EXHIBIT 99.4
2003
BRITISH COLUMBIA
FINANCIAL AND ECONOMIC
REVIEW
63rd EDITION
(JULY 2003)
http://www.gov.bc.ca/
[LOGO]
Ministry of Finance
TABLE OF CONTENTS
ii TABLE OF CONTENTS
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INTRODUCTION...................................................................1
General description of the Province...........................................2
Geography....................................................................2
Physiography.................................................................2
Climate and Vegetation.......................................................2
CHAPTER ONE -- ECONOMIC REVIEW.................................................5
2002 Overview.................................................................6
External Environment..........................................................6
U.S. Economy.................................................................7
Canadian Economy.............................................................7
International Economy........................................................7
Financial Markets............................................................7
British Columbia Economy......................................................9
Real GDP.....................................................................9
Capital Investment...........................................................9
Exports.....................................................................10
Population and Labour Force Characteristics.................................12
Labour and Income Developments..............................................13
Prices and Wages............................................................13
Consumer Expenditure and Housing............................................14
Industrial Structure and Performance.........................................15
High Tech...................................................................16
Tourism.....................................................................17
TOPIC BOXES
Energy in British Columbia..................................................18
B.C.'s Economic Development Initiatives.....................................20
CHARTS
1.1 Canadian and British Columbia economic growth...........................6
1.2 External economic growth................................................8
1.3 Short-term interest rates...............................................8
1.4 British Columbia GDP by component.......................................9
1.5 Exports by market, 2002................................................10
1.6 Key commodity prices...................................................11
1.7 British Columbia population by age and sex, 2002.......................12
1.8 Building permits by activity...........................................14
1.9 Service industries in British Columbia.................................15
1.10 Trends in high technology employment in B.C. ..........................16
1.11 B.C. Tourism industry..................................................17
Map 1.1 Net interprovincial and international migration in B.C. ............12
TABLES
1.1 British Columbia Population and Labour Market Statistics ..............13
1.2 Price and Earnings Indices.............................................14
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TABLE OF CONTENTS iii
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APPENDIX 1 -- ECONOMIC REVIEW.................................................21
TABLES
A1.1 Summary of Economic Activity for British Columbia.....................22
A1.2 British Columbia Real GDP at Market Prices, Expenditure Based.........24
A1.3 British Columbia GDP at Basic Prices, by Industry.....................24
A1.4 British Columbia GDP, Income Based....................................25
A1.5 Employment by Industry in British Columbia............................26
A1.6 Capital Investment by Industry........................................27
A1.7 British Columbia International Goods Exports by Major Market and
Selected Commodities, 2002...........................................28
A1.8 British Columbia International Goods Exports by Market Area, 2002 ....29
A1.9 Historical Commodity Prices (in U.S. Dollars).........................30
A1.10 British Columbia Forest Sector Economic Activity Indicators ..........31
A1.11 Historical Value of Mineral, Petroleum and Natural Gas Production ....32
A1.12 Petroleum and Natural Gas Activity Indicators.........................32
A1.13 Supply and Consumption of Electrical Energy in British Columbia ......33
A1.14 British Columbia High-Technology Sector Activity .....................34
CHAPTER TWO -- FINANCIAL REVIEW...............................................35
2002/03 Overview.............................................................36
Consolidated Revenue Fund Revenue............................................38
Consolidated Revenue Fund Expense............................................39
Crown Corporation Results....................................................45
Full-Time Equivalents (FTEs).................................................49
Provincial Capital Spending..................................................49
Provincial Debt..............................................................50
Credit Rating................................................................53
Debt Indicators..............................................................53
TOPIC BOX
Ministerial Accountability Report............................................44
TABLES
2.1 2002/03 Operating Results..............................................36
2.2 Summary of Changes from Budget 2002/03.................................37
2.3 Revenue by Source -- Consolidated Revenue Fund.........................40
2.4 Expense by Ministry -- Consolidated Revenue Fund.......................41
2.5 Contingencies and New Programs (All Ministries) Vote -- 2002/03........43
2.6 Government Restructuring -- Consolidated Revenue Fund.................46
2.7 2002/03 Crown Corporation and Agency Operating Results.................47
2.8 Full-Time Equivalents (FTEs) Utilization...............................49
2.9 Capital spending.......................................................50
2.10 Provincial Debt Summary................................................51
2.11 Summary of Debt Changes from the 2002/03 Budget .......................52
2.12 Reconciliation of Summary Deficit to Debt Increase -- 2002/03 .........52
2.13 Interprovincial Comparison of Credit Ratings, June 2003................53
2.14 Key Debt Indicators....................................................54
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
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APPENDIX 2 -- FINANCIAL REVIEW................................................55
Government's Financial Statements............................................56
The Financial Cycle..........................................................57
Capitalization...............................................................59
Unfunded Pension Liabilities.................................................60
Adjustments to the Accumulated Deficit.......................................60
CHARTS
A2.1 Summary Financial Statements Components.................................57
A2.2 Financial Planning and Reporting Cycle..................................58
TABLES
A2.1 Effects of Capitalization on the Summary Accounts.....................60
A2.2 Summary of Changes in Accumulated Deficit from the
2001/02 PUBLIC ACCOUNTS Reported Balance.............................61
A2.3 Five-Year Operating Results...........................................62
A2.4 Summary of Changes from the 2002/03 THIRD QUARTERLY REPORT
Updated Forecast.....................................................63
A2.5 Five-Year Statement of Financial Position.............................64
A2.6a Five-Year Revenue by Source -- Consolidated Revenue Fund..............65
A2.6b Five-Year Dedicated Revenue Collected on Behalf of, and Transferred to,
Crown Corporations and Agencies, and Other Entities..................66
A2.7 Five-Year Revenue by Source -- Supplementary Information --
Consolidated Revenue Fund ...........................................67
A2.8 Five-Year Expense by Function -- Consolidated Revenue Fund............68
A2.9 Five-Year Expense by Function -- Supplementary Information --
Consolidated Revenue Fund............................................69
A2.10a Government Restructuring Exit Expense ................................70
A2.10b Consolidated Revenue Fund Government Restructuring Expense, 2002/03...71
A2.11 British Columbia Buildings Corporation Five-Year Income Statement..72
A2.12 British Columbia Ferry Corporation Five-Year Income Statement ......72
A2.13 BC Transportation Financing Authority Five-Year Consolidated
Statement of Income..................................................73
A2.14 British Columbia Hydro and Power Authority Five-Year Income Statement.73
A2.15 Liquor Distribution Branch Five-Year Income Statement.................74
A2.16 British Columbia Lottery Corporation Five-Year Income Statement.......74
A2.17 British Columbia Railway Company Five-Year Income Statement...........75
A2.18 Insurance Corporation of British Columbia Five-Year Income Statement..75
A2.19 Five-Year Provincial Debt Summary.....................................76
A2.20 Five-Year Provincial Debt Summary -- Supplementary Information........77
A2.21 Summary of Changes from the 2002/03 THIRD QUARTERLY REPORT
Updated Forecast -- Capital Spending and Debt .......................78
A2.22 Historical Summary Accounts Surplus (Deficit).........................79
A2.23 Historical Revenue by Source -- Consolidated Revenue Fund ............80
A2.24 Historical Expense by Function -- Consolidated Revenue Fund...........81
A2.25 Historical Provincial Debt Summary....................................82
A2.26 Provincial Taxes (as of July 2003)...................................83
A2.27 Interprovincial Comparisons of Tax Rates for 2003.....................86
A2.28 Summary of Major Tax Changes Announced in 2003........................87
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TABLE OF CONTENTS v
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APPENDIX 3 -- CONSTITUTIONAL FRAMEWORK........................................89
Constitutional Framework.....................................................90
Provincial Government........................................................90
Legislature ................................................................90
Executive ..................................................................90
Judiciary...................................................................91
Provincial Government Jurisdiction..........................................92
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
INTRODUCTION
2 INTRODUCTION
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GENERAL DESCRIPTION OF THE PROVINCE
British Columbia is located on Canada's Pacific coast, and
has a land and freshwater area of 95 million hectares. It is
Canada's third largest province and comprises 9.5 per cent
of the country's total land area.
GEOGRAPHY
The province is nearly four times the size of Great Britain,
2.5 times larger than Japan and larger than any American
state except Alaska. BC's 7,022-kilometre coastline supports
a large shipping industry through ice-free, deep-water
ports. The province has about 8.5 million hectares of
grazing land, 1.8 million hectares of lakes and rivers, and
950,000 hectares of agricultural land that is capable of
supporting a wide range of crops.
PHYSIOGRAPHY
BC is characterized by mountainous topography, but also has
substantial areas of lowland and plateau country. The
province has four basic regions, a northwesterly trending
mountain system on the coast, a similar mountain system on
the east, and an extensive area of plateau country between
the two. The northeastern corner of the province is lowland,
a segment of the continent's Great Plains.
The western system of mountains averages about 300
kilometres in width and extends along the entire BC coast
and the Alaska panhandle. The Coast Mountains contain some
of the tallest peaks in the province. The western system
includes the Insular Mountains that form the basis of
Vancouver Island and the Queen Charlotte Islands. These
islands help to shelter the waters off the mainland coast of
BC, which form an important transportation route for people
and products.
The interior of the province is a plateau of rolling forest
and grassland, 600 to 1,200 metres in average elevation.
North of Prince George the interior becomes mountainous, but
plateau terrain returns just south of the Yukon boundary in
the area drained by the Liard River. The southern interior's
water system is dominated by the Fraser River, which has a
drainage area covering about one-quarter of the province.
The Rocky Mountains, in the eastern mountain system, rise
abruptly on the southern BC-Alberta boundary and are cut by
passes that provide dramatic overland transportation routes
into the province. The Rocky Mountain Trench lies
immediately to the west of the Rockies. This extensive
valley, the longest in North America, is a geological fault
zone separating different earth plates. It is the source of
many of BC's major rivers, including the Peace, Columbia and
Fraser.
CLIMATE AND VEGETATION
Coastal BC has abundant rainfall and mild temperatures
associated with a maritime climate. The Pacific coast has an
average annual rainfall of between 155 and 440 centimetres,
while the more sheltered coasts of eastern Vancouver Island
and the mainland along the Strait of Georgia average between
65 and 150 centimetres. Canada's longest frost-free periods
of over 180 days per
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
INTRODUCTION 3
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year are enjoyed along the edges of the coastal zone and far
inland along the Fraser River valley. Temperatures fall
quickly up the steep slopes of the Coast Mountains. The
predominant trees in this coastal region are the western
hemlock, western red cedar and balsam (amabilis fir) in the
wetter parts, and Douglas fir and grand fir in the drier
areas.
BC's interior region has a mainly continental type of
climate, although not as severe as that of the Canadian
prairies. Considerable variation in climate occurs,
especially in winter, as mild Pacific storms bring relief
from cold spells. The southern interior has the driest and
warmest climate of the province. In the valleys, annual
precipitation ranges from less than 30 centimetres to 50
centimetres, while daily temperatures can average over 20
degrees Celsius in July and just under freezing in January.
The climate becomes more extreme further north and
precipitation increases. The frost-free period in the north
is short and variable. Lodgepole pine is the dominant tree
of commercial value in the interior.
The northeast region of the province is an extension of the
western prairie region of Alberta. It has a continental
climate that is more extreme than that of the northern
interior region. However, it does have long hot summers and
a frost-free period long enough to grow grain, forage and
other crops.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
Chapter One
Economic Review(1)
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(1) Reflects information available as of June 6, 2003.
6 CHAPTER 1 -- ECONOMIC REVIEW
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2002 OVERVIEW
The British Columbia economy grew more rapidly than expected
from the 2001 slowdown, posting 1.8 per cent real growth in
2002, following the 0.2 per cent decline in 2001. British
Columbia's economic turnaround was hindered by a relatively
weak recovery in the U.S. economy. Continuing geopolitical
uncertainty also limited growth rates for many of the
province's economic partners. The lack of resolution in the
U.S. softwood lumber dispute impacted the provincial forest
sector. However, natural gas activity picked up towards the
end of the year.
Consumer spending remained robust through the year thanks to
purchases of large consumer durables. The housing sector
also recorded a significant increase in 2002 propelled by
low mortgage rates. Although BC experienced robust job
creation through the year with 78,000 jobs since December
2001, annual growth was limited to 1.6 per cent reflecting
job losses in the latter part of 2001.
CHART 1.1 CANADIAN AND BRITISH COLUMBIA ECONOMIC GROWTH
[GRAPHIC]
Source: Statistics Canada
EXTERNAL ENVIRONMENT
During 2002, the North American economy expanded at a
moderate pace, reflecting a hesitant U.S. recovery. A much
stronger recovery in Canada was evidenced by growth in
employment, housing construction and trade. Geopolitical
uncertainties heated up in 2002 as tensions around the war
on terrorism, the situation in the Middle East, the
revelation of North Korea's nuclear program and the oil
sector strike in Venezuela raised concerns for the global
economy.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
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U.S. ECONOMY
The U.S. economy expanded 2.4 per cent in 2002, an
improvement from the 0.3 per cent growth recorded in 2001
when the U.S. dipped into recession. Consumer spending was
up strongly due to increased sales of consumer durables and
a surge in automobile sales caused by dealer incentives and
low interest rates. Housing starts rose 6.9 per cent to 1.7
million units, the highest level since 1986. However, behind
the improvement in total output were signs of slowing
business investment and manufacturing output. Industrial
production declined 0.8 per cent in 2002, as excess capacity
acted as a major brake on the economy. Consumer debt also
reached record levels, and without strong job and income
growth, consumers' ability to repay their loans was minimal.
CANADIAN ECONOMY
The Canadian economy outperformed the U.S. economy in 2002,
growing an estimated 3.3 per cent. Unlike the U.S., growth
in Canada was broadly based and accompanied by significant
gains in employment. Canadian interest rates remained near
historically low levels despite a modest increase in July.
Consumer spending was strong with retail sales up 6.0 per
cent in 2002. Purchases of larger consumer durables, like
furniture and appliances, as well as new motor vehicles
drove the increase. The manufacturing sector in Canada
benefited from lower production costs on goods sold into the
U.S. market thanks to a weak Canadian dollar.
INTERNATIONAL ECONOMY
Overseas, economic conditions were stagnant in Japan. Real
GDP inched up by 0.2 per cent in 2002, following growth of
just 0.4 per cent in 2001. High oil prices, resulting from
the strike in Venezuela and rising tensions in the Middle
East hurt the economy. The outlook for Japanese economic
growth remains weak.
Elsewhere, the European economy confronted challenges
including weakening domestic demand and, in Germany, a
fragile banking system. The German economy grew just 0.2 per
cent in 2002, the slowest growth in nine years. Robust
growth in exports saved Europe's largest economy from
slipping into a recession last year.
The International Monetary Fund estimates that world growth
in gross domestic product rose from 2.3 per cent in 2001 to
3.0 per cent in 2002.
FINANCIAL MARKETS
Interest rates held steady for most of 2002. Before the 50
basis point reduction in the federal funds rate in November,
this key U.S. interest rate had been unchanged since
December 2001. In Canada, the Bank of Canada raised the
overnight target rate by 75 basis points between April and
July 2002 and then stayed on the sidelines for the remainder
of the year.
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CHART 1.2 EXTERNAL ECONOMIC GROWTH
[GRAPHIC]
Source: International Monetary Fund
The relative lack of movement in U.S. interest rates
reflected the weakness of the U.S. recovery. At the same
time, Canada's economy rebounded strongly and output moved
closer to full capacity. Rising geopolitical uncertainty and
the lack of a solid global recovery helped ease some of the
pressure to raise domestic interest rates.
CHART 1.3 SHORT-TERM INTEREST RATES
[GRAPHIC]
Source: Bank of Canada and Federal
Reserve Bank of San Francisco
The value of the Canadian dollar fell against the U.S.
dollar throughout 2002. For the year, the currency averaged
63.7 cents US, down 0.9 cents US from 2001. In January 2002,
the Canadian dollar closed at 62.0 US, the lowest value
since the Canadian dollar was established.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
CHAPTER 1 -- ECONOMIC REVIEW 9
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BRITISH COLUMBIA ECONOMY
The British Columbia economy grew 1.8 per cent in 2002,
after a 0.2 per cent decline in 2001. Growth was mainly due
to increased domestic activity. Consumer spending, which
accounts for about two-thirds of economic activity in the
province, benefited from continued low interest rates,
growth in employment and federal and provincial tax cuts.
Domestic demand remained relatively robust with housing
starts and retail sales recording significant annual per
cent growth increases, and final domestic demand posted 1.7
per cent growth.
Total employment rose 1.6 per cent in 2002 and the annual
unemployment rate rose by 0.8 percentage points to 8.5 per
cent. For the first time, over two million British
Columbians were employed.
Consumer demand remained strong with retail sales posting a
6.0 per cent increase in 2002, equivalent to the Canada-wide
growth rate. Residential investment also grew strongly with
housing starts averaging an increase of 25.5 per cent over
2001, the highest growth in a decade.
REAL GDP
In 2002, economic output advanced 1.8 per cent, as consumer
spending continued its fast-paced momentum from 1996.
Business investment declined in 2002, due to a 21.0 per cent
decrease in non-residential investment. The volume of
imports rose more than exports, which also slowed overall
economic growth. Consumer spending grew 2.7 per cent in
2002, continuing to be the main driver of economic growth.
CHART 1.4 BRITISH COLUMBIA GDP BY COMPONENT
[GRAPHIC]
Source: Statistics Canada
CAPITAL INVESTMENT
Total capital investment(1) in the province fell 4.7 per
cent to $21.9 billion in 2002. Public sector investment rose
11.4 per cent, but private sector
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(1) Investment figures generated by Statistics Canada based on a survey of
British Columbia businesses, institutions and government.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
10 CHAPTER 1 -- ECONOMIC REVIEW
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investment, which accounts for just over 75 per cent of
total investment, fell 8.7 per cent.
After a major capital spending increase in the mining,
quarrying and oil well industry in 2001, investment in the
industry fell 36.0 per cent in 2002 as energy prices
weakened. Information and cultural industries investment was
down 27.9 per cent, and finance and insurance fell 23.7 per
cent.
Meanwhile, despite big drops in capital spending in many
industries, housing investment was up 8.3 per cent
reflecting low mortgage interest rates and rising housing
starts through the year. Investment in education rose 19.3
per cent, and investment in health services was up 24.1 per
cent.
Investment figures for 2002 include spending on major
capital projects across the province including:
o The SKYTRAIN Millenium Line;
o Vancouver General Hospital Redevelopment;
o Kicking Horse Canyon (Golden to Yoho) 5 Mile Bridge
Project;
o University of British Columbia Life Sciences Centre.
EXPORTS
The value of foreign merchandise exports fell 9.2 per cent
in 2002. Exports to the U.S., the province's largest trading
partner, fell 11.8 per cent, largely due to a decline in the
value of energy exports. The value of exports to Japan
dropped 4.7 per cent, led by declines in pulp, and lumber.
Exports to the Pacific Rim, excluding Japan, rose 7.6 per
cent, and exports to Western Europe fell 14.4 per cent.
Appendix Table A1.7 provides detail on exports by major
market and commodity.
CHART 1.5 EXPORTS BY MARKET, 2002
[GRAPHIC]
Source: Statistics Canada
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
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As a result, the U.S. was the destination of a slightly
smaller share of British Columbia exports in 2002,
accounting for 67.6 per cent. Japan's share rose to 13.4 per
cent (see Chart 1.5).
Commodity prices were the main reason for the decline in the
value of exports in 2002. Electricity prices, in particular,
declined about 83 per cent from 2001 to 2002. This caused
the value of electricity exports to fall significantly,
despite an increase in the quantity exported. Natural gas
prices fell over $10 U.S./MmBTU from their peak in January
2001 to December. They have declined a further 41 per cent
in 2002 from the previous year. Forest product prices also
fell during 2002.
The softwood lumber dispute with the U.S. has affected
exports in an unexpected way. The U.S. imposed duties of
about 27 per cent on Canadian softwood lumber that crossed
the border. In order to minimize costs Canadian companies
responded to the duties by increasing production at
efficient mills, while less efficient mills closed. The
lumber market became oversupplied causing prices to fall. As
a result, while B.C. companies produced 11 per cent more
lumber measured in volume terms in 2002, the value of lumber
exports dropped 4 per cent.
o Lumber prices averaged $235 US per thousand board feet
in 2002, down from $248 US in 2001.
o Pulp prices averaged $463 US per tonne in 2002, down
significantly from $543 US in 2001. Prices fell
steadily during the year as global demand slowed.
o Newsprint prices followed pulp prices, averaging $468
US per tonne, down from $588 US in the previous year.
CHART 1.6 KEY COMMODITY PRICES
[GRAPHIC]
Source: Madison's Lumber Reporter and
Ministry of Energy and Mines
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POPULATION AND LABOUR FORCE CHARACTERISTICS
Historically, British Columbia's population has grown faster
than Canada's due to large net inflows of people from the
rest of the country and immigrants from other countries.
This changed in 1998. The province's population growth
slowed due to a net outflow of people to other parts of
Canada, while overall net migration remained positive. As
well, net international in-migration slowed in the wake of
the Asian downturn and the turnover of Hong Kong to China.
By 2000, British Columbia's population growth had slowed to
0.8 per cent, slightly below the national average and the
slowest rate since the province joined Canada in 1871.
Subsequently the province's population grew by 1.0 per cent
in 2001 and 2002, as the pace of migrants leaving BC slowed.
MAP 1.1 NET INTERPROVINCIAL AND INTERNATIONAL MIGRATION IN
B.C.
[GRAPHIC]
Note: Net population movement represents
total inflow less total outflow Source: Statistics
Canada
CHART 1.7 BRITISH COLUMBIA POPULATION BY AGE AND SEX, 2002
[GRAPHIC]
Source: BC Stats and Statistics Canada
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CHAPTER 1 -- ECONOMIC REVIEW 13
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The provincial labour force grew modestly over the past five
years, with the exception of 1998 and 2001 when general
economic indicators were weaker. The labour force expanded
by 2.6 per cent in 2002. Employment grew at an average
annual rate of 1.1 per cent from 1998 to 2002. The pace of
employment growth picked up from a 0.3 per cent decline in
2001 to a 1.6 per cent increase in 2002.
LABOUR AND INCOME DEVELOPMENTS
Employment levels rose in 2002 or stayed steady in all the
major sectors of the economy with the exception of the
public administration sector, which declined by 4.3 per
cent. Manufacturing sector employment crept up 0.4 per cent
led by growth in the food, paper, and transportation
equipment industries. The main negative pressure on goods
sector employment was from a 9.1 per cent decline in the
number of jobs in the wood products industry.
Employment in the trade sector rose 3.1 per cent in 2002,
adding 9,500 jobs to the total. Employment in the service
industries grew 1.4 per cent, largely due to expansion in
the health and welfare sector. Although B.C. experienced
robust job creation through the year, with around 78,000
jobs since December 2001, annual job growth was limited to
1.6 per cent, reflecting job losses in the latter part of
2001.
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TABLE 1.1 BRITISH COLUMBIA POPULATION AND LABOUR MARKET STATISTICS
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Units 1998 1999 2000 2001 2002
Population (as at July 1) (thousands) 3,997.1 4,028.3 4,060.1 4,101.6 4,141.3
(% change) 0.9 0.8 0.8 1.0 1.0
Net Migration 10,745 20,339 18,506 31,634 23,498
International 28,266 32,752 33,289 37,966 28,835
Interprovincial -17,521 -12,413 -14,783 -6,332 -5,337
Labour Force (thousands) 2,051.2 2,079.1 2,099.7 2,103.5 2,157.8
(% change) 0.5 1.4 1.0 0.2 2.6
Employment (thousands) 1,870.2 1,906.4 1,949.1 1,942.4 1,973.4
(% change) 0.1 1.9 2.2 -0.3 1.6
Unemployment Rate (%) 8.8 8.3 7.2 7.7 8.5
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Source: Statistics Canada
PRICES AND WAGES
The rate of inflation increased substantially in the second
half of the year and peaked at an annual rate of 3.5 per
cent in November and December of 2002. This was due to a
bounce back from the very low levels of inflation that were
recorded in the months immediately after September 11, 2001.
Personal income increased 1.5 per cent in 2002, reflecting
moderate employment growth, and increases in average weekly
earnings. Total wages and salaries grew 2.4 per cent between
2001 and 2002, bolstered by high-paying jobs in high-tech as
well as in the resource industry, but investment income
weakened, reflecting lower interest rates and a weak stock
market. Corporate profits fell slightly for the second year
in a row, down 2.8 per cent in 2001 and 1.9 per cent last
year.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
14 CHAPTER 1 -- ECONOMIC REVIEW
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TABLE 1.2 PRICE AND EARNINGS INDICES
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Units 1998 1999 2000 2001 2002
Consumer Price (1992=100) 110.0 111.2 113.3 115.2 117.9
Index
(British Columbia) (% change) 0.3 1.1 1.9 1.7 2.3
Average weekly ($) 643.06 650.96 662.81 667.86 674.78
earnings
(% change) 0.7 1.2 1.8 0.8 1.0
Wages and salaries($ millions) 54,174 56,263 60,270 61,496 62,985
(% change) 2.1 3.9 7.1 2.0 2.4
Personal income ($ millions) 98,135 101,384 107,460 110,258 111,955
(% change) 2.3 3.3 6.0 2.6 1.5
Corporate profits ($ millions) 7,335 9,121 10,300 10,009 9,821
(pre-tax)
(% change) -11.5 24.3 12.9 -2.8 -1.9
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Source: Statistics Canada
CONSUMER EXPENDITURE AND HOUSING
Consumer spending remained relatively robust through the
year. The total value of retail sales rose 6.0 per cent in
2002, following a 6.0 per cent increase in 2001. The
increase was mainly due to the purchases of large consumer
durables including new motor vehicles, furniture and
appliances.
Housing starts soared in the province through the year as
mortgage interest rates continued to decline. For 2002,
housing starts totaled 21,625 units, a 25.5 per cent
increase from 2001 and the largest increase in a decade.
CHART 1.8 BUILDING PERMITS BY ACTIVITY
[GRAPHIC]
Source: Statistics Canada
As a result of improving housing demand, the value of
residential building permits rose 37.4 per cent to $3.9
billion. The housing sector boom resulted from a combination
of several factors. Strong employment growth, very low
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
CHAPTER 1 -- ECONOMIC REVIEW 15
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mortgage rates, the scarcity of dwellings available for rent
or sale, and rising disposable income together created
exceptional conditions that attracted consumers to the new
home market. The value of non-residential building permits
fell 16.6 per cent to $1.8 billion.
INDUSTRIAL STRUCTURE AND PERFORMANCE
The province's rich endowment of natural resources and their
development historically formed the backbone of British
Columbia's economic structure. In the past, the economy was
largely based on primary and secondary forest production for
export markets. Other natural resource sectors, such as
agriculture, mining (including oil and gas) and fishing
(including aquaculture) also contributed significantly.
In recent years, a more diversified economy has emerged,
supported by many non-resource activities such as film,
tourism, high-technology industries including software and
biotechnology, and other value-added industries. The British
Columbia economy is steadily maturing into a more broadly
based structure that is becoming less vulnerable to changes
in international markets for natural resources. By
comparison to other Canadian provinces, B.C.'s service
sector is one of the largest as a share of GDP.
CHART 1.9 SERVICE INDUSTRIES IN BRITISH COLUMBIA
[GRAPHIC]
Source: Statistics Canada
The distribution of industrial output reflects the declining
relative share of natural resources in British Columbia's
gross domestic product in the past decade or so. The
agriculture, forestry, fishing, hunting and mining
industries (including their support activities) produced 6.5
per cent of total real gross domestic product in 2002, down
from 7.0 per cent in 1992. Manufacturing industries
(sawmills, pulp mills, factories, smelters, etc.) which, for
the most part, process primary resource products into goods
of higher value, produced 10.5 per cent of the total real
gross domestic product in 2002, compared to 12.0 per cent in
1992.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
16 CHAPTER 1 -- ECONOMIC REVIEW
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In total, the goods-producing sector, including the
construction and utilities industries, produced 24 per cent
of the province's total output in 2002. This was down from
25 per cent a year earlier, and 29 per cent in 1992.
Service-producing industries generated 76 per cent of the
total provincial gross domestic product in 2002. Industries
within the service sector include: transportation,
communications and storage; wholesale and retail trade;
finance, insurance and real estate; community, business and
personal services; and public administration and defense.
The goods-producing sector employed only 20 per cent of
workers in 2002, down from 23 per cent in 1992. With the
declining share of natural resources in provincial output,
the percentage of people employed in the goods sector has
also seen a declining trend in recent years. The
service-producing sector is the province's largest employer,
accounting for nearly 80 per cent of total employment in
2002.
HIGH TECH
The high technology sector(2) has been a leading
performer in British Columbia's economy, and outperformed
other sectors in revenue, employment, and wage and salary
growth. However, the global meltdown in high-tech in 2001
also affected British Columbia's high-tech industry, as
total output from the high-tech sector shrank by 4.0 per
cent in 2001. This was the first time since 1996 that GDP
growth in the high-tech sector was below the provincial
average. Revenue and earnings also fell due to a downturn
in the high-tech manufacturing sector.
CHART 1.10 TRENDS IN HIGH TECHNOLOGY EMPLOYMENT IN B.C.
[GRAPHIC]
Source: Statistics Canada
Although the service industries dominate the high-tech
sector in terms of size, it has been the manufacturers that
have provided much of the stimulus for GDP growth in the
last decade. High-tech manufacturing industries' average
- -----
(2) Data for the high technology sector in 2002 was not available at the time
of publication.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
CHAPTER 1 -- ECONOMIC REVIEW 17
- --------------------------------------------------------------------------------
annual GDP growth rate was 11.7 per cent over the last ten
years, compared to 4.5 per cent for high-tech service
industries over the same period.
Employment in B.C.'s high-tech sector has grown rapidly over
the past decade. The year 2001 was no exception as
employment grew substantially to 45,550 workers, up 5.2 per
cent from 2000. This compares to -0.3 per cent growth for
employment in all sectors in the province(3). The high-tech
sector in B.C. gained approximately 2,260 jobs in 2001.
High-tech employment growth outpaced the expansion of
overall employment in most years in the last decade. This
long run of growth has caused the number of workers in the
high-tech sector to increase by almost 68 per cent over the
last ten years. The high-tech sector now accounts for 2.9
per cent of all jobs, up from 2.0 per cent in 1991.
TOURISM
The tourism industry has been another bright spot in British
Columbia's economy in the past decade, growing faster than
the overall provincial economy. Tourism grew rapidly in 1999
and 2000, buoyed by a low Canadian dollar. This fast-paced
growth continued into the first half of 2001 until the
terrorist attacks on September 11th, when tourism revenue
tumbled as a result of the reduced number of tourists.
However, tourism room revenue still grew 2.2 per cent in
2001. Room revenues increased by the same amount again in
2002, topping $1.5 billion.
CHART 1.11 B.C. TOURISM INDUSTRY
[GRAPHIC]
Source: BC Stats
- -----
(3) Economy wide figures are based on the Labour Force Survey.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
18 CHAPTER 1 -- ECONOMIC REVIEW
- --------------------------------------------------------------------------------
ENERGY IN BRITISH COLUMBIA
British Columbia is emerging as a key player in North America's energy future.
Its oil, natural gas and hydroelectric production is already tied into the North
American market through a series of pipelines and transmission interconnects.
Furthermore, with its large reserves of natural gas and untapped potential,
British Columbia has the capacity to significantly increase its energy
production and exports in the future.
BC's Economic Advantages:
o Highly productive onshore oil and gas industry with three of the largest
recent natural gas finds in North America (Ladyfern, Monkman and Greater
Sierra);
o Significant coalbed methane potential;
o Seven major undeveloped onshore basins;
o Huge offshore potential and a new, dedicated offshore team to work with
First Nations, communities and the federal government to develop BC's
offshore oil and gas resources;
o Large and diverse hydro production, and the second lowest industrial rates
in North America;
o Connected to U.S. infrastructure and energy hubs;
o Centre of North America's fuel cell industry; and
o Tremendous potential for solar, wind, geothermal, ocean, small hydro,
biofuels and biomass energy.
British Columbia's natural gas production accounts for three percent of North
American output. However, while U.S. production has remained static, British
Columbia's production has almost doubled over the last 10 years. British
Columbia has huge proven reserves and undiscovered resource potential. With
its well-developed
[GRAPHIC]
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
CHAPTER 1 -- ECONOMIC REVIEW 19
- --------------------------------------------------------------------------------
pipeline infrastructure and close proximity to the U.S. market, British Columbia
will continue to expand its role in the North American energy market.
o British Columbia' producing fields (in the north east of the province) have
marketable natural gas reserves of 8.9 trillion cubic feet (Tcf).
o Even in the producing area of northeastern BC there is a further 14 to 30
Tcf of undiscovered resources potential.
o Several coalbed methane (CBM) evaluation projects are underway.
o British Columbia produces 16 million barrels (MMBO) of oil per year.
o British Columbia produces 1.1 Tcf of natural gas per year.
[GRAPHIC]
Under-Explored Basins
Resource Potential Producing Area of NE BC
Gas CBM Oil Gas Oil
Onshore 18 Tcf 89 Tcf 7,700 MMBO Marketable Remaining 8-9 Tcf 160 MMBO
Reserves
Offshore 42 Tcf -- 10,000 MMBO Resource Potential 14-30 Tcf 173 MMBO
(Marketable)
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
20 CHAPTER 1 -- ECONOMIC REVIEW
- --------------------------------------------------------------------------------
B.C.'S ECONOMIC DEVELOPMENT INITIATIVES
British Columbia is committed to building strong and vibrant economy
characterized by new investment, new job opportunities and a higher standard of
living for British Columbians. Several key initiatives include:
DEREGULATION
As part of the deregulation initiative more than 28,000 regulatory requirements
have been eliminated, providing greater flexibility for businesses and making
the province an attractive location to invest.
Companies will soon be able to use a single business number to complete several
business processes at one-time, including incorporations, re-organizations and
data maintenance. The new BUSINESS CORPORATIONS ACT provides greater flexibility
and helps to make the province a more attractive location to do business. The
new act adopted the latest and best ideas from other jurisdictions, clarifies
the rules and embraced technological advances such as electronic filing.
ENERGY
A new energy plan was designed to capitalize on British Columbia's competitive
advantage in energy by increasing investment in the energy sector and
maintaining low-cost electricity and public ownership of BC Hydro.
TRANSPORTATION INFRASTRUCTURE PLAN
The government has announced a multi-year plan to open up the province by
building an integrated and competitive transportation system throughout British
Columbia.
In addition to a new transportation investment plan, the government has
implemented a new capital asset management framework that encourages new ways
to provide public sector infrastructure. The framework provides for
alternative service delivery options, including public private partnerships
(P3s).
FORESTRY POLICY REFORM
The forest industry remains a cornerstone of the British Columbia economy. The
government has taken several steps to improve the long-term viability of the
industry and improve its competitiveness. The new FOREST AND RANGE PRACTICES ACT
replaces the Forest Practices Code with a results-based regulatory regime. The
new regime came into effect April 1, 2003 and will substantially reduce industry
costs while ensuring sustainability and protecting other values associated with
British Columbia's forests.
In addition, the province has embarked on series of reforms to transform the
industry to a more market - based approach. These reforms include changes to the
tenure system such as removal of minimum cut levels, more auction based timber
sales, and an end to the appurtenancy system.
COMPETITIVE TAX REGIME
British Columbia's tax system is now more competitive. After cutting personal
income taxes by 25 per cent, the overall level of taxes for British Columbia
families are the second lowest in the country. And the province has the lowest
income tax rates in the country for the bottom two tax brackets.
A substantial investment has also been made in restoring B.C.'s business tax
climate. The province's ability to attract and retain investment has been
improved due to a lower corporate income tax rate, the elimination of the
corporate capital tax, a sales tax exemption for production machinery and
equipment, and sector specific tax reductions.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 1
22 APPENDIX 1 -- ECONOMIC REVIEW
- --------------------------------------------------------------------------------
TABLE A1.1 SUMMARY OF ECONOMIC ACTIVITY FOR BRITISH COLUMBIA
- --------------------------------------------------------------------------------
UNITS 1988 1989 1990 1991 1992
- --------------------------------------------------------------------------------------------------------------------------
Annual aggregate indicators
Population (1) ...................................... (thousands) 3,115.7 3,198.5 3,291.4 3,373.4 3,470.3
Nominal gross domestic product (at market prices).... ($ millions) 69,408 75,582 79,350 81,849 87,242
Real gross domestic product (chained 1997 $) ........ ($ millions) 91,395 94,400 95,722 95,897 98,373
Personal income ..................................... ($ millions) 58,298 65,009 72,038 75,336 78,610
Capital investment .................................. ($ millions) -- -- -- 17,370 17,979
Business incorporations ............................. (number) 18,703 21,817 19,550 18,528 20,406
Labour statistics
Labour force ........................................ (thousands) 1,599 1,659 1,700 1,749 1,804
Employment .......................................... (thousands) 1,435 1,509 1,555 1,573 1,620
Unemployment rate ................................... (per cent) 10.2 9.0 8.6 10.1 10.2
Prices and earnings
Consumer price index (British Columbia) ............. (1992=100) 83.9 87.7 92.4 97.4 100.0
Consumer price index (Vancouver) .................... (1992=100) 83.8 87.5 92.3 97.1 100.0
Average weekly wage rate (2) ........................ ($) -- -- -- -- --
Wages and salaries (2) .............................. ($ millions) -- -- -- -- --
Financial indicators
Prime rate .......................................... (per cent) 10.83 13.33 14.06 9.94 7.48
Canada/U.S. exchange rate ........................... (U.S. cents) 81.25 84.46 85.71 87.28 82.73
Conventional (5 year) mortgage rate ................. (per cent) 11.65 12.06 13.35 11.13 9.51
Other indicators
Manufacturing shipments ............................. ($ millions) -- -- -- -- 24,398
Retail sales (3) .................................... ($ millions) 20,802 22,791 24,200 23,613 24,512
Housing starts ...................................... (number) 30,487 38,894 36,720 31,875 40,621
Non-residential building permits .................... ($ millions) 1,647 1,812 1,833 1,803 2,082
Tourism gross domestic product (2) .................. ($ millions) -- -- -- -- --
High-tech gross domestic product (5) ................ ($ millions) -- -- -- 1,674 1,760
B.C. product exports ................................ ($ millions) 17,830 18,334 16,650 15,301 16,363
Commodity data
Lumber production ................................... (thousand m3) 36,736 35,952 33,514 31,406 33,396
Log production (timber harvest) ..................... (thousand m3) 86,808 87,415 78,318 73,677 74,006
Market pulp shipments ............................... (000 tonnes) 4,141 4,189 3,547 4,014 3,825
Newsprint, other paper and paperboard production .... (000 tonnes) 2,878 2,846 2,994 2,721 2,682
Petroleum and natural gas production ................ ($ millions) 736 783 899 858 890
Coal production ..................................... (000 tonnes) 24,813 25,134 24,367 24,848 18,094
Solid mineral production ............................ ($ millions) 3,224 3,180 2,971 2,755 2,537
Electric power generated ............................ (GW.h) 60,943 57,655 60,662 62,981 64,058
Farm cash receipts .................................. ($ millions) 1,206 1,255 1,299 1,340 1,427
Landed value of fish products ....................... ($ millions) 573 513 559 492 533
- ------------------------------------------------------------------------------------------------------------------------------------
(1) As at July 1. Data take into account adjustments made for net census
undercount in 1991 and 1996, and non-permanent residents.
(2) Data prior to 1997 are not available.
(3) Retail sales data prior to 1991 include the old federal manufacturer's
sales tax (FST); data for 1991 onwards does not include the goods and
services tax.
(4) Data not available.
(5) Data prior to 1991 are not available.
Sources: Statistics Canada and BC STATS, Ministry of Finance, based on federal,
provincial and industry data.
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 1 -- ECONOMIC REVIEW 23
- --------------------------------------------------------------------------------
TABLE A1.1 SUMMARY OF ECONOMIC ACTIVITY FOR BRITISH COLUMBIA - CONTINUED
- ---------------------------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2001-2002
- ---------------------------------------------------------------------------------------------------------------
(per cent)
3,571.5 3,681.8 3,784.0 3,882.0 3,959.7 3,997.1 4,028.3 4,060.1 4,101.6 4,141.3 1.0
94,077 100,512 105,670 108,865 114,383 115,641 120,599 129,356 130,859 134,365 2.7
102,770 105,669 108,194 110,857 114,383 115,883 119,122 124,187 123,912 126,141 1.8
81,914 85,703 90,056 92,661 95,925 98,135 101,384 107,460 110,258 111,955 1.5
18,853 21,335 20,556 19,411 22,552 20,643 20,652 21,025 22,934 21,853 -4.7
22,955 25,774 23,846 22,848 22,958 20,759 21,009 21,515 19,749 21,262 7.7
1,856 1,928 1,958 1,995 2,040 2,051 2,079 2,100 2,104 2,158 2.6
1,676 1,754 1,792 1,821 1,869 1,870 1,906 1,949 1,942 1,973 1.6
9.7 9.0 8.4 8.7 8.4 8.8 8.3 7.2 7.7 8.5 10.4
103.5 105.5 107.9 108.9 109.7 110.0 111.2 113.3 115.2 117.9 2.3
103.6 105.7 108.4 109.2 109.8 110.4 111.4 113.9 116.0 118.6 2.2
-- -- -- -- 610.7 618.4 625.2 637.1 645.7 667.5 3.4
-- -- -- -- 53,035 54,174 56,263 60,270 61,496 62,985 2.4
5.94 6.88 8.65 6.06 4.96 6.60 6.44 7.27 5.81 4.21 -27.5
77.51 73.22 72.86 73.34 72.22 67.41 67.31 67.32 64.56 63.68 -1.4
8.78 9.53 9.16 7.93 7.07 6.93 7.56 8.35 7.40 7.02 -5.2
26,583 30,333 34,207 32,932 33,496 31,757 35,616 37,768 34,106 34,236 0.4
26,553 29,442 31,496 32,071 33,736 33,049 33,684 35,821 37,979 40,273 6.0
42,807 39,408 27,057 27,641 29,351 19,931 16,309 14,418 17,234 21,625 25.5
1,944 1,772 1,966 1,957 1,960 2,022 2,104 2,089 2,125 1,771 -16.7
-- -- -- -- 4,739 4,892 5,047 5,400 5,587 n.a.(4) --
1,918 1,964 2,283 2,179 2,608 2,716 2,961 3,435 3,449 n.a.(4) --
19,064 22,894 26,893 25,765 26,761 26,045 29,113 33,750 31,780 28,843 -9.2
33,935 33,671 32,611 32,671 31,562 30,238 32,397 32,352 30,182 33,555 11.2
79,239 75,649 76,472 75,213 68,628 64,967 75,997 76,984 72,009 73,386 1.9
4,040 4,763 4,572 4,390 4,532 4,462 4,995 5,152 4,710 4,493 -4.6
3,052 2,961 2,850 2,834 2,605 2,659 3,039 3,093 2,900 2,920 0.7
1,089 1,270 1,040 1,333 1,588 1,573 2,091 4,783 5,666 4,256 -24.9
19,482 22,966 24,515 26,179 27,812 25,276 24,810 26,152 26,482 24,409 -7.8
2,371 2,676 3,437 3,087 3,131 3,025 2,565 2,879 2,866 2,814 -1.8
58,774 61,015 58,006 71,765 66,961 67,710 68,045 68,241 57,332 64,888 13.2
1,452 1,543 1,599 1,712 1,759 1,835 1,938 2,074 2,249 2,242 -0.3
605 735 587 589 604 547 613 659 645 n.a.(4) --
- ----------------------------------------------------------------------------------------------------------
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
24 APPENDIX 1 -- ECONOMIC REVIEW
- --------------------------------------------------------------------------------
TABLE A1.2 BRITISH COLUMBIA REAL GDP AT MARKET PRICES, EXPENDITURE BASED
- --------------------------------------------------------------------------------
Consumer Government Residential Non- Machinery
Residential and Equipment Business
Expenditure Expenditure Investment Investment Investment Investment Exports Imports Real GDP
- -----------------------------------------------------------------------------------------------------------------------------------
(millions of 1997 $, chained)
- -----------------------------------------------------------------------------------------------------------------------------------
1997 72,380 22,266 8,716 5,791 6,799 21,306 49,691 55,143 114,383
1998 73,585 22,875 7,543 4,704 7,340 19,598 51,092 54,559 115,883
1999 75,504 22,820 7,048 5,004 7,711 19,800 55,060 58,083 119,122
2000 78,051 23,391 7,048 5,202 8,626 20,915 57,403 60,126 124,187
2001 80,289 24,734 7,739 5,459 8,658 21,896 54,962 60,720 123,912
2002 82,461 24,926 8,951 4,315 8,245 21,468 55,429 61,886 126,141
- -----------------------------------------------------------------------------------------------------------------------------------
(annual percentage change)
- -----------------------------------------------------------------------------------------------------------------------------------
1998 1.7 2.7 -13.5 -18.8 8.0 -8.0 2.8 -1.1 1.3
1999 2.6 -0.2 -6.6 6.4 5.1 1.0 7.8 6.5 2.8
2000 3.4 2.5 0.0 4.0 11.9 5.6 4.3 3.5 4.3
2001 2.9 5.7 9.8 4.9 0.4 4.7 -4.3 1.0 -0.2
2002 2.7 0.8 15.7 -21.0 -4.8 -2.0 0.8 1.9 1.8
-------
Source: Statistics Canada
TABLE A1.3 BRITISH COLUMBIA GDP AT BASIC PRICES, BY INDUSTRY
- --------------------------------------------------------------------------------
Fish- Min- Trans- Fin- Pub-
ing ing porta- ance, lic
Crop Hunt- For- Oil tion Whole- insur- Adminis-
and ing estry and and sale ance tration
Animal and and Gas Manu- Cons- Ware- and and Other and
Product- Trap- Log- Extrac- factur- truc- Utili- hous- Retail Real Ser- De- Total
ion ping ging tion ing tion ties ing Trade Estate vices fence GDP
- ------------------------------------------------------------------------------------------------------------------------------------
(millions of 1997 $)
1997 968 201 3,610 2,646 11,479 6,434 2,468 6,590 10,982 23,606 29,807 5,764 104,554
1998 917 131 3,683 2,855 11,323 5,895 2,526 6,607 11,735 23,912 30,720 5,849 106,151
1999 999 104 3,454 2,803 12,773 5,826 2,599 6,696 11,866 24,465 31,352 5,915 108,851
2000 1,049 96 3,480 3,199 13,431 5,879 2,645 6,898 12,392 25,396 33,116 5,968 113,550
2001 1,059 97 3,292 3,450 12,058 5,905 2,461 6,754 12,567 26,214 34,528 6,154 114,539
2002 1,073 101 3,192 3,203 12,249 5,804 2,507 6,763 13,418 27,144 35,238 6,195 116,888
- ------------------------------------------------------------------------------------------------------------------------------------
(annual percentage change)
- ------------------------------------------------------------------------------------------------------------------------------------
1998 -5.3 -35.0 2.0 7.9 -1.4 -8.4 2.3 0.3 6.9 1.3 3.1 1.5 1.5
1999 9.0 -20.4 -6.2 -1.8 12.8 -1.2 2.9 1.3 1.1 2.3 2.1 1.1 2.5
2000 5.0 -7.5 0.8 14.1 5.2 0.9 1.8 3.0 4.4 3.8 5.6 0.9 4.3
2001 0.9 0.5 -5.4 7.8 -10.2 0.5 -7.0 -2.1 1.4 3.2 4.3 3.1 0.9
2002 1.3 5.0 -3.0 -7.1 1.6 -1.7 1.9 0.1 6.8 3.5 2.1 0.7 2.1
- ------------------------------------------------------------------------------------------------------------------------------------
Source: Statistics Canada
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
25 APPENDIX 1-- ECONOMIC REVIEW
- --------------------------------------------------------------------------------
TABLE A1.4 BRITISH COLUMBIA GDP, INCOME BASED
Capital
Net Income Inven- Net Indir- Cons. Sta-
Corp- Interest Accr- of Non- tory Domes- ect Allowances tisti- GDP GDP
oration and Misc- ued Net farm unin- Valu- tic Pro- Taxes and Misc. cal at at
profits ellaneous Income corporated ation duct at less Valuation Dis- Market Basic
Labour before Investment of Farm Busin- Adjust- Basic Subsi- Adjustments crep- Pri- Pri-
Income taxes Income Operators ess ment Prices dies ments ency ces ces
- ---------------------------------------------------------------------------------------------------------------------------------
($ millions)
- ---------------------------------------------------------------------------------------------------------------------------------
1997...60,681 8,286 8,444 89 7,780 101 90,040 14,480 14,526 -4 114,383 104,562
1998...61,965 7,335 8,355 166 8,285 -24 90,860 14,515 15,050 -6 115,641 105,904
1999...64,045 9,121 8,406 187 8,660 -408 94,829 14,980 15,611 -3 120,599 110,437
2000...68,369 10,300 10,302 188 8,908 -487 102,453 15,544 16,178 54 129,356 118,685
2001...69,882 10,009 8,344 319 9,167 -23 102,600 15,908 16,958 295 130,859 119,853
2002...71,348 9,821 9,225 266 9,691 -356 104,796 16,486 17,676 208 134,365 122,680
- -----------------------------------------------------------------------------------------------------------------------------------
(annual percentage change)
- -----------------------------------------------------------------------------------------------------------------------------------
1998... 2.1 -11.5 -1.1 86.5 6.5 -123.8 0.9 0.2 3.6 50.0 1.1 1.3
1999... 3.4 24.3 0.6 12.7 4.5 1,600.0 4.4 3.2 3.7 -50.0 4.3 4.3
2000... 6.8 12.9 22.6 0.5 2.9 19.4 8.0 3.8 3.6 -1,900.0 7.3 7.5
2001... 2.2 -2.8 -19.0 69.7 2.9 -95.3 0.1 2.3 4.8 446.3 1.2 1.0
2002... 2.1 -1.9 10.6 -16.6 5.7 1,447.8 2.1 3.6 4.2 -29.5 2.7 2.4
- -----------------------------------------------------------------------------------------------------------------------------------
Source: Statistics Canada
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
26 APPENDIX 1 -- ECONOMIC REVIEW
- ------------------------------------------------------------------------------
TABLE A1.5 EMPLOYMENT BY INDUSTRY IN BRITISH COLUMBIA
- ------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
- -----------------------------------------------------------------------------------------------------------------------------
(thousands)
TOTAL - ALL INDUSTRIES .............. 1,620 1,676 1,754 1,792 1,821 1,869 1,870 1,906 1,949 1,942 1,973
Primary industries .................. 79 79 80 81 85 88 84 78 85 69 69
AGRICULTURE ........................ 31 34 31 26 30 33 33 29 30 26 30
FORESTRY ........................... 27 26 31 36 32 33 30 30 37 26 26
FISHING AND TRAPPING ............... 5 6 6 5 5 5 4 4 5 5 3
MINING ............................. 16 12 12 14 18 17 17 15 13 12 10
Manufacturing ....................... 168 179 184 189 195 197 196 192 205 196 197
FOOD, BEVERAGES & TOBACCO .......... 21 22 27 22 24 26 26 22 24 26 27
WOOD PRODUCTS ...................... 46 49 50 43 44 45 44 42 47 50 45
PAPER .............................. 21 22 21 24 23 23 23 22 18 15 17
PRINTING & RELATED SUPPORT ACTIVITIES 9 8 9 9 12 10 8 9 11 8 9
PRIMARY METALS ..................... 7 8 9 12 12 9 9 9 11 8 6
METAL FABRICATION .................. 10 9 9 10 9 11 11 12 13 13 13
TRANSPORTATION EQUIPMENT ........... 8 7 8 9 9 13 13 13 13 10 13
OTHER MANUFACTURING ................ 47 55 51 60 63 62 64 63 70 66 67
Construction ........................ 114 114 126 125 120 123 118 115 113 115 121
GENERAL CONTRACTORS ................ 43 42 47 44 42 39 37 42 42 41 41
SPECIAL TRADE CONTRACTORS .......... 72 72 78 82 77 84 81 74 71 74 79
Utilities ........................... 11 12 13 11 11 10 11 12 11 12 12
Transportation and warehousing ...... 101 101 99 97 99 109 106 118 114 107 110
TRANSPORTATION ..................... 99 95 96 93 96 103 103 114 111 103 105
WAREHOUSING AND STORAGE ............ 2 5 3 4 4 6 3 4 3 4 5
Trade ............................... 265 275 289 300 294 302 294 309 303 310 319
WHOLESALE TRADE .................... 60 64 64 66 68 71 62 80 67 69 73
RETAIL TRADE ....................... 205 211 226 234 226 230 233 229 236 241 246
Finance, Insurance, Real Estate
& Leasing .......................... 109 114 118 118 124 127 123 120 120 116 119
FINANCE ............................ 42 47 48 48 51 56 53 54 53 54 54
INSURANCE .......................... 24 22 25 22 24 27 24 23 28 24 23
REAL ESTATE ........................ 35 35 35 38 39 33 38 34 30 27 31
LEASING ............................ 9 10 10 10 10 11 8 10 9 12 11
Service industries .................. 674 700 746 769 787 814 845 873 908 929 942
EDUCATION AND RELATED SERVICES ..... 106 113 120 123 118 122 120 128 135 136 140
HEALTH AND WELFARE SERVICES ........ 163 164 171 177 183 190 195 195 202 204 217
INFORMATION, CULTURE & RECREATION .. 65 67 79 86 85 89 94 92 99 106 106
SERVICES TO BUSINESS MANAGEMENT .... 127 142 154 157 166 175 190 201 208 215 211
ACCOMMODATION AND FOOD SERVICES .... 131 121 129 135 143 145 152 153 164 171 171
MISCELLANEOUS SERVICES ............. 82 92 93 91 92 93 94 105 99 98 97
Public administration ............... 99 101 100 104 107 100 93 90 90 89 85
FEDERAL ADMINISTRATION ............. 35 34 33 33 37 34 29 32 32 30 31
PROVINCIAL ADMINISTRATION .......... 33 30 34 38 36 32 29 28 26 32 26
LOCAL ADMINISTRATION ............... 32 38 33 34 34 34 35 31 31 27 28
- -----------------------------------------------------------------------------------------------------------------------------
Source: Statistics Canada, Labour Force Survey (unpublished data).
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 1-- ECONOMIC REVIEW 27
- --------------------------------------------------------------------------------
TABLE A1.6 CAPITAL INVESTMENT BY INDUSTRY
- ------------------------------------------------------------------------------
PRELIMINARY
-------------------------------- 2001 2002
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL INTENTIONS TO TO
1998 1999 2000 2001 2002 2003 2002 2003
- -----------------------------------------------------------------------------------------------------------------------------------
($ millions) (per cent)
Agriculture, forestry, fishing and hunting.. 426.6 346.1 353.8 293.1 289.8 331.7 -1.1 14.5
Mining, quarrying and oil well industries... 1,723.2 1,126.4 1,749.0 2,917.9 1,867.6 2,008.6 -36.0 7.5
Manufacturing .............................. 1,187.1 1,249.2 1,355.0 1,268.0 1,060.8 1,271.8 -16.3 19.9
Construction ............................... 296.8 268.2 250.9 264.1 277.8 293.3 5.2 5.6
Transport & warehousing .................... 1,767.9 2,024.9 2,231.8 1,950.8 2,097.1 1,854.7 7.5 -11.6
Utilities .................................. 908.2 874.9 832.7 935.2 1,188.6 1,316.6 27.1 10.8
Wholesale .................................. 66.1 50.0 71.2 79.2 59.9 63.9 -24.4 6.7
Retail trade ............................... 643.5 726.7 819.8 843.9 774.6 820.7 -8.2 6.0
Finance and insurance ...................... 1,627.8 1,827.2 1,605.2 1,419.1 1,082.6 1,195.7 -23.7 10.4
Real estate, rental and leasing ............ 1,401.7 1,273.1 1,310.7 1,382.0 1,240.0 1,291.4 -10.3 4.1
Information and cultural industries ........ n.a. 1,150.1 961.3 1,403.5 1,011.7 905.9 -27.9 -10.5
Professional, scientific and technical...... 335.6 226.8 272.6 285.6 255.5 268.4 -10.5 5.0
Management of companies and enterprises .... n.a. 38.8 15.8 28.7 20.2 21.5 -29.6 6.4
Admin, waste and remediation services ...... 109.3 112.9 78.3 106.7 69.4 77.4 -35.0 11.5
Arts, entertainment and recreation ......... 85.2 105.2 83.0 111.2 79.9 107.2 -28.1 34.2
Accommodation and food services ............ 295.8 247.9 230.5 213.9 232.4 220.5 8.6 -5.1
Education services ......................... 487.5 654.2 667.7 616.3 735.0 743.8 19.3 1.2
Health services ............................ 219.5 420.8 439.1 540.4 670.5 680.0 24.1 1.4
Public administration ...................... 1,756.6 2,276.4 2,102.1 2,131.3 2,225.4 2,302.5 4.4 3.5
Other services ............................. 109.1 148.0 137.9 159.1 172.9 163.0 8.7 -5.7
Housing .................................... 5,860.4 5,209.9 5,185.8 5,705.6 6,176.8 6,709.4 8.3 8.6
---------------------------------------------------------------
TOTAL (1) .................................. 20,642.8 20,651.6 21,025.4 22,934.3 21,852.8 22,965.9 -4.7 5.1
---------------------------------------------------------------
---------------------------------------------------------------
Public ..................................... 3,723.8 4,612.3 4,617.6 4,543.2 5,062.5 5,227.4 11.4 3.3
Private .................................... 16,918.9 16,039.3 16,407.8 18,391.1 16,790.3 17,738.6 -8.7 5.6
---------------------------------------------------------------
TOTAL ...................................... 20,642.8 20,651.6 21,025.4 22,934.3 21,852.8 22,965.9 -4.7 5.1
---------------------------------------------------------------
---------------------------------------------------------------
Machinery and equipment .................... 8,028.0 7,841.3 8,359.4 8,869.1 8,439.3 8,831.6 -4.8 4.6
Construction ............................... 12,614.8 12,810.4 12,666.0 14,065.1 13,413.6 14,134.3 -4.6 5.4
---------------------------------------------------------------
TOTAL ...................................... 20,642.8 20,651.6 21,025.4 22,934.3 21,852.8 22,965.9 -4.7 5.1
---------------------------------------------------------------
---------------------------------------------------------------
Note: Totals may not add due to rounding.
(1) Totals may not add due to some data not being disclosed for confidentiality
reasons
Source: Statistics Canada.
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
28 APPENDIX 1 -- ECONOMIC REVIEW
- ------------------------------------------------------------------------------
TABLE A1.7 BRITISH COLUMBIA INTERNATIONAL GOODS EXPORTS BY MAJOR MARKET AND
SELECTED COMMODITIES, 2002
- ------------------------------------------------------------------------------
COMMODITY U.S. JAPAN EUROPEAN OTHER TOTAL -
UNION(1) MARKETS ALL COUNTRIES
- -------------------------------------------------------------------------------------------------------------------------
Solid wood products .................................... 6,963 1,761 232 332 9,288
Lumber (softwood) ..................................... 4,622 1,242 213 266 6,343
Cedar shakes and shingles ............................. 294 0 2 3 299
Plywood (softwood) .................................... 350 45 8 2 405
Other panel products .................................. 500 33 1 7 541
Selected value-added wood products .................... 809 138 4 22 973
Other ................................................. 388 302 4 34 728
Pulp and paper products ................................ 2,284 464 903 1,418 5,069
Pulp .................................................. 620 299 864 1,028 2,811
Newsprint ............................................. 411 136 0 131 678
Paper, paperboard - excluding newsprint ............... 1,126 26 38 241 1,431
Other ................................................. 126 3 1 19 149
Agriculture and food other than fish ................... 1,070 123 35 196 1,424
Fruit and nuts ........................................ 128 11 3 12 154
Vegetables ............................................ 192 11 4 13 220
Other ................................................. 750 101 28 171 1,050
Fish products .......................................... 676 198 47 93 1,014
Whole fish; fresh, chilled, frozen - excluding salmon.. 124 54 12 8 198
Whole salmon; fresh, chilled, frozen .................. 291 15 0 6 312
Salmon; canned, smoked, etc ........................... 5 2 32 14 53
Other ................................................. 257 127 3 64 451
Metallic mineral products .............................. 417 563 30 410 1,420
Copper ores and concentrates .......................... 12 186 0 151 349
Molybdenum ores and concentrates ...................... 14 37 28 8 87
Unwrought aluminum .................................... 72 231 1 148 452
Unwrought zinc ........................................ 241 3 0 67 311
Other ................................................. 78 107 1 34 220
Energy products ........................................ 2,275 487 297 460 3,519
Natural gas ........................................... 1,693 0 0 0 1,693
Coal .................................................. 133 486 297 457 1,373
Electricity ........................................... 288 0 0 0 288
Other ................................................. 162 1 0 2 165
Machinery and equipment ................................ 2,725 94 202 318 3,339
Motor vehicles and parts .............................. 606 7 8 33 654
Electrical/electronic/communications .................. 422 42 49 68 581
Other ................................................. 1,697 45 145 216 2,103
Plastics and articles of plastic ....................... 459 2 7 18 486
Apparel and accessories ................................ 197 3 3 3 206
All other commodities .................................. 2,438 176 40 424 3,078
------ ----- ----- ----- ------
TOTAL .................................................. 19,504 3,869 1,796 3,674 28,843
====== ===== ===== ===== ======
(1) Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland,
Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and the United
Kingdom.
Source: BC STATS
- ------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 1 -- ECONOMIC REVIEW 29
- ------------------------------------------------------------------------------
TABLE A1.8 BRITISH COLUMBIA INTERNATIONAL GOODS EXPORTS BY MARKET AREA, 2002
- ------------------------------------------------------------------------------
CHANGE PERCENT OF TOTAL
2000 2001 2002 2001-2002 2001 2002
- --------------------------------------------------------------------------------------------------
($ MILLIONS) (PER CENT)
......................
United Kingdom ........... 381 354 337 -4.8 1.1 1.2
Germany .................. 534 381 320 -16.0 1.2 1.1
People's Republic of China 741 761 843 10.8 2.4 2.9
Hong Kong ................ 299 236 228 -3.4 0.7 0.8
Taiwan ................... 422 333 354 6.3 1.0 1.2
Japan .................... 4,890 4,058 3,869 -4.7 12.8 13.4
South Korea .............. 930 758 764 0.8 2.4 2.6
India .................... 99 118 120 1.7 0.4 0.4
Australia ................ 251 172 187 8.7 0.5 0.6
Mexico ................... 58 83 81 -2.4 0.3 0.3
United States ............ 22,196 22,110 19,504 -11.8 69.6 67.6
Other .................... 2,948 2,416 2,235 -7.5 7.6 7.7
------ ------ ------
TOTAL .................. 33,749 31,780 28,843 -9.2 100.0 100.0
====== ====== ======
- -------------------------------------------------------------------------------------------------
Market Areas:
Western Europe (1) ....... 2,611 2,148 1,838 -14.4 6.8 6.4
Pacific Rim (2) .......... 8,176 6,689 6,701 0.2 21.0 23.2
- -------------------------------------------------------------------------------------------------
(1) Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland,
Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and the United
Kingdom.
(2) Australia, Brunei Darussaiam, China, Fiji, Hong Kong, Indonesia, Japan,
Laos, Macau, Malaysia, Mongolia, New Zealand, North Korea, Philippines,
Singapore, South Korea, Taiwan, Thailand and Vietnam.
Source: BC STATS
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
30 APPENDIX 1-- ECONOMIC REVIEW
- --------------------------------------------------------------------------------
TABLE A1.9 HISTORICAL COMMODITY PRICES (IN U.S. DOLLARS)
- ------------------------------------------------------------------------------
Change
2001 to
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2002
- ------------------------------------------------------------------------------------------------------------------
Metals (per cent)
Copper (London; $/lb) .... 0.87 1.05 1.33 1.04 1.03 0.75 0.71 0.82 0.72 0.71 -1.2
Lead (London; $/lb) ...... 0.18 0.25 0.28 0.35 0.28 0.24 0.23 0.21 0.22 0.21 -4.5
Zinc (London; $/lb) ...... 0.46 0.49 0.53 0.51 0.65 0.51 0.53 0.56 0.44 0.35 -20.5
Gold (London; $/troy oz) . 360 384 384 388 331 294 279 280 271 310 14.4
Silver (London; $/troy oz) 4.30 5.28 5.21 5.18 4.89 5.53 5.25 5.00 4.39 4.60 4.8
Molybdenum ($/lb) ........ 2.28 4.50 7.42 3.61 4.18 3.31 2.65 2.51 2.31 3.59 55.4
Aluminum (London; $/lb) .. 0.52 0.67 0.82 0.68 0.73 0.62 0.62 0.69 0.65 0.61 -6.2
Forest Products
Lumber (Madison's Lumber Reporter;
WSPF, $/1000 bd ft) ...... 333 342 251 351 353 287 342 256 248 235 -5.3
Pulp (Northern Europe;
$/tonne; transaction
price) ................... 427 573 883 590 566 515 523 681 543 463 -14.6
Newsprint (Pulp and
Paper Week; $/tonne) ..... 442 465 674 652 560 595 513 564 588 468 -20.4
Hemlock baby squares
(Madison's Lumber
Reporter; 3 9/16") ....... 804 852 862 796 821 556 585 566 583 593 1.7
Other
Oil (West Texas
Intermediate; $/barrel) . 18 17 18 22 21 14 19 30 26 26 0.7
Natural Gas (Sumas;
$/Mmbtu) ................ 1.89 1.60 1.03 1.33 1.72 1.61 2.15 4.17 4.58 2.68 -41.5
Electricity (Mid Columbia Index
in US$/MW.h) ............ -- -- -- -- -- -- 27 138 143 24 -83.2
- -----------------------------------------------------------------------------------------------------------------
Source: Ministry of Finance, Ministry of Energy and Mines
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 1-- ECONOMIC REVIEW 31
- --------------------------------------------------------------------------------
TABLE A1.10 BRITISH COLUMBIA FOREST SECTOR ECONOMIC ACTIVITY INDICATORS
Change(1)
Indicator 1998 1999 2000 2001 2002 2001-2002
- ------------------------------------------------------------------------------------------------------------------
Wood production (million cubic meters) (per cent)
Timber scaled .............................65.0 76.0 77.0 72.0 73.4 1.9
Lumber ....................................30.2 32.4 32.4 30.2 33.6 11.3
Plywood ...................................1.39 1.54 1.54 1.57 1.68 7.2
Timber scaled by species (million tonnes)
Lodgepole pine ........................... 17.7 22.0 22.2 22.9 n.a.
Spruce ................................... 12.3 12.5 12.1 12.4 n.a.
Hemlock .................................. 8.4 10.5 11.0 8.3 n.a.
Douglas fir .............................. 8.4 11.0 10.6 10.8 n.a.
Balsam ................................... 8.0 8.8 8.9 7.1 n.a.
Cedar .................................... 6.1 6.6 7.3 6.2 n.a.
All others ............................... 4.1 4.6 4.9 4.5 n.a.
--- --- --- ---
TOTAL (2) ................................. 65.0 76.0 77.0 72.2 N.A.
===== ==== ==== ====
(million tonnes)
Pulp and paper production .................7.03 8.01 8.29 7.59 7.39 -2.6
Market pulp ..............................4.46 5.00 5.15 4.71 4.49 -4.7
Newsprint, paper and paperboard ..........2.57 3.02 3.13 2.88 3.00 4.2
Industrial product price indices .......... (1997=100)
Softwood lumber -- British Columbia ......86.3 100.2 83.2 82.6 81.7 -1.1
Douglas fir plywood ......................92.5 109.4 94.8 94.4 104.2 10.4
Bleached sulphate pulp ...................97.8 99.4 127.7 105.7 96.1 -9.1
Newsprint for export ....................111.6 96.3 105.4 123.0 96.2 -21.8
- ---------------------------------------------------------------------------------------------------------------
(1) Percentage change based on unrounded numbers.
(2) Total may not add due to rounding.
Sources: Timber harvest -- Ministry of Forests
Lumber and plywood production -- Statistics Canada
Pulp and paper production -- Canadian Pulp and Paper Association
Industrial product price indices -- Statistics Canada
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
32 APPENDIX 1-- ECONOMIC REVIEW
- --------------------------------------------------------------------------------
TABLE A1.11 HISTORICAL VALUE OF MINERAL, PETROLEUM AND NATURAL GAS PRODUCTION
- --------------------------------------------------------------------------------
INDUSTRIAL CONSTRUCTION CRUDE NATURAL GAS OTHER OIL
YEAR METALS MATERIALS AGGREGATES COAL OIL(1) TO PIPELINE AND GAS(2) TOTAL
- -----------------------------------------------------------------------------------------------------------
($ millions)
1989 1,757 125 297 1,001 263 495 25 3,963
1990 1,559 119 313 980 319 537 43 3,870
1991 1,419 86 312 938 260 562 36 3,613
1992 1,438 45 305 749 260 592 38 3,427
1993 1,198 41 335 797 233 814 42 3,460
1994 1,354 47 370 905 235 991 44 3,946
1995 2,016 58 395 968 272 710 58 4,477
1996 1,537 42 398 1,110 441 817 75 4,420
1997 1,495 47 398 1,191 403 1,087 98 4,719
1998 1,484 49 404 1,088 373 1,154 47 4,598
1999 1,183 51 416 915 461 1,577 53 4,656
2000 1,571 50 458 800 843 3,826 114 7,662
2001 1,394 56 457 959 729 4,834 103 8,532
2002 e 1,248 49 493 1,024 703 3,471 82 7,070
- -----------------------------------------------------------------------------------------------------------
e Estimate.
(1) Includes Pentanes and Condensate.
(2) LPG's and Sulphur.
Sources: Natural Resources Canada and Ministry of Energy and Mines
TABLE A1.12 PETROLEUM AND NATURAL GAS ACTIVITY INDICATORS
- --------------------------------------------------------------------------------
CHANGE
INDICATOR UNIT OF MEASURE 1998 1999 2000 2001 2002 2001-2002
- ----------------------------------------------------------------------------------------------------------------
(per cent)
Natural gas production (wellhead)(1). (billion cubic m) 25.3 25.9 26.6 29.9 32.4 8.4
Crude oil and condensate ........... (million cubic m) 2.8 2.4 2.7 2.6 2.6 0.0
Wells authorized ................... (number) 695 828 1010 977 876 -10.3
Wells drilled ...................... (number) 652 620 770 875 643 -26.5
Seismic crew-weeks ................. (number) 112 105 140 167 160 -4.2
Provincial reserves
Marketable gas (remaining reserves) (billion cubic m) 226 237 240 252 255 1.0
Oil (remaining reserves) ......... (million cubic m) 25.0 26.0 27.4 25.5 22.6 -11.4
Provincial government petroleum
and natural gas revenue (2) ...... ($ millions) 379.6 587.3 1,306.2 1,731.1 1,232.6 -28.8
- ----------------------------------------------------------------------------------------------------------------
(1) Includes gas retrieved from storage. During 2002, 1 billion m3 were
produced from storage wells.
(2) Includes Crown royalties, Crown reserve disposition bonuses, fees and
rentals.
Source: Ministry of Energy and Mines
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 1-- ECONOMIC REVIEW 33
- --------------------------------------------------------------------------------
TABLE A1.13 SUPPLY AND CONSUMPTION OF ELECTRICAL ENERGY IN BRITISH COLUMBIA
- --------------------------------------------------------------------------------
SUPPLY CONSUMPTION
-------------------------------------------------------- ------------------------------
NET GENERATION
---------------------------------
RECEIPTS DELIVERED
TOTAL FROM OTHER TOTAL TO OTHER TOTAL
PROVINCIAL PROVINCES PROVINCIAL PROVINCES PROVINCIAL
YEAR HYDRO THERMAL GENERATION AND IMPORTS SUPPLY AND EXPORTS CONSUMPTION
- ---------------------------------------------------------------------------------------------------
(gigawatt-hours (1))
1984..... 50,243 2,126 52,369 1,556 53,925 8,313 45,612
1985..... 57,105 2,022 59,126 1,080 60,207 11,231 48,975
1986..... 48,923 1,836 50,759 3,345 54,104 4,709 49,395
1987..... 61,057 2,010 63,066 1,203 64,269 13,336 50,934
1988..... 58,573 2,370 60,943 2,351 63,293 9,215 54,078
1989..... 51,082 6,573 57,655 4,500 62,155 6,583 55,572
1990..... 57,245 3,417 60,662 3,233 63,895 6,689 57,206
1991..... 60,149 2,832 62,981 2,272 65,253 7,725 57,528
1992..... 60,555 3,503 64,058 2,685 66,743 9,473 57,270
1993..... 53,057 5,716 58,774 5,691 64,465 5,605 58,860
1994..... 53,979 7,036 61,015 7,836 68,851 9,541 59,311
1995..... 49,814 8,192 58,006 6,385 64,391 3,972 60,419
1996..... 67,329 4,436 71,765 3,289 75,053 10,390 64,664
1997..... 61,772 5,189 66,961 4,316 71,278 12,114 59,163
1998..... 60,849 6,861 67,710 5,056 72,766 10,619 62,147
1999..... 61,588 6,457 68,045 6,807 74,852 12,529 62,323
2000..... 59,754 8,487 68,241 6,039 74,280 10,698 63,582
2001..... 48,338 8,994 57,332 10,154 67,486 6,408 61,079
2002..... 58,660 6,227 64,888 5,793 70,680 8,168 62,512
- ----------------------------------------------------------------------------------------------------
(1) Gigawatt-hour = one million kilowatt-hours.
Source: Statistics Canada
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 1 -- ECONOMIC REVIEW 34
- --------------------------------------------------------------------------------
TABLE A1.14 BRITISH COLUMBIA HIGH-TECHNOLOGY SECTOR ACTIVITY
- --------------------------------------------------------------------------------
CHANGE
INDICATOR 1995 1996 1997 1998 1999 2000 2001 2000-2001
- ------------------------------------------------------------------------------------------------------------------------------
(per cent)
Number of Establishments(1)
Manufacturing ................. 973 875 863 830 -3.8
Services ...................... 3,899 4,146 4,528 4,622 2.1
----- ----- ----- -----
TOTAL ......................... 4,872 5,021 5,391 5,452 1.1
===== ===== ===== =====
Employment (persons)
Manufacturing ................. 9,000 9,330 10,940 11,840 14,440 15,890 15,730 -1.0
Services ...................... 22,560 21,830 23,640 21,970 24,270 27,410 29,820 8.8
------ ------ ------ ------ ------ ------ ------
TOTAL ......................... 31,560 31,160 34,570 33,810 38,710 43,290 45,550 5.2
====== ====== ====== ====== ====== ====== ======
Wages and Salaries ($ millions)
Manufacturing ................. 320 351 422 488 618 690 676 -2.1
Services ...................... 1,116 1,095 1,228 1,140 1,294 1,511 1,609 6.5
----- ----- ----- ----- ----- ----- -----
TOTAL ......................... 1,436 1,446 1,651 1,628 1,912 2,201 2,285 3.8
===== ===== ===== ===== ===== ===== =====
Real GDP ($ 1997 millions) ..... 2,297 2,236 2,608 2,817 3,016 3,441 3,302 -4.0
Nominal GDP ($ millions) ....... 2,283 2,179 2,608 2,716 2,961 3,435 3,449 0.4
Revenues ($ millions) .......... 3,773 4,143 4,780 4,990 5,683 6,278 6,045 -3.7
Exports ($ millions) ........... 562 663 837 1,011 1,065 1,133 979 -13.6
- ------------------------------------------------------------------------------------------------------------------------------
(1) Data not available prior to 1998.
Source: BC STATS
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
CHAPTER TWO
FINANCIAL REVIEW(1)
- -----
(1) Financial information presented in this chapter is based on 2002/03 PUBLIC
ACCOUNTS information. Figures are consistent with the government's
organization and accounting policies effective March 31, 2003, and for
comparative purposes, information for prior years has been restated where
practical.
36 CHAPTER 2 -- FINANCIAL REVIEW
- --------------------------------------------------------------------------------
2002/03 OVERVIEW
The provincial government recorded a $3.2 billion deficit
in 2002/03, an improvement of $1.2 billion compared to the
budget estimate of a $4.4 billion deficit.
TABLE 2.1 2002/03 OPERATING RESULTS
- -----------------------------------------------------------------------------------------------------------------
Budget Actual Actual
2002/03 2002/03 2001/02(1)
- -----------------------------------------------------------------------------------------------------------------
CONSOLIDATED REVENUE FUND (CRF):
Revenue ....................................................................... 22,038 22,147 22,894
Expenditure ................................................................... (25,556) (25,196) (24,897)
Wind-up of Forest Renewal BC and Fisheries Renewal BC ........................ -- -- 256
------ ------ ------
CRF BALANCE ................................................................... (3,518) (3,049) (1,747)
------ ------ ------
CROWN CORPORATIONS AND AGENCIES:
Taxpayer-supported ............................................................ (206) (229) (518)
Self-supported commercial ..................................................... 74 109 (484)
------ ------ ------
TOTAL NET CONTRIBUTION (LOSS) OF CROWN CORPORATIONS AND AGENCIES .............. (132) (120) (1,002)
------ ------ ------
SUBTOTAL ...................................................................... (3,650) (3,169) (2,749)
Forecast allowance ........................................................... (750) -- --
------ ------ ------
(DEFICIT) SURPLUS BEFORE JOINT TRUSTEESHIP ..................................... (4,400) (3,169) (2,749)
Joint trusteeship (one-time adjustment) ....................................... -- -- 1,464
SUMMARY ACCOUNTS (DEFICIT) SURPLUS ............................................. (4,400) (3,169) (1,285)
------ ------ ------
------ ------ ------
- -----------------------------------------------------------------------------------------------------------------
- -----
(1) Restated to reflect accounting policy changes in 2002/03 for certain CRF
revenues and expenses. See notes to Tables 2.3 and 2.4.
The final deficit amount included:
o a CRF shortfall of $3,049 million and
o combined Crown corporation net losses of $120 million
(after contributions paid to the CRF).
In 2002/03, CRF revenue totalled $22.1 billion, $109 million
above budget and down 3.3 per cent from 2001/02. Higher
revenue from energy and forestry resources, property
transfer tax, and contributions from Crown corporations and
the federal government was partially offset by reduced
revenue from personal and corporation income taxes resulting
from over $450 million in lower 2001 tax assessment
information. Table 2.3 and Appendix Table A2.6a provide
further details.
An additional $790 million of dedicated revenue was
collected on behalf of, and transferred to, certain Crown
corporations, agencies and other external public bodies in
2002/03. Dedicated revenues, except for amounts collected on
behalf of other government jurisdictions, are included in
the operating results of Crown corporations. Appendix Table
A2.6b provides details of the dedicated revenue transfers.
CRF expenses were $360 million less than budget, reflecting
lower spending by ministries and reduced debt interest
costs, partially offset by a one-time
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
CHAPTER 2 -- FINANCIAL REVIEW 37
- --------------------------------------------------------------------------------
$275 million provision for forestry revitalization. Before
the forestry revitalization provision, ministry and debt
interest savings totalled $635 million.
Combined Crown corporation net losses (after adjustments)
were $12 million lower than budget, as the one-time costs of
transferring BC Ferries to an independent authority were
more than offset by improved results from ICBC and other
Crown corporations.
Table 2.2 summarizes the major changes from the 2002/03
budget.
TABLE 2.2 SUMMARY OF CHANGES FROM BUDGET 2002/03
- ------------------------------------------------------------------------------------------------------------------------------------
Final
Change Results
- ------------------------------------------------------------------------------------------------------------------------------------
($ millions)
BUDGET DEFICIT - 2002/03 ESTIMATES (4,400)
CONSOLIDATED REVENUE FUND (CRF) CHANGES:
REVENUE CHANGES:
- Personal income tax - adjustment to 2001 and prior-year personal income tax ............. (311)
- Personal income tax - lower base and personal income growth in 2002 ..................... (389)
- Corporation income tax - weaker 2001 tax assessments and higher tax credits ............. (166)
- Property transfer taxes - strong housing market ......................................... 110
- Other taxes ............................................................................. 17
- Energy-related sources - higher prices .................................................. 212
- Forests - higher harvest volumes ........................................................ 178
- Medical Service Plan premiums ........................................................... 59
- BC Hydro dividend payment to CRF ........................................................ 55
- Equalization, partly offset by lower CHST ............................................... 344 109
------
SPENDING CHANGES:
- Ministry of Human Resources savings ..................................................... 171
- Ministry of Health Services savings ..................................................... 26
- Ministry of Attorney General savings .................................................... 25
- Other ministry savings .................................................................. 91
- Contingencies savings ................................................................... 113
- Lower debt interest costs ............................................................... 209
- Forestry revitalization ................................................................. (275) 360 469
------ ------
CROWN CORPORATION CHANGES:
TAXPAYER-SUPPORTED:
- BC Buildings - higher net income / accounting policy adjustment (revenue recognition) ... 43
- BC Ferries - costs resulting from transfer to new authority:
- write-down of PACIFICATS value to sale proceeds ...................................... (53)
- transfer of PACIFICAT sale proceeds to the CRF ....................................... (18)
- write-down of previous capital grants ................................................ (77)
- BC Transportation Financing Authority - lower interest costs ............................ 36
- Other changes and adjustments ........................................................... 46 (23)
------
SELF-SUPPORTED COMMERCIAL:
- BC Hydro - higher contribution paid to CRF .............................................. (55)
- BC Rail - improved results for rail operations .......................................... 34
- loss on sale of discontinued operations .............................................. (132)
- accounting for differences in fiscal year-ends ....................................... 87
- ICBC - improved operating results ....................................................... 55
- accounting for differences in fiscal year-ends ....................................... 35
- Other changes and adjustments ........................................................... 11 35 12
------ ------- -------
DEFICIT BEFORE FORECAST ALLOWANCE ............................................................ (3,919)
FORECAST ALLOWANCE - not needed .............................................................. 750
-------
ACTUAL DEFICIT - 2002/03 PUBLIC ACCOUNTS ..................................................... (3,169)
=======
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
38 CHAPTER 2 -- FINANCIAL REVIEW
- --------------------------------------------------------------------------------
The 2002/03 deficit of $3.2 billion contrasts with a $1.3
billion deficit recorded in 2001/02 (see Table 2.1). The
difference is primarily due to the one-time $1.4 billion
joint trusteeship adjustment recorded in 2001/02. Excluding
this adjustment, the 2001/02 deficit was $2.7 billion. The
remaining change reflects a 3.3 per cent decrease in CRF
revenue and a 1.2 per cent increase in CRF spending,
partially offset by improved Crown corporation results.
The 2002/03 deficit was $631 million lower than the third
quarter forecast released with the 2003/04 budget on
February 18, 2003. This reflects:
o $54 million of additional CRF revenue due to
better-than-expected performance in last quarter
natural resources revenue, partially offset by reduced
federal government transfers;
o a $216 million reduction in CRF spending as many
ministries and the contingencies vote spent less than
forecast. Debt interest costs were also lower than
forecast reflecting reduced borrowing needs and lower
interest rates;
o a $61 million improvement in Crown corporation finances
as better year-end results for ICBC and improvements in
various taxpayer-supported Crown corporations more than
offset the write-down of the PACIfICAT ferries; and
o a $300 million forecast allowance included in the third
quarter forecast was not needed.
Further details on changes from the February 2003 updated
forecast are provided in Appendix Table A2.4.
CONSOLIDATED REVENUE FUND REVENUE
Major changes from budget include:
o Personal income tax was $700 million below budget and
down 23 per cent from last year. Weaker-than-assumed
final assessments for the 2001 tax year resulted in a
$311 million reduction in revenue. The remainder of the
variance reflects the resultant effect of the lower
tax base and slower personal income growth in 2002.
o Corporation income tax was $166 million below budget
mainly due to weaker-than-expected final tax
assessments for the 2001 tax year. This was a result of
lower assessments from corporations paying the general
tax rate, and higher tax credits.
o Property transfer tax was $110 million above budget and
34 per cent higher than 2001/02 due to the strong
housing market during the year. In the 2002/03 fiscal
year, residential unit sales were 7.6 per cent higher,
the average selling price was 6.7 per cent higher and
housing starts were 27 per cent higher than 2001/02.
o Other taxes were $17 million above budget. The effects
of stronger collections for property, corporation
capital, insurance premium, and hotel room taxes were
partially offset by weaker revenue from social service,
tobacco and fuel taxes.
o Revenue from energy related sources (natural gas and
petroleum royalties, permit and fees, minerals and
sales of electricity under the Columbia
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
CHAPTER 2 -- FINANCIAL REVIEW 39
- --------------------------------------------------------------------------------
River treaty) was $212 million above budget mainly due
to higher average energy prices during the year. In
2002/03, prices for natural gas ($4.20 Cdn/gigajoule at
plant inlet), oil ($29 US/bbl at Cushing) and
electricity ($29 US/MWh, mid Columbia price index) were
all higher than the budget assumptions of
$3.65/gigajoule, $20 US/bbl and $24 US/MWh,
respectively.
o Forests revenue was $178 million above budget
primarily due to higher-than budgeted harvest volumes.
Overall harvest volumes were 10.3 million cubic metres
or 18 per cent higher than budget and 17 per cent
higher than 2001/02 reflecting industry's resolve to
lower its average costs and increase its market share.
In particular, harvest volumes under the Small Business
Forest Enterprise Program at 10.9 million cubic metres
were 3.5 million cubic metres or 47 per cent higher
than budget.
o Other revenue was $12 million above budget as higher
revenue from Medical Service Plan premiums and
miscellaneous sources was partly offset by lower
revenue from other fees and licences, investment
earnings and higher allowance for doubtful accounts.
o Contributions from government enterprises were $97
million above budget mainly due to a $55 million
improvement in Hydro's CRF dividend. An unexpected $18
million contribution from BC Ferries reflects the net
proceeds from the disposition of the three PACIFICAT
vessels.
o Contributions from the federal government were $337
million above budget mainly due to equalization
payments from the federal government which were not
included in the budget, partly offset by reduced Canada
health and social transfer entitlement.
In 2002/03, the method of recording equalization
revenue changed from a cash basis to an accrual basis.
This resulted in prior period restatements for 1999/00
(up $125 million) and 2001/02 (down $68 million), and
decreased 2002/03 revenue of $57 million.
CONSOLIDATED REVENUE FUND EXPENSE
At the completion of the first year of the government's
first three-year fiscal plan all ministers have met their
individual responsibility for controlling government
spending. All operating expenses, as identified in the
Summary of Ministerial Accountability for Operating Expenses
-- Schedule I of the 2002/03 Estimates, were at or below the
targets set out under the BALANCED BUDGET AND MINISTERIAL
ACCOUNTABILITY ACT (see the Ministerial Accountability
Report topic box).
Expenses totalled $25.2 billion in 2002/03, $360 million
below budget and 1.2 per cent higher than 2001/02. Excluding
$188 million of one-time restructuring exit costs, expenses
totalled $25.0 billion, 1.1 per cent higher than the
previous year.
Major budget variances included:
o $171 million below budget spending in the Ministry of
Human Resources;
o $142 million below budget spending in other ministries
and appropriations;
o $113 million of unused contingencies vote funding;
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
40 CHAPTER 2 -- FINANCIAL REVIEW
- --------------------------------------------------------------------------------
TABLE 2.3 REVENUE BY SOURCE
CONSOLIDATED REVENUE FUND(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Budget Actual Actual Annual
2002/03 2002/03 2001/02 Change
- ------------------------------------------------------------------------------------------------------------------------------------
Taxation Revenue: (per cent)
Personal income ....................................................................... 4,854 4,154 5,375 (22.7)
Corporation income .................................................................... 779 613 1,522 (59.7)
Social service ........................................................................ 3,802 3,770 3,535 6.6
Fuel .................................................................................. 395 393 398 (1.3)
Property .............................................................................. 1,425 1,457 1,401 4.0
Property transfer ..................................................................... 297 407 303 34.3
Other ................................................................................. 1,088 1,125 1,190 (5.5)
Less commissions on collection of public funds ........................................ (30) (32) (36) (11.1)
Less allowance for doubtful accounts .................................................. (25) (41) (36) 13.9
-------- ------- -------
12,585 11,846 13,652 (13.2)
-------- ------- -------
Natural Resource Revenue:
Natural gas and petroleum ............................................................. 1,301 1,504 1,299 15.8
Columbia River Treaty ................................................................. 85 100 360 (72.2)
Minerals .............................................................................. 69 63 53 18.9
Forests ............................................................................... 1,145 1,323 1,109 19.3
Water resources ....................................................................... 251 257 284 (9.5)
WILDLIFE ACT - fees and licences ...................................................... 14 14 15 (6.7)
Less commissions on collection of public funds ........................................ (1) (1) (1) --
Less allowance for doubtful accounts .................................................. (11) (5) (11) (54.5)
-------- ------- -------
2,853 3,255 3,108 4.7
-------- ------- -------
Other Revenue:
Medical Services Plan premiums ........................................................ 1,299 1,358 955 42.2
Other fees and licences ............................................................... 705 691 685 0.9
Investment earnings ................................................................... 50 18 64 (71.9)
Miscellaneous ......................................................................... 220 245 259 (5.4)
Asset dispositions .................................................................... -- -- 42 (100.0)
Less commissions on collection of public funds ........................................ (14) (13) (11) 18.2
Less allowance for doubtful accounts .................................................. (66) (93) (84) 10.7
-------- ------- -------
2,194 2,206 1,910 15.5
-------- ------- -------
Contributions from Government Enterprises:(2)
Liquor Distribution Branch ............................................................ 640 654 637 2.7
British Columbia Hydro and Power Authority ............................................ 283 338 332 1.8
British Columbia Lottery Corporation .................................................. 476 489 449 8.9
Other ................................................................................. 21 36 19 89.5
-------- ------- -------
1,420 1,517 1,437 5.6
-------- ------- -------
Contributions from the Federal Government:
Canada health and social transfer ..................................................... 2,805 2,606 2,445 6.6
Equalization(3) ....................................................................... -- 543 158 243.7
Other ................................................................................. 181 174 184 (5.4)
-------- ------- -------
2,986 3,323 2,787 19.2
-------- ------- -------
TOTAL REVENUE .......................................................................... 22,038 22,147 22,894 (3.3)
======== ======= =======
- ------------------------------------------------------------------------------------------------------------------------------------
- --------
(1) Figures based on 2002/03 PUBLIC ACCOUNTS information. Figures exclude
dedicated revenue totalling $790 million, collected on behalf of, and
transferred to, British Columbia Transit, British Columbia Ferry
Corporation, BC Transportation Financing Authority, Greater Vancouver
Transportation Authority (TRANSLINK), Forest Renewal BC, British Columbia
Oil and Gas Commission, Tourism British Columbia and other entities. These
revenues are included as part of the operations of Crown corporations and
agencies with the exception of TRANSLINK and certain other public bodies
that are not part of the provincial government's summary accounts. Further
information is provided in Appendix Table A2.6b.
(2) Payments to the CRF only. See Tables A2.11 to A2.18 for financial
statements of major Crown corporations.
(3) Revenue has been restated for prior years reflecting a change in the method
of recording equalization entitlement from cash basis to accrual. This has
the effect of increasing revenue in 1999/00 by $125 million, and reducing
revenue in 2001/02 and 2002/03 by $68 million and $57 million,
respectively.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
CHAPTER 2 -- FINANCIAL REVIEW 41
- --------------------------------------------------------------------------------
TABLE 2.4 EXPENSE BY MINISTRY(1)
CONSOLIDATED REVENUE FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Allocation Budget plus
Budget of Contin- Contingencies Actual Actual Annual
2002/03(2) gencies(3) Allocations(2) 20002/03 2001/02(2) Change(4)
- ------------------------------------------------------------------------------------------------------------------------------------
($ millions) (per cent)
Legislation .............................. 39 -- 39 37 38 (2.5)
Officers of the Legislature .............. 32 -- 32 25 45 (44.7)
Office of the Premier .................... 50 1 51 43 54 (21.3)
Advanced Education ....................... 1,900 3 1,903 1,897 1,935 (2.0)
Agriculture, Food and Fisheries .......... 64 8 72 72 66 9.3
Attorney General ......................... 556 -- 556 531 541 (1.9)
Children and Family Development .......... 1,558 11 1,569 1,569 1,525 2.9
Community, Aboriginal and Women's Services 555 -- 555 555 518 7.1
Competition, Science and Enterprise ...... 54 4 58 57 73 (21.2)
Education ................................ 4,861 -- 4,861 4,859 4,840 0.4
Energy and Mines ......................... 50 -- 50 47 67 (29.4)
Finance .................................. 27 -- 27 27 26 3.7
Forests .................................. 621 3 624 618 481 28.5
Health Planning .......................... 17 -- 17 16 25 (36.1)
Health Services .......................... 10,200 -- 10,200 10,174 9,683 5.1
Human Resources .......................... 1,789 -- 1,789 1,618 1,904 (15.0)
Management Services ...................... 48 9 57 56 98 (43.3)
Provincial Revenue ....................... 50 4 54 49 54 (8.5)
Public Safety and Solicitor General ...... 506 19 525 525 522 0.5
Skills Development and Labour ............ 29 -- 29 24 30 (18.8)
Sustainable Resource Management .......... 118 7 125 125 130 (3.7)
Transportation ........................... 739 10 749 748 708 5.7
Water, Land and Air Protection ........... 162 -- 162 162 211 (23.1)
Other Appropriations:
Management of Public Funds and Debt .... 920 -- 920 711 761 (6.7)
BC Family Bonus ........................ 91 -- 91 88 103 (14.7)
Government Restructuring(5)............. 230 -- 230 212 81 162.5
Contingencies (All Ministries)
and New Programs(3) .................. 210 (97) 113 -- -- --
Forestry Restructuring ................. -- -- -- 275 -- --
Skeena Cellulose Inc. Assistance ....... -- -- -- -- 307 (100.0)
Other Appropriations(6) ................ 80 18 98 76 71 8.6
-------- --------- --------- --------- --------- ---------
TOTAL EXPENSE(5) ......................... 25,556 -- 25,556 25,196 24,897 1.2
======== ========= ========= ========= ========= =========
- ------------------------------------------------------------------------------------------------------------------------------------
- ---------
(1) Figures based on 2002/03 PUBLIC ACCOUNTS information.
(2) Actual figures for 2001/02 and budget figures for 2002/03 have been
restated to reflect the government's organization and accounting policy
effective March 31, 2003. 2001/02 actual expense has been decreased by $16
million due to a change in the basis for recognizing silviculture
liabilities arising under the Small Business Forest Enterprise Program.
(3) Permitted charges to the Contingencies vote fall under the responsibility
of the Minister of Finance. For comparative purposes only, charges to the
Contingencies vote of $97 million in 2002/03 ($181 million in 2001/02) have
been allocated to individual ministry spending.
(4) Percentage change between 2002/03 actual and 2001/02 actual (calculated
from unrounded figures).
(5) Includes restructuring exit costs of $188 million ($161 million in
2001/02), funded from the Government Restructuring (All Ministries) vote
and ministry budgets (see Appendix Tables A2.10a and A2.10b).
(6) Other Appropriations include: Commissions on Collection of Public Funds and
Allowances for Doubtful Revenue Accounts, Environmental Assessment Office,
Environmental Boards and Forest Appeals Commission, Forest Practices Board,
Public Sector Employers' Council, Seismic Mitigation, Insurance and Risk
Management, and Unclaimed Property.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
42 CHAPTER 2 -- FINANCIAL REVIEW
- --------------------------------------------------------------------------------
o $209 million of reduced debt interest costs;
partially offset by
o a $275 million funding provision for forestry
revitalization.
As a result of effective management of ministry budgets and
earlier-than-expected progress in meeting three-year service
plan targets, ministries addressed some one-time funding
needs in a number of priority areas. This included a
one-time special provision of $275 million for costs
associated with revitalization of the forestry sector, and
commitments to health care, education, children and other
priorities.
In 2002/03, five ministries -- Health Services, Education,
Advanced Education, Human Resources, and Children and Family
Development -- accounted for about 80 per cent of total CRF
expense. Interest payments on the government's direct
operating debt accounted for about 3 per cent of expense.
During 2002/03 the contingencies vote funded $97 million of
new initiatives and unforeseen requirements. In addition,
the government passed legislation to authorize a $275
million provision to support revitalization of the forest
sector. Legislation in various programs also provided
statutory authority to pay for additional costs.
Significant areas of spending and changes from budget
included:
o Ministry of Advanced Education spending was slightly
below budget. Spending reflected higher-than-planned
contributions to educational institutions and
organizations, higher spending for student financial
assistance and completion of the provincial commitment
to fund Leading Edge Endowments. This was offset by
lower interest costs for capital-related debt,
amortization and other areas. Compared to the previous
year, spending fell 2.0 per cent mainly due to one-time
restructuring costs that occurred in 2001/02. Total
funded post-secondary full-time equivalent student
spaces increased to 157,694 in 2002/03 from 154,991 in
the previous year (up 1.7 per cent). Average per
student funding increased by 1.3 per cent.
o Ministry of Attorney General was $25 million below
budget mainly due to lower-than-expected costs for
First Nation treaty arrangements.
o Ministry of Children and Family Development was on
budget as savings from some programs were used to fund
priority investments such as school based programs,
early childhood development and restructuring in
community living services and other areas. During the
year, the children-in-care average caseload declined
6.5 per cent.
o Ministry of Education spending was slightly below
budget. Lower interest costs for capital-related debt
and lower amortization expenses helped to provide extra
funding for school boards and independent schools at
year-end. In 2002/03, public school full-time enrolment
declined from 594,554 to 587,247, or 1.2 per cent,
while independent school enrolment rose 4.4 per cent
from 2001/02. Average per pupil funding for public
schools increased by 1.9 per cent.
o Ministry of Forests expense was up $137 million from
2001/02 as higher Small Business Forest Enterprise
expenses (due to higher-than-expected
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
CHAPTER 2 -- FINANCIAL REVIEW 43
- --------------------------------------------------------------------------------
activity) and funding for the new Forest Investment
vote were partially offset by lower fire suppression
costs. The forest investment program was established to
provide for the operation and management of forest
investments and international marketing. These services
were previously carried out by Forest Renewal BC, which
was wound up in 2001/02.
Forestry Revitalization -- In March 2003, legislation
was passed to provide $275 million to assist in the
transition to a sustainable forestry sector. Of this,
$200 million has been set aside to provide for
compensation to those companies that are returning some
of their logging rights to the Crown. As well, the $75
million BC Forestry Revitalization Trust will provide
assistance to forest workers and contractors impacted
by the forest policy changes.
o Ministry of Health Services was $26 million below
budget. Higher regional health sector funding,
emergency health care services and Pharmacare costs
were offset by lower-than-expected spending for the
Medical Services Plan and capital-related debt interest
costs. Ministry spending was up 5.1 per cent from
2001/02, reflecting significant increases in most
areas.
o Ministry of Human Resources was $171 million below
budget and $286 million lower than the previous year.
This reflects a continuing downward trend in the
employment assistance caseload and average costs per
case. The average monthly assistance caseload of
130,524 was 11 per cent below budget and 16 per cent
lower than in 2001/02.
o Ministry of Public Safety and Solicitor General met its
budget as savings in corrections and other program
areas helped offset higher policing costs related to
the Port Coquitlam missing persons investigation.
o Ministry of Water, Land and Air Protection spending was
on budget and $49 million lower than the previous year
mainly due to one-time costs for Britannia Mine site
remediation that occurred in 2001/02.
o The Contingencies and New Programs Vote funded $97
million of new initiatives and unforeseen requirements
in 2002/03.
TABLE 2.5 CONTINGENCIES AND NEW PROGRAMS (ALL MINISTRIES)
VOTE - 2002/03 CONSOLIDATED REVENUE FUND
----------------------------------------------------------------------------------------------
($ millions)
Okanagan Valley Tree Fruit Authority transition ........................... 7.6
School-based programs ..................................................... 10.5
Pacific National Exhibition contribution .................................. 3.7
Seismic mitigation commitments ............................................ 18.6
Softwood Lumber legal costs ............................................... 2.8
Increase in workers' compensation liability (public sector share) ......... 7.3
Employee benefits costs ................................................... 1.7
Juno Beach Memorial ....................................................... 1.0
Lieutenant Governor Awards Fund ........................................... 0.7
BC Achievements Award Fund ................................................ 6.0
Missing persons investigation ............................................. 7.6
Emergency roads repair from flooding ...................................... 11.8
Muskwa-Kechika trust fund contribution .................................... 2.1
Interest liability for tenure compensation (protected areas) .............. 4.9
Public Transit - write-off of deferred capital costs ...................... 10.5
Other ..................................................................... 0.1
---------
TOTAL ..................................................................... 96.9
=========
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
44 CHAPTER 2 -- FINANCIAL REVIEW
- --------------------------------------------------------------------------------
MINISTERIAL ACCOUNTABILITY REPORT
The MINISTERIAL ACCOUNTABILITY REPORT is a requirement of the BALANCED BUDGET
AND MINISTERIAL ACCOUNTABILITY ACT (BBMAA). This act establishes individual and
collective accountability through financial and performance targets. Cabinet
ministers are collectively accountable for achieving an overall government
bottom-line target. Financial targets for ministers, performance targets for
ministers of state and a revenue target for the Minister of Provincial Revenue
comprise the individual accountability measures.
During the year, 20 per cent of ministerial salary for the Premier, each
minister and minister of state is withheld. Each minister earns back 10 per cent
upon meeting his or her individual budget or performance targets, and the
remaining 10 per cent if the government as a whole comes in on or under budget.
Based on the audited financial results for the 2003/03 fiscal year, the
MINISTERIAL ACCOUNTABILITY REPORT compares the expected targets that the Premier
and ministers must achieve in order to earn their 20 per cent salary holdback
with actual financial or performance results. Under BBMAA, actual financial
results are compared to individual ministry and collective bottom-line targets
presented in the provincial budget and estimates, and performance results are
compared to ministry service plans.
Exept for two Ministers of State whose performance measurement data was not
available in June 2003, all ministers met their requirements and received their
salary holdbacks for 2002/03. Canadian Institute of Health Information data for
measuring performance results will not be available until September 2003 for the
Ministers of State for Mental Health and for Intermediate, Long-Term and Home
Care. A report comparing targets to actual results must be presented prior to
the end of the 2003 calendar year before these two ministers are eligible to
receive their individual salary holdbacks.
For more information on the MINISTERIAL ACCOUNTABILITY REPORT, please refer to
the Ministry of Finance Web site at http://www.gov.bc.ca/fin/
-------------------------
MINISTERIAL ACCOUNTABILITY REPORT
SUMMARY OF OPERATION RESULTS
TARGETS
MET
-------
INDIVIDUAL ACCOUNTABILITY - PERFORMANCE OUTCOMES
Minister of State for Intergovernmental Relations X
Minister of State for Early Childhood Development X
Minister of State for Community Charter and 2010 Winter Olympic Bid X
Minister of State for Women's Equality X
Minister of State for Deregulation X
Minister of State for Mental Health Pending**
Minister of State for Intermediate, Long-term and Home Care Pending**
- --------
** Data from the Canadian Institute for Health Information required for
measuring performance results for the Ministers of State for Mental Health
and for Intermediate, Long-Term and Home Care is not available until the
fall. These two ministers are required to report out by December 31, 2003.
The Comptroller General will then issue an update to the MINISTERIAL
ACCOUNTABILITY REPORT.
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
CHAPTER 2 -- FINANCIAL REVIEW 45
- --------------------------------------------------------------------------------
MINISTERIAL ACCOUNTABILITY REPORT
SUMMARY OF FINANCIAL TARGETS AND RESULTS
EXPECTED ACTUAL TARGETS
RESULT RESULT MET
-------- ------ -------
$000'S $000'S
COLLECTIVE ACCOUNTABILITY
Summary Deficit for fiscal 2002/03 (BBMAA)* 4,400,000 3,111,698 X
* Actual result for summary deficit under the BBMAA removes the
effect of an in-year $58 million adjustment that results from
a change in accounting policy. The BBMAA does not allow
accounting policy changes to affect summary deficit figures
for which ministers are accountable.
INDIVIDUAL ACCOUNTABILITY - EXPENDITURE MANAGEMENT
Premier 49,727 41,587 X
Minister of Advanced Education 1,899,696 1,894,051 X
Minister of Agriculture, Food and Fisheries 64,078 64,074 X
Attorney General and Minister Responsible for Treaty Negotiations 556,228 530,762 X
Minister of Children and Family Development 1,558,430 1,558,430 X
Minister of Community, Aboriginal And Women's Services 554,828 554,613 X
Minister of Competition, Science and Enterprise 53,680 53,549 X
Minister of Education 4,861,081 4,859,206 X
Minister of Energy and Minies 50,144 47,012 X
Minister of Finance 1,547,802 1,182,926 X
Minister of Forests 901,541 895,131 X
Minister of Health Planning 16,633 15,953 X
Minister of Health Services 10,202,266 10,175,796 X
Minister of Human Resources 1,789,143 1,618,251 X
Minister of Management Services 47,843 46,776 X
Minister of Public Safety and Solicitor General 506,491 505,243 X
Minister of Skills Development and Labour 28,728 24,030 X
Minister of Sustainable Resource Management 121,416 121,318 X
Minister of Transportation 738,505 738,087 X
Minister of Water, Land and Air Protection 163,480 163,048 X
INDIVIDUAL ACCOUNTABILITY - REVENUE
Minister of Provincial Revenue 7,000 150,000 X
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
46 CHAPTER 2 -- FINANCIAL REVIEW
- --------------------------------------------------------------------------------
o Management of Public Funds and Debt (debt interest) was $209
million below budget due to significantly lower-than-assumed
borrowing requirements, lower interest rates, a stronger
Canada/U.S. exchange rate and a change in borrowing strategy
to take advantage of low short-term interest rates.
Government operating debt requirements were $1.7 billion
below budget. The average long-term interest rate was 0.8
percentage points lower than assumed, while the average
short-term interest rate was 0.1 percentage point lower.
These factors also contributed to a 6.7 per cent drop in
interest costs compared to the previous year.
o Government Restructuring (all Ministries) - Government has
now completed the second year of the three-year $550 million
restructuring plan for the Consolidated Revenue Fund (CRF)
set out in the 2002/03 budget. CRF expenses for 2002/03 were
$219 million compared to $168 million for 2001/02 (see Table
2.6). See Appendix Table A2.10a for details on total
restructuring expenses (including Crown corporations).
TABLE 2.6 GOVERNMENT RESTRUCTURING(1)
CONSOLIDATED REVENUE FUND (CRF)
----------------------------------------------------------------------------------------------
2001/02 2002/03
($ millions)
o EXIT COSTS:
Funded by Government Restructuring vote ......................... 81 185
Funded by ministry budgets ...................................... 23 3
Funded by Contingencies vote .................................... 57 -
------- -------
161 188
o EXIT COSTS:
Funded by Government Restructuring vote ......................... - 27
Funded by ministry budgets ...................................... 2 4
Funded by Contingencies votes ................................... 5 -
------- -------
7 31
------- -------
TOTAL CRF RESTRUCTURING ........................................ 168 219
======= =======
----------------------------------------------------------------------------------------------
-------
(1) Accounting policy divides restructuring costs into exit
costs related to charges that have no future value to
government and non-exit restructuring costs for charges that
do provide future benefits. For further details see Appendix
Table A2.10b.
CROWN CORPORATION RESULTS
TAXPAYER-SUPPORTED CROWN CORPORATIONS AND AGENCIES
Combined taxpayer-supported net losses of $229 million (after
adjustments and contributions to the CRF) were $23 million higher
than budget.
Major changes from budget included the following:
o BC Buildings realized additional net income of $18 million
compared to budget primarily due to one-time items. The
government-wide restructuring program caused some early
lease terminations of special purpose properties resulting
in early cost recoveries ($13 million). Also, the
corporation experienced higher net gains on property sales.
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
CHAPTER 2 -- FINANCIAL REVIEW 47
- --------------------------------------------------------------------------------
TABLE 2.7 2002/03 CROWN CORPORATION AND AGENCY OPERATING RESULTS
- ---------------------------------------------------------------------------------------------------------------------------
Budget Actual Actual
2002/03 2002/03 2001/02(1)
- ---------------------------------------------------------------------------------------------------------------------------
TAXPAYER-SUPPORTED:
British Columbia Buildings Corporation ...................................... 34 52 37
British Columbia Ferry Corporation .......................................... 16 (29) (23)
BC Transportation Financing Authority ....................................... (56) (20) --
Forest Renewal BC ........................................................... -- -- (179)
552513 British Columbia Ltd. (Skeena Cellulose Inc.) ........................ -- (4) (69)
Other ....................................................................... 3 10 (6)
Accounting adjustments(2) ................................................. (184) (204) (225)
Debt assistance for Skeena Cellulose Inc. ................................. -- -- 220
------ ------ ------
TAXPAYER-SUPPORTED RESULTS BEFORE CONTRIBUTIONS TO CRF ...................... (187) (195) (245)
LESS: Contributions paid to CRF ........................................... (19) (34) (17)
Transfer to the CRF for the wind-up of Forest Renewal BC
and Fisheries Renewal BC .......................................... -- -- (256)
------ ------ ------
TAXPAYER-SUPPORTED NET RESULTS .............................................. (206) (229) (518)
------ ------ ------
Self-supported commercial:
British Columbia Hydro and Power Authority - net income .................... 345 418 403
Reversal of rate stabilization account transfer impact on net income ....... 5 (66) (145)
------ ------ ------
British Columbia Hydro and Power Authority - operating results .............. 350 352 258
Liquor Distribution Branch .................................................. 640 654 637
British Columbia Lottery Corporation ........................................ 660 671 606
British Columbia Railway Company ............................................ 14 (84) (107)
Insurance Corporation of British Columbia ................................... (10) 45 (251)
Other ....................................................................... 5 14 --
Accounting adjustments(3) ................................................. (184) (60) (207)
------ ------- -------
SELF-SUPPORTED COMMERCIAL RESULTS BEFORE CONTRIBUTIONS TO CRF ............... 1,475 1,592 936
LESS: Contributions paid to CRF ........................................... (1,401) (1,483) (1,420)
------ ------- -------
SELF-SUPPORTED COMMERCIAL NET RESULTS ....................................... 74 109 (484)
------ ------- -------
TOTAL NET (LOSS) CONTRIBUTION OF CROWN CORPORATIONS AND AGENCIES .............. (132) (120) (1,002)
====== ======= =======
- ---------------------------------------------------------------------------------------------------------------------------
(1) Restated to be consistent with the presentation used for 2002/03.
(2) Primarily reflects the amortization of the cost of highways transferred to
the BC Transportation Financing Authority in 1998/99. The 2001/02
adjustment includes a write-down resulting from the disposal of Skeena
Cellulose Inc. ($67 million), and the 2002/03 adjustment includes the
write-down of previous capital grants to BC Ferries ($77 million).
(3) Primarily reflects transfers of BC Lottery revenue to charities and local
governments ($181 million), partially offset by adjustments to account for
differences between the fiscal year ends of the government and BC Rail ($88
million) and ICBC ($35 million).
o BC Ferries was $45 million below budget as a further $53 million
write-down of the PACIFICAT ferries was recorded as a result of
their auction in March 2003. This sale was prior to devolution
of BC Ferries to an independent, regulated authority in April
2003. The write-down was partially offset by a $8 million
improvement in operating results.
The provincial government also expensed $77 million in previous
capital grants to the corporation, which is included in the
accounting adjustments to the taxpayer-supported Crown
corporation results.
The PACIFICAT ferries auction proceeds of $18 million were
transferred to the CRF as part of the contributions from
taxpayer-supported Crown corporations.
o BC Transportation Financing Authority showed a $36 million
improvement mainly due to lower debt servicing costs.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
48 CHAPTER 2 -- FINANCIAL REVIEW
- --------------------------------------------------------------------------------
COMMERCIAL CROWN CORPORATIONS
Commercial Crown corporations recorded combined net results of $109
million (after adjustments and contributions to the CRF) compared to
budgeted net results of $74 million.
Major changes from budget included the following:
o BC Hydro's better than expected operating results were offset by
$37 million in restructuring costs. As a result, the $352 million
operating income (before rate stabilization transfers) was
virtually unchanged from budget. An accounting policy change
approved by the BC Utilities Commission for rate setting and
reporting purposes resulted in a higher level of equity than
assumed in the budget. Since BC Hydro's contribution to the CRF
is based on an allowed return on equity, the higher equity
resulted in a higher-than-anticipated contributions to the CRF.
o The Liquor Distribution Branch and BC Lotteries earnings were $14
million and $11 million, respectively, higher than expected.
These improvements resulted in higher contributions to the CRF.
o For the year ended December 31, 2002, BC Rail reported a net loss
of $84 million after including the $140 million impact of
discontinued operations. The loss from discontinued operations
included a $124 million write-down of Vancouver Wharves. Part of
this write-down ($58 million) was estimated during the first
quarter of 2002 and was reflected in the 2001/02 PUBLIC ACCOUNTS.
As well, BC Rail completed the sale of Canadian Stevedoring and
Casco Terminals in February 2003, with the $36 million gain on
sale reflected in the 2002/03 PUBLIC ACCOUNTS.
Excluding the impact of discontinued operations, BC Rail's
consolidated net income from continuing operations was $56
million reflecting a $51 million improvement over the previous
year mainly due to a 3.8 per cent increase in revenue and a 9.2
per cent reduction in operating expenses.
In total, BC Rail's results for the first quarter of 2003 were an
$88 million improvement over the same period in 2002, resulting
in a positive adjustment to match the corporation's fiscal year
to that of the provincial government.
o ICBC reported a net income of $45 million for the year ended
December 31, 2002, a $55 million improvement over the budgeted
loss of $10 million. The change from budget was mainly due to:
- a 2.1 per cent increase in premium revenue (partially due to
the 7.4 per cent rate increase announced in November 2001);
- a 10 per cent decrease in operating costs;
partially offset by:
- a 1.9 per cent increase in claims costs (primarily due to a
13 per cent increase in the average cost per claim,
partially offset by an 11 per cent decrease in the number of
claims); and
- lower-than-expected investment earnings.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
CHAPTER 2 -- FINANCIAL REVIEW 49
- --------------------------------------------------------------------------------
ICBC's results for the first quarter of 2003 were significantly
higher than the same period in 2002, resulting in a $35 million
positive adjustment to match the corporation's fiscal year to
that of the provincial government.
Five-year financial statements for the above Crown corporations are
presented in Appendix Tables A2.11 to A2.18.
FULL-TIME EQUIVALENTS (FTEs)
Staff utilization is measured in full-time equivalents. FTEs are
calculated by dividing the total hours of employment paid for in a
given period by the number of hours an individual, full-time person
would normally work in that period. FTE amounts do not equate to the
acutal number of employees.
TABLE 2.8 FULL-TIME EQUIVALENTS (FTEs) UTILIZATION
--------------------------------------------------------------------------------------------------------------
Budget Actual Actual
2002/03 2002/03 2001/02
Consolidation revenue fund (ministries and special offices)......... 31,608 29,751 33,214
Taxpayer-supported Crown corporations and agencies.................. 8,800 8,244 9,178
---------- --------- ---------
TOTAL................................................ 40,408 37,995 42,392
========== ========= =========
--------------------------------------------------------------------------------------------------------------
(1) Includes third quarter forecasts for Canadian Blood Services and
the Forensic Psychiatric Services Commission. No estimates for
these organizations were included in the 2002/03 PUBLIC ACCOUNTS.
FTEs were 2,413 below budget and 4,397 lower than the previous year
(see Table 2.8). In 2002/03, the reduction in FTEs was primarily due
to earlier than anticipated staffing reductions resulting from the
implementation of core review recommendations, accelerated
implementation of ministry service plan reductions, and
higher-than-expected participation in voluntary departure and early
retirement programs.
PROVINCIAL CAPITAL SPENDING
Capital spending is required to build, acquire or replace assets such
as roads, schools, post-secondary facilities, hospitals and related
major equipment.
Capital spending does not flow directly to the government's annual
surplus or deficit. Generally accepted accounting principles require
capital costs to be spread out over the useful lives of the related
assets through annual amortization expenses (see Appendix Table A2.1).
Capital spending in 2002/03 totalled $2.1 billion, $674 million below
budget:
o Taxpayer-supported capital spending includes schools, hospitals,
post-secondary facilities and transportation projects, plus minor
capital spending by ministries and other minor taxpayer-supported
agencies. In 2002/03, spending of $1.1 billion was $538 million
below budget due to reduced spending for health and education
facilties, transportation projects, and ministry minor capital
purchases. This was partially offset by the purchase of land for
expansion of the Vancouver Convention and Exhibition Centre,
which was not originally budgeted to occur in 2002/03.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
50 CHAPTER 2 -- FINANCIAL REVIEW
- --------------------------------------------------------------------------------
TABLE 2.9 CAPITAL SPENDING
- ------------------------------------------------------------------------------------------------------------------------------------
Budget Actual Actual Actual
2002/03 2002/03 2001/02 Change
- ------------------------------------------------------------------------------------------------------------------------------------
($ millions) (per cent)
TAXPAYER-SUPPORTED
Education ......................................... 466 367 360 1.9
Health(1) ......................................... 273 117 169 (30.8)
BC Transportion Financing Authority ............... 254 255 324 (21.3)
BC Ferries ........................................ 103 58 57 1.8
Rapid Transit Project 2000(1) ..................... 143 59 199 (70.4)
Ministry minor capital ............................ 301 183 203 (9.9)
Other(2) .......................................... 129 92 103 (10.7)
--------- --------- ---------
TOTAL TAXPAYER-SUPPORTED .......................... 1,669 1,131 1,415 (20.1)
--------- --------- ---------
SELF-SUPPORTED COMMERICAL
BC Hydro .......................................... 745 741 545 36.0
BC Rail ........................................... 66 52 78 (33.3)
Columbia River power projects(3) .................. 86 54 118 (54.2)
Insurance Corporation of British Columbia(4) ...... 116 41 107 (61.7)
BC Lotteries ...................................... 26 28 20 40.0
Liquor Distribution Branch ........................ 22 9 26 (65.4)
--------- --------- ---------
TOTAL SELF-SUPPORTED COMMERCIAL ................... 1,061 925 894 3.5
--------- --------- ---------
TOTAL CAPITAL SPENDING ............................ 2,730 2,056 2,309 (11.0)
========= ========= =========
- ------------------------------------------------------------------------------------------------------------------------------------
- ----------
(1) Net of expenditures by hospital districts for cost-shared projects and
capital spending on behalf of, and recovered from, the Greater Vancouver
Transportation Authority (TRANSLINK).
(2) Includes BC Housing Management Commission, Provincial Rental Housing
Corporation, BC Buildings Corporation, Ministry of Attorney General,
Ministry of Public Safety and Solicitor General, Ministry of Children and
Family Development, BC Transit and purchase of land for expansion of the
Vancouver Convention and Exhibition Centre.
(3) Columbia Power Corporation and Columbia Basin Trust.
(4) Includes ICBC Properties Ltd.
o Self-supported commercial Crown corporation capital spending
includes projects undertaken by BC Hydro, BC Rail, ICBC and for
Columbia River power projects. Spending for these agencies
totalled $925 million and was $136 million below budget mainly
due to reduced spending by ICBC and deferred Columbia River power
projects.
PROVINCIAL DEBT
The government and its Crown corporations borrow to finance their own
operations (for example, when revenues fall short of expenses), to
finance construction of capital projects or other investments, to
refinance maturing debt and to finance working capital needs.
Provincial debt totalling $36.6 billion at March 31, 2003, 27.2 per
cent of provincial GDP (see Table 2.10 and Appendix Table A2.19).
Total debt was $4.2 billion below budget reflecting
lower-than-forecast debt balances at the end of the 2001/02 fiscal
year, improved government operating results, reduced capital spending,
reduced working capital requirements and non-utilization of the
forecast allowance.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
CHAPTER 2 -- FINANCIAL REVIEW 51
- --------------------------------------------------------------------------------
TABLE 2.10 PROVINCIAL DEBT SUMMARY(1)
- -----------------------------------------------------------------------------------------------------------------------------
Budget Actual Actual Annual
2002/03 2002/03 2001/02 Change
- -----------------------------------------------------------------------------------------------------------------------------
($ millions) (per cent)
TAXPAYER-SUPPORTED DEBT
Provincial government direct operating ............................. 17,182 15,453 13,789 12.1
Education facilities ............................................... 6,012 5,793 5,517 5.0
Health facilities .................................................. 2,199 2,004 1,920 4.4
Highways, ferries and public transit ............................... 5,060 4,786 4,639 3.2
Other(2) ........................................................... 1,148 1,024 1,312 (22.0)
---------- ---------- ---------
TOTAL TAXPAYER-SUPPORTED DEBT ........................................ 31,601 29,060 27,177 6.9
---------- ---------- ---------
SELF-SUPPORTED DEBT
Commercial Crown corporations and agencies ......................... 8,377 7,497 7,674 (2.3)
Warehouse borrowing program ........................................ -- -- 1,067 (100.0)
---------- ---------- ---------
TOTAL SELF-SUPPORTED DEBT ............................................ 8,377 7,497 8,741 (14.2)
---------- ---------- ---------
FORECAST ALLOWANCE ................................................... 750 -- -- --
---------- ---------- --------- --------
TOTAL PROVINCIAL DEBT ................................................ 40,728 36,557 35,918 1.8
========== ========== ========= ========
- -----------------------------------------------------------------------------------------------------------------------------
(1) Debt is after deduction of sinking funds and unamortized discounts, and
excludes accrued interest. Government direct and fiscal agency accrued
interest is reported in the government's accounts as an accounts payable.
(2) Includes government services Crown corporations and agencies, other fiscal
agency loans, student assistance loans, loan guarantees to agricultural
producers, guarantees issued under economic development and home mortgage
assistance programs, and loan guarantee provisions.
TAXPAYER-SUPPORTED DEBT
Taxpayer-supported debt increased by $1.9 billion to total $29.1
billion at year-end (21.6 per cent of GDP). This was $2.5 billion
below budget, mainly reflecting:
o lower-than-forecast debt balances at the end of the 2001/02
fiscal year;
o lower borrowing requirements for government's consolidated
revenue fund due to better-than-expected operating results, lower
ministry minor capital spending, reduced working capital
requirements and higher cash balances at the start of the fiscal
year; and
o reduced capital spending for education, health and transportation
projects.
SELF-SUPPORTED DEBT
Self-supported debt totalled $7.5 billion at March 31, 2003 (5.6 per
cent of GDP). Debt at year-end was $1.2 billion lower than the
previous year (mainly due to draw-down of cash held in the warehouse
borrowing program) and $880 million below plan mainly reflecting:
o lower-than-forecast debt balances at the end of the 2001/02
fiscal year;
o better foreign exchange rates and decreased working capital
requirements for BC Hydro;
o use of asset sale proceeds to pay down debt of BC Rail; and
o deferred capital projects and other decreased working capital
requirements for Columbia River power projects.
Table 2.11 shows a summary of debt changes from the 2002/03 budget.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
52 CHAPTER 2 -- FINANCIAL REVIEW
- --------------------------------------------------------------------------------
TABLE 2.11 SUMMARY OF DEBT CHANGES FROM THE 2002/03 BUDGET
- ----------------------------------------------------------------------------------------------------------------------------------
Final
Change Results
- ----------------------------------------------------------------------------------------------------------------------------------
($ millions)
PROVINCIAL DEBT AT MARCH 31, 2003 - 2002/03 BUDGET 40,728
March 31, 2002 year-end changes between budget forecast
and the 2001/02 PUBLIC ACCOUNTS
Taxpayer-supported debt ...................................................................... (193)
Self-supported commercial .................................................................... (241)
--------
ADJUSTED PROVINCIAL DEBT AT MARCH 31, 2003 - POST PUBLIC ACCOUNTS ................................ 40,294
Taxpayer-supported debt
Provincial government operating:
- improved CRF operating results ........................................................... (469)
- higher cash balances at the start of the fiscal year ..................................... (122)
- reduced working capital requirements and cash/accrual timing differences ................. (933)
- lower ministry minor capital spending .................................................... (118)
Education and health facilities - mainly reduced capital spending ............................ (292)
Highways, ferries and public transit (lower capital spending and reduced
working capital requirements) .............................................................. (262)
BC Buildings (lower capital spending and reduced working capital requirements) ............... (81)
Other (mainly lower debt guarantees) ......................................................... (71)
--------
TOTAL TAXPAYER-SUPPORTED ..................................................................... (2,348)
Self-supported commercial
BC Hydro - improved foreign exchange rates and decreased working capital requirements ........ (400)
BC Rail - mainly proceeds from sale of assets ................................................ (124)
Columbia River power projects - deferred capital spending and other decreased
working capital requirements .............................................................. (112)
Other ........................................................................................ (3) (639)
--------
Debt forecast allowance not needed ............................................................. (750)
--------
PROVINCIAL DEBT AT MARCH 31, 2003 - 2002/03 PUBLIC ACCOUNTS ...................................... 36,557
========
Although the summary accounts deficit was $3.2 billion,
total provincial debt only increased $639 million. This was
due to numerous factors including non-cash items included in
the deficit (primarily amortization costs), the draw-down of
previously borrowed funds from the warehouse program, timing
differences between accrued revenue/expenses and actual cash
receipts/disbursements, and changes in working capital items
such as accounts receivable and accounts payable. Table 2.12
provides a reconciliation between the summary accounts
deficit and the total provincial debt increase.
TABLE 2.12 RECONCILIATION OF SUMMARY DEFICIT TO DEBT
INCREASE - 2002/03
----------------------------------------------------------------------------------------------------------
($ millions)
SUMMARY DEFICIT ....................................................................... 3,169
Taxpayer-supported capital expenditures ............................................... 1,131
Non-cash items included in the deficit ................................................ (1,359)
Reduction in warehouse debt ........................................................... (1,067)
Higher cash balances at the start of the year ......................................... (122)
Cash sources from working capital items (e.g. loans, accounts receivable etc.) ........ (697)
Sinking fund changes and lower debt guarantees ........................................ (239)
Self-supported Crown corporations debt changes ........................................ (177)
--------
TOTAL PROVINCIAL DEBT INCREASE ........................................................ 639
========
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
CHAPTER 2 -- FINANCIAL REVIEW 53
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CREDIT RATING
A credit rating is an evaluation of a borrower's ability to
pay interest and to repay principal. A credit rating affects
the borrower's debt servicing costs and the investor's rate
of return since an investor will demand a higher interest
rate on a higher-risk, lower-rated security. Table 2.13
provides an interprovincial comparison of credit ratings.
The ratio of taxpayer-supported debt relative to gross
domestic product is a measure often used by investors and
credit rating agencies when analyzing a province's ability
to manage its debt load. British Columbia's
taxpayer-supported debt is one of the lowest in Canada, and
this translates into a strong credit rating and lower debt
service costs.
TABLE 2.13 INTERPROVINCIAL COMPARISON OF CREDIT RATINGS,
JUNE 2003
-----------------------------------------------------------------------------------
Rating Agency(1)
---------------------------------------------------
Moody's Investors Standard and Dominion Bond
Province Service Poor's Rating Service
-----------------------------------------------------------------------------------
British Columbia ............ Aa2 AA- AA (Low)
Alberta ..................... Aaa AAA AAA
Saskatchewan ................ Aa3 A+ A
Manitoba .................... Aa2 AA- A
Ontario ..................... Aa2 AA AA
Quebec ...................... A1 A+ A
New Brunswick ............... A1 AA- A
Nova Scotia ................. A3 A- BBB (High)
Prince Edward Island ........ A2 Not Rated A (Low)
Newfoundland ................ A3 A- BBB
-----------------------------------------------------------------------------------
- --------
(1) The rating agencies assign letter ratings to borrowers. The major
categories, in descending order of credit quality are: AAA/Aaa; AA/Aa; A;
BBB/Baa; BB/Ba; and B. The "1", "2", "3", "high", "low", "+", and "-"
modifiers show relative standing within the major categories. For example,
AA+ exceeds AA and Aa2 exceeds Aa3.
DEBT INDICATORS
Table 2.14 provides a historical summary of financial
indicators that are used to depict the province's debt
position, recent borrowing trends and the impact of debt on
fiscal operating results.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
54 CHAPTER 2 -- FINANCIAL REVIEW
- --------------------------------------------------------------------------------
TABLE 2.14 KEY DEBT INDICATORS
- ------------------------------------------------------------------------------------------------------------------------------------
Budget Actual
1998/99 1999/2000 2000/01 2001/02 2002/03 2002/03
- ------------------------------------------------------------------------------------------------------------------------------------
Debt to revenue (per cent)
Total provincial ................................... 103.1 102.0 83.4 95.3 120.1 104.8
Taxpayer-supported ................................. 99.7 101.1 90.3 104.1 127.9 115.9
Debt per capita ($)(1)
Total provincial ................................... 8,071 8,559 8,345 8,757 9,866 8,827
Taxpayer-supported ................................. 5,805 6,251 6,157 6,626 7,655 7,017
Debt to GDP (per cent)(2)
Total provincial ................................... 27.9 28.6 26.2 27.4 31.3 27.2
Taxpayer-supported ................................. 20.1 20.9 19.3 20.8 24.3 21.6
Interest bite (cents per dollar of revenue)(3)
Total provincial ................................... 7.8 7.5 6.4 6.4 7.7 6.4
Taxpayer-supported ................................. 7.4 7.2 6.8 6.6 8.1 6.6
Interest costs ($ millions)
Total provincial ................................... 2,452 2,528 2,604 2,422 2,628 2,231
Taxpayer-supported ................................. 1,723 1,785 1,871 1,724 2,007 1,663
Interest rate (per cent)(4)
Taxpayer-supported ................................. 7.6 7.4 7.5 6.6 6.8 5.9
BACKGROUND INFORMATION:
Revenue ($ millions)(5)
Total provincial(6) ................................ 31,294 33,804 40,618 37,689 33,918 34,887
Taxpayer-supported(7) .............................. 23,285 24,909 27,690 26,108 24,703 25,076
Total debt ($ millions)
Total provincial ................................... 32,261 34,478 33,880 35,918 40,728 36,557
Taxpayer-supported(8) .............................. 23,204 25,181 24,998 27,177 31,601 29,060
Provincial GDP
($ millions)(9) .................................... 115,641 120,599 129,356 130,859 130,100 134,365
Population (thousands at July 1)(10) .................. 3,997 4,028 4,060 4,102 4,128 4,141
- ------------------------------------------------------------------------------------------------------------------------------------
- --------
(1) The ratio of debt to population (e.g. debt at March 31, 2003 divided by
population at July 1, 2002).
(2) The ratio of debt outstanding at fiscal year end to provincial nominal
gross domestic product (GDP) for the calendar year ending in the fiscal
year (e.g. debt at March 31, 2003 divided by 2002 GDP).
(3) The ratio of interest costs (less sinking fund interest) to revenue.
Figures include capitalized interest expense in order to provide a more
comparable measure to outstanding debt.
(4) Weighted average of all outstanding debt issues.
(5) Revenue has been restated for prior years reflecting a change in accounting
policy for equalization entitlements from a cash basis to an accrual basis.
This had the effect of increasing 1999/00 revenue by $125 million, and
reducing 2001/02 and 2002/03 revenue by $68 million and $57 million,
respectively.
(6) Includes revenue of the consolidated revenue fund plus revenue of all Crown
corporations and agencies.
(7) Excludes revenue of commercial Crown corporations and agencies.
(8) Excludes debt of commercial Crown corporations and agencies (including
non-guaranteed debt) and funds held under the province's warehouse
borrowing program.
(9) GDP for the calendar year ending in the fiscal year (e.g. GDP for 2002 is
used for the fiscal year ended March 31, 2003).
(10) Population at July 1st within the fiscal year (e.g. population at July 1,
2002 is used for the fiscal year ended March 31, 2003).
APPENDIX 2
56 APPENDIX 2 -- FINANCIAL REVIEW
- -------------------------------------------------------------------------------
GOVERNMENT'S FINANCIAL STATEMENTS
The government conducts its activities through ministries, Crown
corporations and agencies, and what is known as the SUCH sector
(school districts, universities, colleges, and health care facilities
and organizations). Information on the combined financial results of
the government and its Crown corporations and agencies is presented in
the government's summary financial statements, which are published in
the annual PUBLIC ACCOUNTS. The SUCH sector, consistent with the
legislated requirement to fully comply with generally accepted
accounting principles (GAAP), will be included in the summary
financial statements beginning in 2004/05.
CONSOLIDATED REVENUE FUND
The accounts relating to the government's direct activities are
contained in the consolidated revenue fund which consists of a main
operating account and various special accounts. The consolidated
revenue fund comprises all money over which the legislature has the
power of appropriation.
The financial results of the consolidated revenue fund are reported
as a separate entity in the PUBLIC ACCOUNTS. Revenue and expenditure
are recorded on an accrual basis of accounting, with certain limited
exceptions. Assets are recorded to the extent that they represent
financial claims by the government upon outside parties; are items
held for resale, prepaid expenses, deferred charges, or prepaid
capital advances; or are tangible capital assets acquired. Similarly,
liabilities are recorded only if they represent actual or probable
financial claims against the government.
CROWN CORPORATIONS AND AGENCIES
Crown corporations and agencies may be classified as either
taxpayer-supported or self-supported. Taxpayer-supported Crown
corporations and agencies may sell services directly to the public,
but their revenue may not cover operating expenses and debt servicing
payments. In these cases, the government provides some grants or other
forms of assistance to them, including the dedication of provincial
revenue. This category also includes Crown corporations whose primary
purpose is to provide services to the government. Self-supported Crown
corporations and agencies do generate sufficient revenue to cover
operating and debt service costs, and may pay dividends to the
provincial government. The operations of Crown corporations and
agencies are recorded in their own financial statements, which are
subject to audit by the Auditor General or by private-sector auditors.
As individual Crown corporations and agencies publish their own
financial statements, only summarized financial information is
provided in the Public Accounts.
SUMMARY FINANCIAL STATEMENTS
The financial results of the consolidated revenue fund and the Crown
corporations and agencies are combined into the summary financial
statements (see Chart A2.1). Where the accounting policies of
taxpayer-supported Crown corporations and agencies differ from those
used by central government to prepare its own consolidated revenue
fund financial statements, the Crown
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 2 -- FINANCIAL REVIEW 57
- -------------------------------------------------------------------------------
corporation and agency financial statements include adjustments to
conform to government's accounting policies unless they are following
the norms for their industry.
CHART A2.1 SUMMARY FINANCIAL STATEMENTS COMPONENTS
[CHART]
Currently, as is the practice of many other jurisdictions in the rest
of Canada, the summary financial statements do not include all of the
financial results of the SUCH sector, although the government
publishes SUCH sector financial information in supplemental schedules
to the PUBLIC ACCOUNTS. The government has passed legislation
requiring that its financial statements fully conform to GAAP
beginning with fiscal year 2004/05. Therefore, appropriate SUCH sector
financial results will be fully combined with the summary financial
statements beginning in 2004/05. Had it been included in 2002/03, the
SUCH sector would have reduced the deficit by $243 million, and
increased financial assets by $3.4 billion, liabilities by $3.7
billion and non-financial assets by $3.6 billion.
In this appendix, current and historical operating results are
presented in accordance with the government's accounting polices
effective March 31, 2003.
THE FINANCIAL CYCLE
The BUDGET TRANSPARENCY AND ACCOUNTABILITY ACT (BTAA) outlines
government's reporting requirements during the financial cycle and
imposes specific reporting deadlines or release dates for these
publications. In particular, fixed dates for presentation of the
Throne Speech and budget, as well as dates for quarterly and annual
reports, are set by law.
Under the BTAA, the provincial government focuses its budgeting and
reporting on a summary accounts basis. The BTAA requirements include
reporting on the advice of the Economic Forecast Council, presentation
of the annual ESTIMATES, BUDGET AND THREE-YEAR FISCAL PLAN and
QUARTERLY REPORTS in accordance with GAAP by 2004/05, publication of
QUARTERLY REPORTS with revised forecasts, presentation of the PUBLIC
ACCOUNTS, annual three-year service plans for each ministry and
government organization, and an annual three-year government strategic
plan.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
58 APPENDIX 2 -- FINANCIAL REVIEW
- -------------------------------------------------------------------------------
CHART A2.2 FINANCIAL PLANNING AND REPORTING CYCLE
[CHART]
Chart A2.2 summarizes the annual financial process of the provincial
government. This process consists of four main stages.
- PLANNING AND BUDGET PREPARATION -- Treasury Board reviews longer-term
estimates of revenue, expense, capital and debt, and establishes a
preliminary fiscal plan within the framework of the government's
overall strategic plan. Preliminary high-level targets are provided to
ministries and received from Crown corporations. Ministries and Crown
corporations prepare three-year service plans, including performance
measures and targets, and operating and capital budgets, for review by
Treasury Board and/or government Caucus committees. Treasury Board
makes decisions on budget allocations for ministries and assesses
Crown corporation net income benchmarks based on government revenue
forecasts, spending and capital priorities, and debt targets within
the context of the fiscal plan. As input to this process, a
consultation paper is made public by September 15th of each year that
invites public comment on issues that need to be addressed in the
fiscal and service plans, and a committee of the legislature holds
public hearings throughout the province.
- IMPLEMENTATION AND REPORTING -- The government's revenue, expense and
capital plans for the next three fiscal years, as well as other
information on the government's finances, are presented to the
Legislative Assembly by the
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 2 -- FINANCIAL REVIEW 59
- -------------------------------------------------------------------------------
Minister of Finance in a budget document called the BUDGET AND FISCAL
PLAN. The financial plan for the next fiscal year is included in the
document called the ESTIMATES, which describes the individual
appropriations to be voted on by the Legislative Assembly. The service
plans and a report on major capital projects (those whose government
contribution exceeds $50 million) must also be tabled. Throughout the
year, the authorized funding as specified in the ESTIMATES and
ministry service plans is spent on programs and services. Crown
corporations follow approved service plans under direction of their
own Boards of Directors. QUARTERLY REPORTS, including full-year
forecasts, are published by legislated dates to provide regular public
updates on the government's finances.
- EVALUATION -- At the end of the fiscal year, the PUBLIC ACCOUNTS are
prepared by the Comptroller General and examined by the Auditor
General to ensure that the financial statements fairly present the
government's financial position. The PUBLIC ACCOUNTS are augmented by
the BRITISH COLUMBIA FINANCIAL AND ECONOMIC REVIEW, which provides an
overview of annual and historical financial and economic results. In
addition, annual service plan reports are made public that compare
actual results with ministry and Crown corporation performance measure
targets.
- ACCOUNTABILITY -- The PUBLIC ACCOUNTS are presented to the Legislative
Assembly and they are reviewed by two committees of the Legislative
Assembly (the Select Standing Committee on the PUBLIC ACCOUNTS and the
Select Standing Committee on Crown corporations). The MINISTERIAL
ACCOUNTABILITY REPORT is published detailing the individual and
collective financial performance of cabinet ministers, and the service
and revenue results achieved by the Ministers of State and the
Minister of Provincial Revenue. When the PUBLIC ACCOUNTS are tabled,
ministries and most Crown corporations also release their service plan
reports detailing results for the previous fiscal year, and a report
on government's strategic plan is presented.
CAPITALIZATION
The government uses the "expense basis" of accounting for capital
expenditures. Accordingly, capital expenditures are reported on the
government's balance sheet (capitalized) and amortized (expensed) in
the government's annual budgetary expenditures over the useful life of
the assets.
The provincial government also issues advances to the SUCH sector for
investment in capital assets. These advances are capitalized in the
summary accounts balance sheet as prepaid capital advances. Prepaid
capital advances are amortized in similar fashion to capital assets.
Appendix Table A2.1 illustrates the effect of capitalization
accounting policy on the government's surplus (deficit) for 1998/99 to
2002/03. The table shows that excluding the effect of capitalization,
the 2002/03 deficit was $2,988 million compared to a $1,528 million
deficit in 2001/02. Additional information on the government's
capitalization accounting policy is provided in the 2002/03 PUBLIC
ACCOUNTS.
The five-year summary accounts balance sheet and the relationship
between the surplus/deficit and changes in debt is included in
Appendix Table A2.5.
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
60 APPENDIX 2 -- FINANCIAL REVIEW
- -------------------------------------------------------------------------------
TABLE A2.1 EFFECTS OF CAPITALIZATION ON THE SUMMARY ACCOUNTS
- -----------------------------------------------------------------------------------------------------------------------------------
1998/99 1999/00 2000/01 2001/02 2002/03
- -----------------------------------------------------------------------------------------------------------------------------------
($ millions)
SURPLUS (DEFICIT) EXCLUDING EFFECTS OF CAPITALIZATION .................... (1,312) (676) 428 (1,528) (2,988)
------- ---------- ------- ------- -------
ADJUSTMENTS TO INCLUDE CAPITALIZATION POLICY:
ADD: Cost of capital asset investments during the year................. 1,689 1,900 2,028 1,415 1,131
LESS: Cost of disposals, amortization and valuation adjustments......... (1,374) (1,074) (1,025) (1,172) (1,312)
------- ---------- ------- ------- -------
Net adjustment........................................................... 315 826 1,003 243 (181)
------- ---------- ------- ------- -------
SURPLUS (DEFICIT) AFTER CAPITALIZATION.................................... (997) 150 1,431 (1,285) (3,169)
------- ---------- ------- ------- -------
------- ---------- ------- ------- -------
UNFUNDED PENSION LIABILITIES
The province contributes to four defined benefit pension plans for
substantially all of its employees. These jointly trusteed pension
plans were determined to be in a surplus position based on economic
conditions and expectations at the time of their last actuarial
valuation. The plans and the date of their last actuarial valuation
are:
- Public Service Pension Plan, March 31, 2002;
- Municipal Pension Plan, December 31, 2000;
- Teachers' Pension Plan, December 31, 2000; and
- College Pension Plan, August 31, 2000.
In the event that a plan is determined to be in a deficit position by
a subsequent actuarial valuation (performed every three years), the
province is required to address the situation along with individual
pension plan boards by adjusting joint contributions or through other
measures.
Note 17 in the 2002/03 PUBLIC ACCOUNTS provides more information on
pension plans.
In addition to pension benefits, each of the plans provide some group
health and/or dental benefits to retired members. During 2002/03, all
of the plans reviewed and curtailed some of these post-retirement
group benefits due to rising costs.
ADJUSTMENTS TO THE ACCUMULATED DEFICIT
During 2002/03, a number of retroactive adjustments were made to the
government's financial statements to reflect changes in accounting
policy and to correct previously published information. Table A2.2
provides a brief summary of the changes that have been reviewed and
approved by the Office of the Auditor General.
One of the adjustments relates to certain tenures issued under the
Small Business Forest Enterprise program where the provincial
government is responsible for silviculture obligations. Previously,
these costs were expensed when they occurred (a cash basis approach).
In keeping with its move to accrual accounting (GAAP), the provincial
government has estimated its
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 2 -- FINANCIAL REVIEW 61
- -------------------------------------------------------------------------------
TABLE A2.2 SUMMARY OF CHANGES IN ACCUMULATED DEFICIT
FROM THE 2001/02 PUBLIC ACCOUNTS REPORTED BALANCE
- ---------------------------------------------------------------------------------------------------------------------------
Final
Change Results
- ---------------------------------------------------------------------------------------------------------------------------
($ millions)
ACCUMULATED DEFICIT ON MARCH 31, 2001 AS REPORTED IN THE 2001/02 PUBLIC ACCOUNTS.................. (3,509)
OPENING BALANCE ADJUSTMENTS REPORTED IN 2001/02................................................. 32
OPENING BALANCE ADJUSTMENTS DUE TO ACCOUNTING POLICY CHANGES IN 2002/03:
Recognition of liability due to Small Business Forest Enterprise silviculture obligations..... (129)
Change from cash to accrual accounting for federal equalization payments...................... 125
Change in consolidation method used by Canadian Blood Services to record its
investment in a subsidiary, CBS Insurance Company........................................... (19) (23)
------- -------
ACCUMULATED DEFICIT ON MARCH 31, 2001 AS REPORTED IN THE 2002/03 PUBLIC ACCOUNTS.................. (3,500)
2001/02 DEFICIT:
AS REPORTED IN THE 2001/02 PUBLIC ACCOUNTS.................................................... (1,233)
ADJUSTMENTS DUE TO ACCOUNTING POLICY CHANGES IN 2002/03:
Recognition of a reduction in Small Business Forest Enterprise silviculture liability....... 16
Change from cash to accrual accounting for federal equalization transfers................... (68) (1,285)
------- -------
ACCUMULATED DEFICIT ON MARCH 31, 2002 AS REPORTED IN THE 2002/03 PUBLIC ACCOUNTS.................. (4,785)
-------
-------
- -----------------------------------------------------------------------------------------------------------------------------------
potential silviculture liability for these tenures and recorded the
liability on its balance sheet. The 2001/02 expense reduction
reflects the difference between the accrued liability for the
year and the actual cash expenditures that were previously recorded.
In 2001/02, the provincial government reported a cash equalization
payment of $226 million that related to both 1999/00 and 2001/02.
In 2002/03, the provincial government accrued an additional $57
million for the federal government's equalization obligation for
these two years. Also in 2002/03 the provincial government changed
its accounting policy to record grants under the program on an
accrual basis rather than on a cash basis. As a result, $125
million was allocated as revenue in 1999/00, an overall $68 million
reduction in revenue was recorded in 2001/02 and a $57 million
reduction in 2002/03.
Canadian Blood Services is self-insured through a subsidiary, CBS
Insurance Company (CBSI), and records its investment in CBSI on an
equity basis. Previous consolidations of CBSI had been done on a
line-by-line, fully consolidated basis. The change in policy
resulted in an overall $19 million increase in the accumulated
deficit (based on the province's proportional share of Canadian
Blood Services).
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
62 APPENDIX 2 -- FINANCIAL REVIEW
- -------------------------------------------------------------------------------
TABLE A2.3 FIVE-YEAR OPERATING RESULTS(1)
- ------------------------------------------------------------------------------------------------------------------------------------
1998/99 1999/00 2000/01 2001/02 2002/03
- ------------------------------------------------------------------------------------------------------------------------------------
($ millions)
Consolidated revenue fund (CRF):
Revenue........................................................ 20,306 21,957 24,013 22,894 22,147
Expenditure.................................................... (20,581) (22,213) (22,460) (24,897) (25,196)
-------- ----------- -------- -------- --------
(275) (256) 1,553 (2,003) (3,049)
Wind-up of Forest Renewal BC & Fisheries Renewal BC............ - - - 256 -
-------- ----------- -------- -------- --------
CRF BALANCE.................................................... (275) (256) 1,553 ( 1,747) (3,049)
-------- ----------- -------- -------- --------
CROWN CORPORATIONS AND AGENCIES:
TAXPAYER-SUPPORTED:
British Columbia Buildings Corporation....................... 49 45 51 37 52
British Columbia Ferry Corporation (BCFC).................... (114) (299) 11 (23) (29)
BC Transportation Financing Authority........................ (114) 22 1 - (20)
Forest Renewal BC (FRBC)..................................... (265) 1 (64) (179) -
552513 British Columbia Ltd. (Skeena Cellulose Inc.)(2)...... - - - (69) (4)
Other........................................................ 9 (44) 32 (6) 10
Accounting adjustments(3)................................. (368) (131) (189) (225) (204)
Debt assistance for BCFC and Skeena
Cellulose Inc........................................... - 1,080 - 220 -
-------- ----------- -------- -------- --------
TAXPAYER-SUPPORTED RESULTS BEFORE
CONTRIBUTIONS TO THE CRF................................ (803) 674 (158) (245) (195)
Contributions paid to CRF................................. (14) (78) (69) (17) (34)
Wind-up of Fisheries & Forest Renewal BC.................. - - - (256) -
-------- ----------- -------- -------- --------
TAXPAYER-SUPPORTED NET RESULTS................................. (817) 596 (227) (518) (229)
-------- ----------- -------- -------- --------
COMMERCIAL:
British Columbia Hydro & Power Authority - net income........ 395 416 446 403 418
Reversal of RSA transfer impact on net income................ - 129 103 (145) (66)
-------- ----------- -------- -------- --------
British Columbia Hydro & Power Authority - operating........... 395 545 549 258 352
Liquor Distribution Branch..................................... 616 617 642 637 654
British Columbia Lottery Corporation........................... 456 532 562 606 671
British Columbia Railway Company............................... 24 (582) (7) (107) (84)
Insurance Corporation of British Columbia...................... 74 96 139 (251) 45
552513 British Columbia Ltd. (Skeena Cellulose Inc.)(2)........ (26) (3) - - -
Other.......................................................... 3 4 4 - 14
Accounting adjustments (4)................................... (99) (23) (301) (207) (60)
-------- ----------- -------- -------- --------
COMMERCIAL RESULTS BEFORE
CONTRIBUTIONS TO THE CRF................................... 1,443 1,186 1,588 936 1,592
Contributions paid to CRF.................................... (1,348) (1,376) (1,431) (1,420) (1,483)
-------- ----------- -------- -------- --------
COMMERCIAL NET RESULTS....................................... 95 (190) 157 (484) 109
-------- ----------- -------- -------- --------
TOTAL CROWN CORPORATIONS AND AGENCIES.......................... (722) 406 (70) (1,002) (120)
-------- ----------- -------- -------- --------
(DEFICIT) SURPLUS BEFORE JOINT TRUSTEESHIP....................... (997) 150 1,483 (2,749) (3,169)
Joint trusteeship.............................................. - - (52) 1,464 -
-------- ----------- -------- -------- --------
(DEFICIT) SURPLUS................................................ (997) 150 1,431 (1,285) (3,169)
-------- ----------- -------- -------- --------
-------- ----------- -------- -------- --------
- -----------------------------------------------------------------------------------------------------------------------------------
- --------
(1) Based on 2002/03 Public Accounts information. For comparative purposes,
figures for prior years have been restated for the presentation used in
2002/03, and to reflect accounting policy changes for certain CRF revenue
and expenses. See Tables A2.6 and A2.7 for details
(2) Until 2000/01, 552513 British Columbia Ltd (Skeena Cellulose Inc) was
classified as a commercial Crown corporation. Due to a significant
deterioration in the outlook for world pulp prices, the company was
reclassified as taxpayer-supported starting in 2001/02.
(3) Primarily reflects the amortization of the cost of highways transferred to
the BC Transportation Financing Authority and one-time asset valuation
adjustments.
(4) Primarily reflects adjustments to account for differences between the
fiscal year ends of the government and BC Rail and ICBC, and transfers of
BC Lottery revenue to charities and local governments.
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 2 -- FINANCIAL REVIEW 63
- -------------------------------------------------------------------------------
TABLE A2.4 SUMMARY OF CHANGES FROM THE 2002/03
THIRD QUARTERLY REPORT UPDATED FORECAST
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Final
Change Results
- -------------------------------------------------------------------------------------------------------------------------------
($ millions)
BUDGET DEFICIT - 2002/03 THIRD QUARTERLY REPORT UPDATED FORECAST.............................. (3,800)
CONSOLIDATED REVENUE FUND (CRF) CHANGES:
REVENUE CHANGES:
- Personal income tax - lower personal income growth in 2002.............................. (66)
- Corporation income tax - higher tax credits in 2001..................................... (32)
- Other taxes - higher collections from most sources except social service tax............ 40
- Energy-related sources - higher prices.................................................. 153
- Forests - higher harvest volumes........................................................ 111
- Medical Service Plan premiums........................................................... (30)
- Equalization and CHST entitlements - lower population estimates and
accounting policy changes............................................................. (168)
- Other................................................................................... 46 54
----- ----
SPENDING CHANGES:
- Contingencies vote savings.............................................................. 113
- Ministry of Health Services savings..................................................... 26
- Other ministry savings.................................................................. 58
- Lower debt interest..................................................................... 19 216 270
----- ----
CROWN CORPORATION CHANGES:
TAXPAYER-SUPPORTED:
- British Columbia Buildings Corporation - accounting policy adjustment,
revenue recognition................................................................... 42
- British Columbia Ferry Corporation - write-down of PACIFICAT FERRIES to sale
proceeds and transfer of proceeds to CRF.............................................. (70)
- Other changes and adjustments........................................................... 42 14
----- ----
COMMERCIAL:
- British Columbia Railway Company - impact of 2003 first quarter results on
adjustment to match government's fiscal year-end...................................... (9)
- Insurance Corporation of British Columbia - impact of final audited results and
adjustment to match government's fiscal year-end...................................... 47
- Other changes and adjustments........................................................... 9 47 61
----- ----
FORECAST ALLOWANCE - not needed............................................................... 300
-------
ACTUAL DEFICIT - 2002/03 PUBLIC ACCOUNTS...................................................... (3,169)
-------
-------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
64 APPENDIX 2 -- FINANCIAL REVIEW
- -------------------------------------------------------------------------------
TABLE A2.5 FIVE-YEAR STATEMENT OF FINANCIAL POSITION (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------------
1998/99 1999/00 2000/01 2001/02 2002/03
- -----------------------------------------------------------------------------------------------------------------------------------
($ millions)
FINANCIAL ASSETS
Cash and temporary investments .................................... 791 1,569 548 780 326
Other financial assets ............................................ 3,577 4,155 4,525 4,412 4,093
Investments in commercial Crown corporations
and agencies
- Retained earnings of self-supported
Crown corporations .......................................... 2,960 2,820 3,001 2,520 2,629
- Loans for purchases of assets
recoverable from agencies ................................... 7,988 7,499 7,437 7,552 7,381
------- ------- ------- ------- -------
10,948 10,319 10,438 10,072 10,010
Warehouse borrowing program assets ................................ 658 1,320 1,312 1,067 -
------- ------- ------- ------- -------
15,974 17,363 16,823 16,331 14,429
------- ------- ------- ------- -------
LIABILITIES
Current liabilities ............................................... 3,502 4,091 3,945 4,177 4,576
Unfunded pension liabilities ...................................... 2,444 2,053 1,477 6 4
Debt
- Taxpayer-supported debt ....................................... 23,204 25,181 24,998 27,177 29,060
- Commercial Crown corporations and agencies .................... 9,057 9,297 8,882 8,741 7,497
------- ------- ------- ------- -------
Total provincial debt ........................................... 32,261 34,478 33,880 35,918 36,557
LESS : guarantees and non-guaranteed debt ........................ (707) (934) (597) (464) (416)
------- ------- ------- ------- -------
31,554 33,544 33,283 35,454 36,141
------- ------- ------- ------- -------
37,500 39,688 38,705 39,637 40,721
------- ------- ------- ------- -------
NET LIABILITIES ...................................................... (21,526) (22,325) (21,882) (23,306) (26,292)
------- ------- ------- ------- -------
CAPITAL AND OTHER ASSETS
Prepaid capital advances ........................................... 6,138 6,517 6,905 7,033 7,108
Tangible capital assets ............................................ 10,029 10,476 11,091 11,206 10,950
Other assets ....................................................... 278 401 386 282 280
------- ------- ------- ------- -------
16,445 17,394 18,382 18,521 18,338
------- ------- ------- ------- -------
ACCUMULATED SURPLUS (DEFICIT) ........................................ (5,081) (4,931) (3,500) (4,785) (7,954)
------- ------- ------- ------- -------
------- ------- ------- ------- -------
- -----------------------------------------------------------------------------------------------------------------------------------
CHANGE IN SUMMARY ACCOUNTS FINANCIAL POSITION
- -----------------------------------------------------------------------------------------------------------------------------------
1998/99 1999/00 2000/01 2001/02 2002/03
- -----------------------------------------------------------------------------------------------------------------------------------
($ millions)
CHANGE IN ACCUMULATED (SURPLUS)/DEFICIT: 997 (150) (1,431) 1,285 3,169
------- ------- ------- ------- -------
WORKING CAPITAL CHANGES:
Increase (reduction) in cash and temporary investments........... (507) 778 (1,021) 232 (454)
Reduction in unfunded pension liability.......................... 252 391 576 1,471 2
Other working capital changes.................................... 407 112 501 (449) (720)
------- ------- ------- ------- -------
152 1,281 56 1,254 (1,172)
------- ------- ------- ------- -------
CAPITAL ASSET AND INVESTMENT CHANGES:
Increase in taxpayer-supported capital investments............... 1,689 1,900 2,028 1,415 1,131
LESS: amortization and other accounting changes................ (1,374) (1,074) (1,025) (1,172) (1,312)
------- ------- ------- ------- -------
315 826 1,003 243 (181)
------- ------- ------- ------- -------
Increase in total investment in commercial Crown
corporations................................................... 740 953 771 410 984
LESS: loan repayments and other accounting changes............. (241) (1,582) (652) (776) (1,046)
------- ------- ------- ------- -------
499 (629) 119 (366) (62)
------- ------- ------- ------- -------
Increase (decrease) in warehouse borrowing investments........... 446 662 (8) (245) (1,067)
------- ------- ------- ------- -------
1,260 859 1,114 (368) (1,310)
------- ------- ------- ------- -------
INCREASE (DECREASE) IN GUARANTEES AND
NON-GUARANTEED DEBT.............................................. (503) 227 (337) (133) (48)
------- ------- ------- ------- -------
INCREASE (DECREASE) IN TOTAL PROVINCIAL DEBT....................... 1,906 2,217 (598) 2,038 639
------- ------- ------- ------- -------
------- ------- ------- ------- -------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 2 -- FINANCIAL REVIEW 65
- -------------------------------------------------------------------------------
TABLE A2.6a FIVE-YEAR REVENUE BY SOURCE
CONSOLIDATED REVENUE FUND(1)
- -----------------------------------------------------------------------------------------------------------------------------------
1998/99 1999/2000 2000/01 2001/02 2002/03
- -----------------------------------------------------------------------------------------------------------------------------------
($ millions)
TAXATION REVENUE
Personal income........................................... 5,423 5,825 5,963 5,375 4,154
Corporation income........................................ 1,098 939 1,054 1,522 613
Social service............................................ 3,209 3,338 3,617 3,535 3,770
Fuel...................................................... 654 470 443 398 393
Tobacco................................................... 505 498 460 499 606
Property - residential (school purpose)(2)................ 511 529 538 556 562
Property - business (school purpose)...................... 764 758 770 781 823
Property - rural area..................................... 61 63 63 64 72
Property transfer......................................... 223 245 262 303 407
Corporation capital....................................... 455 460 459 395 198
Insurance premium......................................... 195 199 196 203 223
Hotel room................................................ 79 86 93 93 98
Horse racing.............................................. 4 3 - - -
Less commissions on collection of public funds............ (24) (24) (23) (36) (32)
Less allowance for doubtful accounts...................... (23) (25) (14) (36) (41)
------- -------- ------- ------- --------
TOTAL TAXATION REVENUE.................................... 13,134 13,364 13,881 13,652 11,846
------- -------- ------- ------- --------
NATURAL RESOURCE REVENUE
Natural gas and petroleum
Natural gas royalties................................... 193 328 1,249 836 1,056
Permits and fees........................................ 106 248 462 360 330
Petroleum royalties..................................... 62 94 136 103 118
------- -------- ------- ------- --------
361 670 1,847 1,299 1,504
Columbia River Treaty..................................... 16 100 632 360 100
Minerals.................................................. 44 47 53 53 63
------- -------- ------- ------- --------
421 817 2,532 1,712 1,667
------- -------- ------- ------- --------
Forests
Timber sales............................................ 815 1,041 821 830 996
Small Business Forest Enterprise Program................ 209 269 257 186 292
Logging tax............................................. 14 24 60 28 21
Other forests revenue................................... 55 58 15 65 14
------- -------- ------- ------- --------
1,093 1,392 1,153 1,109 1,323
------- -------- ------- ------- --------
Water resources........................................... 306 297 294 284 257
WILDLIFE ACT - fees and licences.......................... 15 15 15 15 14
Less commissions on collection of public funds............ (1) (1) (1) (1) (1)
Less allowance for doubtful accounts...................... (5) (3) (18) (11) (5)
------- -------- ------- ------- --------
TOTAL NATURAL RESOURCE REVENUE............................ 1,829 2,517 3,975 3,108 3,255
------- -------- ------- ------- --------
OTHER REVENUE
Fees and Licences
Medical Services Plan premiums.......................... 876 868 895 955 1,358
Motor vehicle licences and permits...................... 329 336 342 346 355
Ministry of Attorney General and Land Registries fees... 106 102 101 107 110
Other fees and licences................................. 258 261 229 232 226
Less commissions on collection of public funds.......... (51) (14) (7) (7) (9)
Less allowance for doubtful accounts.................... (34) (5) (17) (44) (90)
------- -------- ------- ------- --------
1,484 1,548 1,543 1,589 1,950
------- -------- ------- ------- --------
Investment Earnings and Miscellaneous
Investment earnings..................................... 51 60 111 64 18
Fines and penalties..................................... 112 108 99 99 77
Other miscellaneous..................................... 125 127 126 160 168
Asset dispositions...................................... 63 52 - 42 -
Less commissions on collection of public funds.......... (4) (3) - (4) (4)
Less allowance for doubtful accounts.................... - (4) (19) (40) (3)
------- -------- ------- ------- --------
347 340 317 321 256
------- -------- ------- ------- --------
TOTAL OTHER REVENUE......................................... 1,831 1,888 1,860 1,910 2,206
------- -------- ------- ------- --------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
66 APPENDIX 2 -- FINANCIAL REVIEW
- -------------------------------------------------------------------------------
TABLE A2.6a FIVE-YEAR REVENUE BY SOURCE
CONSOLIDATED REVENUE FUND(1)
- -----------------------------------------------------------------------------------------------------------------------------------
1998/99 1999/2000 2000/01 2001/02 2002/03
- -----------------------------------------------------------------------------------------------------------------------------------
($ millions)
CONTRIBUTIONS FROM GOVERNMENT ENTERPRISES
Liquor Distribution Branch................................... 616 617 642 637 654
British Columbia Hydro and Power Authority................... 323 343 372 332 338
British Columbia Lottery Corporation(3)...................... 369 416 414 449 489
Other contributions.......................................... 54 78 72 19 36
------- -------- ------- ------- --------
TOTAL CONTRIBUTIONS FROM GOVERNMENT ENTERPRISES.............. 1,362 1,454 1,500 1,437 1,517
------- -------- ------- ------- --------
CONTRIBUTIONS FROM THE FEDERAL GOVERNMENT
Canada health and social transfer............................ 1,968 2,438 2,619 2,445 2,606
Equalization(4).............................................. - 125 - 158 543
Education (public schools)................................... 76 81 74 85 80
Other payments............................................... 106 90 104 99 94
------- -------- ------- ------- --------
TOTAL CONTRIBUTIONS FROM THE FEDERAL GOVERNMENT.............. 2,150 2,734 2,797 2,787 3,323
------- -------- ------- ------- --------
TOTAL REVENUE.................................................. 20,306 21,957 24,013 22,894 22,147
------- -------- ------- ------- --------
------- -------- ------- ------- --------
- -----------------------------------------------------------------------------------------------------------------------------------
- --------
(1) For comparative purposes, figures for prior years have been restated to be
consistent with the presentation used in 2002/03. Figures exclude dedicated
revenue collected on behalf of, and transferred to, British Columbia
Transit, British Columbia Ferry Corporation, BC Transportation Financing
Authority, Greater Vancouver Transportation Authority (TRANSLINK), Forest
Renewal BC, BC Oil and Gas Commission, and Tourism British Columbia. These
revenues are included as part of the operations of Crown corporations and
agencies, with the exception of TRANSLINK and certain other public bodies
that are not part of the provincial government.
(2) Revenue is shown net of home owner grants (basic and supplementary).
(3) The British Columbia Lottery Corporation remitted additional funds to
government which was distributed to charitable organizations and local
governments.
(4) Revenue has been restated for prior years reflecting a change in accounting
policy for equalization entitlements from cash basis to accrual. This had
the effect of increasing 1999/00 revenue by $125 million, and reducing
2001/02 and 2002/03 revenue by $68 million and $57 million, respectively.
- -------------------------------------------------------------------------------
TABLE A2.6b FIVE-YEAR DEDICATED REVENUE COLLECTED ON BEHALF OF, AND TRANSFERRED
TO, CROWN CORPORATIONS AND AGENCIES, AND OTHER ENTITIES
- -----------------------------------------------------------------------------------------------------------------------------------
1998/99 1999/2000 2000/01 2001/02 2002/03
- -----------------------------------------------------------------------------------------------------------------------------------
($ millions)
DEDICATED REVENUE:
British Columbia Transit(1)................................. 94 8 7 8 8
BC Transportation Financing Authority (BCTFA)(2)............ 124 176 202 195 222
Forest Renewal BC(3)........................................ 177 302 187 144 -
British Columbia Ferry Corporation(4)....................... - 65 73 71 75
Greater Vancouver Transportation Authority (TRANSLINK)(5)... - 182 173 201 250
Tourism British Columbia(6)................................. 20 22 24 24 25
Oil and Gas Commission(7)................................... 6 13 18 17 20
Other(8).................................................... 149 151 158 178 190
----- ----- ---- ---- -----
TOTAL DEDICATED REVENUE....................................... 570 919 842 838 790
----- ----- ---- ---- -----
----- ----- ---- ---- -----
- -----------------------------------------------------------------------------------------------------------------------------------
- -------
(1) The 1998/99 figure includes motor fuel tax collected in the Vancouver and
Victoria regional transit service areas. Effective April 1, 1999, figures
include motor fuel tax collected only in the Victoria regional transit area
(2.5 cents/litre on clear gasoline and motive fuel) as a result of the
creation of TRANSLINK.
(2) Includes motor fuel tax and a sales tax on short-term rentals of passenger
vehicles. Figures are based on a transfer of 6.75 cents/litre on clear
gasoline and motive fuel effective March 1, 2003, up from 3.25 cents/litre
on clear gasoline and motive fuel effective April 1, 2000. The initial rate
of 1 cent/litre (effective May 1, 1994) was increased to 2 cents/litre on
July 1, 1997 and 3 cents/litre on June 1, 1999.
(3) Includes incremental stumpage and royalty revenue resulting from changes to
rates introduced under the provincial government's Forest Renewal Plan on
and after May 1, 1994.
(4) Includes 1 cent/litre of motor fuel tax for the period April 1, 1999 to
September 30, 1999 and 1.25 cents/litre effective October 1, 1999.
(5) Effective April 1, 1999, includes 8 cents/litre on clear gasoline and
motive fuel (4 cents/litre of which was previously collected on behalf of
BC Transit) and social services tax on parking in the Vancouver transit
area. Effective April 1, 2002, the tax collected increased to 11
cents/litre on clear gasoline and motive fuels, up from 9 cents/litre
effective April 1, 2001.
(6) Includes a 1.65-per-cent share of the revenue raised from the 8-per-cent
provincial hotel room tax.
(7) Includes fees collected under the Petroleum and Natural Gas Act and the
Pipeline Act, and a levy assessed under the Oil and Gas Commission Levy
Regulation.
(8) Primarily reflects transfers of property tax revenue collected on behalf of
local governments.
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 2 -- FINANCIAL REVIEW 67
- -------------------------------------------------------------------------------
TABLE A2.7 FIVE-YEAR REVENUE BY SOURCE - SUPPLEMENTARY INFORMATION
CONSOLIDATED REVENUE FUND(1)
- -----------------------------------------------------------------------------------------------------------------------------------
1998/99 1999/2000 2000/01 2001/02 2002/03
- -----------------------------------------------------------------------------------------------------------------------------------
(per cent)
PER CENT OF GDP:(2)
Taxation.................................................. 11.4 11.1 10.7 10.4 8.8
Natural resource.......................................... 1.6 2.1 3.1 2.4 2.4
Other..................................................... 1.6 1.6 1.4 1.5 1.6
Contributions from government enterprises................. 1.2 1.2 1.2 1.1 1.1
Contributions from the federal government................. 1.9 2.3 2.2 2.1 2.5
------ ----- ------ ------ ------
Total Revenue......................................... 17.6 18.2 18.6 17.5 16.5
------ ----- ------ ------ ------
------ ----- ------ ------ ------
GROWTH RATES: (per cent)
Taxation.................................................. 0.2 1.8 3.9 -1.6 -13.2
Natural resource.......................................... -16.8 37.6 57.9 -21.8 4.7
Other..................................................... 1.8 3.1 -1.5 2.7 15.5
Contributions from government enterprises................. 6.4 6.8 3.2 -4.2 5.6
Contributions from the federal government................. 17.0 27.2 2.3 -0.4 19.2
Total Revenue......................................... 0.4 8.1 9.4 -4.7 -3.3
PER CAPITA REVENUE:(3) (dollars)
Taxation.................................................. 3,286 3,318 3,419 3,328 2,860
Natural resource.......................................... 458 625 979 758 786
Other..................................................... 458 469 458 466 533
Contributions from government enterprises................. 341 361 369 350 366
Contributions from the federal government................. 538 679 689 679 803
------ ----- ------ ------ ------
Total Revenue......................................... 5,080 5,451 5,914 5,582 5,348
------ ----- ------ ------ ------
------ ----- ------ ------ ------
REAL PER CAPITA REVENUE (2002 DOLLARS)(4)................... 5,445 5,779 6,155 5,713 5,348
- growth rate (per cent).................................. -0.8 6.1 6.5 -7.2 -6.4
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Revenue has been restated to reflect the government's accounting policy at
March 31, 2003. Figures exclude dedicated revenue collected on behalf of,
and transferred to, Crown corporations and agencies, the Greater Vancouver
Transportation Authority (TRANSLINK) and other public bodies.
(2) Revenue as a per cent of GDP is calculated using GDP for the calendar year
ending in the fiscal year (e.g. 2002/03 revenue divided by GDP for the 2002
calendar year). Totals may not add due to rounding.
(3) Per capita revenue is calculated using July 1 population (e.g. 2002/03
revenue divided by population on July 1, 2002).
(4) Revenue is converted to real (inflation-adjusted) terms using the consumer
price index (CPI) for the corresponding calendar year (e.g. 2002 CPI for
2002/03 revenue). Totals may not add due to rounding.
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
68 APPENDIX 2 -- FINANCIAL REVIEW
- -------------------------------------------------------------------------------
TABLE A2.8 FIVE-YEAR EXPENSE BY FUNCTION(1)
CONSOLIDATED REVENUE FUND
- ----------------------------------------------------------------------------------------------------------------------------
1998/99 1999/2000 2000/01 2001/02 2002/03
- ----------------------------------------------------------------------------------------------------------------------------
($ millions)
Health
Hospital care.................................... 4,546 4,836 5,278 5,998 6,305
Medical care..................................... 2,420 2,665 2,847 3,166 3,308
Preventive care.................................. 207 248 337 384 419
Other health..................................... 306 268 283 298 325
------ ------- -------- ------- -------
TOTAL.......................................... 7,479 8,017 8,745 9,846 10,357
Social services.................................... 3,113 3,093 3,208 3,381 3,090
Education
Elementary and secondary......................... 4,161 4,262 4,349 4,868 4,890
Post-secondary................................... 1,451 1,497 1,806 1,797 1,828
Other education.................................. 213 216 202 189 159
------ ------- -------- ------- -------
TOTAL.......................................... 5,825 5,975 6,357 6,854 6,877
Protection of persons and property
Law enforcement.................................. 328 347 327 376 373
Police protection................................ 157 161 175 197 229
Corrections...................................... 207 224 242 267 256
Other protection and regulation.................. 297 296 275 263 243
------ ------- -------- ------- -------
TOTAL.......................................... 989 1,028 1,019 1,103 1,101
Transportation
Road and air..................................... 472 469 447 494 490
Ferries.......................................... 24 1,080(2) - - -
Public transit................................... 294 148(3) 164 207 260
------ ------- -------- ------- -------
TOTAL.......................................... 790 1,697 611 701 750
Natural resources and economic development
Forests (includes firefighting).................. 571(4) 491(4) 592(4) 794(4) 902
Minerals and mines............................... 31 43 58 113 47
Environment and agriculture...................... 213 226 238 306 322
Fish and game.................................... 21 21 28 18 4
Trade and industry............................... 112 182(2) 110 93 82
------ ------- -------- ------- -------
TOTAL.......................................... 948 963 1,026 1,324 1,357
Other expense
Local government................................. 200 127 122 169 178
Housing support.................................. 91 93 104 134 151
Recreation and culture........................... 81 139(2) 115 89 73
Restructuring exit costs......................... - - - 161(5) 188(5)
------ ------- -------- ------- -------
TOTAL.......................................... 372 359 341 553 590
General government
Legislature...................................... 35 34 34 39 37
Administration................................... 192 212 230 335 326
------ ------- -------- ------- -------
TOTAL.......................................... 227 246 264 374 363
Debt servicing..................................... 838 835 889 761 711
------ ------- -------- ------- -------
TOTAL EXPENSE.................................. 20,581 22,213 22,460 24,897 25,196
------ ------- -------- ------- -------
------ ------- -------- ------- -------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------
(1) Expense by function has been restated to conform more closely to the
presentation used by Statistics Canada. Figures are based on 2002/03 PUBLIC
ACCOUNTS information. For comparative purposes, figures for previous years
have been restated to be consistent with the presentation used in 2002/03.
(2) 1999/00 includes one-time expenses of $1,183 million to record the
forgiveness of $1,080 million of debt owed by the British Columbia Ferry
Corporation to the government, and write-downs of provincial investments in
the Vancouver Trade and Convention Centre (trade and industry - $70
million) and the Kemess mine (recreation and culture - $33 million).
(3) Public transit expenses are lower in 1999/00 due to the transfer of transit
responsibilities for the Lower Mainland from British Columbia Transit to
the Greater Vancouver Transportation Authority (TRANSLINK) at the end of
1998/99. Funding for TRANSLINK is provided by increased provincial
transfers of revenue from fuel and sales taxes, increased access to the
local property tax base, and other own-source fees and charges.
(4) Expense for prior years was decreased due to a change in recognition of
silviculture liabilities arising under the Small Business Forest Enterprise
Program. Silviculture costs were previously expensed as incurred but are
now accrued when the liability occurs. Expense was reduced by $16
million-2001/02, $4.5 million-2000/01, $2.2 million-1999/00, and $5.9
million-1998/99.
(5) Restructuring exit costs have no future value to government and are shown
separately from other categories of operating expenses.
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 2 -- FINANCIAL REVIEW 69
- -------------------------------------------------------------------------------
TABLE A2.9 FIVE-YEAR EXPENSE BY FUNCTION - SUPPLEMENTARY INFORMATION
CONSOLIDATED REVENUE FUND(1)
- -----------------------------------------------------------------------------------------------------------------------------------
1998/99 1999/2000 2000/01 2001/02 2002/03
- -----------------------------------------------------------------------------------------------------------------------------------
(per cent)
PER CENT OF GDP:
Health care......................................................... 6.5 6.6 6.8 7.5 7.7
Social services..................................................... 2.7 2.6 2.5 2.6 2.3
Education........................................................... 5.0 5.0 4.9 5.2 5.1
Protection of persons and property.................................. 0.9 0.9 0.8 0.8 0.8
Transportation...................................................... 0.7 1.4 0.5 0.5 0.6
Natural resources and economic development.......................... 0.8 0.8 0.8 1.0 1.0
Other expense....................................................... 0.3 0.2 0.2 0.5 0.5
General government.................................................. 0.2 0.2 0.2 0.3 0.3
Debt servicing...................................................... 0.7 0.7 0.7 0.6 0.5
----- ----- ------ ------ ------
TOTAL EXPENSE..................................................... 17.8 18.4 17.4 19.0 18.8
----- ----- ------ ------ ------
----- ----- ------ ------ ------
GROWTH RATES: (per cent)
Health care........................................................... 3.5 7.2 9.1 12.6 5.2
Social services....................................................... -0.5 -0.6 3.7 5.4 -8.6
Education............................................................. 1.0 2.6 6.4 7.8 0.3
Protection of persons and property.................................... 10.3 3.9 -0.9 8.2 -0.2
Transportation(2)..................................................... 2.6 114.8 -64.0 14.7 7.0
Natural resources and economic development(2)......................... 14.8 1.6 6.5 29.0 2.5
Other expense(2)...................................................... -21.4 -3.5 -5.0 62.2 6.7
General government.................................................... 6.6 8.4 7.3 41.7 -2.9
Debt servicing........................................................ 0.5 -0.4 6.5 -14.4 -6.6
----- ----- ------ ------ ------
TOTAL EXPENSE(2)................................................ 2.2 7.9 1.1 10.9 1.2
----- ----- ------ ------ ------
----- ----- ------ ------ ------
PER CAPITA EXPENSE: (dollars)
Health care........................................................... 1,871 1,990 2,154 2,401 2,501
Social services....................................................... 779 768 790 824 746
Education............................................................. 1,457 1,483 1,566 1,671 1,661
Protection of persons and property.................................... 247 255 251 269 266
Transportation........................................................ 198 421 150 171 181
Natural resources and economic development............................ 237 239 253 323 328
Other expense......................................................... 93 90 84 134 141
General government.................................................... 57 61 65 91 88
Debt servicing........................................................ 210 207 219 186 172
----- ----- ------ ------ ------
TOTAL EXPENSE................................................... 5,149 5,514 5,532 6,070 6,084
----- ----- ------ ------ ------
----- ----- ------ ------ ------
REAL PER CAPITA EXPENSE (2002 DOLLARS)................................ 5,519 5,846 5,756 6,212 6,084
- - growth rate (per cent)(2)........................................... 1.0 5.9 -1.5 7.9 -2.1
- -----------------------------------------------------------------------------------------------------------------------------------
- --------
(1) Expense has been restated to reflect the government's accounting policy at
March 31, 2003.
(2) Excluding one-time expenses in 1999/00 of $1,183 million, 1999/00 growth
rates would be -21.9% for transportation, -4.3% for natural resources and
economic development, -12.4% for other, 2.1% for total spending, and 0.3%
for real per capita; 2000/01 growth rates would be -1.0% for
transportation, 15.2% for natural resources and economic development, 4.6%
for other, 6.8% for total spending, and 3.9% for real per capita.
NOTE: Per capita expense is calculated using July 1 population (e.g. 2002/
03 expense divided by population on July 1, 2002). Similarly, expense as a
per cent of GDP is calculated using GDP for the calendar year ending in the
fiscal year (e.g. 2002/03 expense divided by GDP for the 2002 calendar
year). Expense is converted to real (inflation-adjusted) terms using the
consumer price index (CPI) for the corresponding calendar year (e.g. 2002
CPI for 2002/03 expense).
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
70 APPENDIX 2 -- FINANCIAL REVIEW
- -------------------------------------------------------------------------------
TABLE A2.10a GOVERNMENT RESTRUCTURING EXIT EXPENSE(1)
- --------------------------------------------------------------------------------
2001/02 2002/03
---------------------------------------
$ millions
Consolidated Revenue Fund:
Government Restructuring (All Ministries) Vote............................ 81 185
Ministry budgets.......................................................... 23 3
Contingencies Vote........................................................ 57 161 - 188(2)
----- ------ ------
Taxpayer-supported Crown Corporations:
BC Buildings Corporation.................................................. 5 51
BC Health Research Foundation............................................. - 4
BC Pavilion Corporation................................................... - 1
Forest Renewal BC......................................................... 37 -
Legal Services Society.................................................... 6 2
Okanagan Valley Tree Fruit Authority...................................... - 10
Other..................................................................... 15 -
LESS : ministry payments to taxpayer-supported Crown corporations......... - 63 (87) (19)(3)
----- ------ ------ ------
SUBTOTAL TAXPAYER-SUPPORTED................................................. 224 169
Commercial Crown Corporations:
BC Hydro.................................................................. - 37
BC Liquor Distribution Branch............................................. - 28
BC Rail................................................................... 165 -
Insurance Corporation of BC............................................... 40 205 15 80(4)
----- ------ ------ ------
TOTAL RESTRUCTURING EXIT COSTS.............................................. 429 249
------ ------
------ ------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------
(1) Includes one-time expenditures relating to staffing, building occupancy and
other restructuring activities that have no future value to government.
(2) As reported in Table A2.10b.
(3) As reported in the 2002/03 PUBLIC ACCOUNTS summary statements.
(4) Included as part of changes to government investments in commercial Crown
corporations.
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 2 -- FINANCIAL REVIEW 71
- -------------------------------------------------------------------------------
TABLE A2.10b CONSOLIDATED REVENUE FUND
GOVERNMENT RESTRUCTURING EXPENSE, 2002/03
- -------------------------------------------------------------------------------------------------------------------------------
Restructuring Exit Expense(1) Non-Exit Restructuring Expense(2)
---------------------------- --------------------------------
Work- Accom- Other Total Work- Accom- Other Total TOTAL
force modation Restruc- force modation Restruc-
Adjust- Restruc- turing Adjust- Restruc- turing
ment turing ment turing
- -------------------------------------------------------------------------------------------------------------------------------
($ millions)
GOVERNMENT RESTRUCTURING
(ALL MINISTRIES) VOTE:
Legislation......................... - - - - - - - - -
Officers of the Legislature......... 0.5 - - 0.5 - 0.1 - 0.1 0.6
Office of the Premier............... 0.3 - - 0.3 - - - - 0.3
Advanced Education.................. 0.8 0.7 - 1.5 0.2 - - 0.2 1.7
Agriculture, Food and Fisheries..... 0.8 1.1 - 1.9 - - - - 1.9
Attorney General.................... 4.3 - - 4.3 0.2 1.4 0.3 1.9 6.2
Children and Family
Development....................... 7.8 0.8 4.1 12.7 0.1 0.6 0.6 1.3 14.0
Community, Aboriginal and
Women's Services.................. 1.7 - 2.5 4.2 - 0.1 1.9 2.0 6.2
Competition, Science
and Enterprise.................... 0.6 0.1 - 0.7 - 0.1 - 0.1 0.8
Education........................... 0.7 - - 0.7 - - - - 0.7
Energy and Mines.................... 0.5 - - 0.5 0.1 0.1 - 0.2 0.7
Finance............................. 0.4 - - 0.4 0.1 0.3 0.1 0.5 0.9
Forests............................. 12.1 5.1 0.7 17.9 0.1 0.3 0.6 1.0 18.9
Health Planning..................... 0.3 - - 0.3 0.1 - - 0.1 0.4
Health Services..................... - - - - - - - - -
Human Resources..................... 3.5 0.3 0.1 3.9 0.2 0.5 - 0.7 4.6
Management Services................. 2.6 - - 2.6 - 0.4 5.1 5.5 8.1
Provincial Revenue.................. 0.7 - - 0.7 - - - - 0.7
Public Safety and
Solicitor General................. 3.9 46.3 - 50.2 0.1 5.6 0.1 5.8 56.0
Skills Development and Labour....... 0.7 - - 0.7 0.1 0.3 0.1 0.5 1.2
Sustainable Resource
Management........................ 3.8 1.7 - 5.5 - 0.1 0.3 0.4 5.9
Transportation...................... 5.7 11.5 0.1 17.3 1.8 1.2 0.2 3.2 20.5
Water, Land and Air Protection...... 2.3 14.7 1.9 18.9 - 0.3 - 0.3 19.2
Other Appropriations................ - 0.4 - 0.4 - - - - 0.4
Cross-Government(3)................. 29.9 8.8 - 38.7 1.3 0.9 1.1 3.3 42.0
----- ----- ---- ----- ----- ----- ----- ----- -----
TOTAL VOTE.......................... 83.9 91.5 9.4 184.8 4.4 12.3 10.4 27.1 211.9
MINISTRY BUDGETS:
Health Services..................... 2.2 0.2 - 2.4 0.4 0.7 1.3 2.4 4.8
Sustainable Resource
Management........................ - - 1.1 1.1 - - - - 1.1
Water, Land and Air Protection...... - - - - 0.8 0.2 0.1 1.1 1.1
----- ----- ---- ----- ----- ----- ----- ----- -----
TOTAL FROM MINISTRY BUDGETS......... 2.2 0.2 1.1 3.5 1.2 0.9 1.4 3.5 7.0
----- ----- ---- ----- ----- ----- ----- ----- -----
TOTAL............................... 86.1 91.7 10.5 188.3 5.6 13.2 11.8 30.6 218.9
----- ----- ---- ----- ----- ----- ----- ----- -----
----- ----- ---- ----- ----- ----- ----- ----- -----
- ---------------------------------------------------------------------------------------------------------------------------------
- -------
(1) Restructuring exit costs represent no future value to government.
(2) Non-exit restructuring costs result from the restructuring initiative but
do have a future value to government.
(3) Cross-Government expense includes government-wide charges for enhanced
pension eligibility, involuntary severance, severance for long-term
disability employees and other transition costs not attributable to a
specific ministry.
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
72 APPENDIX 2 -- FINANCIAL REVIEW
- -------------------------------------------------------------------------------
TABLE A2.11 BRITISH COLUMBIA FERRY CORPORATION
FIVE-YEAR INCOME STATEMENT FOR THE YEARS ENDED MARCH 31
- -----------------------------------------------------------------------------------------------------------------------------------
1999 2000 2001 2002 2003
- -----------------------------------------------------------------------------------------------------------------------------------
($ millions)
Revenues:
Rentals ........................... 399.0 399.3 403.6 412.7 396.6
Other income ...................... 37.3 48.3 48.2 46.1 64.6
Gains on sale of properties ....... 9.9 15.9 10.4 6.6 10.5
----- ----- ----- ----- -----
446.2 463.5 462.2 465.2 471.7
----- ----- ----- ----- -----
Expenses:
Lease costs and client projects ... 165.4 169.0 174.8 172.5 193.7
Operations and maintenance ........ 139.3 149.7 156.7 168.7 155.7
Amortization ...................... 40.6 39.8 41.6 41.6 38.0
Interest expense .................. 51.5 60.0 38.2 39.9 36.9
----- ----- ----- ----- -----
396.8 418.5 411.3 422.7 424.3
----- ----- ----- ----- -----
Net income before restructuring items 49.4 45.0 50.9 42.7 47.4
Restructuring costs ............... -- -- -- (5.5) (8.4)
Early lease termination recoveries -- -- -- -- 13.1
----- ----- ----- ----- -----
Net income .......................... 49.4 45.0 50.9 37.2 52.1
----- ----- ----- ----- -----
----- ----- ----- ----- -----
- --------------------------------------------------------------------------------
- ----------
Source: British Columbia Buildings Corporation.
TABLE A2.12 BRITISH COLUMBIA FERRY CORPORATION
FIVE-YEAR INCOME STATEMENT FOR THE YEARS ENDED MARCH 31
- -----------------------------------------------------------------------------------------------------------------------------------
1999 2000 2001 2002 2003
- ----------------------------------------------------------------------------------------------------------------------------------
($ millions)
Revenues
Tolls ................................................... 296.5 292.4 292.8 305.7 315.6
Catering and other income ............................... 87.6 85.9 91.1 95.8 100.2
Provincial grant/dedicated revenue(1) ................... 24.0 64.9 72.5 71.7 74.2
-------- -------- ------- ------- -------
408.1 443.2 456.4 473.2 490.0
-------- -------- ------- ------- -------
Expenses:
Salaries, wages and benefits ............................ 235.2 227.2 227.1 241.6 248.1
Other operating costs ................................... 146.5 161.9 168.9 166.3 172.0
Net financing expense ................................... 42.4 53.1 (0.3) 1.8 1.4
Amortization ............................................ 50.3 60.2 50.0 46.1 44.1
-------- -------- ------- ------- -------
474.4 502.4 445.7 455.8 465.6
-------- -------- ------- ------- -------
Net income (loss) before unusual items .................... (66.3) (59.2) 10.7 17.4 24.4
Provision for write-down of PACIFICAT ferries ........... (48.0) (240.0) -- (40.0) (53.1)
-------- -------- ------- ------- -------
Net income (loss) ......................................... (114.3) (299.2) 10.7(2) (22.6) (28.7)
======== ======== ======= ======= ========
- -----------------------------------------------------------------------------------------------------------------------------------
- --------
(1) Differs from amounts reported in Table A2.6b (dedicated revenue) due to
minor year-end accounting adjustments.
(2) Excludes the effect of the government's foregiveness of $1,080 million of
debt. This is recorded on the corporation's balance sheet and is accounted
for in the government's summary accounts as an adjustment to
taxpayer-supported Crown corporations and agencies.
Source: British Columbia Ferry Corporation.
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 2 -- FINANCIAL REVIEW 73
- --------------------------------------------------------------------------------
Table A2.13 BC TRANSPORTATION FINANCING AUTHORITY
FIVE-YEAR CONSOLIDATED STATEMENT OF INCOME FOR THE YEARS ENDED
MARCH 31
- --------------------------------------------------------------------------------
1999 2000 2001 2002 2003
Revenue
Dedicated revenue(1) ...................... 126.3 177.2 199.5 196.7 223.2
Provincial grants ......................... -- -- -- 42.2 --
Contractors' fees and other ............... -- 33.5 87.3 38.2 8.4
Capital contributions (amortization)(2) ... -- 189.7 189.7 188.7 187.5
----- ----- ----- ----- -----
126.3 400.4 476.5 465.8 419.1
----- ----- ----- ----- -----
Expenditures
Operations and administration ............. 49.7 46.4 41.0 43.7 6.2
Construction wages and benefits ........... -- 26.6 80.6 30.2 0.7
Amortization(2) ........................... 32.1 231.4 247.9 263.4 286.3
Interest .................................. 68.1 73.8 106.3 118.6 126.1
----- ----- ----- ----- -----
149.9 378.2 475.8 455.9 419.3
----- ----- ----- ----- -----
Operating results before extraordinary items (23.6) 22.2 0.7 9.9 (0.2)
Extraordinary items ........................ (90.7)(3) -- -- (10.0)(4) (19.6)(5)
----- ----- ----- ----- -----
Net results for the year ................... (114.3) 22.2 0.7 (0.1) (19.8)
----- ----- ----- ----- -----
----- ----- ----- ----- -----
- --------------------------------------------------------------------------------
(1) Differs from amounts reported in Table A2.6b (dedicated revenue) due to
minor year-end accounting adjustments.
(2) Effective March 31, 1999, the provincial government transferred highway
infrastructure assets to the Authority. The value of the highways is
recorded on the Authority's balance sheet as a deferred capital
contribution, which is amortized as income to offset the amortization
expense of the highways.
(3) The net book value of highways in the Lower Mainland that were transferred
to the Greater Vancouver Transportation Authority.
(4) The net book value of highways transferred to municipalities as a result of
incorporations and completion of new arterial routes.
(5) The net book value of highways transferred to municipalities ($2.4
million), write-down of highway development costs ($10.5 million) and
the write-down of assets held for resale ($6.7 million).
Source: BC Transportation Financing Authority.
Table A2.14 BRITISH COLUMBIA HYDRO AND POWER AUTHORITY
FIVE-YEAR INCOME STATEMENT FOR THE YEARS ENDED MARCH 31
- --------------------------------------------------------------------------------
1999 2000 2001 2002 2003
- --------------------------------------------------------------------------------
($ millions)
Revenue:
Domestic................ 2,277.9 2,327.5 2,431.0 2,450.0 2,475.0
Electricity trade....... 739.0 1,129.1 5,458.0 3,861.0 1,932.0
----- ------- ------- ------- -------
3,016.9 3,456.6 7,889.0 6,311.0 4,407.0
------- ------- ------- ------- -------
Expenses:
Energy costs............ 1,075.2 1,354.9 5,162.0 4,407.0 2,426.0
Operating expenses...... 592.3 612.4 929.0 716.0 718.0
Depreciation............ 338.8 365.0 380.0 386.0 417.0
Finance charges......... 615.2 578.8 559.0 544.0 457.0
------- ------- ------- ------- -------
2,621.6 2,911.1 7,030.0 6,053.0 4,018.0
------- ------- ------- ------- -------
Operating results........ 395.4 545.5 859.0 258.0 389.0
Restructuring costs..... -- -- -- -- (37.0)
Customer profit sharing. -- -- (310.0) -- --
Transfer (to) from RSA(1) -- (129.3) (103.0) 145.0 66.0
------- ------- ------- ------- -------
Net income............... 395.4 416.2 446.0 403.0 418.0
------- ------- ------- ------- -------
------- ------- ------- ------- -------
- --------------------------------------------------------------------------------
(1) Effective March 31, 1999, the Authority modified its accounting and
reporting of transfers (to) from the rate stabilization account (RSA). RSA
transfers are now shown as adjustments to net income rather than to
retained earnings as previously reported.
Source: British Columbia Hydro and Power Authority.
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
74 APPENDIX 2 -- FINANCIAL REVIEW
- --------------------------------------------------------------------------------
TABLE A2.15 LIQUOR DISTRIBUTION BRANCH
FIVE-YEAR INCOME STATEMENT FOR THE YEARS ENDED MARCH 31
- --------------------------------------------------------------------------------
1999 2000 2001 2002 2003
- --------------------------------------------------------------------------------
($ millions)
Provincial liquor sales... 1,640.8 1,663.3 1,719.2 1,792.9 1,885.3
Less: Cost of sales(1)... 850.6 864.8 891.6 929.6 981.0
------- ----- ----- ----- -----
Gross margin.............. 790.2 798.5 827.6 863.3 904.3
Operating expenses........ (178.2) (188.4) (197.9) (231.9) (254.9)
Other income.............. 3.9 7.3 12.7 5.3 4.8
------- ----- ----- ----- -----
Net income................ 615.9 617.4 642.4 636.7 654.2
------- ----- ----- ----- -----
------- ----- ----- ----- -----
- --------------------------------------------------------------------------------
(1) Includes discounts and commissions.
Source: Liquor Distribution Branch.
Table A2.16 BRITISH COLUMBIA LOTTERY CORPORATION
FIVE-YEAR INCOME STATEMENT FOR THE YEARS ENDED MARCH 31
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1999 2000 2001 2002 2003
- --------------------------------------------------------------------------------
($ millions)
Gaming revenue........... 1,261.5 1,401.5 1,483.0 1,607.4 1,792.4
Less: Prizes and
direct costs........... 699.1 745.9 796.1 863.5 987.0
----- ----- ----- ----- -----
Gross margin............. 562.4 655.6 686.9 743.9 805.4
Operating expenses (net). (106.4) (123.6) (124.9) (137.8) (134.5)
----- ----- ----- ----- -----
Net income............... 456.0 532.0 562.0 606.1 670.9
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Allocation of net income
Government of Canada.... 7.0 7.2 7.4 7.6 7.8
Funding for provincial
gaming programs........ 5.0 1.9 3.7 4.1 3.2
Transfers to charities/
local governments...... 74.6 106.9 137.2 145.6 171.1
Contribution to
provincial revenue..... 369.4 416.0 413.7 448.8 488.8
----- ----- ----- ----- -----
456.0 532.0 526.0 606.1 670.9
----- ----- ----- ----- -----
----- ----- ----- ----- -----
- --------------------------------------------------------------------------------
Source: British Columbia Lottery Corporation.
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 2 -- FINANCIAL REVIEW 75
- --------------------------------------------------------------------------------
Table A2.17 BRITISH COLUMBIA RAILWAY COMPANY
FIVE-YEAR INCOME STATEMENT FOR THE YEARS ENDED DECEMBER 31(1)
- ------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002
- ------------------------------------------------------------------------------------------------------
($ millions)
Revenue ................................................ 338.3 341.1 333.5 301.8 313.2
Expenses ............................................... 284.5 271.3 293.1 266.6 241.9
----- ----- ----- ----- -----
Operating income ....................................... 53.8 69.8 40.4 35.2 71.3
Non-operating expenses ................................ (21.8) (22.6) (28.7) (29.7) (15.3)
----- ----- ----- ----- -----
Income from continuing operations before special charges 32.0 47.2 11.7 5.5 56.0
Special charges ....................................... -- (605.8)(2) (8.0)(3)(79.8)(4) --
----- ----- ----- ----- -----
Income (loss) from continuing operations ............... 32.0 (558.6) 3.7 (74.3) 56.0
Results of discontinued operations .................... (7.9) (23.5) (10.4) (32.6) (140.2)
----- ----- ----- ----- -----
Net income (loss) ...................................... 24.1 (582.1) (6.7) (106.9) (84.2)
----- ----- ----- ----- -----
----- ----- ----- ----- -----
- --------------------------------------------------------------------------------
(1) Prior years are restated to be consistent with the current presentation.
(2) Asset impairment charge on northern British Columbia rail assets.
(3) Provision to reflect anticipated future costs of environmental
remediation.
(4) Restructuring costs.
Source: British Columbia Railway Company.
Table A2.18 INSURANCE CORPORATION OF BRITISH COLUMBIA
FIVE-YEAR INCOME STATEMENT FOR THE YEARS ENDED DECEMBER 31
- ---------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002
- ---------------------------------------------------------------------------------------------------------------
($ millions)
Revenue:
Net premiums.......................................... 2,368.9 2,382.4 2,387.0 2,447.1 2,628.5
Investment income..................................... 412.2 449.2 625.7 454.0 327.3
Net provincial fine and licence collections(1)........ 41.0 -- -- -- --
------- ------- ------ ------- -------
2,822.1 2,831.6 3,012.7 2,901.1 2,955.8
------- ------- ------ ------- -------
Claims and expenses:
Claims incurred...................................... 2,134.6 2,080.3 2,006.2 2,126.3 2,193.5
Prior years' claims adjustments...................... (219.5) (238.2) (266.3) 2.2 (24.8)
------- ------- ------ ------- -------
Net claims incurred................................... 1,915.1 1,842.1 1,739.9 2,128.5 2,168.7
Claims operations expense............................. 287.6 334.3 333.0 316.6 268.5
Operating costs - insurance........................... 417.0 466.8 479.2 472.6 374.7
Operating costs - non-insurance....................... 81.9 92.7 103.4 94.4 83.7
------- ------- ------ ------- -------
2,701.6 2,735.9 2,655.5 3,012.1 2,895.6
------- ------- ------ ------- -------
Income before unusual items............................ 120.5 95.7 357.2 (111.0) 60.2
Unusual items.......................................... (47.0)(2) -- (218.5)(2) (139.5)(3) (15.2)(4)
Net income (loss)...................................... 73.5 95.7 138.7 (250.5) 45.0
------- ------- ------ ------- -------
------- ------- ------ ------- -------
- ---------------------------------------------------------------------------------------------------------------
(1) Commencing in 1997, the corporation assumed responsibility for the
collection of licence fees and fines revenues as part of a merger with
the Motor Vehicle Branch of the Ministry of Transportation and Highways.
(2) Road Safety Dividend.
(3) Includes restructuring costs (39.5 million) and a provision for a reduction
in investment value ($100 million).
(4) Restructuring costs.
Source: Insurance Corporation of British Columbia.
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
76 APPENDIX 2 -- FINANCIAL REVIEW
- -------------------------------------------------------------------------------
TABLE A2.19 FIVE-YEAR PROVINCIAL DEBT SUMMARY(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Budget Actual
1998/99 1999/2000 2000/01 2001/02 2002/03 2002/03
- -----------------------------------------------------------------------------------------------------------------------------------
($ millions)
TAXPAYER-SUPPORTED DEBT
Provincial government direct operating ...................... 12,217 13,859(2) 12,113 13,789 17,182 15,453
---------- ---------- -------- ---------- ---------- --------
Education facilities(3)
Schools ................................................... 3,261 3,609 3,880 4,092 4,375 4,294
Post-secondary institutions ............................... 1,336 1,369 1,383 1,425 1,637 1,499
---------- ---------- -------- ---------- ---------- --------
4,597 4,978 5,263 5,517 6,012 5,793
---------- ---------- -------- ---------- ---------- --------
Health facilities(3) ........................................ 1,282 1,451 1,780 1,920 2,199 2,004
---------- ---------- -------- ---------- ---------- --------
Highways, ferries and public transit
BC Transportation Financing Authority ..................... 1,433 1,843 2,197 2,514 2,743 2,661
BC Ferries ................................................ 973 24(2) 21 19 72 --
BC Transit ................................................ 59 79 75 79 94 87
Public transit(3) ......................................... 987 952 948 936 937 930
SKYTRAIN extension(3) ..................................... 133 488 836 1,044 1,214 1,105
Rapid Transit Project 2000 Ltd ............................ 56 101 114 47 -- 3
---------- ---------- -------- ---------- ---------- --------
3,641 3,487 4,191 4,639 5,060 4,786
---------- ---------- -------- ---------- ---------- --------
Other
BC Buildings ................................................ 715 615 610 596 538 456
552513 British Columbia Ltd. (Skeena Cellulose Inc.)(4) ..... -- -- 337 -- -- --
Social housing(5) ........................................... 183 205 265 299 218 161
Homeowner Protection Office ................................. 11 34 71 113 139 123
Universities and colleges - fiscal agency loans ............. 137 130 124 114 113 105
Student assistance loans .................................... 287 267 159 90 73 54
Other(6) .................................................... 134 155 85 100 67 125
---------- ---------- -------- ---------- ---------- --------
1,467 1,406 1,651 1,312 1,148 1,024
---------- ---------- -------- ---------- ---------- --------
TOTAL TAXPAYER-SUPPORTED DEBT ................................. 23,204 25,181 24,998 27,177 31,601 29,060
---------- ---------- -------- ---------- ---------- --------
SELF-SUPPORTED DEBT
Commercial Crown corporations and agencies
BC Hydro .................................................. 7,474 6,945 6,852 6,863 7,442 6,829
BC Rail ................................................... 607 655 603 614 638 494
552513 British Columbia Ltd. (Skeena Cellulose Inc.)(4) ... 221 280 -- -- -- --
Columbia Basin Power Company(7) ........................... 94 94 93 120 285 118
Columbia Power Corporation ................................ -- -- 20 64 -- 47
Liquor Distribution Branch ................................ 3 3 2 13 12 9
---------- ---------- -------- ---------- ---------- --------
8,399 7,977 7,570 7,674 8,377 7,497
Warehouse borrowing program ................................. 658 1,320 1,312 1,067 -- --
---------- ---------- -------- ---------- ---------- --------
TOTAL SELF-SUPPORTED DEBT ..................................... 9,057 9,297 8,882 8,741 8,377 7,497
---------- ---------- -------- ---------- ---------- --------
FORECAST ALLOWANCE ............................................ -- -- -- -- 750 --
---------- ---------- -------- ---------- ---------- --------
TOTAL PROVINCIAL DEBT ......................................... 32,261 34,478 33,880 35,918 40,728 36,557
---------- ---------- -------- ---------- ---------- --------
---------- ---------- -------- ---------- ---------- --------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------
(1) Debt is after deduction of sinking funds and unamortized discounts, and
excludes accrued interest. Government direct and fiscal agency accrued
interest is reported in the government's accounts as an accounts payable.
(2) Effective March 31, 2000, the provincial government assumed responsibility
for the fiscal agency loans of BC Ferries ($1,080 million) and 580440
British Columbia Ltd. (Vancouver Trade and Convention Centre) ($70
million). Although this resulted in a change to debt composition, debt
totals were not affected.
(3) Represents government direct debt incurred for capital financing purposes.
(4) Based on a revised outlook for world pulp prices and its potential impact
on the finances of 552513 British Columbia Ltd. (Skeena Cellulose Inc.),
the company's debt was reclassified from self-supported to
taxpayer-supported in 2000/01. In March 2002, the company's debt was
assumed by the provincial government ($260 million) and by the minority
shareholder ($94 million) in preparation for returning Skeena Cellulose
Inc. to the private sector.
(5) Includes the BC Housing Management Commission and the Provincial Rental
Housing Corporation.
(6) Includes the BC Assessment Authority, the Pacific Racing Association, and
other taxpayer-supported Crown corporations and agencies. Also includes
loan guarantees to agricultural producers, guarantees issued under economic
development assistance programs and loan guarantee provisions.
(7) A joint venture of the Columbia Power Corporation and Columbia Basin Trust.
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 2 -- FINANCIAL REVIEW 77
- -------------------------------------------------------------------------------
TABLE A2.20 FIVE-YEAR PROVINCIAL DEBT SUMMARY -- SUPPLEMENTARY INFORMATION
- -----------------------------------------------------------------------------------------------------------------------------------
1998/99 1999/2000 2000/01 2001/02 2002/03
- -----------------------------------------------------------------------------------------------------------------------------------
(per cent)
PER CENT OF GDP:
TAXPAYER-SUPPORTED DEBT
Provincial government direct ............................... 10.6 11.5 9.4 10.5 11.5
Education .................................................. 4.0 4.1 4.1 4.2 4.3
Health facilities .......................................... 1.1 1.2 1.4 1.5 1.5
Highways, ferries and public transit ....................... 3.1 2.9 3.2 3.5 3.6
Other debt ................................................. 1.3 1.2 1.3 1.0 0.8
--------- --------- --------- --------- ---------
Total taxpayer-supported debt ............................ 20.1 20.9 19.3 20.8 21.6
--------- --------- --------- --------- ---------
SELF-SUPPORTED DEBT
Commercial Crown corporations and agencies ................. 7.3 6.6 5.9 5.9 5.6
Warehouse borrowing program ................................ 0.6 1.1 1.0 0.8 --
--------- --------- --------- --------- ---------
Total self-supported debt ................................ 7.8 7.7 6.9 6.7 5.6
--------- --------- --------- --------- ---------
TOTAL PROVINCIALDEBT ....................................... 27.9 28.6 26.2 27.4 27.2
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
(per cent)
GROWTH RATES:
TAXPAYER-SUPPORTED DEBT
Provincial government direct ............................... 10.8 13.4 -12.6 13.8 12.1
Education .................................................. 8.7 8.3 5.7 4.8 5.0
Health facilities .......................................... -10.4 13.2 22.7 7.9 4.4
Highways, ferries and public transit ....................... 15.8 -4.2 20.2 10.7 3.2
Other debt ................................................. 1.9 -4.2 17.4 -20.5 -22.0
Total taxpayer-supported debt ............................ 9.1 8.5 -0.7 8.7 6.9
SELF-SUPPORTED DEBT
Commercial Crown corporations and agencies ................. 5.0 -5.0 -5.1 1.4 -2.3
Warehouse borrowing program ................................ 558.0 100.6 -0.6 -18.7 -100.0
Total self-supported debt ................................ 11.9 2.6 -4.5 -1.6 -14.2
--------- --------- --------- --------- ---------
TOTAL PROVINCIAL DEBT ...................................... 9.8 6.9 -1.7 6.0 1.8
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
(dollars)
PER CAPITA DEBT:
TAXPAYER-SUPPORTED DEBT
Provincial government direct ............................... 3,056 3,440 2,983 3,362 3,731
Education .................................................. 1,150 1,236 1,296 1,345 1,399
Health facilities .......................................... 321 360 438 468 484
Highways, ferries and public transit ....................... 911 866 1,032 1,131 1,156
Other debt ................................................. 367 349 407 320 247
--------- --------- --------- --------- ---------
Total taxpayer-supported debt ............................ 5,805 6,251 6,157 6,626 7,017
--------- --------- --------- --------- ---------
SELF-SUPPORTED DEBT
Commercial Crown corporations and agencies ................. 2,101 1,980 1,864 1,871 1,810
Warehouse borrowing program ................................ 165 328 323 260 --
--------- --------- --------- --------- ---------
Total self-supported debt ................................ 2,266 2,308 2,188 2,131 1,810
--------- --------- --------- --------- ---------
TOTAL PROVINCIAL DEBT ...................................... 8,071 8,559 8,345 8,757 8,827
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------
Note: Totals may not add due to rounding.
- --------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
78 APPENDIX 2 -- FINANCIAL REVIEW
- -------------------------------------------------------------------------------
TABLE A2.21 SUMMARY OF CHANGES FROM THE 2002/03
THIRD QUARTERLY REPORT UPDATED FORECAST - CAPITAL SPENDING AND DEBT
- -----------------------------------------------------------------------------------------------------------------------------------
Final
Change Results
-------- ---------
($ millions)
CAPITAL SPENDING - THIRD QUARTER UPDATED FORECAST 2,179
TAXPAYER-SUPPORTED
Education facilities ................................................................... (19)
Health facilities ...................................................................... (17)
Rapid Transit Project 2000 ............................................................. (29)
Purchase of land for Vancouver Convention and Exhibition Centre expansion project ...... 32
Other .................................................................................. (17) (50)
--------
SELF-SUPPORTED COMMERCIAL
Columbia power projects ................................................................ (40)
ICBC ................................................................................... (15)
Other .................................................................................. (18) (73)
-------- --------
CAPITAL SPENDING - ACTUAL .................................................................. 2,056
--------
--------
- -----------------------------------------------------------------------------------------------------------------------------------
PROVINCIAL DEBT AT MARCH 31, 2003 - THIRD QUARTER UPDATED FORECAST 37,268
TAXPAYER-SUPPORTED DEBT
Provincial government operating - improved results of the CRF, partially offset by
higher working capital requirements .................................................. (111)
Education and health facilities - mainly reduced capital spending ...................... (38)
Transportation - mainly reduced SKYTRAIN capital spending .............................. (45)
Other reduced requirements ............................................................. (27)
--------
Total taxpayer-supported ............................................................... (221)
SELF-SUPPORTED COMMERCIAL
BC Hydro - reduced working capital requirements ........................................ (169)
Other - mainly Columbia power projects reduced capital spending ........................ (21)
--------
Total self-supported ................................................................... (190)
Debt forecast allowance not needed ....................................................... (300)
--------
PROVINCIAL DEBT AT MARCH 31, 2003 - 2002/03 PUBLIC ACCOUNTS ................................ 36,557
--------
--------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 2 -- FINANCIAL REVIEW 79
- -------------------------------------------------------------------------------
TABLE A2.22 HISTORICAL SUMMARY ACCOUNTS SURPLUS (DEFICIT)(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Crown Summary Surplus
Consolidated Revenue Fund Corporations Joint Accounts (Deficit)
-------------------------------- and Trusteeship Surplus as a Per Cent
Year Revenue Expenditure Balance Agencies Arrangements (Deficit) of GDP
- -----------------------------------------------------------------------------------------------------------------------------------
($ millions)
1969/70 ........................... 1,248 1,244 4 -- -- 4 --
1970/71 ........................... 1,373 1,274 99 -- -- 99 1.1
1971/72 ........................... 1,558 1,474 84 -- -- 84 0.8
1972/73 ........................... 1,772 1,675 97 -- -- 97 0.8
1973/74 ........................... 2,217 2,071 146 -- -- 146 1.0
1974/75 ........................... 2,769 2,779 (10) -- -- (10) (0.1)
1975/76 ........................... 3,124 3,534 (410) -- -- (410) (2.1)
1976/77 ........................... 3,785 3,691 94 -- -- 94 0.4
1977/78 ........................... 4,372 4,168 204 -- -- 204 0.8
1978/79 ........................... 4,853 4,582 271 -- -- 271 0.9
1979/80(1) ........................ 5,860 5,318 542 (88) -- 454 1.4
1980/81 ........................... 5,982 6,239 (257) 45 -- (212) (0.6)
1981/82 ........................... 7,139 7,323 (184) 43 -- (141) (0.3)
1982/83 ........................... 7,678 8,662 (984) (257) -- (1,241) (2.8)
1983/84 ........................... 8,335 9,347 (1,012) 49 -- (963) (2.0)
1984/85 ........................... 8,807 9,801 (994) 172 -- (822) (1.6)
1985/86 ........................... 9,160 10,127 (967) 110 -- (857) (1.6)
1986/87 ........................... 9,463 10,624 (1,161) 526 -- (635) (1.1)
1987/88 ........................... 11,007 11,055 (48) 119 -- 71 0.1
1988/89 ........................... 12,570 11,834 736 194 -- 930 1.3
1989/90 ........................... 13,656 13,200 456 40 -- 496 0.7
1990/91 ........................... 14,236 15,010 (774) 107 -- (667) (0.8)
1991/92 ........................... 14,570 17,101 (2,531) 192 -- (2,339) (2.9)
1992/93 ........................... 16,172 17,858 (1,686) 210 -- (1,476) (1.7)
1993/94 ........................... 17,923 18,833 (910) 11 -- (899) (1.0)
1994/95 ........................... 19,506 19,953 (447) 219 -- (228) (0.2)
1995/96 ........................... 19,698 20,054 (356) 38 -- (318) (0.3)
1996/97 ........................... 20,126 20,241 (115) (270) -- (385) (0.4)
1997/98 ........................... 20,216 20,135 81 (248) -- (167) (0.1)
1998/99 ........................... 20,306 20,581 (275) (722) -- (997) (0.9)
1999/2000 ......................... 21,957 22,213 (256) 406 -- 150 0.1
2000/01 ........................... 24,013 22,460 1,553 (70) (52) 1,431 1.1
2001/02 ........................... 22,894 24,897 (2,003)(2) (746)(2) 1,464 (1,285) (1.0)
2002/03 ........................... 22,147 25,196 (3,049) (120) -- (3,169) (2.4)
- -----------------------------------------------------------------------------------------------------------------------------------
- -------
(1) The provincial government began publishing summary financial statements in
1979/80. Figures for prior years are unavailable. For 1970/71 to 1978/79,
the CRF surplus/(deficit) is used in place of the summary accounts
surplus/(deficit).
(2) Does not include the $256 million transfer to the CRF for the wind-up of
Forest Renewal BC and Fisheries Renewal BC.
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
80 APPENDIX 2 -- FINANCIAL REVIEW
- -------------------------------------------------------------------------------
TABLE A2.23 HISTORICAL REVENUE BY SOURCE CONSOLIDATED REVENUE FUND(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Contributions Contributions
from from
Natural Other Government the Federal
Year Taxation Resource Revenue Enterprises Government Total
- -----------------------------------------------------------------------------------------------------------------------------------
($ millions)
1984/85 ................................ 5,015 721 886 360 1,825 8,807
1985/86 ................................ 5,237 704 965 398 1,856 9,160
1986/87 ................................ 5,354 658 979 448 2,024 9,463
1987/88 ................................ 6,200 1,223 1,060 470 2,054 11,007
1988/89 ................................ 6,973 1,272 1,729 447 2,149 12,570
1989/90(2) ............................. 8,095 1,249 1,464 727 2,121 13,656
1990/91 ................................ 8,702 1,171 1,433 834 2,096 14,236
1991/92 ................................ 8,997 1,101 1,573 701 2,198 14,570
1992/93 ................................ 9,897 1,264 1,580 1,016 2,415 16,172
1993/94(3) ............................. 11,101 1,772 1,733 1,048 2,269 17,923
1994/95 ................................ 11,937 2,244 1,835 1,028 2,462 19,506
1995/96(4) ............................. 12,509 2,026 1,801 968 2,394 19,698
1996/97 ................................ 13,094 2,186 1,743 1,148 1,955 20,126
1997/98 ................................ 13,103 2,197 1,799 1,280 1,837 20,216
1998/99 ................................ 13,134 1,829 1,831 1,362 2,150 20,306
1999/2000(5) ........................... 13,364 2,517 1,888 1,454 2,734 21,957
2000/01 ................................ 13,881 3,975 1,860 1,500 2,797 24,013
2001/02(5) ............................. 13,652 3,108 1,910 1,437 2,787 22,894
2002/03(5) ............................. 11,846 3,255 2,206 1,517 3,323 22,147
- -----------------------------------------------------------------------------------------------------------------------------------
- ------
(1) Revenue has been restated to reflect the government's accounting policy at
March 31, 2003. Further information is provided in footnotes to Table A2.3,
and in the introduction to this appendix. Figures exclude dedicated revenue
collected on behalf of, and transferred to, Crown corporations and
agencies. These revenues are included as part of the operations of the
Crown corporations and agencies. Figures are based on PUBLIC ACCOUNTS
information.
(2) Beginning in 1989/90, other revenue has been restated to reflect a change
in accounting policy to exclude sinking fund earnings from revenue.
(3) Beginning in 1993/94, revenue has been restated to reflect a change in
accounting policy to show allowances for doubtful collection of revenue
accounts as deductions from revenue. Previously, these amounts were
recorded as expenditures.
(4) Beginning in 1995/96, other revenue has been restated to reflect a change
in accounting policy to exclude from revenue and expenditure, non-cash
exchanges of Crown land (of equivalent value) to third parties.
(5) Revenue have been restated for 1999/00 and 2001/02 reflecting a change in
the method of recording equalization entitlement from cash basis to
accrual. This has the effect of increasing 1999/00 revenue by $125 million,
and reducing 2001/02 and 2002/03 revenue by $68 million and $57 million,
respectively.
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 2 -- FINANCIAL REVIEW 81
- -------------------------------------------------------------------------------
TABLE A2.24 HISTORICAL EXPENSE BY FUNCTION
CONSOLIDATED REVENUE FUND(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Social Debt
Year Health Services Education Transportation Servicing Other(2) Total
- -----------------------------------------------------------------------------------------------------------------------------------
($ millions)
1984/85 .......................... 3,042 1,266 2,455 1,263 275 1,500 9,801
1985/86 .......................... 3,161 1,298 2,385 1,157 342 1,784 10,127
1986/87 .......................... 3,446 1,298 2,495 905 384 2,096 10,624
1987/88 .......................... 3,684 1,349 2,663 928 525 1,906 11,055
1988/89 .......................... 4,012 1,440 2,920 844 530 2,088 11,834
1989/90(3) ....................... 4,502 1,496 3,228 1,199 457 2,318 13,200
1990/91 .......................... 5,028 1,669 4,113(4) 1,188 478 2,534 15,010
1991/92 .......................... 5,617 1,994 4,521 1,262 590 3,117 17,101
1992/93 .......................... 6,003 2,366 4,804 1,078(5) 736 2,871 17,858
1993/94 .......................... 6,287 2,704 4,984 1,024(5) 844 2,990 18,833
1994/95 .......................... 6,584 2,890 5,252 907 931 3,389 19,953
1995/96 .......................... 6,778 3,033 5,492 852 887 3,012 20,054
1996/97 .......................... 7,038 2,969 5,750 844 867 2,773 20,241
1997/98 .......................... 7,224 3,048 5,766 770 834 2,493 20,135
1998/99(6) ....................... 7,479 3,113 5,825 790 838 2,536 20,581
1999/2000 ........................ 8,017 3,093 5,975 1,697 835 2,596 22,213
2000/01 .......................... 8,745 3,208 6,357 611 889 2,650 22,460
2001/02(7) ....................... 9,846 3,381 6,854 701 761 3,354 24,897
2002/03(7) ....................... 10,357 3,090 6,877 750 711 3,411 25,196
- -----------------------------------------------------------------------------------------------------------------------------------
- ------
(1) Expense has been restated to reflect the government's accounting policy at
March 31, 2003. Further information is provided in footnotes to Table A2.8.
Figures are based on PUBLIC ACCOUNTS information.
(2) Other includes: protection of persons and property, natural resources and
economic development, general government and other expenses.
(3) Beginning in 1989/90, expense has been restated to report sinking fund
earnings as a deduction from expense. Previously, these earnings were
reported as revenue. The annual deficits are unchanged by this accounting
policy change.
(4) Beginning in 1990/91, the provincial government assumed full responsibility
for contributions to school districts previously funded through residential
school property taxes. As a result, some expenses formerly financed by
local school districts are included as expenses of the government.
(5) Responsibility for highway capital construction was transferred to the BC
Transportation Financing Authority in 1993/94.
(6) Expense for prior years was decreased due to a change in recognition of
silviculture liabilities arising under the Small Business Forest Enterprise
Program. Silviculture costs were previously expensed as incurred but are
now accrued when the liability occurs. Expense was reduced by $16
million-2001/02, $4.5 million-2000/01, $2.2 million-1999/00, and $5.9
million-1998/99.
(7) Includes restructuring exit costs (2002/03 - $188 million, 2001/02 - $161
million).
- -------------------------------------------------------------------------------
2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
82 APPENDIX 2 -- FINANCIAL REVIEW
- -------------------------------------------------------------------------------
TABLE A2.25 HISTORICAL PROVINCIAL DEBT SUMMARY(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Taxpayer-Supported Debt
------------------------------------------------------------------- Total Taxpayer-
Provincial Education Health Highways, Total Debt Supported
Government Facilities Facilities Ferries and Taxpayer- Self- Total as a Debt as a
Direct Capital Capital Public Supported Supported Provincial Per Cent Per Cent
Year Operating Financing Financing Transit Other(2) Debt Debt(3) Debt of GDP of GDP
- -----------------------------------------------------------------------------------------------------------------------------------
(millions) (per cent)
1969/70 ........... -- 338 42 142 100 622 1,661 2,283 24.7 6.7
1970/71 ........... -- 362 64 172 99 697 1,808 2,505 25.6 7.1
1971/72 ........... -- 380 85 233 95 793 1,948 2,741 24.9 7.2
1972/73 ........... -- 408 105 288 87 888 2,062 2,950 23.8 7.2
1973/74 ........... -- 425 117 340 145 1,027 2,228 3,255 21.1 6.7
1974/75 ........... -- 485 133 386 149 1,153 2,650 3,803 21.3 6.5
1975/76 ........... -- 557 178 544 145 1,424 3,144 4,568 23.1 7.2
1976/77 ........... 261 658 236 649 188 1,992 3,787 5,779 24.4 8.4
1977/78 ........... 261 710 291 656 215 2,133 4,464 6,597 24.9 8.1
1978/79 ........... 261 778 334 653 91 2,117 4,838 6,955 23.3 7.1
1979/80 ........... 235 836 401 730 195 2,397 5,704 8,101 23.3 6.9
1980/81 ........... 209 919 461 729 270 2,588 5,956 8,544 21.6 6.5
1981/82 ........... 183 1,067 561 844 291 2,946 7,227 10,173 22.7 6.6
1982/83 ........... 883 1,204 660 1,024 894 4,665 7,692 12,357 27.4 10.4
1983/84 ........... 1,596 1,321 712 1,392 1,174 6,195 8,440 14,635 30.8 13.0
1984/85 ........... 2,476 1,308 717 691(4) 1,276 6,468 9,082(4) 15,550 31.2 13.0
1985/86 ........... 3,197 1,276 680 1,034 1,376 7,563 8,990 16,553 30.9 14.1
1986/87 ........... 4,802 1,268 681 1,097 812 8,660 8,485 17,145 30.3 15.3
1987/88 ........... 5,017 1,278 716 1,192 660 8,863 8,149 17,012 27.2 14.2
1988/89 ........... 4,919 1,322 763 1,213 842 9,059 7,396 16,455 23.7 13.1
1989/90 ........... 4,209 1,367 837 1,244 1,262 8,919 7,340 16,259 21.5 11.8
1990/91 ........... 4,726 1,565 959 1,287 1,281 9,818 7,444 17,262 21.8 12.4
1991/92 ........... 6,611 1,939 1,040 1,527 1,431 12,548 7,493 20,041 24.5 15.3
1992/93 ........... 8,969 2,426 1,141 1,719 1,641 15,896 7,526 23,422 26.8 18.2
1993/94 ........... 10,257(5) 3,054 1,181 1,862(5) 1,627 17,981 7,946 25,927 27.6 19.1
1994/95 ........... 10,181 3,631 1,318 2,158 1,749 19,037 8,013 27,050 26.9 18.9
1995/96 ........... 10,237 3,990 1,399 2,598 1,695 19,919 8,847 28,766 27.2 18.9
1996/97 ........... 11,030 4,230 1,431 3,144 1,440 21,275 8,096 29,371 27.0 19.5
1997/98 ........... 11,488 4,352 1,417 3,463 1,431 22,151 8,204 30,355 26.5 19.4
1998/99 ........... 12,217 4,597 1,282 3,641 1,467 23,204 9,057 32,261 27.9 20.1
1999/2000 ......... 13,859(6) 4,978 1,451 3,487(6) 1,406(6) 25,181 9,297(6) 34,478 28.6 20.9
2000/01 ........... 12,113 5,263 1,780 4,191 1,651(7) 24,998 8,882(7) 33,880 26.2 19.3
2001/02 ........... 13,789(8) 5,517 1,920 4,639 1,312(8) 27,177 8,741 35,918 27.4 20.8
2002/03 ........... 15,453 5,793 2,004 4,786 1,024 29,060 7,497 36,557 27.2 21.6
- -----------------------------------------------------------------------------------------------------------------------------------
- ------
(1) Debt is after deduction of sinking funds and unamortized discounts, and
excludes accrued interest. Government direct and fiscal agency accrued
interest is reported in the government's accounts as an accounts payable.
(2) Includes BC Buildings, BC Housing Management Commission, Provincial Rental
Housing Corporation and other taxpayer-supported Crown corporations and
agencies. Also includes loan guarantees to agricultural producers,
guarantees issued under economic development assistance programs and loan
guarantee provisions.
(3) Includes commercial Crown corporations and agencies and, beginning in
1995/96, funds held under the province's warehouse borrowing program.
(4) Prior to 1984/85 debt outstanding for BC Rail was classified as
taxpayer-supported debt. Beginning in 1984/85 the company was considered to
be a commercial operation.
(5) Prior to the establishment of the BC Transportation Financing Authority in
the spring of 1993, capital financing for highways was provided through
provincial government direct operating debt.
(6) Effective March 31, 2000, the provincial government assumed responsibility
for fiscal agency loans of BC Ferries ($1,080 million) and 580440 British
Columbia Ltd. (Vancouver Trade and Convention Centre) ($70 million).
(7) Based on a revised outlook for world pulp prices and its potential impact
on the finances of 552513 British Columbia Ltd. (Skeena Cellulose Inc.),
the company's debt was reclassified from self-supported to
taxpayer-supported in 2000/01. As the province is not the sole shareholder
of Skeena Cellulose Inc., a portion of this debt was attributed to the
minority shareholder.
(8) In March 2002, Skeena Cellulose debt was assumed by the provincial
government ($260 million) and by the minority shareholder ($94 million) in
preparation for returning Skeena Cellulose Inc. to the private sector.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 2 -- FINANCIAL REVIEW 83
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TABLE A2.26 PROVINCIAL TAXES (AS OF JULY 2003)
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Type and
Statute Reference Tax Base Tax Rate Characteristics and Exemptions
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Income -- Taxable Income 13.5% of taxable income Both personal and corporate taxes are administered
INCOME TAX ACT (1) Corporate. (small business rate: by the Canada Customs and Revenue Agency under an
4.5%). agreement between the province and the federal
government.
Corporate tax credits include the scientific
research and experimental development tax credit, book
publishing tax credit and the film tax credit. In
addition, the political contributions tax credit,
royalty tax credit, the mining exploration tax credit,
logging tax credit and venture capital tax credits are
available to both individuals and corporations.
(2) Personal. Tax rates of 6.05%, 9.15%, Under the tax on income system, BC provides a set of
11.7%, 13.7% and 14.7% non-refundable credits equivalent to all federal non-
corresponding to tax refundable credits.
brackets of up to $31,653,
$31,653 to $63,308,
$63,308 to $72,685, BC Family Bonus and BC Earned Income Benefit are
$72,685 to $88,260 and combined with the federal Tax Benefit in a single
over $88,260. monthly payment to families. Tax credits for claims
personal income taxes include the refundable sales tax
credit, mining flow-through share tax credit and
employee venture capital tax credits.
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Capital -- Net BC paid-up capital. Banks, trust companies and Associated groups of corporations with net paid-up
CORPORATION credit unions with net capital of less than $10 million are exempt from the
CAPITAL TAX ACT paid-up capital: greater tax.Family farm, cooperative, non-profit and other
than $1 billion -- 3%; $1 specified corporations are also exempt. The tax rate
billion or less or is phased in for corporations with net British Columbia
headquartered in paid-up capital between $10 million and $10.25 million
British Columbia 1%. There is a special flat fee for corporations above the
exemption threshold but with net paid-up capital
allocated to British Columbia below the threshold.
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Real Property Fair market value of 1% on the first $200,000 Exemptions include: transfers of principal residences,
Transfers -- property or interest in of value transferred and on recreational residences and family farms to related
PROPERTY property transferred. 2% amounts in excess of individuals; transfers of property between spouses
TRANSFER TAX ACT $200,000. pursuant to written separation agreements or court
orders; transfers of property to local governments,
registered charities and educational institutions;
transfers of property to veterans under the Veterans'
Land Act (Canada); transfers of land to be protected,
preserved, conserved or kept in a natural state; and
transfers of leases less than 31 years in duration.
A number of technical exemptions are also provided.
Eligible first time home-buyers are exempt from tax on
transfers of eligible properties.
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Retail Sales -- Purchase and lease price General rate is 7.5%. Collected through vendors and lessors registered
SOCIAL SERVICE of tangible personal Liquor 10%. under the act and paid by purchasers and lessees. The
TAX ACT property, repair labour Passenger vehicles: exemptions generally fall into four categories: (1)
and legal services. under $47,000 -- 7.5%; items considered to be basic necessities of life such
$47,000 to $48,000 -- 8%; as food and prescription and non-prescription drugs;
$48,000 to $49,000 -- 9%; (2) specified inputs for certain sectors to enhance
over $49,000 -- 10%. competitiveness such as the exemption for machinery
and equipment used in manufacturing and in the natural
resource industries and the exemption of specified
equipment used by bonafide farmers, fishers and
aquaculturists; (3) safety-related equipment designed
to be worn by a worker, such as high-visibility vests
and steel-toed boots, and specified general safety
equipment such as life jackets; (4) energy conservation
materials and equipment such as insulation material
for buildings, and eligible wind, solar and micro-hydro
equipment.
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Accommodation Purchase price of 8%. Eligible local Exemptions include accommodation rented for a period
- -- HOTEL ROOM accommodation. governments may apply to in excess of two months; lodging provided in hospitals
TAX ACT have the province levy an and nursing homes; lodging supplied to employees by
additional tax of up to 2% employers; lodging on ships or trains; hotel rooms
in specified areas on not used for accommodation; charges of $20 or less per
their behalf. day charitable institutions; trailer parks and
campsites; cabins without utilities and other
amenities; and establishments with accommodation for
less than four tenants
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
84 APPENDIX 2 -- FINANCIAL REVIEW
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TABLE A2.26 PROVINCIAL TAXES (AS OF JULY 2003) -- CONTINUED
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Tobacco -- By cigarette, cigar retail 16 cents per cigarette
TOBACCO TAX ACT price, and weight on other and tobacco tobacco
products. stick; 77% of retail
price on cigars to a
maximum tax of $5 per
cigar; 16 cents per gram
of loose tobacco.
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Motor Fuel -- Tax generally applies to all fuels used in internal
MOTOR FUEL TAX combustion engines. Qualifying persons with
ACT disabilities who own or lease a vehicle are entitled to
refunds of provincial tax paid up to an annual maximum
of $400. In the Vancouver Regional Transit service area
the province collects an additional 6 cents per litre
tax on clear gasoline and motive fuel on behalf of
Translink to help fund regional public and private
transportation system costs. In the Victoria Regional
Transit service area the province collects (collected
on behalf of) an additional 2.5 cents per litre on
behalf of BC Transit to help fund the public transit
system.
Clear gasoline (unleaded 14.5 cents per litre.
gasoline only). Includes 6.75 cents per
litre collected
on behalf of the BC
Transportation
Financing Authority.
Of the tax collected in
the Greater Vancouver
Regional District,
5.5 cents is collected
on behalf of TransLink.
Motive fuel. 15.0 cents per litre. Tax applies to any fuel except unleaded gasoline,
Includes 3.25 cents gasohol, natural gas, propane and butane used in a
per litre collected motor vehicle. Refunds of 0.5 cents per litre are
on behalf of the BC available for motive fuel used in private passenger
Transportation Financing vehicles.
Authority. Of the tax
collected in the Greater
Vancouver Regional
District,
5.5 cents is collected on
behalf of TransLink.
Alternative Fuels. Propane 2.7 cents per Natural gas, 85% ethanol and methanol blends are
litre. exempt from tax.
Fuels using PuriNOx additive technology to blend at
least 15% water and diesel motor fuel is also exempt
from taxation until July 31, 2004.
Coloured fuel, marine 3 cents per litre. Coloured fuel may only be used for specified primary
diesel fuel. production and industrial uses. Bona fide farmers are
exempt from paying the tax when fuel is used for
farming purposes.
Locomotive fuel. 3 cents per litre. Tax applies to fuel specifically for use in
locomotives.
Jet and aviation fuel. 2 cents per litre. Jet fuel tax applies to fuel produced specifically
for use in a turbine aircraft engine. Aviation fuel
tax applies to fuel produced specifically for use in a
non-turbine aircraft engine.
Natural gas used in 7% of price if purchased. Tax applies to natural gas used in stationary
stationary engines. 1.1 cents per 810.32 engines other
litres if used than pipeline compressors.
but not purchased.
Natural gas used in 1.9 cents per 810.32 Tax applies to natural gas used in a stationary
pipeline compressors to litres. engine at a pipeline compressor station.
transmit marketable gas.
Natural gas used in Exempt
pipeline compressors to
extract and transmit raw
gas from wells to
processing plants.
Natural gas used in Exempt.
compressors to re-inject
sour gas into depleted
wells.
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Marine bunker. Exempt Exemption applies to bunker fuel, or a combination of
bunker and other fuels used as fuel in a ship.
Marine gas oil. Exempt Exemption applies to marine gas oil when used in gas
turbine engines to propel passenger and cargo
vessels.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 2 -- FINANCIAL REVIEW 85
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TABLE A2.26 PROVINCIAL TAXES (AS OF JULY 2003) -- CONTINUED
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Natural resources Net income from logging in 10% (fully recoverable Net income from logging after deducting non-forestry
- -- LOGGING TAX BC against federal and income and a processing allowance.
ACT provincial corporation
and personal income tax).
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- -- MINERAL LAND Assessed value of freehold Undesignated mineral land Rates of tax set on sliding scale, dependent on size
TAX ACT mineral land and production -- $1.25 to $4.94 per and designation of land.
areas. hectare. Designated
production areas --
$4.94 per hectare.
- -- MINERAL TAX Cash flow from individual 2% of net current Tax calculated on a mine-by-mine basis. NCP tax paid
ACT metal and coal mines proceeds on current operating cash flow until all current and
(other than placer gold (NCP). 13% of net revenue capital costs, plus any investment allowance, are
mines). (NR). recovered. NR tax paid thereafter on cumulative cash
flow. NCP tax creditable against NR tax.
Volume of production of $0.15 per tonne removed An operator may deduct 25,000 tonnes from the total
limestone, dolomite, from all quarries number of tonnes removed from all quarries operated
marble, shale, clay, operated. by that operator. However the amount deducted from any
volcanic ash, one quarry by all operators of that quarry must not
diatomaceous earth, exceed 25,000 tonnes.
sandstone, quartzite
and dimension stone.
Value of minerals sold by 0.5% of value of minerals
placer gold mines. sold.
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Insurance -- Direct premiums written. 4% for vehicle and Exemptions -- benefit societies; mutual corporations
INSURANCE general insurance; 2% with 50% of income from farm or 100% from religious,
PREMIUM TAX ACT for life, sickness, educational or charitable institutions; marine, except
personal accident pleasure craft; approved medical or hospitalization
and loss of salary and plans.
wages insurance.
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Real property -- Assessed value of land and Rates are set annually. Some exemptions apply under various statutes.
TAXATION (RURAL improvements in rural areas For residential
AREA) ACT (outside municipalities). properties the rates
Assessment determined under are set to increase
the ASSESSMENT ACT. average residential
rural taxes by the
rate of inflation. For
2003, the rates are
0.05% for farms
and managed forest land;
0.103% for residential;
0.17% for recreational
property/non-profit
organizations; 0.37%
for light industry,
business and other
property not contained
in any other class;
0.42% for utilities;
0.45% for major
industry and unmanaged
forest land.
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Residential Assessed value of Rates are set annually Basic rates are calculated using a formula to
school tax -- residential land and to increase average moderate effects of varying average assessments on
SCHOOL ACT improvements. Assessment gross residential taxes school district taxes. School districts may levy
determined under by the rate of inflation. additional tax if authorized by local referendum.
the ASSESSMENT ACT. The rates vary by Amendments to the School Act in 2002 allow the Minister
school district. For of Finance to apply different tax rates within a school
2003 rates range from district. Tofino is the only municipality with a rate
about 0.24% to 0.9%; that differs from the rest of the school district
weighted average 0.35%.
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Non-residential Assessed value of non- Rates are set annually. Some exemptions apply under various statutes.
school tax -- residential land and For 2003 the rates are
SCHOOL ACT improvements. Assessment 0.45% for recreational
determined under the property/non-profit
ASSESSMENT ACT. organizations; 0.23%
for managed forest land;
0.68% for farms; 0.99% for
light industry, business
and other property not
contained in any other
class; 1.2% for
unmanaged forest land;
1.25% for major industry;
1.5% for utilities.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
86 APPENDIX 2 -- FINANCIAL REVIEW
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TABLE A2.27 INTERPROVINCIAL COMPARISONS OF TAX RATES - 2003
(RATES KNOWN AS OF JUNE 30, 2003)(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Prince
British Saskat- New Nova Edward New-
Tax Columbia Alberta chewan Manitoba Ontario Quebec Brunswick Scotia Island foundland
<s>
Corporation income tax
(per cent of taxable income)(2)
General Rate 13.5 12.5 17.0 16.0 12.5 8.9/16.25 13.0 16.0 16.0 14.0
Manufacturing Rate 13.5 12.5 10.0 16.0 11.0 8.9 13.0 16.0 7.5 5.0
Small Business Rate 4.5 4.0 6.0 5.0 5.5 8.9 3.0 5.0 7.5 5.0
Small Business Threshold ($000s) 300 400 300 320 320 n/a 400 200 200 200
Corporation Capital Tax (per cent)(3)
Non-financial Nil Nil 0.6 0.3/0.5 0.3 0.6 0.3 0.25/0.5 Nil Nil
Financial 1.0/3.0 Nil 0.7/3.25 3.0 .6/.72/.9 1.2 3.0 3.0 3.0 4.0
Health Care Monthly Premiums
Individual/family(4) $54/$108 $44/$88 Nil Nil Nil Nil Nil Nil Nil Nil
Payroll tax(5) (per cent) Nil Nil Nil 2.15 1.95 4.26 Nil Nil Nil 2.0
Insurance premium tax
(per cent)(6) 2.0-4.0 2.0-3.0 3.0-4.0 2.0-3.0 2.0-3.5 2.0-3.0 2.0-3.0 3.0-4.0 3.5 4.0
Fuel tax (cents per litre)
Gasoline(7) 14.5 9.0 15.0 11.5 14.7 19.2 10.7 15.5 14.0 16.5
Diesel 15.0 9.0 15.0 10.9 14.3 20.2 13.7 15.4 13.5 16.5
Sales tax (per cent)(8)
General rate 7.5 Nil 6.0 7.0 8.0 7.5 8.0 8.0 10.0 8.0
Liquor 10.0 Nil 7.0 7.0 12.0 7.5 8.0 8.0 37.5 8.0
Meals Nil Nil Nil 7.0 8.0 7.5 8.0 8.0 10.0 8.0
Accommodation(9) 8.0 5.0 6.0 7.0 5.0 7.5 8.0 8.0 10.0 8.0
Tobacco tax (dollars per
carton of 200 cigarettes)(10) $32.00 $32.00 $35.80 $33.20 $17.20 $18.10 $29.00 $30.60 $29.90 $34.90
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(1) Personal income tax rates are not shown because they vary by income ranges
determined by each province.
(2) Alberta, Manitoba, Ontario and New Brunswick plan further reductions in
their corporate income tax rates or increases in their small business
thresholds in future years. Quebec's rate on investment income is 16.25 per
cent.
(3) The lower British Columbia rate applies to financial corporations with net
paid-up capital in excess of $10 million. Ontario has a deduction of
$5 million for all corporations; Manitoba has a $5 million
exemption level and the higher rate applies to corporations with taxable
capital in excess of $10 million; Saskatchewan has a $10 million deduction
with an additional $5 million available to Saskatchewan-based companies.
Large Saskatchewan resource corporations are assessed a surcharge on the
value of Saskatchewan resource sales. Ontario and Quebec have an additional
surcharge or compensation tax on financial institutions. Ontario has
announced it intends to phase out its capital tax starting in 2004.
(4) British Columbia has a two-person rate of $96 per month. British Columbia
and Alberta offer premium assistance in the form of lower rates or an
exemption from premiums for lower-income individuals and families.
(5) Manitoba, Ontario and Newfoundland provide payroll tax relief for small
businesses.
(6) The lower rate applies to premiums for life, sickness and accident
insurance; the higher rate applies to premiums for property insurance. The
rate on automobile insurance is 4 per cent in British Columbia and
Saskatchewan, and 3 per cent in Ontario. Sales tax applies to insurance
premiums, except those related to individual life and health, in Ontario (8
per cent), Newfoundland (12 per cent) and Quebec (9 per cent). The sales
tax is 5 per cent for auto insurance in Quebec and Ontario.
(7) Tax rate is for regular unleaded fuel used on highways. The British
Columbia rate includes 3.25 cents per litre dedicated to the BC
Transportation Financing Authority, 1.25 cents per litre dedicated to the
British Columbia Ferry Corporation and five cents per litre dedicated to
TRANSLINK, Vancouver's regional transportation authority. The rates do not
include regional taxes. The Quebec rate includes estimated sales tax.
(8) The Quebec and Prince Edward Island tax rates are imposed on top of the
federal goods and services tax.
(9) The British Columbia rate includes 1.65 percentage points which are imposed
on behalf of Tourism British Columbia.
(10) Includes estimated provincial sales tax where applicable.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 2 -- FINANCIAL REVIEW 87
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TABLE A2.28 SUMMARY OF MAJOR TAX CHANGES ANNOUNCED IN 2003
INCOME TAX ACT
o Enhanced regional incentives were added to the corporate film tax credit.
o New digital animation or visual effects credits were introduced for film
production productions. A new book publishing tax credit was introduced
effective October 1, 2002.
o The mining flow-through share tax credit was extended to match the
extension of the federal credit.
o The BC Mining Exploration Tax Credit was extended for three more years to
August 2006.
CORPORATE CAPITAL TAX ACT
o The corporation capital tax exemption threshold for financial institutions
was increased to $10 million from $5 million effective April 1, 2003.
SOCIAL SERVICE TAX ACT
o Effective February 19, 2003 the sales tax exemption for machinery and
equipment (M&E) used in manufacturing, logging, mining and the energy
sector was extended to apply to contractors who purchase M&E under
fixed-price contracts to improve real property for eligible customers.
o Effective February 19, 2003, the exemption for machinery and equipment used
in the forest industry was expanded to include boom boats.
o Effective February 19, 2003 the Act was amended to treat aggregate
producers the same as mineral producers for provincial sales tax purposes.
This allows aggregate producers to qualify for the exemption for purchases
of explosive supplies.
o Effective February 19, 2003 the list of items that can be purchased exempt
by bona fide farmers was expanded to include hanging gutters and shade
curtains and the exemption for aquaculturists was expanded to include
closed bags containment systems and water pumps used to fill or empty fish
enclosures. Effective February 19, 2003 parts delivery vehicles used by
motor vehicle dealers were made eligible to be taxed under the "dealer use
formulas".
o Effective February 19, 2003, the Act was amended to clarify that
agricultural feeds and seeds are taxable when used to feed wild birds, pet
birds and other household pets.
SCHOOL ACT
o For 2003, the province announced a new policy that in 2003 and future years
average gross residential school taxes would increase by the rate of
inflation. In 2003 the increase is 2.5 per cent. As usual, the province
adjusted school property tax rates in response to changes in average
assessed values in each school district. Some homeowners will experience an
increase in their school taxes that exceeds 2.5 per cent, while others will
have offsetting reductions.
o For each of the eight non-residential property classes, a single,
province-wide rate is set. Non-residential school tax rates are unchanged
from last year. Individual property tax bills for non-residential property
owners may rise or fall depending on changes in assessments.
TAXATION (RURAL AREA) ACT
o The province announced a new policy that in 2003 and future years average
gross residential rural area taxes would increase by the rate of inflation.
In 2003 the increase is 2.5 per cent. The residential tax rate was reduced
to 0.103 per cent. Assessments on existing properties, on average, were up
3.8 per cent. Non-residential rates were not changed from last year.
MOTOR FUEL TAX ACT
o Effective March 1, 2003 the tax rate on clear gasoline and clear diesel
fuel raised by the BC Transportation Financing Authority was increased by
3.5 cents per litre to 6.75 cents per litre. The tax rate for auto propane
was increased to 2.7 cents per litre from 2.1 cents in order to maintain
the 25 per cent relationship with clear gasoline.
o Effective April 1, 2003, the 1.25 cent per litre clear motor fuel tax
formerly paid to the BC Ferry Corporation was redirected to the
consolidated revenue fund.
o Effective February 19, 2003, a tax exemption was provided for marine gas
oil when the fuel is used in gas turbine engines to propel passenger or
cargo vessels.
o Effective April 1, 2003, the portion of tax on clear gasoline and diesel
fuel transferred to TRANSLINK was increased by 0.5 cents per litre.
TOBACCO TAX ACT
o Effective February 19, 2003, the tax rate on cigarettes was increased to
$32 from $30 per carton of 200 cigarettes and the tax rate on fine-cut
tobacco was increased to 16 cents from 15 cents per gram.
HORSE RACING TAX ACT
o The Act was repealed, effective April 1, 2003, and the authority to collect
revenue from wagering on horse racing was transferred to the BC Lottery
Corporation.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 3
CONSTITUTIONAL
FRAMEWORK
90 APPENDIX 3 -- CONSTITUTIONAL FRAMEWORK
- --------------------------------------------------------------------------------
CONSTITUTIONAL FRAMEWORK
The structure of the British Columbia government is based on
British parliamentary tradition and precedent. Prior to
1866, BC was composed of two British-controlled Crown
colonies, one on Vancouver Island and a second on the
mainland. In 1866, the Union Proclamation joined these two
colonies to form the Crown Colony of British Columbia, and
on July 20, 1871, BC entered into Confederation with Canada.
Although the Colony of Vancouver Island had a parliamentary
form of government as far back as 1856, the first fully
elected government was not instituted in BC until the autumn
after Confederation with Canada. Responsible government was
achieved in late 1872, when the Lieutenant Governor
acquiesced to an executive council that was responsible to
the legislative assembly.
Upon entering Confederation, BC came under the authority of
the BRITISH NORTH AMERICA ACT, 1867 (BNA ACT), a statute of
the British parliament. Until 1982, the BNA ACT defined the
major national institutions and established the division of
authority between the federal and provincial governments. In
1982, the BNA ACT was renamed the CONSTITUTION ACT, 1867 and
its amendments were incorporated into the CONSTITUTION ACT,
1982. The CONSTITUTION ACT, 1982, which also includes the
Canadian Charter of Rights and Freedoms, is companion
legislation to the CANADA ACT, 1982. With the passage of the
CANADA ACT, 1982, the British Parliament ended its legal
right to legislate for Canada. Canada, as a federal state,
divides legislative powers between the federal and
provincial governments.
PROVINCIAL GOVERNMENT
BC's government is modeled after the British system.
Functionally there are three main branches: the legislature,
the executive and the judiciary.
LEGISLATURE
Legislative powers in British Columbia are exercised by a
single legislative chamber, which is elected for a term of
up to five years. The legislature consists of the Lieutenant
Governor and 79 elected members of the legislative assembly.
The legislative assembly represents the people of BC in the
conduct of the province's affairs. The assembly is required
by law to meet at least once a year with a normal session
lasting several months. However, special sessions can last
just a few days or many months, depending on the nature of
the government's business.
The Legislature operates on a fixed schedule -- the second
Tuesday in February each year is reserved for the Throne
Speech and the third Tuesday in February each year is
reserved for the Budget Speech.
EXECUTIVE
The executive is composed of the Lieutenant Governor and the
executive council. The Lieutenant Governor is the Queen's
representative in British Columbia and holds a largely
ceremonial place in modern provincial
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
APPENDIX 3 -- CONSTITUTIONAL FRAMEWORK 91
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government. By constitutional custom, the Lieutenant
Governor is appointed by the Governor General of Canada for
a term usually lasting five years.
The Lieutenant Governor, on the advice of the premier,
appoints members of the executive council and is guided by
the executive council's advice as long as it holds the
confidence of the legislative assembly. Following a general
election, the Lieutenant Governor calls upon the leader of
the political party with the largest number of elected
members to serve as premier and to form the provincial
government.
The Lieutenant Governor, on recommendation of the premier,
convenes, prorogues and dissolves the legislative assembly
and gives Royal Assent to all measures and bills passed by
the assembly before they become law.
The executive council, or cabinet, is headed by the premier
and is composed of selected members of the ruling party.
Ministers are the head of government ministries, and are
usually members of cabinet.
Cabinet determines government policy and is held responsible
by the legislative assembly for the operation of the
provincial government. Deputy ministers are the chief
operating officers of ministries and are appointed by
cabinet. Deputy ministers are responsible for carrying out
government policies and for managing the work of their
ministries.
JUDICIARY
The judiciary performs functions that are central to the
orderly operation of society. Judges hear and give judgment
in criminal prosecutions and in actions arising from
disputes between private citizens or between the government
and private citizens. Judges apply both judge-made law,
known as "common law," and laws made by the Parliament of
Canada and provincial legislatures. The judiciary is
increasingly called on to determine whether laws passed by
governments conform to the values expressed in the Canadian
Charter of Rights and Freedoms.
BC's judicial system is made up of the Provincial Court of
British Columbia, the Supreme Court of British Columbia and
the Court of Appeal of British Columbia. The Provincial
Court includes Small Claims, Adult Criminal, Youth and
Family divisions. The provincial government appoints
Provincial Court judges, and the federal government appoints
Court of Appeal and Supreme Court judges.
The federal judicial system includes the Tax Court of
Canada, the Federal Court of Canada (Appeals division and
Trial division) and the Supreme Court of Canada. The Federal
Court of Canada hears cases in limited areas of exclusively
federal jurisdiction, for example, reviewing decisions made
by federal tribunals such as the Canada Labour Relations
Board. The Supreme Court of Canada is the court of final
resort and hears selected appeals from the Federal Court of
Appeal and provincial Courts of Appeal.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003
92 APPENDIX 3 -- CONSTITUTIONAL FRAMEWORK
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PROVINCIAL GOVERNMENT JURISDICTION
Under Canada's constitutional framework, BC has ownership
and jurisdiction over natural resources and is responsible
for education, health and social services, municipal
institutions, property and civil rights, the administration
of justice and other matters of purely provincial or local
concern.
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2003 FINANCIAL AND ECONOMIC REVIEW -- JULY 2003