845	)		709		(552	)
- Public Health Immunization Fund		—		—		—			14,619		(14,619	)
Total Other Health Funds		157		11,024		(10,867	)		17,955		(17,798	)
Departments
- Labour Market Development		24,010		24,010		—			24,010		—
- Other Departments		17,417		15,387		2,030			17,605		(188	)
Total Government of Canada		1,390,941		1,374,166		16,775			1,163,908		227,033
Total Revenue		3,949,069		3,916,857		32,212			3,515,570		433,499

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PROVINCE OF MANITOBA FINANCIAL REPORT APRIL TO SEPTEMBER 2005

OPERATING FUND
STATEMENT OF PART A — OPERATING EXPENDITURE
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2005

(UNAUDITED)
($000s)

	2005/06		Comparison to 2005/06					Comparison to 2004/05
	ACTUAL		Estimate		Variance			Actual		Variance
Legislative Assembly		13,047		13,034		13			12,151		896
Executive Council		1,639		1,671		(32	)		1,457		182
Aboriginal and Northern Affairs		18,291		20,375		(2,084	)		15,512		2,779
Advanced Education and Training		268,056		288,732		(20,676	)		277,372		(9,316	)
Agriculture, Food and Rural Initiatives		39,148		53,794		(14,646	)		34,900		4,248
Civil Service Commission		2,544		2,722		(178	)		2,304		240
Conservation		61,172		64,372		(3,200	)		54,883		6,289
Culture, Heritage and Tourism		38,786		40,359		(1,573	)		35,460		3,326
Education, Citizenship and Youth		608,060		612,432		(4,372	)		558,526		49,534
Employee Pensions and Other Costs		30,158		30,860		(702	)		27,019		3,139
Energy, Science and Technology		28,874		30,376		(1,502	)		23,583		5,291
Family Services and Housing		471,959		487,811		(15,852	)		439,299		32,660
Finance — Departmental Costs		73,378		74,194		(816	)		71,070		2,308
Finance — Debt Servicing Costs		119,060		111,364		7,696			93,955		25,105
Health		1,707,059		1,711,494		(4,435	)		1,619,662		87,397
Healthy Child Manitoba		10,775		11,797		(1,022	)		9,926		849
Industry, Economic Development and Mines		8,393		11,233		(2,840	)		10,722		(2,329	)
Intergovernmental Affairs and Trade		146,588		152,805		(6,217	)		131,064		15,524
Justice		130,382		131,816		(1,434	)		115,272		15,110
Labour and Immigration		15,365		15,869		(504	)		13,837		1,528
Seniors and Healthy Aging Secretariat		453		482		(29	)		371		82
Sport		5,678		5,691		(13	)		5,430		248
Transportation and Government Services		186,779		190,338		(3,559	)		178,978		7,801
Water Stewardship		22,172		23,534		(1,362	)		19,085		3,087
Enabling Appropriations		857		1,024		(167	)		1,097		(240	)
Other Appropriations		17,019		21,957		(4,938	)		10,509		6,510
Total Expenditure		4,025,692		4,110,136		(84,444	)		3,763,444		262,248

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PROVINCE OF MANITOBA FINANCIAL REPORT APRIL TO SEPTEMBER 2005

OPERATING FUND
STATEMENT OF PART B — CAPITAL INVESTMENT
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2005

(UNAUDITED)
($000s)

	2005/06		Comparison to 2005/06					Comparison to 2004/05
	ACTUAL		Estimate		Variance			Actual		Variance
General Assets
Legislative Assembly		—		30		(30	)		34		(34	)
Advanced Education and Training		305		393		(88	)		221		84
Agriculture, Food and Rural Initiatives		—		47		(47	)		—		—
Conservation		160		718		(558	)		182		(22	)
Culture, Heritage and Tourism		—		—		—			—		—
Energy, Science and Technology		4,094		4,749		(655	)		4,836		(742	)
Family Services and Housing		640		668		(28	)		392		248
Finance		68		292		(224	)		29		39
Health		1		719		(718	)		607		(606	)
Justice		466		690		(224	)		735		(269	)
Transportation and Government Services		15,239		21,509		(6,270	)		7,655		7,584
Enabling Appropriations		—		—		—			75		(75	)
Total General Assets		20,973		29,815		(8,842	)		14,766		6,207
Infrastructure Assets
Conservation		726		2,547		(1,821	)		411		315
Transportation and Government Services		49,027		51,171		(2,144	)		44,196		4,831
Water Stewardship		655		2,049		(1,394	)		1,034		(379	)
Manitoba Floodway Expansion		11,268		12,934		(1,666	)		3,468		7,800
Enabling Appropriations		—		—		—			—		—
Total Infrastructure Assets		61,676		68,701		(7,025	)		49,109		12,567
Total Capital Assets		82,649		98,516		(15,867	)		63,875		18,774

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PROVINCE OF MANITOBA FINANCIAL REPORT APRIL TO SEPTEMBER 2005

OPERATING FUND
STATEMENT OF VALUATION AND PURPOSE OF
DIRECT AND GUARANTEED DEBT OUTSTANDING
(with comparative figures for March 31, 2005)

(UNAUDITED)
($000s)

	Canadian Dollar			Canadian Dollar			Increase/(Decrease)
	Valuation			Valuation			September 30/05
	(Note 1)			(Note 1)			over
	September 30/05			Mar 31/05			Mar 31/05
Direct Debt Payable in:
Canadian Dollars		13,870,494			14,162,084			(291,590	)
Issues Hedged to Canadian Dollars		3,380,914			2,946,914			434,000
U.S. Dollars		2,209,631			2,056,320			153,311
Issues Hedged to U.S. Dollars		614,166			884,160			(269,994	)
Subtotal Direct Debt		20,075,205			20,049,478			25,727
Guaranteed Debt Payable in:
Canadian Dollars		509,370			660,075			(150,705	)
U.S. Dollars		—			—			—
Subtotal Guaranteed Debt		509,370			660,075			(150,705	)
Total Direct and Guaranteed Debt (note 2)		20,584,575			20,709,553			(124,978	)
Less: Sinking Fund Investments		(4,444,777	)		(4,561,149	)		116,372
Less: Debt Retirement Fund		—			—			—
Total Direct and Guaranteed Debt Outstanding (note 3)		16,139,798			16,148,404			(8,606	)

NOTE TO READER:

The above table provides information on the total direct and guaranteed debt outstanding at September 30, 2005, with comparative figures for March 31, 2005. Outstanding debt will fluctuate during the fiscal year as a result of the timing of borrowing activities of the province. While current accounting standards identify net debt as the best presentation of a government’s financial position, certain valuations used in the calculation of net debt are not available on a quarterly basis. Net debt is defined as total liabilities less the financial assets available to repay those liabilities. The Public Accounts for the year ended March 31, 2005 reflected net debt of the operating fund to be $8.3 billion (see Public Accounts, Volume 1, page 99) and for the government reporting entity to be $10.5 billion (see Public Accounts Volume 1, page 53).

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PROVINCE OF MANITOBA FINANCIAL REPORT APRIL TO SEPTEMBER 2005

OPERATING FUND
STATEMENT OF VALUATION AND PURPOSE OF
DIRECT AND GUARANTEED DEBT OUTSTANDING
(with comparative figures for March 31, 2005)

(UNAUDITED)

NOTES:

1.	The Canadian Dollar Valuation is calculated using the foreign currency exchange rates in effect at September 30, 2005 and at March 31, 2005. As at September 30, 2005, the US dollar exchange rate was $1.1611 ($1.2096 at March 31, 2005).
2.	Direct and Guaranteed Debt are payable in Canadian and U.S. dollars. As at September 30, 2005, total Gross Debt was payable 86% in Canadian dollars and 14% in U.S. dollars. Of this total, General Government Program Debt and Other Debt was 100% payable in Canadian dollars. Manitoba Hydro Debt was payable 60% in Canadian dollars (59% at March 31, 2005) and 40% in U.S. dollars (41% at March 31, 2005).
3.	The above debt was issued for the following purposes:

	September 30, 2005				March 31, 2005
	($000 s)		($ per capita)		($000 s)		($ per capita)
			(Note 4)				(Note 4)
General Government Programs		6,667,768		5,662		6,594,139		5,607
The Manitoba Hydro-Electric Board		6,552,381		5,564		6,615,015		5,625
Capital Investments		466,736		396		363,519		309
Manitoba Hospital Facilities		675,761		574		738,761		628
Government Enterprises and Other		496,514		422		496,514		422
Other		1,280,638		1,087		1,340,456		1,140
Total		16,139,798		13,705		16,148,404		13,731
	(Note 5)

4.	Per Capita data is based upon population figures as at July 1, 2005 and April 1, 2005 as reported by Statistics Canada.
5.	In 2003/04, the Province, in accordance with Canadian GAAP, changed its accounting treatment for certain amounts owed to Canada and for debentures issued by certain school boards and hospitals, the debt service of which is paid with future grants from the Government. Amounts owed to the Federal Government over time, which were previously treated as accounts payable are now accounted for as loans payable. Debentures issued by school boards and hospitals, were previously recognized as an expense over the life of the debentures as grants for debt service were made and held by the Provincial Sinking Fund and Manitoba Public Insurance (MPI), (a Crown corporation). Now the obligation to fund debt principal payments is expensed in full at the time the debenture is issued. Any of these debentures held by MPI are recorded as “Loans Payable to Government Enterprises”. The Government also recognized a loan payable in respect of the pension liability of the Manitoba Liquor Control Commission.
6.	General Government Program Debt increased by $73.6 million due to prefunding debt not yet matured. All other debt decreased $82.2 million due to Manitoba Hydro’s new capital requirements offset by the impact of a stronger Canadian dollar and a net increase in Manitoba Hydro’s sinking fund, matured hospital facilities debt and other debt which have not yet been refunded, offset by an increase in Provincial Part B capital requirements as a result of prefunding maturing debt. Manitoba Hydro’s U.S. dollar revenues are sufficient to pay the interest and principal on all outstanding U.S. dollar debt.
7.	Manitoba’s net general purpose debt to GDP ratio is projected to be 15.7% in 2005/06, down from 16.5% in 2004/05 and from 20.9% in 1999/2000. GDP data reflects the latest information available from Statistics Canada.

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PROVINCE OF MANITOBA FINANCIAL REPORT APRIL TO SEPTEMBER 2005

DEBT RETIREMENT FUND
PROJECTION FOR YEAR ENDING MARCH 31, 2006
(with comparative figures for March 31, 2005)

(UNAUDITED)
($000s)

	2005/06			2004/05
	Projection (1)			Actual (2)
Fund Balance, Beginning of Year		—			180,325
Revenue:
Interest Earnings		—			1,862
Transfer from Operating Fund		110,000			98,500
		110,000			100,362
Expenditure:
Transfer to Operating Fund for:
— Pension Assets Fund (3)		(87,000	)		(78,712	)
— Sinking Fund Obligation (4)		—			(201,975	)
		(87,000	)		(280,687	)
Fund Balance, End of Year		23,000			—

Notes:

(1)	Based on projection included in the 2005 Budget.
(2)	Based on 2004/05 Public Accounts.
(3)	The actual allocation of funds for 2005/06 will be determined by the Allocation Committee as per Balanced Budget, Debt Repayment and Taxpayer Accountability Act.
(4)	Based on debt retirement provision of the Act that at least once every five years, the Fund be collapsed and all amounts allocated to the Sinking Fund or Pension Assets Fund.

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PROVINCE OF MANITOBA FINANCIAL REPORT APRIL TO SEPTEMBER 2005

PENSION ASSET FUND
PROJECTION FOR YEAR ENDING MARCH 31, 2006
(with comparative figures for March 31, 2005)

(UNAUDITED)
($000s)

	2005/06		2004/05
	Projection		Actual (1)
Fund Balance, Beginning of Year		382,342		267,157
Revenue:
Interest Earnings		41,800		30,602
Transfer from Debt Retirement Fund (2)		87,000		78,712
Transfer from Departments and Crown Corporations		8,400		5,871
		137,200		115,185
Fund Balance, End of Year		519,542		382,342

Notes:

(1)	Based on 2004/05 Public Accounts
(2)	The actual allocation of funds for 2005/06 will be determined by the Allocation Committee as per the Balanced Budget, Debt Repayment and Taxpayer Accountability Act.

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PROVINCE OF MANITOBA FINANCIAL REPORT APRIL TO SEPTEMBER 2005

FISCAL STABILIZATION FUND
PROJECTION FOR YEAR ENDING MARCH 31, 2006
(with comparative figures for March 31, 2005)

(UNAUDITED)
($000s)

	2005/06			2004/05
	Projection			Actual (1)
Total Fund Balance — Beginning of Year		485,943			78,881
Health Programs
Fund Balance — Beginning of Year		210,067			—
Interest Earnings		6,435			—
Transfer from / (to) the Operating Fund
— Wait Time Reduction Programming		(9,400	)		155,115
— Other Health Related Programming		—			54,952
Fund Balance — End of Year		207,102			210,067
General Programs
Fund Balance — Beginning of Year		275,876			78,881
Interest Earnings		7,930			1,572
Transfer from / (to) the Operating Fund
— Year-end Positive Balance		2,665			195,423
— General Requirements		(98,700	)		—
Fund Balance — End of Year		187,771			275,876
Total Fund Balance, End of Year		394,873			485,943

Note:

(1) Based on 2004/05 Public Accounts.

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PROVINCE OF MANITOBA FINANCIAL REPORT APRIL TO SEPTEMBER 2005

OPERATING FUND
PROJECTION FOR THE YEAR ENDING MARCH 31, 2006

(UNAUDITED)
($000s)

	Revised			Budget
	Projection			Estimate
Revenue		8,342,653			8,176,598
Expenditure		8,338,088			8,063,912
Net Revenue/(Expenditure)		4,565			112,686
Interfund Transfers
Debt/Pension Repayment		(110,000	)		(110,000	)
Fiscal Stabilization Fund
— Wait Time Programs (Health)		9,400			—
— Other general requirements		98,700			—
		(1,900	)		(110,000	)
Balance Under Balanced Budget Legislation		2,665			2,686

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