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PUBLIC ACCOUNTS
For the Fiscal Year Ended
March 31, 2004
2003/2004
[BRITISH COLUMBIA LOGO]
MINISTRY OF FINANCE
Office of the Comptroller General
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NATIONAL LIBRARY OF CANADA CATALOGUING IN PUBLICATION
DATA
British Columbia. Office of the Comptroller General.
Public accounts for the year ended . . . -2000/2001-
Annual.
Report year ends Mar. 31.
Continues: British Columbia. Ministry of Finance. Public
accounts. ISSN 1187-8657.
ISSN 1499-1659 = Public accounts-British Columbia.
Office of the Comptroller General
1. British Columbia-Appropriations and
expenditures-Periodicals. 2. Revenue-British
Columbia-Periodicals.
3. Finance, Public-British Columbia-Periodicals. I. British
Columbia. Ministry of Finance. 2. Title.
HJ13.B74 352.4'09711'05 C2001-960204-9
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JUNE 29, 2004
VICTORIA, BRITISH COLUMBIA
LIEUTENANT GOVERNOR OF THE PROVINCE OF BRITISH COLUMBIA
MAY IT PLEASE YOUR HONOUR:
The undersigned has the honour to present the Public Accounts of the
Government of the Province of British Columbia for the fiscal year ended
March 31, 2004.
GARY COLLINS
MINISTER OF FINANCE
MINISTRY OF FINANCE
VICTORIA, BRITISH COLUMBIA
HONOURABLE GARY COLLINS
MINISTER OF FINANCE
I have the honour to submit here with the Public Accounts of the
Government of the Province of British Columbia for the fiscal year ended
March 31, 2004.
Respectfully submitted,
ARN VAN IERSEL
COMPTROLLER GENERAL
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BRITISH COLUMBIA'S PUBLIC ACCOUNTS
SETTING THE COURSE
The Public Accounts are one of the major accountability documents for the
Provincial Government. They demonstrate accountability to the citizens of
British Columbia by providing actual audited financial information in a
consistent, timely and understandable format. They further allow the reader
to see how government performed relative to its fiscal plan for the year, as
laid out in the Budget and Estimates of revenue and expenditure. Finally,
they report on the financial state of the Province in terms of its assets,
liabilities and net debt.
The proper focus of the Public Accounts is the Summary Financial Statements
that represent the consolidated financial results and financial position for
all those organizations that make up the government reporting entity. These
statements provide an aggregate over view of how the Province and its various
organizations performed against the financial plan. Supplementary information
is also provided through the Consolidated Revenue Fund Extracts (available on
the internet) that compare actual to planned spending on an appropriation
basis, which represents another significant accountability of ministries back
to the Legislative Assembly.
The Province continues to improve the Public Accounts in terms of their
usefulness to readers. A new front section has been developed for Fiscal
2003/04, that provides a summary of the fiscal year. It further provides
explanations of revenue, expense, assets and liabilities that tie into both
the 2003/04 budget and the 2003/04 financial statements. This section is
intended to make the Public Accounts more understandable and continues our
effort to better integrate all our major financial accountability documents.
Our intention is to further improve this section of the Public Accounts in
the coming years by adding comparative data for prior years so that readers
can better identify trends. The Public Sector Accounting Board also has a
project to develop segmented financial reporting that will provide
information on the major components of government. They intend this
initiative to address some current concerns that the government entity has
become so large and has lost some of its meaningfulness in terms of
describing the government's major responsibilities, for example, health and
education.
The 2003/04 Public Accounts are themselves, a transition document given that
the government reporting entity, that is, those organizations considered to
be part of government, has already been expanded in the 2004/05 budget, to
include schools, universities, colleges, and health authorities (SUCH
sector). However, since these Public Accounts are a report against the
2003/04 Budget that did not include the SUCH sector, they do not yet
officially include these organizations. As has been the case for the past
eight years, however, the projected impact of including SUCH sector is shown
in the supplementary material (see page 83-86). Recognizing that as of
2004/05 and beyond, the Public Accounts will be based on the larger
government reporting entity, we have provided some additional information on
the impact of SUCH sector. Consistent with recent experience, adding in the
SUCH sector would have improved our bottom line, as acknowledged by the
auditor general, by $337 million.
As the 2003/04 Public Accounts are still based on the old reporting entity
and do not officially in clude the SUCH sector, the statements again include
a reservation by the Auditor General in keeping with the past number of
years. As of 2004/05, with the expanded entity being included in the budget,
we expect this reservation will disappear. The government has agreed to
include the SUCH sector effective 2004/05, based on our legal requirement to
follow Generally Accepted Accounting Principles (GAAP). British Columbia,
therefore, leads the country in terms of the organizations it includes in its
reporting entity. We have stated, however, that with respect to universities,
we will monitor the practices of other senior governments to determine if
universities truly should be considered part of government in the long term.
Besides the SUCH sector, there have been other changes to the reporting
entity for 2003/04. New organizations have been added, while others have been
deleted, and some have changed status. Major changes include the conversion
of BC Ferries into a new authority model, the transfer of the Pacific
National Exhibition to the Municipality of Vancouver, and the starting of
operations for the Forestry Innovation Investment Ltd and the Vancouver
Convention Center Expansion Project.
There is a complete listing of the reporting entity for government on pages
67-68. For British Columbia Ferry Corporation, page 47, (As sets Held for
Resale, Note 11), provides further information. Also, page 65, (Significant
Events, Note 34), provides information regarding the BC Rail transaction
anticipated to close in 2004/05. This information is provided to show the impact
of the BC Rail transaction on the Summary Financial Statements.
<Page>
Accounting policies are reviewed each year for continued relevance and
consistency with GAAP. Since we are required by law to be GAAP compliant, we
have to adjust our policies accordingly. For fiscal 2003/04 there were no
accounting policy changes, how ever deferred foreign exchange gains or losses on
debt are now included in the reported debt numbers rather than appearing as a
deferred revenue or deferred expense.
Policy and format changes are made in consultation with the independent
Accounting Policy Advisory Committee created under the BUDGET TRANSPARENCY AND
ACCOUNTABILITY ACT in 2001. This Committee has advised government on the
requirements to be fully compliant with GAAP by the legislated date of April 1,
2004. Based on progress to date, we are on track to meet this requirement.
British Columbia remains a leader in budgeting and financial reporting based
on the comparability of its Estimates and Public Accounts, with its focus on
"One Bottom Line"; that is, the Summary Financial Statements of the Province
including ministries, Crown corporations and other agencies. While we
continue to go through significant change, we remain dedicated to improving
both the budgeting and reporting of the Province.
Again, I thank the Select Standing Committee on Public Accounts of the
Legislative Assembly, government ministries, Crown corporations and agencies,
and the Office of the Auditor General for their guidance and support in
preparing the 2003/04 Public Accounts. The efforts of all participants were
critical in maintaining an early release date comparable with the best
practitioners in Canada.
Comments or questions regarding the Public Accounts documents are very much
appreciated and can be directed to me by mail at PO Box 9413 STN PROV GOVT,
Victoria BC V8W 9V1, e-mail at arn.vaniersel@gems8.gov.bc.ca or by telephone at
250-387-6692 or fax at 250-356-2001.
ARN VAN IERSEL
COMPTROLLER GENERAL
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<Table>
<Caption>
CONTENTS
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OVERVIEW (UNAUDITED)
PUBLIC ACCOUNTS CONTENT................................................ 9
FINANCIAL STATEMENT DISCUSSION AND ANALYSIS............................ 10
SUMMARY ACCOUNTS' SURPLUS (DEFICIT).................................... 11
CHANGES FROM 2003/04 BUDGET............................................ 12
CHANGES IN ACTUAL RESULTS FROM 2003 TO 2004............................ 12
TOTAL PROVINCIAL DEBT.................................................. 13
ECONOMIC HIGHLIGHTS.................................................... 13
REVENUE BY SOURCE...................................................... 14
REVENUE BY CATEGORY.................................................... 15
EXPENSE BY FUNCTION.................................................... 16
EXPENSE BY FUNCTION-CHART.............................................. 17
EXPENSE BY MAJOR ACCOUNTABILITY........................................ 17
FINANCIAL ASSETS....................................................... 18
LIABILITIES............................................................ 19
FINANCIAL STATEMENT DEBT............................................... 19
TOTAL PROVINCIAL DEBT.................................................. 19
CREDIT RATING-CHART.................................................... 20
NON-FINANCIAL ASSETS................................................... 20
NET LIABILITIES AND ACCUMULATED DEFICIT................................ 21
SUM MARY ACCOUNTS' STAFF UTILIZATION................................... 21
IMPACT OF SUCH......................................................... 22
SUMMARY FINANCIAL STATEMENTS
REPORT OF THE AUDITOR GENERAL OF BRITISH COLUMBIA...................... 25
STATEMENT OF RESPONSIBILITY FOR THE SUMMARY
FINANCIAL STATEMENTS OF THE GOVERNMENT OF THE
PROVINCE OF BRITISH COLUMBIA......................................... 29
STATEMENT OF FINANCIAL POSITION........................................ 31
STATEMENT OF OPERATIONS................................................ 32
STATEMENT OF CHANGE IN NET LIABILITIES................................. 33
STATEMENT OF CHANGES IN CASH AND TEMPORARY INVESTMENTS................. 34
NOTES TO SUMMARY FINANCIAL STATEMENTS.................................. 36
REPORTING ENTITY....................................................... 67
STATEMENT OF FINANCIAL POSITION BY SECTOR.............................. 69
STATEMENT OF OPERATIONS BY SECTOR...................................... 71
STATEMENT OF SELF-SUPPORTED CROWN CORPORATIONS
AND AGENCIES SUMMARY OF FINANCIAL POSITION........................... 73
STATEMENT OF SELF-SUPPORTED CROWN CORPORATIONS
AND AGENCIES SUMMARY OF RESULTS OF OPERARTIONS
AND STATEMENT OF EQUITY.............................................. 74
STATEMENT OF TANGIBLE CAPITAL ASSETS................................... 75
STATEMENT OF GUARANTEED DEBT........................................... 76
SUPPLEMENTARY INFORMATION (UNAUDITED)
ADJUSTED NET INCOME OF CROWN CORPORATIONS AND AGENCIES................. 81
IMPACT OF SUCH SECTOR ON THE SUMMARY FINANCIAL
STATEMENTS' STATEMENT OF FINANCIAL POSITION.......................... 83
IMPACT OF SUCH SECTOR ON THE SUMMARY FINANCIAL
STATEMENTS' STATEMENT OF OPERATIONS.................................. 85
SUMMARY FINANCIAL STATEMENTS INCLUDING SUCH
SECTOR STATEMENT OF FINANCIAL POSITION BY SECTOR..................... 87
SUMMARY FINANCIAL STATEMENTS INCLUDING SUCH
SECTOR STATEMENT OF OPERATIONS BY SECTOR............................. 89
CONSOLIDATED REVENUE FUND EXTRACTS
(UNAUDITED)
OPERATING RESULT....................................................... 93
SCHEDULE OF NET REVENUE BY SOURCE...................................... 94
SCHEDULE OF COMPARISON OF ESTIMATED EXPENSES TO
ACTUAL EXPENSES...................................................... 96
SCHEDULE OF FINANCING TRANSACTION DISBURSEMENTS........................ 98
SCHEDULE OF INFORMATION REQUIRED UNDER SECTION
9(2)(D)(II), (III) AND (IV) OF THE BUDGET TRANSPARENCY
AND ACCOUNTABILITY ACT............................................... 99
PROVINCIAL DEBT SUMMARY
OVERVIEW OF PROVINCIAL DEBT (UNAUDITED)................................ 103
PROVINCIAL DEBT (UNAUDITED)............................................ 104
CHANGE IN PROVINCIAL DEBT (UNAUDITED).................................. 105
RECONCILIATION OF SUMMARY FINANCIAL STATEMENTS
(SURPLUS) DEFICIT TO CHANGE IN TAXPAYER-SUPPORTED
DEBT AND TOTAL DEBT (UNAUDITED)...................................... 106
RECONCILIATION OF TOTAL DEBT TO THE SUMMARY
FINANCIAL STATEMENTS DEBT (UNAUDITED)................................ 106
CHANGE IN PROVINCIAL DEBT, COMPARISON TO BUDGET
(UNAUDITED).......................................................... 107
</Table>
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<Table>
<Caption>
CONTENTS--CONTINUED
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INTERPROVINCIAL COMPARISON OF TAXPAYER-SUPPORTED DEBT
AS A PER CENTAGE OF GROSS DOMESTIC PRODUCT (UNAUDITED)................ 108
INTERPROVINCIAL COMPARISON OF TAXPAYER-SUPPORTED
DEBT PER CAPITA (UNAUDITED)........................................... 109
REPORT OF THE AUDITOR GENERAL OF BRITISH COLUMBIA
ON THE SUMMARY OF PROVINCIAL DEBT, KEY INDICATORS OF PROVINCIAL
DEBT, AND SUMMARY OF PERFORMANCE MEASURES.............................. 111
SUMMARY OF PROVINCIAL DEBT................................................ 113
KEY INDICATORS OF PROVINCIAL DEBT......................................... 115
SUMMARY OF PERFORMANCE MEASURES........................................... 116
DEFINITIONS............................................................... 117
</Table>
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PROVINCE OF BRITISH COLUMBIA 9
PUBLIC ACCOUNTS 2003/04
PUBLIC ACCOUNTS CONTENT
FINANCIAL STATEMENT DISCUSSION AND ANALYSIS (FINANCIAL
HIGHLIGHTS)--provides a written commentary on the Summary Financial Statements
plus additional information on the financial performance of the government.
SUMMARY FINANCIAL STATEMENTS--these audited statements have been prepared
to disclose the financial impact of the government's activities. They aggregate
the Consolidated Revenue Fund and taxpayer-supported Crown corporations and
agencies (government organizations) and self-supported Crown corporations and
agencies (government enterprises).
SUPPLEMENTARY INFORMATION (UNAUDITED)--this section provides supplementary
schedules containing detailed information on the results of those Crown
corporations and agencies that are part of the government reporting entity.
Additional information is also included on the impact of including
schools, universities, colleges and institutes, and health care authorities in
the government reporting entity. Currently, they are not considered part of the
government reporting entity because each is part of a province-wide program, is
locally based and has an initial accountability to a local board. These
organizations will be included in 2004/05.
CONSOLIDATED REVENUE FUND EXTRACTS (UNAUDITED)--the Consolidated Revenue
Fund (CRF) reflects the core operations of the province as represented by the
operations of government ministries and legislative offices. Its statements are
included in an abridged form. The CRF Extracts include a summary of the CRF
operating result, a schedule of net revenue by source, a schedule of expenses, a
schedule of financing transactions, and a schedule of write-off, remission and
forgiveness, as required by statute.
PROVINCIAL DEBT SUMMARY--presents schedules and statements that provide
further details on provincial debt and reconcile the Summary Financial
Statements to the province's total debt. Also included are the audited Summary
of Provincial Debt, Key Indicators of Provincial Debt and Summary of Performance
Measures.
This publication is available on the Internet at: www.fin.gov.bc.ca
ADDITIONAL INFORMATION AVAILABLE
The following information is available only on the Internet at:
www.fin.gov.bc.ca
CONSOLIDATED REVENUE FUND SUPPLEMENTARY SCHEDULES--this section contains
schedules that provide details of financial activities of the province's
Consolidated Revenue Fund, including details of expenses by ministerial
appropriations, including an analysis of statutory appropriations, Special
Accounts and Special Funds, and financing transactions.
CONSOLIDATED REVENUE FUND DETAILED SCHEDULES OF PAYMENTS--this section
contains detailed schedules of salaries, wages, travel expenses, grants and
other payments.
FINANCIAL STATEMENTS OF GOVERNMENT ORGANIZATIONS AND ENTERPRISES--this
section contains links to the audited financial statements of those Crown
corporations and agencies that are included in the government reporting entity.
SEGREGATED FUNDS AND TRUST FUNDS FINANCIAL STATEMENTS--this section
contains the audited financial statements of the pension, superannuation and
long-term disability funds administered by the province. A summary of financial
information for trust funds is also included in this section.
SUMMARIES OF FINANCIAL STATEMENTS OF CORPORATIONS AND AGENCIES TO WHICH
THE FINANCIAL INFORMATION ACT APPLIES--this section contains summaries of the
financial statements of corporations, associations, boards, commissions,
societies and public bodies required to report under the FINANCIAL INFORMATION
ACT (R.S.B.C. 1996, chap. 140, sec. 2).
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10 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
FINANCIAL STATEMENT DISCUSSION AND ANALYSIS REPORT
The focus of the province's financial reporting is the Summary Financial
Statements that consolidate the operating and financial results of the
province's Crown corporations and agencies with the Consolidated Revenue Fund.
These are general-purpose statements designed to meet, to the extent possible,
the information needs of a variety of users.
The Public Accounts are prepared in accordance with the FINANCIAL
ADMINISTRATION ACT and the BUDGET TRANSPARENCY AND ACCOUNTABILITY ACT (BTAA).
The BTAA was amended in 2001 with the passing of Bill 5. Under section 20
of that Bill, the government has mandated that "all accounting policies and
practices applicable to documents required to be made public under this Act for
the government reporting entity must conform to generally accepted accounting
principles (GAAP)." This move to fully comply with GAAP must be completed
effective with the 2004/05 fiscal year.
For senior governments, GAAP is generally considered to be the
recommendations and guidelines of the Public Sector Accounting Board (PSAB) of
The Canadian Institute of Chartered Accountants. While the province generally
follows the recommendations of PSAB, there are two areas that have been or will
be reviewed in the move to full GAAP reporting:
i) school districts, universities, colleges and institutes, and health
authorities (SUCH sector) were examined to determine whether or not they
belong in the government reporting entity (GRE). These organizations will be
included in the GRE in 2004/05.
ii) prepaid capital advances, currently used to capitalize grants to
entities outside the GRE for tangible capital assets, will be reviewed to
determine if they are still required once the move to fully comply with GAAP
is complete.
An Accounting Policy Advisory Committee has been established as an
independent body and is assisting the province in addressing these two issues.
The Public Accounts are printed in one volume and include the Overview,
the Summary Financial Statements, Supplementary Information, the Consolidated
Revenue Fund Extracts and the Provincial Debt Summary. Additional information is
available to the public on the Internet at: www.fin.gov.bc.ca.
<Page>
PROVINCE OF BRITISH COLUMBIA 11
PUBLIC ACCOUNTS 2003/04
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
The information contained within the Financial Highlights is taken from
the Summary Financial Statements on pages 31 to 77. The bud get figures are from
pages 3 to 5 of the ESTIMATES--FISCAL YEAR ENDED MARCH 31, 2004.
Despite significant revenue and expenditure shocks in 2003/04, the
province ended the year with a deficit of $1,339 million, an improvement of
$961 million compared with the budgeted $2,300 million deficit and an
improvement of $1,860 million compared with the prior year.
SUMMARY ACCOUNTS' SURPLUS (DEFICIT)
<Table>
<Caption>
In Millions Variance
2003/04
2003/04 2003/04 2002/031 Actual 2003/04
Budget Actual Actual to Budget vs 02/03
----------------------------------------------------------
TAXPAYER-SUPPORTED PROGRAMS AND AGENCIES $ $ $ $ $
Revenue(2)............................................... 24,619 24,793 22,887 174 1,906
Expense(2)............................................... (27,800) (27,891) (27,577) (91) (314)
----------------------------------------------------------
TAXPAYER-SUPPORTED BALANCE (3,181) (3,098) (4,690) 83 1,592
Self-supported Crown corporation net earnings............ 1,381 1,881 1,766 500 115
----------------------------------------------------------
SURPLUS (DEFICIT) BEFORE UNUSUAL ITEMS (1,800) (1,217) (2,924) 583 1,707
Results of discontinued operations....................... (106) 106
Restructuring exit expense............................... (122) (169) (122) 47
Forecast allowance....................................... (500) 500
----------------------------------------------------------
SURPLUS (DEFICIT) FOR THE YEAR (2,300) (1,339) (3,199) 961 1,860
----------------------------------------------------------
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</Table>
(1)The 2002/03 figures have been restated to conform with the
presentation of the 2003/04 Public Accounts.
(2)2003/04 Budget excluded $319 million in additional CHST funds from
the federal government that were not known at the time of the Budget, but were
included in the Supply Act passed on May 29, 2003.
Improvements in taxation and energy revenues and self-supported Crown
corporation operating results helped to offset unanticipated events, such as
reduced Equalization revenues and the costs of forest fires, floods and Bovine
Spongiform Encephalopathy (BSE). At the same time, lower debt service costs and
ministry savings created additional fiscal room to accommodate priority
initiatives, including the acceleration of $72 million of the government's
commitment to support the 2010 Olympic and Paralympic Winter Games.
During the 2003/04 fiscal year, the Legislative Assembly approved four
Supplementary Estimates totalling $837 million. The Supplementary Estimate
authorized the spending of $319 million in federal health accord funding
received. The Supplementary Estimates provided information and authorization to
support spending of $446 million in additional expenses related to disaster
costs, $72 million in accelerated funding for the 2010 Olympics, and $274,000 in
additional expenses for the Information and Privacy Commissioner.
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12 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
FINANCIAL HIGHLIGHTS
CHANGES FROM 2003/04 BUDGET
<Table>
<Caption>
In Millions
Revenues Expenses Deficit
-------- -------- -------
$ $ $
BUDGET (BEFORE FORECAST ALLOWANCE) 26,000 27,800 (1,800)
Forecast Allowance.............................................................. (500)
-------
SURPLUS (DEFICIT) PER BUDGET (2,300)
Increase in taxation revenue.................................................... 467 467
Decrease in equalization funding................................................ (1,005) (1,005)
Increase in Canada Health and Social Transfer................................... 281 281
Increase in energy revenue...................................................... 332 332
Increase in self-supported Crown corporation net earnings....................... 500 500
Increase in other revenue....................................................... 99 99
(Decrease) in debt interest expense............................................. (341) 341
Increase in forest fires, floods, and BSE costs................................. 410 (410)
Increase in other spending...................................................... 144 (144)
Decrease in forecast allowance.................................................. 500
------ ------ -------
674 213 961
------ ------ -------
ACTUAL RESULTS 26,674 28,013 (1,339)
------ ------ -------
------ ------ -------
</Table>
CHANGES IN ACTUAL RESULTS FROM 2003 TO 2004
<Table>
<Caption>
In Millions
Revenues Expenses Deficit
-------- -------- -------
$ $ $
2002/03(1) SURPLUS (DEFICIT) 24,653 27,852 (3,199)
Increase in taxation revenue (see page 14)...................................... 1,531 1,531
Increase in natural resources revenue (see page 14)............................. 372 372
In crease in other revenue (see page 14)........................................ 235 235
Increase in self-supported Crown corporation net earnings (see page 14)......... 115 115
(Decrease) in federal contributions (see page 14)............................... (232) (232)
Increase in health expenses (see page 16)....................................... 221 (221)
(Decrease) in social services expense (see page 16)............................. (280) 280
Increase in other expense....................................................... 220 (220)
------ ------ -------
Subtotal of changes in actual results........................................... 2,021 161 1,860
------ ------ -------
2003/04 SURPLUS (DEFICIT) 26,674 28,013 (1,339)
------ ------
2002/03(1) ACCUMULATED SURPLUS (DEFICIT) (8,015)
-------
2003/04 ACCUMULATED SURPLUS (DEFICIT) (9,354)
-------
-------
</Table>
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(1)The 2002/03 figures have been restated to conform with the presentation of
the 2003/04 Public Accounts.
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PROVINCE OF BRITISH COLUMBIA 13
PUBLIC ACCOUNTS 2003/04
FINANCIAL HIGHLIGHTS
Fiscal 2003/04 also marks the final year of the government's three-year
restructuring initiative for government ministries. Over the three-year period,
actual ministry restructuring costs totalled $574 million. Crown corporations
restructuring costs over the same period were $309 million.
Debt reported on the financial statements at the end of 2003/04 was
$36,938 million, up $814 million from 2002/03. As noted in the table below,
total provincial debt was $399 million higher than the amount reported in the
province's financial statements due to differences in how debt guarantees and
non-guaranteed debt are reported for accounting purposes.
TOTAL PROVINCIAL DEBT
<Table>
<Caption>
In Millions Variance
2003/04
2003/04 2003/04 2002/03(1) Actual 2003/04
Budget Actual Actual to Budget vs 02/03
------ ------ ------ ---------- --------
$ $ $ $ $
Financial statement debt.......................................... 40,527 36,938 36,124 (3,589) 814
Third party guarantees and non-guaranteed debt.................... 439 399 415 (40) (16)
------ ------ ------ ---------- --------
TOTAL PROVINCIAL DEBT 40,966 37,337 36,539 (3,629) 798
------ ------ ------ ---------- --------
------ ------ ------ ---------- --------
</Table>
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(1)The 2002/03 figures have been restated to conform with the presentation of
the 2003/04 Public Accounts.
A more comprehensive overview of provincial debt, including key debt
indicators is located on pages 103 to 116.
ECONOMIC HIGHLIGHTS
British Columbia's economy grew by 2.2% in calendar 2003, tying for
fourth highest among provinces, according to preliminary results from Statistics
Canada. The estimated 2.2% growth last year exceeded the national average of
1.7%. Economic growth in British Columbia was fueled by a strong housing market
and robust job creation in 2003. Employment grew 2.5% last year with just over
50,000 jobs created, almost all of them full-time. Housing starts posted growth
of 21% in calendar 2003 and non-residential construction also saw a pick-up in
growth to 6.1%.
[Graphic]
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14 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
FINANCIAL HIGHLIGHTS
STRONG AND STABLE CREDIT
British Columbia continues to maintain a strong and stable credit rating,
most notably evidenced by the recent upgrade to the province's credit rating
outlook by two of the three credit rating agencies. (See page 19 for details.)
FINANCIAL PERFORMANCE
REVENUE
For the 2003/04 fiscal year, revenue totalled $26,674 million, $674
million higher than budget and $2,021 million higher than 2002/03.
REVENUE BY SOURCE
<Table>
<Caption>
In Millions Variance
2003/04
2003/04 2003/04 2002/03(1) Actual 2003/04
Budget Actual Actual to Budget vs 02/03
------- ------- ---------- --------- --------
$ $ $ $ $
Taxation........................................................... 13,341 13,808 12,277 467 1,531
Contributions from Federal Government(2)........................... 3,992 3,346 3,578 (646) (232)
Natural Resources.................................................. 3,396 3,653 3,281 257 372
Fees and Licences.................................................. 2,262 2,427 2,283 165 144
Net earnings of self-supported Crown Corporations.................. 1,381 1,881 1,766 500 115
Miscellaneous...................................................... 900 977 829 77 148
Investment Earnings................................................ 728 582 639 (146) (57)
------- ------- ---------- --------- --------
TOTAL REVENUE...................................................... 26,000 26,674 24,653 674 2,021
------- ------- ---------- --------- --------
------- ------- ---------- --------- --------
</Table>
- ------------
(1)The 2002/03 figures have been restated to conform with the
presentation of the 2003/04 Public Accounts.
(2)2003/04 Bud get excluded $319 million in additional CHST funds from
the federal government that were not known at the time of the Budget, but were
included in the SUPPLY ACT passed on May 29, 2003.
The main reasons for the difference between budget and actuals were
higher self-supported Crown corporation net earnings and higher taxation and
natural resource revenues, partially off set by lower federal transfer payments.
Taxation revenues, which comprise over 50% of all revenues, were $467
million higher than budget and $1,531 million higher than 2002/03, reflecting
personal income tax and property transfer tax improvements.
<Page>
PROVINCE OF BRITISH COLUMBIA 15
PUBLIC ACCOUNTS 2003/04
FINANCIAL HIGHLIGHTS
Contributions from the federal government were $646 million lower than
budget and $232 million lower than 2002/03 since reduced equalization
entitlements for 2003/04 and prior years were only partially offset by higher
revenues for Canada Health and Social Transfer (CHST) and federal government
relief for forest fire costs. Equalization revenue was $1,005 million below
budget reflecting a $499 million lower entitlement in respect of 2003/04 and a
negative $506 million prior year adjustment mainly for 2002/03. CHST revenue was
up $281 million from budget mainly due to the Health Accord funding and federal
contributions for forest fire relief totalled $121 million. Relative to 2002/03,
equalization revenue was $873 million lower and CHST revenue was up $438
million. The year-over-year change in CHST revenue reflects the Health Accord
funding, the higher entitlement for prior years and an increased base in
2003/04.
Natural resource revenues were $257 million higher than budget and $372
million higher than 2002/03, reflecting higher energy revenues, mainly due to
the record natural gas and petroleum drilling rights sold in September 2003.
These gains were partially offset during the year by lower natural gas revenues
resulting from lower production and lower forest revenues due to the effects of
a higher Canadian dollar and lower coastal harvest volumes.
Net earnings of self-supported Crown corporations were $500 million
higher than budget and $115 million higher than 2002/03. The change from budget
was primarily due to improved reservoir levels, lower than expected energy and
interest costs for the British Columbia Hydro and Power Authority (BC Hydro),
and higher premium revenue and reduced operating costs for the Insurance
Corporation of British Columbia (ICBC). The improvement over the 2002/03 fiscal
year was due to increased sales and reduced costs for the Liquor Distribution
Branch, increased BC Lotteries' revenues, and higher premium revenues from ICBC.
These in creases were partially offset by lower income from BC Hydro due to an
increase in electricity purchases to meet domestic demand and a provision for
the Vancouver Island Generation Project/Georgia Strait Crossing Pipeline costs.
Primary sources of provincial revenue are outlined in the chart below.
REVENUE BY CATEGORY FOR FISCAL YEAR 2003/04
[GRAPHIC]
<Page>
16 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
FINANCIAL HIGHLIGHTS
EXPENSE
In 2003/04, provincial expenses totalled $28,013 million, $213 million
higher than budget and $161 million higher than 2002/03.
EXPENSE BY FUNCTION
<Table>
<Caption>
In Millions Variance
2003/04
2003/04 2003/04 2002/03(1) Actual 2003/04
Budget Actual Actual to Budget vs 02/03
------- ------- ---------- --------- --------
$ $ $ $ $
Health(2).................................................... 10,718 10,945 10,724 227 221
Education.................................................... 6,936 6,899 6,898 (37) 1
Social Services.............................................. 2,856 2,871 3,151 15 (280)
Interest(3).................................................. 1,792 1,451 1,493 (341) (42)
Protection of Persons and Property........................... 1,428 1,565 1,422 137 143
Transportation............................................... 1,354 1,267 1,150 (87) 117
Natural resources and economic development................... 1,127 1,496 1,533 369 (37)
Other........................................................ 1,123 906 667 (217) 239
General Government........................................... 466 491 539 25 (48)
------- ------- ---------- --------- --------
TOTAL OPERATING EXPENSE...................................... 27,800 27,891 27,577 91 314
Results of discontinued operations........................... 106 (106)
Restructuring exit expense................................... 122 169 122 (47)
------- ------- ---------- --------- --------
TOTAL EXPENSE................................................ 27,800 28,013 27,852 213 161
------- ------- ---------- --------- --------
------- ------- ---------- --------- --------
</Table>
- ------------
(1)The 2002/03 figures have been restated to conform with the
presentation of the 2003/04 Public Accounts.
(2)2003/04 Budget for Health excluded $319 million in additional CHST
funds from the federal government that were not known at the time of the budget,
but were included in the Supply Act passed on May 29, 2003.
(3)Interest expense does not include interest relating to prepaid capital
advances. These interest costs are recorded in the related health, education and
transportation functions. SEE Note 29 on page 63 for more details.
Health spending was $227 million higher than budget and $221 million
higher than 2002/03, primarily due to additional federal funding arising from
the federal/provincial Health Accord.
Social services spending was $15 million higher than budget and
$280 million lower than 2002/03. The decrease from the prior year was
primarily due to an overall reduction in case loads and other program costs.
Interest expense was $341 million less than budget and $42 million less
than 2002/03 as a result of lower interest rates, reduced debt balances compared
to budget and a stronger Canadian dollar.
Natural resources and economic development spending was $369 million
higher than budget and $37 million lower than 2002/03. The change from budget
was primarily due to unanticipated forest fire suppression, BSE, and flood
related costs. The decrease from the prior year mainly reflected the effect of a
one-time provision of $275 million made in 2002/03 for forestry revitalization
offset by the additional disaster costs in 2003/04.
Other spending was $217 million lower than budget and $239 million higher
than 2002/03. The difference between actual and budget was due to lower than
expected spending by taxpayer-supported Crown corporations. The 2003/04 to
2002/03 actual variance related to the accelerated spending associated with the
2010 Olympics.
<Page>
PROVINCE OF BRITISH COLUMBIA 17
PUBLIC ACCOUNTS 2003/04
FINANCIAL HIGHLIGHTS
In accordance with Generally Accepted Accounting Principles (GAAP) for
senior governments and Public Sector Accounting Board (PSAB), provincial
expenses are reported on a functional basis in the Public Accounts. Under
functional reporting, expenses are grouped and classified according to their
principle purpose using a modified version of the Statistics Canada account
classification system. Primary expense functions are outlined in the chart
below:
EXPENSE BY FUNCTION FOR FISCAL YEAR 2003/04
[GRAPHIC]
MINISTRY, PROGRAM AND AGENCY REPORTING
While functional reporting allows for greater comparability across
jurisdictions, it is not considered the primary tool for managing results as the
level of aggregation does not provide specific information about the operational
objectives and major activities of the reporting entity. Reporting by entity
provides management and the public additional information regarding the
allocation of resources and related costs of the different operational
activities of government. For example, Health Services shows an expense of
$10,453 million while the Health Function in the above table shows an expense of
$10,945 million. The difference results from the Health Function including the
Health Services Ministry, taxpayer-supported Crown corporations and agencies
and other ministries' programs that are related to health function spending.
EXPENSE BY MAJOR ACCOUNTABILITY
<Table>
<Caption>
In Millions Variance
2003/04
2003/04 2003/04 2002/03(1) Actual 2003/04
Budget Actual Actual to Budget vs 02/03
------ ------ ------ ---------- --------
$ $ $ $ $
Health Services.......................................... 10,209 10,453 10,206 244 247
Education................................................ 4,860 4,787 4,807 (73) (20)
Advanced Education....................................... 1,899 1,897 1,897 (2)
Management of Public Funds and Debt...................... 926 738 711 (188) 27
Other Ministries and Programs............................ 6,950 7,235 7,346 285 (111)
Government restructuring (All ministries)................ 190 168 212 (22) (44)
------ ------ ------ ---------- --------
CONSOLIDATED REVENUE FUND EXPENSE........................ 25,034 25,278 25,179 244 99
Less: Grants/internal transfers.......................... (1,087) (1,128) (1,155) (41) 27
Add: Recoveries.......................................... 1,615 1,733 1,670 118 63
Other taxpayer supported entities (net of accounting
adjustments).......................................... 2,238 2,130 2,158 (108) (28)
------ ------ ------ ---------- --------
TOTAL EXPENSE............................................ 27,800 28,013 27,852 213 161
------ ------ ------ ---------- --------
------ ------ ------ ---------- --------
</Table>
- -------------
(1)The 2002/03 figures have been restated to conform with the
presentation of the 2003/04 Public Accounts.
<Page>
18 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
FINANCIAL HIGHLIGHTS
Major variances in the Expense by Major Accountability are:
o Health Services was $244 million higher than budget and $247 million
higher than 2002/03, due primarily to additional federal contributions
for health care. A Supplementary Estimate to authorize the spending of
the federal contribution was approved in May 2003. After taking into
account the Supplementary Estimate, health care spending was
$75 million below budget.
o Other ministries and program spending was $285 million higher than
budget and $111 million lower than 2002/03. The change from budget
primarily reflects the additional costs associated with forest fire
suppression, BSE, and flood related costs partially offset by lower
spending in other areas.
o Management of Public Funds and Debt (interest) was $188 million lower
than budget due to government interest savings arising from lower
interest rates, reduced debt balances and a stronger Canadian dollar.
o Other taxpayer-supported entity spending was a $108 million lower than
budget and $28 million lower than 2002/03, primarily due to delays in
the implementation of Ministry of Children and Family governance
authorities.
Further details on ministry, program and agency spending can be found in
the 2004 British Columbia Financial and Economic Review available in July 2004,
at: www.fin.gov.bc.ca/pubs
FINANCIAL ASSETS
Financial assets as at March 31, 2004 totalled $15,810 million, $269
million lower than budget and $1,439 million higher than 2002/03. The increase
compared to 2002/03 is primarily due to a $344 million increase in BC Hydro
loans receivable, a $399 million increase in ICBC equity and a $428 million loan
receivable from British Columbia Ferry Services Inc.
FINANCIAL ASSETS
<Table>
<Caption>
In Millions Variance
2003/04
2003/04 2003/04 2002/03(1) Actual 2003/04
Budget Actual Actual to Budget vs 02/03
------ ------ ------ --------- --------
$ $ $ $ $
Accounts receivable................................................. 2,539 2,542 2,380 3 162
Equity in self-supported Crown Corporations and Agencies............ 2,594 2,989 2,629 395 360
Loans for purchases of assets recoverable from agencies............. 8,270 7,602 7,336 (668) 266
Other financial assets.............................................. 2,676 2,677 2,026 1 651
------ ------ ------ --------- --------
TOTAL FINANCIAL ASSETS.............................................. 16,079 15,810 14,371 (269) 1,439
------ ------ ------ --------- --------
------ ------ ------ --------- --------
</Table>
- --------------
(1)The 2002/03 figures have been restated to conform with the
presentation of the 2003/04 Public Accounts.
<Page>
PROVINCE OF BRITISH COLUMBIA 19
PUBLIC ACCOUNTS 2003/04
FINANCIAL HIGHLIGHTS
As at March 31, 2004, the province's equity investment in self-supported
Crown corporations was $2,989 million. In 2003/04, these organizations provided
government with $1,881 million in net income.
More than 90% of the $7,602 million in recoverable capital loans
represents loans to BC Hydro toward the acquisition of power generation and
distribution assets. The change from budget is primarily due to lower than
anticipated borrowing requirements for BC Hydro.
Other financial assets include cash and cash equivalents, temporary
investments, inventory, and loans receivable.
LIABILITIES
Total liabilities were $2,250 million lower than budget and $2,285
million higher than 2002/03.
LIABILITIES
<Table>
<Caption>
In Millions Variance
2003/04
2003/04 2003/04 2002/03(1) Actual 2003/04
Budget Actual Actual to Budget vs 02/03
------ ------ ------ --------- --------
$ $ $ $ $
Taxpayer-supported Debt.................. 31,871 29,431 28,899 (2,440) 532
Self-supported Debt...................... 8,156 7,507 7,225 (649) 282
Forecast Allowance....................... 500 (500)
------ ------ ------ --------- --------
TOTAL FINANCIAL STATEMENT DEBT........... 40,527 36,938 36,124 (3,589) 814
Accounts Payable......................... 3,790 3,543 3,353 (247) 190
Other Liabilities........................ 941 2,527 1,246 1,586 1,281
------ ------ ------ --------- --------
TOTAL LIABILITIES........................ 45,258 43,008 40,723 (2,250) 2,285
------ ------ ------ --------- --------
------ ------ ------ --------- --------
</Table>
- -------------
(1)The 2002/03 figures have been restated to conform with the
presentation of the 2003/04 Public Accounts.
FINANCIAL STATEMENT DEBT
Total financial statement debt was $3,589 million lower than budget, but
$814 million higher than 2002/03. Primary reasons for the change from budget
included lower than forecast debt balances at the end of the 2002/03 fiscal
year, improved government operating results and reduced capital spending
requirements.
OTHER LIABILITIES
Other liabilities were $1,586 million higher than budget and
$1,281 million higher than 2002/03. Of this difference, $733 million related
to the increase for the repayable Equalization advance from the federal
government and an increase of $390 million in deferred revenue related to the
federal trusts for CHST.
TOTAL PROVINCIAL DEBT
When reporting to rating agencies, the province adds to its financial
statement debt, all debt guarantees and the debt directly incurred by the
self-supported Crown corporations. This balance is referred to as the total
provincial debt.
Total provincial debt at March 31, 2003/04, was $37,337 million, which is
$3,629 million less than budget and $798 million higher than 2002/03.
In April 2004, two of the three rating agencies up graded the province's
credit rating outlook to positive from stable. The Moody's Investors Service
Inc., presents the outlook for the province at Aa2 (Positive) and Standard and
Poor's outlook for the province is at AA-(Positive). The outlook from Dominion
Bond Rating Service (DBRS) remains unchanged at AA (low).
<Page>
20 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
FINANCIAL HIGHLIGHTS
CREDIT RATINGS JUNE 2004
<Table>
<Caption>
RATING AGENCY(1)
PROVINCE MOODY'S INVESTORS STANDARD AND POOR'S DOMINION BOND
SERVICES INC. RATING SERVICE
- ------------------------------------------------------------------------------------------------
British Columbia Aa2 AA- AA(low)
Alberta Aaa AAA AAA
Saskatchewan Aa3 AA- A
Manitoba Aa2 AA- A (high)
Ontario Aa2 AA AA
Quebec A1 A+ A
New Brunswick Aa3 AA- A
Nova Scotia A3 A- BBB(high)
Prince Edward Island A2 Not rated A(low)
Newfoundland A3 A- BBB
Canada Aaa AAA AAA
</Table>
(1)The rating agencies as sign 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
A more comprehensive overview of provincial debt, including key debt
indicators is located on pages 103-116 of this publication.
NON-FINANCIAL ASSETS
At March 31, 2004, non-financial assets totalled $17,844 million,
representing a $507 million decrease from budget and a $493 million decrease
from the previous year. The decreases were a result of lower than anticipated
capital requirements in ministries and the health and education sectors.
NON-FINANCIAL ASSETS
<Table>
<Caption>
In Millions Variance
2003/04
2003/04 2003/04 2002/03(1) Actual 2003/04
Budget Actual Actual to Budget vs 02/03
------ ------ ------ ---------- --------
$ $ $ $ $
Tangible Capital Assets............................. 10,735 10,482 10,381 (253) 101
Prepaid Capital Advances............................ 7,313 7,136 7,108 (177) 28
Prepaid Program Costs............................... 98 82 107 (16) (25)
Non-financial assets held for resale................ 593 (593)
Other Assets........................................ 205 144 148 (61) (4)
------ ------ ------ ---------- --------
TOTAL NON-FINANCIAL ASSETS.......................... 18,351 17,844 18,337 (507) (493)
------ ------ ------ ---------- --------
------ ------ ------ ---------- --------
</Table>
- -------------
(1)The 2002/03 figures have been restated to conform with the
presentation of the 2003/04 Public Accounts.
Non-financial assets typically represent resources that government can
use in the future to provide services. The majority of the province's
non-financial assets reflect capital asset related expenditures and take the
form of either tangible capital assets or prepaid capital advances. Prepaid
capital advances represent the government's claim on provincially funded assets
acquired by external entities in the health, education and transportation
sectors.
<Page>
PROVINCE OF BRITISH COLUMBIA 21
PUBLIC ACCOUNTS 2003/04
FINANCIAL HIGHLIGHTS
NET LIABILITIES AND ACCUMULATED DEFICIT
In accordance with GAAP, the government's statement of financial position
is presented on a net debt or net liabilities basis. Net liabilities represents
the difference between a government's financial assets and its liabilities and
is often used as a measure of the future revenues required to pay for past
transactions and events. The accumulated deficit represents the sum of prior
years' operating results.
NET LIABILITIES AND ACCUMULATED DEFICIT
<Table>
<Caption>
In Millions Variance
2003/04
2003/04 2003/04 2002/03(1) Actual 2003/04
Budget Actual Actual to Budget vs 02/03
------ ------ ------ ---------- --------
$ $ $ $ $
Financial Assets.................... 16,079 15,810 14,371 (269) 1,439
Less: Liabilities................... (45,258) (43,008) (40,723) 2,250 (2,285)
------ ------ ------ ---------- --------
NET LIABILITIES..................... (29,179) (27,198) (26,352) 1,981 (846)
Less: Non-financial Assets.......... 18,351 17,844 18,337 (507) (493)
------ ------ ------ ---------- --------
ACCUMULATED DEFICIT................. (10,828) (9,354) (8,015) 1,474 (1,339)
------ ------ ------ ---------- --------
------ ------ ------ ---------- --------
</Table>
- -------------
(1)The 2002/03 figures have been restated to conform with the
presentation of the 2003/04 Public Accounts.
SUMMARY ACCOUNTS' STAFF UTILIZATION FOR THE FISCAL YEAR ENDED MARCH 31, 2004(1)
The table below provides a summary of full-time equivalent (FTE)employment.
<Table>
<Caption>
Variance
2003/04
2003/04 2003/04 2002/03(2) Actual 2003/04
Budget Actual Actual to Budget vs 02/03
------ ------ ------ --------- --------
Consolidated Revenue Fund(3)......................................... 29,049 28,684 29,751 (365) (1,067)
Taxpayer-supported Crown corporations and agencies(4,5).............. 5,270 4,570 7,747 (700) (3,177)
Regional authorities(6).............................................. 150 (150)
------ ------ ------ --------- --------
TOTAL STAFF UTILIZATION.............................................. 34,469 33,254 37,498 (1,215) (4,244)
------ ------ ------ --------- --------
------ ------ ------ --------- --------
</Table>
(1)Staff utilization is the full time equivalent of the number of persons
employed in the fiscal year whose salaries are paid by taxpayer-supported
entities within the Summary Accounts.
(2)The 2002/03 figures have been restated to conform with the
presentation of the 2003/04 Public Accounts.
(3)See the Consolidated Revenue Fund Schedules at www.fin.gov.bc.ca. for
details.
(4)See financial statements of Crown corporations and agencies at
www.fin.gov.bc.ca for details of amounts included in this total.
(5)The 2003/04 Budget includes an estimate for Canadian Blood Services.
This organization is not included in the Public Accounts figures.
(6)In 2003/04, the government reporting entity was expanded to include
the Ministry of Children and Family Development governance authorities.
<Page>
22 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
FINANCIAL HIGHLIGHTS
The FTE reductions for the CRF against 2003/04 budget and 2002/03 actuals
reflect the government's three-year restructuring and workforce adjustment
initiative, offset by 150 FTEs not transferred to regional authorities in
2003/04.
The difference between budgeted utilization for taxpayer-supported Crown
corporations and actual utilization was 700 employees. This difference included
an estimate of 545 employees for Canadian Blood Services while no actual
utilization was available for this entity at year end and there were also 82
fewer employees than budgeted for in the Legal Services Society. No employees
were transferred to regional authorities in 2003/04 although 150 employees were
budgeted to be transferred.
The major change between 2003/04 and 2002/03 (4,244 employees) was the
transfer of the British Columbia Ferry Corporation in the 2003/04 fiscal year,
to an organization outside of the government reporting entity. This accounted
for 3,345 employees.
MOVE TO GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Although the province is not required to include the schools,
universities, colleges and health authorities (SUCH sector) in its financial
statements until fiscal 2004/05, the 2003/04 Public Accounts does provide an
impact statement as if these entities were included. This information has been
included in the Public Accounts since fiscal year end 1997/98.
The following table outlines the financial impact to government had the
SUCH sector organizations been included under Generally Accepted Accounting
Principles for the 2003/04 fiscal year.
IMPACT OF SUCH SECTOR
<Table>
<Caption>
In Millions
Before After Impact
Inclusion Inclusion of
of SUCH of SUCH SUCH
--------- --------- ------
$ $ $
Revenue(1)......................... 26,674 28,974 2,300
Expenses(1)........................ 28,013 29,976 1,963
--------- --------- ------
ANNUAL DEFICIT (1,339) (1,002) 337
--------- --------- ------
--------- --------- ------
Financial Assets................... 15,810 19,540 3,730
Less: Liabilities.................. (43,008) (46,900) (3,892)
--------- --------- ------
NET LIABILITIES (27,198) (27,360) (162)
Less: Non-financial Assets......... 17,844 22,617 4,773
--------- --------- ------
ACCUMULATED DEFICIT (9,354) (4,743) 4,611
--------- --------- ------
--------- --------- ------
</Table>
(1)Changes to accounting adjustments resulting from the impact of the
SUCH sector.
Further details on the impact of the SUCH sector are available on pages
83 to 90 of this publication.
<Page>
- -------------------------------------------------------------------------------
SUMMARY FINANCIAL STATEMENTS
PROVINCE OF BRITISH COLUMBIA
FOR THE FISCAL YEAR ENDED
MARCH 31, 2004
- -------------------------------------------------------------------------------
[BRITISH COLUMBIA LOGO]
<Page>
<Page>
[Graphic] Report of the Auditor General
of British Columbia
ON THE
SUMMARY FINANCIAL STATEMENTS
OF THE GOVERNMENT OF THE PROVINCE OF BRITISH COLUMBIA
TO THE LEGISLATIVE ASSEMBLY
OF THE PROVINCE OF BRITISH COLUMBIA
I have audited the summary financial statements of the Government of the
Province of British Columbia consisting of the statement of financial position
as at March 31, 2004, and the statements of operations, change in net
liabilities, and changes in cash and temporary investments for the year then
ended. These financial statements are the responsibility of the Government. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with Canadian generally accepted auditing
standards. Those standards require that I plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Government, as well as evaluating the overall financial statement presentation.
RESERVATION
As explained in note 1(c) to these financial statements, the Government's stated
accounting policies contain exceptions to generally accepted accounting
principles (GAAP) for senior governments, as recommended by The Canadian
Institute of Chartered Accountants, related to schools, universities, colleges
and institutes, and health care organizations. Had GAAP been followed as at
March 31, 2004, it would be expected that financial assets increase by $3.7
billion ($3.4 billion at March 31, 2003), liabilities increase by $3.9 billion
($3.7 billion at March 31, 2003), non-financial assets increase by $4.8 billion
($3.6 billion at March 31, 2003), and the accumulated deficit decrease by $4.6
billion ($3.3 billion at March 31, 2003). Similarly, for the year ended March
31, 2004, revenues increase by $2.3 billion ($2.4 billion for 2003), expenses
increase by $2.0 billion ($2.2 billion for 2003), and the annual deficit
decrease by $0.3 billion ($0.2 billion for 2003).
... 2
<Page>
<Page>
Page 2
REPORT OF THE AUDITOR GENERAL
OF BRITISH COLUMBIA ON THE
SUMMARY FINANCIAL STATEMENTS
OF THE GOVERNMENT OF THE
PROVINCE OF BRITISH COLUMBIA
OPINION
In my opinion, except for the effects of my reservation explained in the
preceding paragraph, these financial statements present fairly, in all material
respects, the financial position of the Government of the Province of British
Columbia as at March 31, 2004, the results of its operations and the changes in
net liabilities and its cash and temporary investments for the year then ended,
in accordance with generally accepted accounting principles for senior
governments as recommended by The Canadian Institute of Chartered Accountants.
[Signature]
VICTORIA, BRITISH COLUMBIA Wayne Strelioff, FCA
MAY 14, 2004 Auditor General
<Page>
<Page>
STATEMENT OF RESPONSIBILITY
FOR THE SUMMARY FINANCIAL STATEMENTS
OF THE GOVERNMENT OF THE PROVINCE OF BRITISH COLUMBIA
Responsibility for the integrity and objectivity of the Summary Financial
Statements for the Government of the Province of British Columbia rests with the
Provincial Government. These financial statements are prepared by the
Comptroller General in accordance with the accounting policies as determined by
Treasury Board. The fiscal year of the government is from April 1 to March 31 of
the following year.
To fulfill its accounting and reporting responsibilities, the government
maintains systems of financial management and internal control. These systems
give due consideration to costs, benefits and risks; and, are designed to
provide reasonable assurance that transactions are properly authorized by the
Legislative Assembly, are executed in accordance with prescribed regulations
and are properly recorded. This is done to maintain accountability of public
money and safeguard the assets and properties of the Province of British
Columbia under government administration. The Comptroller General of British
Columbia maintains the accounts of British Columbia, a centralized record of the
government's financial transactions, and obtains additional information as
required from ministries, Crown corporations and agencies to meet accounting and
reporting requirements.
The Auditor General of British Columbia provides an independent opinion on
the financial statements prepared by the government. The duties of the Auditor
General in that respect are contained in section 11 of the AUDITOR GENERAL ACT.
Annually, the financial statements are tabled in the Legislature as part of
the Public Accounts, and are referred to the Select Standing Committee on Public
Accounts of the Legislative Assembly. The Select Standing Committee on Public
Accounts reports to the Legislative Assembly on the results of its examination
together with any recommendations it may have with respect to the financial
statements and accompanying audit opinions.
Approved on behalf of the Government of the Province of British Columbia:
[Signature]
GARY COLLINS
Chair, Treasury Board
<Page>
<Page>
31
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL POSITION
AS AT MARCH 31, 2004
<Table>
<Caption>
In Millions
Note 2004 2003
---- ---------- ----------
FINANCIAL ASSETS
Cash and temporary investments................................................ 3 430 312
Accounts receivable........................................................... 4 2,542 2,380
Inventories for resale........................................................ 5 238 216
Due from other governments.................................................... 6 344 135
Due from self-supported Crown corporations and agencies....................... 7 164 402
Equity in self-supported Crown corporations and agencies...................... 8 2,989 2,629
Loans, advances and mortgages receivable...................................... 9 1,048 596
Other investments............................................................. 10 453 328
Financial assets held for sale................................................ 11 37
Loans for purchase of assets, recoverable from agencies....................... 12 7,602 7,336
---------- ----------
15,810 14,371
---------- ----------
LIABILITIES
Accounts payable and accrued liabilities...................................... 13 3,543 3,353
Due to other governments...................................................... 14 1,109 322
Due to Crown corporations, agencies and funds................................. 15 123 101
Deferred revenue.............................................................. 16 1,292 706
Liabilities related to assets held for sale................................... 11 113
Employee pension plans (unfunded pension liabilities)......................... 17 3 4
Taxpayer-supported debt....................................................... 18 29,431 28,899
Self-supported debt........................................................... 19 7,507 7,225
---------- ----------
43,008 40,723
---------- ----------
Net liabilities............................................................... 21 (27,198) (26,352)
---------- ----------
NON-FINANCIAL ASSETS
Tangible capital assets....................................................... 22 10,482 10,381
Prepaid capital advances...................................................... 23 7,136 7,108
Prepaid program costs......................................................... 24 82 107
Non-financial assets held for sale............................................ 11 593
Other assets.................................................................. 25 144 148
---------- ----------
17,844 18,337
---------- ----------
ACCUMULATED SURPLUS (DEFICIT)................................................. 26 (9,354) (8,015)
---------- ----------
---------- ----------
Contingencies and commitments................................................. 27
Significant events............................................................ 34
</Table>
The accompanying notes and supplementary statements are an
integral part of these financial statements.
Prepared in accordance with the accounting policies
as determined by Treasury Board.
[Signature]
ARN VAN IERSEL
Comptroller General
<Page>
32
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
<Table>
<Caption>
In Millions
2004 2003
------------------- ----------
Estimates
(Note 31) Actual Actual
$ $ $
REVENUE
Taxation (Note 28)............................................................. 13,341 13,808 12,277
Contributions from the federal government...................................... 3,992 3,346 3,578
Natural resources.............................................................. 3,396 3,653 3,281
Fees and licences.............................................................. 2,262 2,427 2,283
Net earnings of self-supported Crown corporations and agencies (Note 8)........ 1,381 1,881 1,766
Miscellaneous.................................................................. 900 977 829
Investment earnings............................................................ 728 582 639
-------- ------- --------
26,000 26,674 24,653
-------- ------- --------
EXPENSE
Health (Note 29)............................................................... 10,718 10,945 10,724
Education (Note 29)............................................................ 6,936 6,899 6,898
Social services................................................................ 2,856 2,871 3,151
Interest (Note 29)............................................................. 1,792 1,451 1,493
Protection of persons and property............................................. 1,428 1,565 1,422
Transportation (Note 29)....................................................... 1,354 1,267 1,150
Natural resources and economic development..................................... . 1,127 1,496 1,533
Other.......................................................................... 1,123 906 667
General government............................................................. 466 491 539
-------- ------- --------
27,800 27,891 27,577
-------- ------- --------
Surplus (deficit) for the year before unusual items............................ (1,800) (1,217) (2,924)
Forecast allowance............................................................. (500)
Results of discontinued operations (Note 11)................................... (106)
Restructuring exit expense (Note 35)........................................... (122) (169)
-------- ------- --------
SURPLUS (DEFICIT) FOR THE YEAR................................................. (2,300) (1,339) (3,199)
--------
--------
Accumulated surplus (deficit)--beginning of year as restated (Note 26)......... (8,015) (4,816)
------- --------
ACCUMULATED SURPLUS (DEFICIT)--END OF YEAR..................................... (9,354) (8,015)
------- --------
------- --------
</Table>
The accompanying notes and supplementary statements are an integral
part of these financial statements.
<Page>
33
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS
STATEMENT OF CHANGE IN NET LIABILITIES
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
<Table>
<Caption>
In Millions
2004 2003
---- ----
$ $
Surplus (deficit) for the year.............................................. (1,339) (3,199)
------- -------
Effect of change in tangible capital assets:
Acquisition of tangible capital assets................................... (702) (601)
Amortization of tangible capital assets.................................. 526 564
Impact of tangible capital assets held for sale.......................... 593
Disposals and valuation adjustments...................................... 75 268
------- -------
492 231
------- -------
Effect of change in:
Prepaid capital advances................................................. (28) (75)
Prepaid program costs.................................................... 25 19
Other assets............................................................. 4 9
------- -------
1 (47)
------- -------
(Increase) decrease in net liabilities...................................... (846) (3,015)
Net liabilities--beginning of year.......................................... (26,352) (23,337)
------- -------
NET LIABILITIES--END OF YEAR................................................ (27,198) (26,352)
------- -------
------- -------
</Table>
The accompanying notes and supplementary statements are an integral
part of these financial statements.
<Page>
34
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN CASH AND TEMPORARY INVESTMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
<Table>
<Caption>
In Millions
2004 2003
------------------------------------ --------
Disburse-
Receipts ments Net Net
$ $ $ $
OPERATING TRANSACTIONS
Surplus (deficit) for the year................................................. (1,339) (3,199)
Non-cash items included in surplus (deficit)
Amortization of tangible capital assets..................................... 526 564
Amortization of prepaid capital advances.................................... 468 415
Amortization of public debt deferred revenues and deferred charges.......... (15) 55
Concessionary loan adjustments (decreases).................................. (2) (1)
Impact of Tangible Capital Assets held for sale............................. (51) 51
Valuation adjustments....................................................... 228 273
Net earnings of self-supported Crown corporations and agencies.............. (1,881) (1,766)
Accounts receivable (increases)................................................ (327) (55)
Due from other governments (increases)......................................... (209) 278
Due from self-supported Crown corporations and agencies (increases) decreases.. 238 (18)
Accounts payable increases (decreases)......................................... 190 (30)
Due to other governments increases............................................. 787 223
Due to Crown corporations, agencies and funds increases........................ 22 38
Unfunded pension liability payments............................................ (1) (2)
Items applicable to future operations increases................................ 615 116
Contributions of self-supported Crown corporations and agencies................ 1,541 1,657
------- -------
Cash derived from (used for) operations........................................ 790 (1,401)
------- -------
CAPITAL TRANSACTIONS
Tangible capital assets (acquisitions)......................................... 629 702 (73) (392)
Prepaid capital advances (increases)........................................... 496 (496) (490)
------ ------ ------- -------
Cash (used for) capital........................................................ 629 1,198 (569) (882)
------ ------ ------- -------
INVESTMENT TRANSACTIONS
Investment in self-supported Crown corporations and agencies................... 20 (20)
Loans, advances and mortgages receivable (issues).............................. 120 603 (483) (35)
Other investments--net decreases (increases)................................... 133 (133) (44)
------ ------ ------- -------
Cash (used for) investments.................................................... 120 756 (636) (79)
------ ------ ------- -------
Total financing (requirements)................................................. (415) (2,362)
------- -------
</Table>
<Page>
35
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN CASH AND TEMPORARY INVESTMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
<Table>
<Caption>
In Millions
2004 2003
------------------------------------ --------
Disburse-
Receipts ments Net Net
$ $ $ $
FINANCING TRANSACTIONS(1)
Public debt increases.......................................................... 15,905 15,094 811 770
Derived from Warehouse Program investments..................................... 1,067
Derived from (used for) purchase of assets, recoverable from agencies.......... (4,900) (4,622) (278) 57
------ ------- ------- -------
Cash derived from (used for) financing......................................... 11,005 10,472 533 1,894
------ ------- ------- -------
Increase (decrease) in cash and temporary investments.......................... 118 (468)
Balance--beginning of year..................................................... 312 780
------- -------
BALANCE--END OF YEAR........................................................... 430 312
------- -------
------- -------
</Table>
(1) Financing transaction receipts are from debt issues and disbursements
are for debt repayments.
The accompanying notes and supplementary statements are an integral
part of these financial statements.
<Page>
36
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
1. SIGNIFICANT ACCOUNTING POLICIES
( a ) REPORTING ENTITY
These financial statements include the accounts of organizations
accountable for the administration of their financial affairs and resources to a
minister of the government or, directly to the Legislature, and are owned or
controlled by the government. For purposes of the reporting entity,
accountability to a minister or directly to the Legislature, does not include
those entities that are part of a province-wide program and are locally based
having initial accountability to a local board.
The reporting entity also includes government partnerships.
A list of organizations included in these consolidated financial statements
can be found on pages 67 and 68.
Trusts administered by the government or a Crown corporation or agency are
excluded from the reporting entity.
( b ) PRINCIPLES OF CONSOLIDATION
Taxpayer-supported Crown corporations' and agencies' financial statements
are consolidated with the Consolidated Revenue Fund using the full consolidation
method. The government's interests in government partnerships are recorded on a
proportional consolidation basis.
Self-supported Crown corporations and agencies and government business
partnerships are consolidated with the Consolidated Revenue Fund on the modified
equity basis of consolidation.
The definitions of these consolidation methods can be found on page 117.
No adjustments are made for Crown corporations and agencies whose fiscal
year-ends are different from the government's fiscal year-end of March 31,
unless the effect of an adjustment would be significant to the consolidated
operating result.
( c ) BASIS OF ACCOUNTING
The government's Summary Financial Statements are prepared in accordance
with the Generally Accepted Accounting Principles (GAAP) for senior governments
as recommended by the Public Sector Accounting Board (PSAB) of the Canadian
Institute of Chartered Accountants, with the following exceptions:
(i) Reporting entity--PSAB recommends the reporting entity comprise all
organizations that are accountable for the administration of their
financial affairs and resources either to a minister of the government
or directly to the Legislature, and are owned or controlled by the
government. The government currently does not include school districts,
universities, colleges and institutes, or health care authorities (SUCH
sector) in its reporting entity. These organizations will be included
in 2004/05. The inclusion of universities will be reviewed annually.
(ii) Prepaid capital advances--PSAB recommends government transfers be
expensed in a government's financial statements in the period that the
events giving rise to the transfer occurred, as long as the transfer is
authorized, eligibility criteria are met, and a reasonable estimate of
the amount can be made. Transfers to school districts, universities,
colleges and institutes, and health care authorities for the
acquisition of significant tangible capital assets are not expensed in
the year they are issued; rather, they are treated as a prepaid expense
and amortized over the life of the tangible capital assets acquired
with the advances.
<Page>
37
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
1. SIGNIFICANT ACCOUNTING POLICIES--Continued
The following table provides the impact to the province's financial
statements if the accounting policies were changed to conform to current PSAB.
<Table>
<Caption>
In Millions
(Unaudited)
Assets Liabilities Net Equity Revenue Expense Surplus
------ ----------- ---------- ------- ------- -------
$ $ $ $ $ $
INCLUSION OF SUCH SECTOR AND EXPENSING
PREPAID CAPITAL ADVANCES--INCREASE............. 8,503 3,892 4,611 2,300 1,963 337
----- ----- ----- ----- ----- ---
----- ----- ----- ----- ----- ---
</Table>
The BUDGET TRANSPARENCY AND ACCOUNTABILITY ACT requires that any exceptions
to GAAP be eliminated for fiscal 2004/05.
( d )SPECIFIC ACCOUNTING POLICIES
REVENUE
All revenue is recorded on an accrual basis except when the accruals
cannot be determined with a reasonable degree of certainty or when their
estimation is impracticable. The exception is corporation income tax which
is recorded on a cash basis.
Government transfers are recognized as revenues in the period during
which the transfer is authorized and any eligibility criteria are met.
Tax credits/offsets are accrued on the same basis as the associated
tax revenues and reduce gross taxation revenue but are not considered
valuation allowances.
EXPENSES
The cost of all goods and services received during the year is
expensed.
Interest expense is recorded net of sinking fund earnings and includes
debt servicing costs such as amortization of discounts and premiums,
foreign exchange gains and losses, and issue costs.
Pension expense is calculated as the cost of pension benefits earned
by employees during the year, interest on the pension benefits liability,
net of pension plan assets, and amortization of the government's share of
any experience gains or losses, less contributions made by members. The
estimated total cost of the government's share of the plan amendments
related to past service is expensed in the year the plan is amended.
Government transfers include grants, entitlements and transfers under
agreements, as described in the definitions on page 117. Government
transfers are recognized as expenses in the period in which the events
giving rise to the transfer occurred, as long as the transfer is
authorized, eligibility criteria have been met and a reasonable estimate of
the amount can be made. This excludes transfers that meet the criteria for
a prepaid capital advance.
Acquisitions of tangible capital assets and prepaid capital advances
are recorded as assets and the cost is amortized over the useful life of
the relevant tangible capital asset. Tangible capital assets not related to
a capitalized class of assets are expensed in the year of acquisition.
<Page>
38
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
1. SIGNIFICANT ACCOUNTING POLICIES--Continued
Restructuring exit expenses are recorded when a restructuring plan in
appropriate form has been approved by the province. To qualify, the
expense must not be associated with or benefit activities that will be
continued by the government reporting entity. In addition, the expense
must:
(i) be incremental to other expenses incurred in normal operations
and incurred as a direct result of the restructuring plan; or,
(ii) represent amounts to be incurred under an existing contractual
obligation that will continue after the restructuring plan is
completed with no economic benefit to the government; or,
(iii) represent a penalty or compensation incurred to cancel an existing
contractual obligation.
ASSETS
Assets are recorded to the extent that they represent cash and claims
upon outside parties, items held for resale to outside parties, prepaid
expenses, deferred charges, prepaid capital advances or tangible capital
assets acquired as a result of events and transactions prior to the
year-end.
FINANCIAL ASSETS
Temporary investments and Warehouse Program investments include
short-term investments recorded at the lower of cost or market value.
Inventories for resale include property which has been purchased, or
for which development costs have been incurred, that is held for ultimate
resale or lease to outside parties. Inventories for resale are recorded at
the lower of cost or net realizable value.
Equity in self-supported Crown corporations and agencies represents
the province's investment (including long-term advances) in those
self-supported Crown corporations and agencies at cost, adjusted for
increases and decreases in the investees' net assets.
Loans and advances are recorded at cost less adjustment for any
prolonged impairment in value. Mortgages receivable are recorded at the
principal amount less valuation allowance, are secured by real estate and
are repayable over periods ranging up to thirty years. Concessionary loans
and mortgages are recorded at net present value at issue and related
present value discounts are expensed. Valuation allowances are made when
collectability is considered doubtful.
Other investments are recorded at the lower of cost of acquisition
(which may be adjusted by attributed income) or estimated current value.
Valuation adjustments are made when the value of investments is impaired.
Loans for purchase of assets, recoverable from agencies are recorded
at maturity value less unamortized premium or discount, deferred foreign
exchange gains or losses and sinking fund balances. Premium/discount is
amortized on a constant yield basis.
NON-FINANCIAL ASSETS
Tangible capital assets are recorded at historical cost, less
accumulated amortization. Estimated cost is used to record existing
tangible capital assets when actual cost is unknown. The recorded cost,
less the residual value, is generally amortized over the estimated useful
lives of the assets on a straight-line basis except for some transportation
equipment which is amortized using the sinking fund method.
All significant tangible capital assets of government organizations
and operations have been capitalized. Crown land is capitalized at a
nominal value of $1.
The value of collections (artifacts, specimens and documents) has been
excluded from the balance sheet.
Prepaid capital advances are provided to school districts, post-
secondary educational institutions, health care organizations and other
specified government organizations to fund capital asset acquisitions. The
province has an ongoing claim on the assets of these organizations. Prepaid
capital advances are amortized over the useful life of the assets funded.
<Page>
39
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
1. SIGNIFICANT ACCOUNTING POLICIES--Continued
LIABILITIES
All liabilities are recorded to the extent they represent claims
payable to outside parties as a result of events and transactions prior to
the year-end, including probable losses on loan guarantees issued by the
province, contingent liabilities when it is likely a liability exists and
the amount of the liability can be reasonably determined on an individual
or portfolio basis, and unfunded pension liabilities.
EMPLOYEE PENSION PLANS (UNFUNDED PENSION LIABILITIES)
The province accounts for employee pension plans by recognizing a
liability and an expense in the reporting period in which the employee has
provided service. The amount is calculated using the accrued benefit
actuarial cost method. Where plans are in a net asset position, and Joint
Trusteeship Agreements restrict access to the assets, the province records
the value of plan net assets as nil. Changes in net liabilities/assets
which arise as a result of actuarial gains and losses, are amortized on a
straight-line basis by the plan, over the average remaining service period
of employees active at the date of the adjustments. Past service costs from
plan amendments are recognized in full in the year of the amendment.
Unfunded pension liabilities of the Members of the Legislative
Assembly Superannuation Account represent the terminal funding that would
be required from the province for the difference between the present value
of the obligations for future benefit entitlements and the amount of funds
available in the account.
PUBLIC DEBT
Public debt represents the direct debt obligations of the Province of
British Columbia including borrowings incurred for government operating
purposes, the acquisition of capital assets, for re-lending to authorized
government bodies and for borrowings in advance of future requirements
under the Warehouse Program. Public debt consists of short-term promissory
notes, notes, bonds and debentures, bank loans, capital leases and
mortgages payable. These obligations are recorded at principal less
unamortized premium or discount, deferred foreign exchange gains or losses,
and sinking fund balances where applicable. Public debt is reported in two
categories: (1) taxpayer-supported, and (2) self-supported.
(1) Tax payer-supported debt includes direct debt used for government
operating and capital purposes, and the debt of Crown corporations and
agencies that requires an operating or debt servicing subsidy from the
provincial government or that are fully consolidated within these financial
statements.
(2) Self-supported debt includes the portion of debt of commercial
Crown corporations and agencies that has been borrowed through the
government's fiscal agency loan program. It does not include all debt of
commercial Crown corporations and agencies as these entities are
consolidated on the modified equity basis. Commercial Crown corporations
and agencies fully fund their operations and debt from revenue generated
through the sale of goods and/or services at commercial rates to buyers
that are outside the government reporting entity. Self-supported debt
includes debt of the Warehouse Program.
Debt premium/discount is amortized on a constant yield basis.
Unamortized premium/discount on bonds called and refinanced is amortized
over the remaining life of the old debt, or the life of the new debt,
whichever is shorter.
When it has been determined that there are sufficient securities to
satisfy scheduled interest and principal payments for a debt instrument,
the sinking fund assets are set aside in a defeased trust account. The
debt and the related securities used to extinguish the debt are removed
from the province's Statement of Financial Position. The debt is considered
extinguished for financial reporting purposes.
<Page>
40
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
1. SIGNIFICANT ACCOUNTING POLICIES--Continued
FOREIGN CURRENCY TRANSLATION
Monetary assets and liabilities denominated in foreign currencies are
translated to Canadian dollars at the exchange rate prevailing at the
year-end. Foreign currency transactions are translated at the exchange rate
prevailing at the date of the transaction unless hedged by forward
contracts that specify the rate of exchange. Adjustments to revenue or
expense transactions arising as a result of foreign currency translation
are credited or charged to operations at the time the adjustments arise.
Unrealized foreign currency gains and losses, on long-term fixed-term
monetary assets and liabilities, are reported as a component of Public Debt
and Loans for purchase of assets, recoverable from agencies and amortized
over the remaining terms of the related items on a straight-line basis.
Non-monetary assets and liabilities are translated at historical rates of
exchange.
DERIVATIVE FINANCIAL INSTRUMENTS
The province is a party to financial instruments with off-balance
sheet risk due to fluctuations in foreign currency exchange rates, interest
rate fluctuations and counterparty default on financial obligations. The
province does not use derivative financial instruments for speculative
purposes. Off-balance sheet position data is given in the form of nominal
principal amounts outstanding. Amounts earned and expenses incurred under
swaps are recognized and offset against the related interest expense.
Gains and losses on terminated derivative contracts are deferred and
amortized over the lesser of the remaining term of the contract or the
related debt.
2. MEASUREMENT UNCERTAINTY
Uncertainty in the determination of the amount at which an item is
recognized in the financial statements is known as measurement uncertainty.
Uncertainty exists whenever estimates are used because it is reasonably possible
that there could be a material variance between the recognized amount and
another reasonably possible amount.
Measurement uncertainty in these financial statements exists in the
accruals for pension obligations, Canada Health and Social Transfer (CHST),
the Federal Equalization Program and personal income tax.
The nature of the uncertainty in the accruals for pension obligations
arises because actual results may differ significantly from the province's best
estimates of expected results based on variables such as earnings on pension
investments and life expectancy of claimants. Uncertainty related to the accrual
for CHST, the Federal Equalization Program and personal income tax arises
because of the possible differences between the estimates for the economic
factors used in calculating the accruals and actual economic results.
British Columbia Hydro and Power Authority (BC Hydro), a wholly owned
self-supported Crown corporation, is directly exposed to counterparty credit
risk as a result of the purchase and sale of electricity and natural gas. During
fiscal year 2001, the rapid rise of wholesale power prices and in-state supply
shortages have caused significant financial hardship for a number of utilities
in California, resulting in defaults on payments. As a result, BC Hydro has not
recognized some amounts as revenue owed them from sales to these utilities and
has recorded provisions for uncollectible amounts and legal costs that are, in
management's best estimate, sufficient to cover any remaining exposure. Due to
the instability in the California market and ongoing regulatory and legal
proceedings, management cannot predict the outcome and the amount ultimately
collected may differ materially from management's current estimate.
<Page>
41
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
3. CASH AND TEMPORARY INVESTMENTS
<Table>
<Caption>
In Millions
2004 2003
---- ----
$ $
Cash (cheques issued in excess of funds on deposit)..... (28) (248)
Temporary investments(1)................................ 458 560
---- ----
430 312
---- ----
---- ----
</Table>
(1) Temporary investments consist mainly of units in the Province of British
Columbia Investment Management Corporation Pooled Investment Portfolios.
Units are carried at the lower of market value or cost of acquisition
adjusted by income attributed to the units.
4. ACCOUNTS RECEIVABLE
<Table>
<Caption>
In Millions
2004 2003
---- ----
$ $
Taxes receivable...................................... 1,742 1,666
Trade accounts receivable............................. 1,176 1,015
Accrued interest...................................... 343 315
----- -----
3,261 2,996
Provision for doubtful accounts....................... (719) (616)
----- -----
2,542 2,380
----- -----
----- -----
</Table>
5. INVENTORIES FOR RESALE
<Table>
<Caption>
In Millions
2004 2003
---- ----
$ $
Properties............................................ 49 82
Small Business Forest Enterprise Program.............. 176 131
Other................................................. 13 3
----- -----
238 216
----- -----
----- -----
</Table>
<Page>
42 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--CONTINUED
6. DUE FROM OTHER GOVERNMENTS
<Table>
<Caption>
In Millions
2004 2003
---- ----
$ $
Government of Canada
Current 186 95
Long-term 132
Provincial governments
Current 18 14
Local governments(1)
Current 8 24
Long-term 2
--- ---
344 135
=== ===
</Table>
(1) Local governments are municipal units established by the provincial
government which include regional and metropolitan municipalities, cities,
towns, townships, districts, rural municipalities and villages.
7. DUE FROM SELF-SUPPORTED CROWN CORPORATIONS AND AGENCIES
<Table>
<Caption>
In Millions
2004 2003
---- ----
$ $
British Columbia Hydro and Power Authority 91 338
British Columbia Lottery Corporation 71 62
Columbia Power Corporation 2 2
--- ---
164 402
=== ===
</Table>
See page 73 for details.
<Page>
PROVINCE OF BRITISH COLUMBIA 43
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
8. EQUITY IN SELF-SUPPORTED CROWN CORPORATIONS AND AGENCIES
<Table>
<Caption>
In Millions
2004 2003
---------------------------------- -------
Unremitted
Investments Earnings Total Total
$ $ $ $
British Columbia Hydro and Power Authority 20 1,614 1,634 1,630
British Columbia Railway Company 258 164 422 371
Columbia Power Corporation 276 23 299 293
Insurance Corporation of British Columbia 618 618 319
Provincial Capital Commission 16 16 16
---- ----- ----- -----
554 2,435 2,989 2,629
==== ===== ===== =====
CHANGE IN EQUITY IN SELF-SUPPORTED CROWN CORPORATIONS
AND AGENCIES
Balance--beginning of year 534 2,095 2,629 2,520
Increase in investment 20 20
Net earnings of self-supported Crown corporations and agencies 1,881 1,881 1,766
Contributions paid to the Consolidated Revenue Fund (1,353) (1,353) (1,483)
Adjustments to contributions paid (188) (188) (174)
---- ----- ----- -----
BALANCE--END OF YEAR 554 2,435 2,989 2,629
==== ===== ===== =====
</Table>
See pages 73 and 74 for details.
<Page>
44 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
9. LOANS, ADVANCES AND MORTGAGES RECEIVABLE
<Table>
<Caption>
In Millions
2004 2003
----- -----
LOANS AND ADVANCES $ $
British Columbia Student loans 412 302
Industrial Development Fund commercial loans 97 135
Land Tax Deferment loans 150 144
British Columbia Ferry Services Inc 428
Construction loans to social housing projects 21 24
Accountable advances 17 29
Miscellaneous 57 67
----- -----
1,182 701
Provision for doubtful accounts (170) (145)
----- -----
1,012 556
----- -----
MORTGAGES RECEIVABLE
Reconstruction Program 49 58
Miscellaneous 8
----- -----
57 58
Provision for doubtful accounts (21) (18)
----- -----
36 40
----- -----
1,048 596
===== =====
</Table>
<Page>
PROVINCE OF BRITISH COLUMBIA 45
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
9. LOANS, ADVANCES AND MORTGAGES RECEIVABLE--Continued
The BC Student Loan Program provides loans to students for higher
education. Students are required to repay these loans through a contracted
service provider, to the province over a maximum of 174 months with a floating
interest rate of prime plus 2.5% or a fixed rate of prime plus 5%. Defaulted
loans are due on demand with interest at a floating rate of prime plus 2.5%. The
Program also administers defaulted student loans issued by financial
institutions under a guaranteed and risk sharing agreement with the province.
Defaulted risk sharing loans arise due to bankruptcy or death of the student
while attending school.
The Industrial Development Fund provided loans to assist the establishment
of new industry, the introduction of new technology to existing industry, or the
development of a region of British Columbia. These loans incur interest at rates
ranging from 0% to 10%. The Industrial Development Fund was eliminated pursuant
to the repeal of the INDUSTRIAL DEVELOPMENT INCENTIVE ACT UNDER THE BUDGET
MEASURES IMPLEMENTATION ACT, 2002. No loans were issued after March 31, 2002.
The Land Tax Deferment Program allows eligible owners to defer payment
of all, or a portion of, annual property taxes due on residences. Eligible
individuals are either 60 years or older, a surviving spouse or a person with
a disability. Simple interest is charged on the deferred taxes at a rate set
by the Minister of Provincial Revenue. This rate will not exceed 2.0% below
the prime lending rate of the principal banker to the government. The
deferred taxes, administration fees, plus any outstanding interest, must be
repaid be fore the residence can be legally transferred to a new owner, other
than directly to a surviving spouse.
As part of a secured debenture amendment and preferred share surrender
agreement, dated May 23, 2003, the province exchanged its interest in British
Columbia Ferry Corporation for an interest-bearing debt in British Columbia
Ferry Service Inc. The loan is interest bearing at 5.33% with a maturity date
of April 1, 2006.
Construction loans are provided by British Columbia Housing Management
Commission (BCHMC), a taxpayer-supported Crown corporation, and an approved
lender under the NATIONAL HOUSING ACT. BCHMC provides construction loans for
societies that are building approved projects under social housing programs.
Interest is payable at the province's weighted average borrowing rate for
short-term funds, plus administration costs. Loans are repaid at substantial
completion of each project from financing arranged with private lenders.
Account able advances represent funds issued for program costs that have
not been expended in accordance with the applicable agreements.
The Reconstruction Program provides financial assistance to home owners to
pay for repairs to homes with premature building envelope failure. The financial
assistance is provided in the form of subsidized interest loans, no interest
loans or deferred payment loans and secured by registered mortgages. This
Program is administered by the Home owner Protection Office.
Miscellaneous mortgages receivable have terms ranging from less than one
year to twenty years with some loans being payable on demand. Interest rates
range from 3.5% to 10%.
<Page>
46 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
10. OTHER INVESTMENTS
<Table>
<Caption>
In Millions
2004 2003
----- -----
$ $
Government of Canada bonds 36 18
Provincial government bonds 63 63
Commercial loans and investments 111 111
British Columbia Ferry Services Inc 75
Pooled Investment Portfolios 14 45
Columbia Basin Trust investments 201 152
Miscellaneous 68 54
----- -----
568 443
Provision for doubtful accounts (115) (115)
----- -----
453 328
===== =====
</Table>
Government of Canada bonds have a market value of $37.4 million (par value
$35.5 million), with yields ranging from 2.305% to 4.336%. Maturity dates range
from June 18, 2004 to June 1, 2012.
Provincial bonds of various provinces have a market value of $68.9 million
(par value $60.9 million), with yields ranging from 2.075% to 4.566%. Maturity
dates range from March 8, 2005 to July 22, 2013.
Commercial loans and investments are recorded at the lower of cost of
acquisition adjusted by attributed income and market value. A provision in the
full amount of these loans has been recorded.
As part of a secured debenture amendment and preferred share surrender
agreement dated May 23, 2003, the province exchanged its interest in British
Columbia Ferry Corporation for 75,477 preferred shares in British Columbia Ferry
Services Inc. These non-voting shares are valued at $1,000 per share and entitle
the province to a fixed cumulative dividend at a rate of 8% of the issue price.
Pooled investment portfolios consist of units in the British Columbia
Investment Management Corporation's BC Focus Fund and Illiquid Fund. These
funds' investments consist primarily of debt and equity holdings of privately
held companies.
Columbia Basin Trust investments include $9 million in bankers acceptances
and deposits. The balance of $192 million represents investments in power
development joint ventures.
<Page>
PROVINCE OF BRITISH COLUMBIA 47
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
11. ASSETS HELD FOR SALE
The Financial Statements and related notes for the fiscal year ended March
31, 2003, have been restated to report the disposal of long lived assets and
discontinued operations of only significant government operations. For the
2003/04 fiscal year, the impact of the government's decision to sell the shares
and transfer control of British Columbia Ferry Services Inc. (BCFSI), (formerly
British Columbia Ferry Corporation) to the British Columbia Ferry Authority is
shown.
British Columbia Ferry Services Inc. provides ferry transportation services
in British Columbia. The British Columbia Ferry Authority is an independent
no-share capital corporation; its purpose is to govern BCFSI and to appoint its
Board of Directors. As of April 2, 2003, BCFSI is no longer owned or controlled
by the province and its assets and operations are no longer included in the
government reporting entity. On that date, the province exchanged its ownership
in BCFSI for non-voting preference shares in BCFSI with a stated value of $75
million and a promissory note from BCFSI with a par value of $428 million.
The discontinued operations and assets held for sale of the British
Columbia Railway Company, a modified equity enterprise, are included in Equity
in self-supported Crown corporations and agencies and described in Note 34,
Significant Events.
12. LOANS FOR PURCHASE OF ASSETS, RECOVERABLE FROM AGENCIES
<Table>
<Caption>
In Millions
2004 2003
----- -----
$ $
British Columbia Hydro and Power Authority 7,040 6,696
British Columbia Railway Company 467 481
Columbia Power Corporation 47
Improvement districts 5 6
Post-secondary educational institutions 90 106
----- -----
7,602 7,336
Provision for doubtful accounts
----- -----
7,602 7,336
===== =====
</Table>
13. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
<Table>
<Caption>
In Millions
2004 2003
----- -----
$ $
Trade accounts payable and other liabilities 1,700 1,624
Accrued interest on debt 805 789
Accrued employee leave entitlements 280 245
Other accrued estimated liabilities(1) 758 695
----- -----
3,543 3,353
===== =====
</Table>
(1) Includes pending litigation, provision for guaranteed debt payout and
other miscellaneous accrued claims.
<Page>
48 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
14. DUE TO OTHER GOVERNMENTS
<Table>
<Caption>
In Millions
2004 2003
----- -----
$ $
Government of Canada
Current 334 297
Long-term 738
Provincial governments
Current 30 22
Local governments(1)
Current 7 3
----- -----
1,109 322
===== =====
</Table>
(1) Local governments are municipal units established by the provincial
government which include regional and metropolitan municipalities, cities,
towns, townships, districts, rural municipalities and villages.
15. DUE TO CROWN CORPORATIONS, AGENCIES AND FUNDS
<Table>
<Caption>
In Millions
2004 2003
----- -----
$ $
British Columbia Liquor Distribution Branch 44 44
Post-secondary educational institutions 1
Trust funds 79 56
----- -----
123 101
===== =====
</Table>
16. DEFERRED REVENUE
<Table>
<Caption>
In Millions
2004 2003
----- -----
$ $
Medical Services Plan premiums 66 69
Motor vehicle licences and permits 185 166
Petroleum, natural gas and minerals, leases and fees 35 32
Water rentals and recording fees 70 76
Derivative debt instruments 144 47
Federal Contributions 390
Unearned lease revenue 106 107
Federal and municipal highway project revenues 65 36
Forest Stand Management Fund 15 16
Deferred Capital Contributions 85 67
Miscellaneous 131 90
----- -----
1,292 706
===== =====
</Table>
<Page>
PROVINCE OF BRITISH COLUMBIA 49
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
17. EMPLOYEE PENSION PLANS (UNFUNDED PENSION LIABILITIES)
<Table>
<Caption>
In Millions
2004 2003
----- -----
$ $
Members of the Legislative Assembly Superannuation Account 3 4
===== =====
</Table>
The province contributes to four defined benefit pension plans for
substantially all its employees and to the Members of the Legislative Assembly
Superannuation Account (the Account). The four pension plans are the Public
Service Pension Plan, the Municipal Pension Plan, the Teachers' Pension Plan and
the College Pension Plan. The plans provide pensions based on length of service
and highest five-year average earnings. No unfunded liability exists for the
future indexing of pensions as the obligation is limited to the amount of
available assets in separate inflation accounts.
There are additional employee pension plans in Crown corporations and
agencies consolidated on the modified equity basis. Net assets or net
liabilities of the pension funds are included in the investment balance of the
particular Crown corporation or agency.
The estimated financial position as at March 31, 2004 for each plan is as
follows:
<Table>
<Caption>
In Millions
Public
Service Municipal Teachers' College
Pension Pension Pension Pension
Plan Plan Plan Plan Total
---- ---- ---- ---- -----
$ $ $ $ $
Accrued benefit obligation 8,986 9,049 10,566 1,331 29,932
Pension fund assets 11,069 10,300 10,182 1,523 33,074
------ ------ ------ ----- ------
(2,083) (1,251) 384 (192) (3,142)
Unamortized actuarial gain (loss) (776) (196) (972)
------ ------ ------ ----- ------
ACCRUED NET OBLIGATION (ASSET) (2,083) (1,251) (392) (388) (4,114)
====== ====== ====== ===== ======
</Table>
The College, Public Service, Municipal and Teachers' plans are joint
trusteeship plans. In joint trusteeship plans, control of the plans and their
assets are assumed by individual pension boards made up of government and plan
member representatives. Provisions of these plans stipulate that the province
has no formal claim to any pension plan surpluses or assets. The boards are
fully responsible for the management of the plans, including investment of the
assets and administration of the plans. The British Columbia Pension Corporation
(Pension Corporation) provides benefit administrative services as agents of the
boards of trustees.
<Page>
50 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
17. EMPLOYEE PENSION PLANS (UNFUNDED PENSION LIABILITIES)--Continued
In the event that a plan deficit is determined by an actuarial valuation
(performed every three years), the pension boards, by agreement, are required to
address it through contribution adjustments or other means. It is expected,
therefore, that any unfunded liabilities in the future will be short-term in
nature.
The reported net assets of the pension plans are under joint trusteeship
agreements which limit the province's possible conditional share to 50%. The
province has no claim on accrued asset amounts. If the individual pension boards
decide to reduce or suspend employer contributions for a period of time, the
province may record an asset. Therefore, the recorded value of the net assets is
nil until such time that such a decision is made. Also, only 70% of the pension
fund assets and accrued benefit obligation are included for the Municipal
Pension Plan, reflecting the province's interest in the plan.
The accrued benefit obligations and pension assets shown for 2003/04 are
based on extrapolation of the most recent actuarial valuations as follows:
Public Service Pension Plan (March 31, 2002); Municipal Pension Plan (December
31, 2000); Teachers' Pension Plan (December 31, 2002); and College Pension Plan
(August 31, 2003). Fund assets are based on market value at the date of
actuarial valuation and extrapolated using actuarial growth assumptions.
The Account is also administered by the Pension Corporation. As members of
the Legislative Assembly retire, the present value of the amount required to
provide a legislative member's future pension benefits are transferred from the
Account to the Public Service Pension Plan from which monthly pensions are paid.
Pension benefits are based on length of service and highest five-year average
earnings. The unfunded pension liability for the Account represents the terminal
funding that would be required from the province for the difference between the
present value of the obligations for future benefit entitlements and the amount
of funds available in the Account.
Key actuarial assumptions used in the valuations include a long-term annual
rate of return on pension fund assets of 7.30% for the Public Service Pension
Plan, 7.25% for the Municipal Pension Plan, 7.25% for the Teachers' Pension
Plan, and 7.20% for the College Pension Plan, and long-term annual salary
increases of 4.80% for the Public Service Pension Plan, 4.75% for the Municipal
Pension Plan, 4.75% for the Teachers' Pension Plan, and 4.70% for the College
Pension Plan.
The audited financial statements of each pension plan listed, along with
full descriptions, benefit formulas, inflation assumptions and funding policies
may be found at www.pensionsbc.ca.
<Page>
PROVINCE OF BRITISH COLUMBIA 51
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
18. TAXPAYER-SUPPORTED DEBT(1)
<Table>
<Caption>
In Millions
2004 2003
Canadian Canadian
Year of Canadian US Japanese Other Dollar Dollar
Maturity Dollar Dollar(2) Yen(2) Currencies(2) Total Total
-------- ------ ------- ---- ----------- ----- -----
Short-term promissory
notes 2004 976
2005 850 73 923
Notes, bonds and
debentures(3) 2004 1,912
2005 1,036 489 610 2,135 2,123
2006 2,365 2,365 2,296
2007 1,431 1,179 370 2,980 2,987
2008 930 829 59 418 2,236 2,248
2009 2,103 1,157 3,260 2,970
2009-2014 6,983 919 204 935 9,041 8,387
2014-2019 783 783 659
2019-2024 2,776 2,776 2,473
2024-2029 1,635 1,635 1,632
2029-2034 3,110 3,110 3,110
2034-2039 665 665 165
2039-2044 350 350 200
----- ------ ------ ------ ------ -------
TOTAL DEBT ISSUED AT FACE VALUE 25,017 4,646 263 2,333 32,259 32,138
====== ====== ====== ======
Sinking funds(4) (2,680) (3,135)
Unamortized premium (discount) (119) (119)
Unrealized foreign exchange gains/(losses) (18) 24
Amount held in the Consolidated Revenue Fund (11) (9)
------ ------
TOTAL TAXPAYER-SUPPORTED DEBT 29,431 28,899
======= =======
The effective interest rates (weighted average percent) as at March 31 on
the above debt are:
2004 5.67%
2003 5.98%
</Table>
(1) The balances and interest rates reflect the impact of the related
derivative contracts, presented in Note 20 (Risk Management and Derivative
Financial Instruments).
(2) Foreign currencies include: $3,023 million US ($4,646 million
Canadian); 22,000 million Japanese yen ($263 million Canadian); 1,000 million
Swiss francs ($1,028 million Canadian); and 741 million euros ($1,305 million
Canadian). Effective January 1, 2002, debt originally issued in and totalling
2,499 million French francs and 703 million Deutsche marks was converted at
established fixed exchange rates (6.55957 French francs for 1 euro and
1.95583 Deutsche marks for 1 euro) and is now reported in euros.
(3) Notes, bonds and debentures include nil (2003: $6 million) in bank
loans, $32 million (2003: $47 million) in capital leases and $134 million
(2003: $141 million) in mortgages.
(4) Sinking fund balances include assets totalling $108 million (2003:
$138 million) invested in the Matched Book Program and assets totalling
$2,572 million (2003: $2,997 million) set aside for orderly repayment of
debt. Sinking funds are managed by the British Columbia Investment Management
Corporation.
<Page>
52 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
18. TAXPAYER-SUPPORTED DEBT--Continued
NOTES, BONDS AND DEBENTURES
REDEEMABLE BY THE BOND HOLDER
Balances include debentures issued to the Canada Pension Plan totalling
$3,424 million (2003: $3,447 million) at a weighted average interest rate of
8.73% (2003: 9.27%). These debentures mature at various dates from April 2, 2004
to March 1, 2024, with interest rates varying between 5.29% and 14.06%. These
debentures are redeemable in whole or in part before maturity, on six months'
prior notice, at the option of the Minister of Finance of Canada, subject to
certain restrictions. During the year, $300 million in Canada Pension Plan
debentures were issued. Under Canada Pension Plan legislation, any significant
amendment to benefits or contributions requires the approval of the legislature
of two-thirds of the provinces.
Balances include 5.45% debentures due August 17, 2028, totalling $200
million (2003: $200 million). The holders have a put option that, if exercised,
would result in the bond maturing on August 17, 2005. If the option is not
exercised, the debenture will mature on August 17, 2028, and the effective rate
on the bond will be 5.62% for the period August 18, 2005 to August 17, 2028.
Balances include 5.86% debentures due June 18, 2029, totalling $250 million
(2003: $250 million). The holders have a put option that, if exercised, would
result in the bond maturing on June 19, 2006. If the option is not exercised,
the debenture will mature on June 18, 2029.
Balances include British Columbia Savings Bonds totalling $180 million
(2003: $229 million) maturing at dates from October 15, 2005 to October 15,
2007, and with an effective rate of 2.35% are redeemable at par by the holder
each April 15 and October 15 prior to maturity.
REDEEMABLE BY THE PROVINCE
Balances include debentures issued to the Canada Pension Plan totalling
$3,424 million (2003: $3,447 million) at a weighted average interest rate of
8.73% (2003: 9.27%). These debentures mature at various dates from April 2, 2004
to March 1, 2024, with interest rates varying between 5.29% and 14.06%. These
debentures are redeemable in whole or in part before maturity, on 30 days' prior
notice, at the option of the province.
Issues totalling $150 million (2003: $80 million) with effective rates
ranging from 2.25% to 2.31% are redeemable at par at the province's option on
dates ranging from October 20, 2005 to April 30, 2015.
DEFEASANCES
At March 31, 2004, sufficient securities had been set aside in a defeasance
trust account to satisfy the scheduled interest and principal payment
requirements of $763 million (2003: $814 million). The securities are government
of Canada bonds, provincial bonds or BC Municipal Finance Authority securities
that are held to maturity and match the timing and specific amounts required to
pay the interest and principal payments on the debt. The debt is considered
extinguished for financial reporting purposes. The debt and related securities
used to extinguish the debt are removed from the province's Statement of
Financial Position.
<Page>
PROVINCE OF BRITISH COLUMBIA 53
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
18. TAXPAYER-SUPPORTED DEBT--Continued
NOTES, BONDS AND DEBENTURES--Continued
AGGREGATE PAYMENTS TO MEET SINKING FUND INSTALMENTS AND RETIREMENT PROVISIONS
Aggregate payments for the next five fiscal years to meet sinking fund
instalments and retirement provisions on notes, bonds and debentures are:
In Millions
Canadian
Dollar
------
2005 1,836
2006 2,164
2007 2,765
2008 2,101
2009 3,130
19. SELF-SUPPORTED DEBT(1)
<Table>
<Caption>
In Millions
2004 2003
Canadian Canadian
Year of Canadian US Japanese Other Dollar Dollar
Maturity Dollar Dollar(2) Yen(2) Currencies(2) Total Total
-------- ------ ------- ---- ----------- ----- -----
Short-term promissory
notes 2004 1,187
2005 267 733 1,000
Notes, bonds and
debentures 2004 300
2005 388 75 135 598 598
2006 413 413 413
2007 314 314 314
2008 9 397 406 430
2009 144 144 144
2009-2014 1,674 356 150 2,180 1,747
2014-2019 350 350
2019-2024 1,296 1,296 1,296
2024-2029 75 655 730 810
2029-2034 575 575 575
2034-2039 50 393 443 491
----- ----- --- --- ------- -------
TOTAL DEBT ISSUED AT FACE VALUE 5,555 2,609 135 150 8,449 8,305
===== ===== === ===
Sinking funds(3) (1,048) (1,029)
Unamortized premium (discount) 4 (6)
Unrealized foreign exchange gains/(losses) 102 (45)
--- ----
TOTAL SELF-SUPPORTED DEBT 7,507 7,225
===== =====
</Table>
<Page>
54 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
19. SELF-SUPPORTED DEBT--Continued
The effective interest rates (weighted average percent) as at March 31 on the
above debt are:
<Table>
<Caption>
2004 6.11%
2003 6.25%
</Table>
(1) The balances and interest rates reflect the impact of the related
derivative contracts, presented in Note 20 (Risk Management and Derivative
Financial Instruments).
(2) Foreign currencies include: $1,949 million US ($2,609 million
Canadian); 10,000 million Japanese yen ($135 million Canadian); 97 million
euros ($150 million Canadian).
(3) Sinking funds at March 31, 2004, totalling $397 million US (2003:
$372 million US) act as a natural hedge of the US dollar debentures and
short-term promissory notes. Sinking funds are managed by the British
Columbia Investment Management Corporation.
NOTES, BONDS AND DEBENTURES
REDEEMABLE BY THE BOND HOLDER
Balances include debentures issued to the Canada Pension Plan totalling
$317 million (2003: $317 million) at a weighted average interest rate of 11.11%
(2003: 11.11%). These debentures mature at various dates from July 10, 2004 to
June 9, 2009 with interest rates varying between 9.62% and 14.06%. These
debentures are redeemable in whole or in part before maturity, on six months'
prior notice, at the option of the Minister of Finance of Canada, subject to
certain restrictions. During the year, no Canada Pension Plan debentures were
issued for self-supported debt. Under Canada Pension Plan legislation, any
significant amendment to benefits or contributions requires the approval of the
legislature of two-thirds of the provinces.
REDEEMABLE BY THE PROVINCE
Balances include debentures issued to the Canada Pension Plan totalling
$317 million (2003: $317 million) at a weighted average interest rate of 11.11%
(2003: 11.11%). These debentures mature at various dates from July 10, 2004 to
June 9, 2009, with interest rates varying between 9.62% and 14.06%. These
debentures are redeemable in whole or in part before maturity, on 30 days' prior
notice, at the option of the province.
DEFEASANCES
At March 31, 2004, sufficient securities had been set aside in a defeasance
trust account to satisfy the scheduled interest and principal payment
requirements of $68 million (2003: $68 million). The securities are government
of Canada bonds or provincial bonds that are held to maturity and match the
timing and specific amounts required to pay the interest and principal payments
on the debt. The debt is considered extinguished for financial reporting
purposes. The debt and related securities used to extinguish the debt are
removed from the province's Statement of Financial Position.
AGGREGATE PAYMENTS TO MEET SINKING FUND INSTALMENTS AND RETIREMENT PROVISIONS
Aggregate payments for the next five fiscal years to meet sinking fund
instalments and retirement provisions on notes, bonds and debentures are:
<Table>
<Caption>
In Millions
Canadian
Dollar
------
2005 566
2006 427
2007 327
2008 431
2009 150
</Table>
<Page>
PROVINCE OF BRITISH COLUMBIA 55
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
20. RISK MANAGEMENT AND DERIVATIVE FINANCIAL INSTRUMENTS
The province borrows funds in both domestic and foreign capital markets,
and manages its existing debt portfolio to achieve the lowest debt costs within
specified risk parameters. As a result, the province is exposed to risks
associated with interest rate fluctuations, foreign exchange rate fluctuations
and credit risk. In accordance with risk management policy guidelines set by the
Risk Committee of the Ministry of Finance, the province uses a variety of
derivative financial instruments to hedge exposure to interest and foreign
exchange risks.
Derivatives used by the province include interest rate swaps,
cross-currency swaps, forward foreign exchange contracts, forward rate
agreements, advanced rate setting agreements and options. A derivative
instrument is a financial contract with a financial institution or counterparty
that is applied to effect a hedge on interest rate or foreign exchange exposure
contained in the underlying provincial debt instrument. A derivative derives
value from the impact of market changes on the underlying hedged debt
instrument.
The province also engaged in commodity derivative hedging on behalf of the
British Columbia Ferry Corporation. The objective of commodity derivative
hedging was to reduce the financial risks associated with price volatility in
the commodity market. As at March 31, 2004, the remaining notional amounts under
commodity contracts totalled nil (2003: 122,000) barrels of oil. Effective April
2, 2003, the contracts were transferred to British Columbia Ferry Services Inc.
and matured at various dates from May 31, 2003, to August 31, 2003.
The following tables present maturity schedules of the province's
derivatives by type, outstanding at March 31, 2004, based on the notional
amounts of the contracts.
TAXPAYER-SUPPORTED DEBT
<Table>
<Caption>
In Millions
Forward
Cross Interest Advanced Foreign
Year of Currency Rate Rate Setting Exchange
Maturity Swaps Swaps Agreement Contracts Total
-------- ----- ----- --------- --------- -----
$ $ $ $ $
2005 1,099 95 200 73 1,467
2006 745 745
2007 1,919 1,679 3,598
2008 1,305 1,305
2009 1,158 1,055 2,213
6-10 years 2,013 1,011 3,024
Over 10 years 218 634 852
------ ------ ------ ------ ------
TOTAL 7,712 5,219 200 73 13,204
====== ====== ====== ====== ======
</Table>
As at March 31, 2004, the province entered into two advanced rate setting
agreements to lock in interest rates in advance of an expected bond issue. The
hedging instrument for both is a Government of Canada bond, 5.75%, maturing June
1, 2029 with a notional amount of $200 million.
<Page>
56 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
20. RISK MANAGEMENT AND DERIVATIVE FINANCIAL INSTRUMENTS--Continued
SELF-SUPPORTED DEBT
<Table>
<Caption>
In Millions
Cross Interest Delayed
Year of Currency Rate Interest Rate
Maturity Swaps Swaps Swap Total
-------- ----- ----- --------- -----
$ $ $ $
2005 279 1,168 1,447
2006 135 236 371
2007 200 200
2008 200 524 724
2009
6-10 years 440 1,296 200 1,936
Over 10 years 150 150
----- ----- ----- -----
TOTAL 1,054 3,574 200 4,828
===== ===== ===== =====
</Table>
On behalf of British Columbia Hydro and Power Authority (BC Hydro), the
province entered into a delayed interest rate swap to hedge the refinancing risk
on a BC Hydro debt issue. Under the interest rate swap, the province pays a
fixed semi-annual rate and receives a floating rate, starting June 21, 2004 and
maturing December 21, 2012, on a notional amount of $200 million.
INTEREST RATE RISK
Interest rate risk is the risk that the province's debt servicing costs
will fluctuate due to changes in interest rates. The province uses derivative
contracts to manage interest rate risk by exchanging a series of interest
payments, and assuming either a fixed or floating rate liability to a
counterparty, based on the notional principal amount. Derivatives allow the
province to alter the proportion of its debt held in fixed and floating rate
form to take advantage of changes in interest rates.
The government's current policy guidelines, with respect to the provincial
government direct debt portfolio, that totals $25,943 million (2003: $25,309
million), allow floating rate exposure up to 45.00% (2003: 45.00%) of this
portion of the taxpayer-supported debt. At March 31, 2004, floating rate debt
exposure was 35.62% (2003: 40.57%) of the government direct debt portfolio.
Under current policy guidelines for BC Hydro, the floating rate exposure is
46.00% (2003: 46.00%) of their debt that totals $7,040 million (2003: $6,784
million). At March 31, 2004, floating rate debt exposure for BC Hydro was 29.30%
(2003: 38.40%) of their debt.
Based on the taxpayer-supported and self-supported debt portfolios at March
31, 2004, a 1.00% increase in interest rates would result in an increase in the
annual debt servicing expense of $93 million (2003: $100 million) for the
taxpayer-supported debt portfolio and $15 million (2003: $25 million) for the
self-supported debt portfolio.
<Page>
PROVINCE OF BRITISH COLUMBIA 57
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
20. RISK MANAGEMENT AND DERIVATIVE FINANCIAL INSTRUMENTS--Continued
FOREIGN EXCHANGE RISK
Foreign exchange risk is the risk that the province's debt servicing costs
and principal payments will fluctuate due to changes in foreign exchange rates.
The province uses derivative contracts to hedge foreign exchange risk by
converting foreign currency principal and interest cash flows into Canadian
dollar cash flows. Within specified limits set by policy, the province and
provincial corporations may only assume unhedged exposure to US dollars and
Japanese yen.
The government's current policy guidelines with respect to the provincial
government direct debt portfolio, which totals $25,943 million (2003: $25,309
million), allow unhedged foreign debt exposure up to 10.00% (2003: 10.00%) of
this portion of the taxpayer-supported debt. At March 31, 2004, unhedged foreign
debt exposure in Japanese yen was 4.73% (2003: 2.99%) of the government direct
debt portfolio. At March 31, 2004, there was no unhedged foreign debt exposure
in US dollars for the government direct debt portfolio (2003: nil).
Under current policy guidelines for BC Hydro, the maximum unhedged
foreign debt exposure is 30.00% (2003: 30.00%) of their debt, which totals
$7,040 million (2003: $6,784 million). At March 31, 2004, 20.10% (2003:
25.20%) of their debt was in the form of unhedged foreign debt in US dollars.
Based on the taxpayer-supported and self-supported debt portfolios at March
31, 2004, a one cent decrease in the Canadian dollar versus the US dollar would
result in an increase of $11 million (2003: $15 million) in the annual debt
servicing expense for the self-supported debt portfolio. A decrease of one yen
versus the value of the Canadian dollar (for example, from 79 yen to 78 yen)
would result in an increase to the annual debt servicing expense of $3 million
(2003: $2 million) for the taxpayer-supported debt portfolio.
CREDIT RISK
Credit risk is the risk that the province will incur financial loss due to
a counterparty defaulting on its financial obligation to the province. In
accordance with the government's policy guidelines, the province reduces its
credit risk by dealing with only highly rated counterparties. The province only
enters into derivative transactions with counterparties that have a rating from
Moody's Investors Service and Standard & Poor's of at least AA-/Aa3 or A+/A1 in
the case of Canadian Schedule A banks. The province also establishes limits on
individual counterparty credit exposures and monitors these exposures on a
regular basis.
<Page>
58 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
21. NET LIABILITIES
The Statement of Change in Net Liabilities (SEE page 33) shows the net
impact of applying the expenditure basis of accounting. The net liabilities
calculation uses the expenditure, rather than the expense, basis of accounting.
Under the expenditure basis of accounting, prepaid capital advances, tangible
capital assets, prepaid program costs and other assets are recorded as
expenditures when calculating the current year surplus or deficit. Under the
expense basis of accounting, these items are recorded on the Statement of
Financial Position as assets and amortized over an applicable period of time.
22. TANGIBLE CAPITAL ASSETS
<Table>
<Caption>
In Millions
2004 2003
-------- --------
Net Book Net Book
Value Value
$ $
Land and land improvements 833 770
Buildings (including tenant
improvements) 921 944
Highway infrastructure 6,263 6,161
Ferries and related infrastructure 11 15
Transportation equipment 2,053 2,088
Computer hardware and software 268 257
Other 133 146
------ ------
10,482 10,381
====== ======
</Table>
SEE Statement of Tangible Capital Assets on page 75.
The estimated useful lives of the more common tangible capital assets are:
buildings (10-50 years); highway infrastructure (15-40 years); ferries and
related infrastructure (5-40 years); transportation equipment (5-40 years);
computer hardware and software (3-5 years); and other (including vehicles,
specialized equipment, and furniture and equipment) (5-20 years). Land
improvements are amortized over 30 years (recreation areas) or 40 years (dams
and water management systems). Tenant improvements are amortized over 5 years or
the length of the relevant lease term.
Included in tangible capital assets of British Columbia Transit (BCT) and
of Rapid Transit Project 2000 Ltd (RTP) are capital assets under lease to
Greater Vancouver Transportation Authority (GVTA). These capital assets under
lease consist of land, land improvements, stations, guideways and other assets
related to the SkyTrain system and West Coast Express. These assets are made
available to GVTA for their use under the GREATER VANCOUVER TRANSPORTATION
AUTHORITY ACT and an Order in Council (OIC) enacted thereunder, and represent
one of the province's contributions toward public transportation in the Greater
Vancouver Regional District. The OIC-directed lease arrangements with GVTA and
BCT are for one dollar per year under an initial fifteen-year term with
additional five-year renewal periods upon the agreement of BCT and GVTA. The net
book value of these assets is $945 million (2003: $963 million). A similar lease
arrangement is under negotiation with GVTA for the RTP assets.
23. PREPAID CAPITAL ADVANCES
<Table>
<Caption>
In Millions
2004 2003
-------- --------
$ $
Health facilities 3,074 2,953
Post-secondary educational institutions 2,609 2,401
Schools 6,429 6,475
----- -----
12,112 11,829
Accumulated amortization (4,976) (4,721)
------- -------
7,136 7,108
======= =======
</Table>
<Page>
PROVINCE OF BRITISH COLUMBIA 59
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
24. PREPAID PROGRAM COSTS
<Table>
<Caption>
In Millions
2004 2003
---- ----
$ $
PREPAID PROGRAM COSTS(1) 82 107
== ===
</Table>
(1) Includes inventories of operating material held in the Purchasing
Commission and Queen's Printer warehouses pending distribution in a
subsequent fiscal year. Also includes inventories of supplies and other not
for resale items held by taxpayer-supported Crown corporations and agencies
and charged to expenses when consumed in the normal course of operations.
25. OTHER ASSETS
<Table>
<Caption>
In Millions
2004 2003
-------- --------
$ $
Deferred debt instrument costs 119 122
Deferred treaty costs 21 23
Other deferred costs 4 3
------- -------
144 148
======= =======
</Table>
26. ACCUMULATED SURPLUS (DEFICIT)
<Table>
<Caption>
In Millions
2004 2003
-------- --------
$ $
Accumulated surplus (deficit)--beginning of
year as previously reported (7,954) (4,785)
Adjustments to accumulated surplus (deficit)(1,2) (61) (31)
------- -------
Accumulated surplus (deficit)--beginning of
year as restated(2) (8,015) (4,816)
Surplus (deficit) for the year(2) (1,339) (3,199)
------- -------
ACCUMULATED SURPLUS (DEFICIT)--END OF YEAR (9,354) (8,015)
======= =======
</Table>
(1) In fiscal 2002/03, the opening accumulated deficit for 2002/03 was
restated to apply changes due to correction of errors. These adjustments were
made: to recognize the outstanding amount of leave liability for the
Healthcare Benefits Trust for those organizations funded through government
($30 million increase); to adjust the land account for land held for the
federal government that had been capitalized by the province ($1 million
increase); to adjust revenue recognition for safety inspection fees
recognized as revenue in prior years that should have been deferred to future
years to coincide with the related cost incurrence ($8 million increase);
and, to transfer the trust account held for the Crop Insurance Fund to be
included as a part of regular government operations, ($8 million decrease).
The net effect of these changes results in an increase to the 2002/03 opening
accumulated deficit of $31 million (from $4,785 to $4,816).
(2) In fiscal 2003/04, further restatements to the 2002/03 accumulated
deficit were made to apply changes due to correction of errors. These
adjustments were made: to recognize the outstanding amount of leave liability
for the Healthcare Benefits Trust for those organizations funded through
government ($23 million increase); to adjust expense for School District
Building Envelope Program ($7 million increase); to transfer the trust
account held for the Crop Insurance Fund to be included as a part of regular
government operations, ($8 million decrease); and, to adjust the accrual for
employee leave liability ($8 million increase). The net effect of these
changes is a $30 million increase to the 2002/03 deficit (from $3,169 to
$3,199). When combined with the prior year's change, the total impact to the
2003/04 opening accumulated deficit is $61 million (from $7,954 to $8,015).
<Page>
60 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
27. CONTINGENCIES AND COMMITMENTS
(a) GUARANTEED DEBT
Guaranteed debt as at March 31, 2004, totalled $156 million (2003: $264
million). These guarantees include amounts where indemnities have been made for
explicit quantifiable loans. SEE Statement of Guaranteed Debt on page 76 for
details.
(b) CONTINGENT LIABILITIES
(i) Litigation
The province is a defendant in legal actions and is involved in
matters such as expropriation compensation disputes and tax
assessment appeals. These matters may give rise to future
liabilities.
The province has the following contingent liabilities where the
estimated or known claim is or exceeds $100,000, but the likelihood
of payment is uncertain.
<Table>
<Caption>
In Millions
2004 2003
---- ----
$ $
Negligence and miscellaneous 2 38
Contract disputes 130 163
Damages to persons or property 28 157
Expropriation disputes 34
Timber harvesting rights disputes 3
Property access disputes 9 22
Motor vehicle accidents 1 2
Tax disputes 18 8
--- ---
191 424
=== ===
</Table>
When it is determined that it is likely that a liability exists and
the amount can be reasonably estimated, the amount is recorded as an
accrued liability (SEE Note 13) and an expense. The accrued liability for
litigation at March 31, 2004 was $61 million (2003: $36 million).
(ii) Guarantees and Indemnities
The province also has contingent liabilities in the form of
indemnities, indirect guarantees and outstanding claims for amounts that
are not explicit or reasonably estimable at this time.
(iii) Environmental Clean-up
The province is responsible for the environmental clean-up of numerous
contaminated sites in the province. For those sites where the province has
possession, a liability of $130 million (2003: $145 million) has been
accrued based on preliminary environmental audits. This liability is based
on the minimum estimated clean-up costs for those sites where an estimate
has been made and it has been determined that the government is liable.
Estimated clean-up costs, not already accrued, for sites under evaluation
are approximately $93 million at March 31, 2004. In addition, the Ministry
of Energy and Mines has determined possible net liabilities of $300 million
for sites the province does not own. Many other sites remain to be
evaluated; the future liability for all environmental clean-up costs is not
currently determinable.
(iv) Aboriginal Land Claims
Treaty negotiations between the province, Canada and First Nations
commenced in 1994. The province anticipates that these negotiations will
result in modern-day treaties defining the boundaries and nature of First
Nations treaty settlement lands. As of March 31, 2004, there were 45 treaty
tables in various stages of negotiation, representing two-thirds of the
aboriginal people in British Columbia.
When final treaty agreements are ratified, the provincial cost of
treaties is recorded in the Public Accounts. Costs are amortized over the
same period as the period of capital transfers established in final
agreements.
<Page>
PROVINCE OF BRITISH COLUMBIA 61
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
27. CONTINGENCIES AND COMMITMENTS--Continued
Four Agreements in Principle (AiPs) were signed in 2003, to add to the
AiP signed with Sechelt in 1999. It is expected that the capital transfer
components in all the AiPs will be entirely provided by Canada. The
provincial land commitments of Provincial Crown Land within all five AiPs
are as follows:
- Lheidli T'enneh, 3,120 hectares
- Maa-nulth, 20,900 hectares
- Sliammon, 6,000 hectares
- Tsawwassen, 427 hectares
- Sechelt, 933 hectares
Since the signing of the Sechelt AiP, there has been little or no
progress in negotiations and a final agreement is not anticipated in the
near future.
Eighty percent of funding for First Nations negotiation costs is in
the form of loans from Canada and is repayable from treaty settlements. The
province has committed to reimburse Canada 50% of any negotiation support
loans that default, along with 50% of the interest accrued. The earliest
date at which the loans are expected to become due is 2006 and the amount
of any provincial liability is not determinable at this time.
Some First Nations have chosen not to negotiate through the formal
British Columbia Treaty Commission process. Several have commenced
litigation claiming aboriginal rights and/or title over their asserted
Traditional Territories and/or challenging provincial approvals regarding
resource allocation and extraction on those lands with respect to the
adequacy of consultation and accommodation. The result of these actions is
not determinable at this time.
(v) Crown Corporations
The Insurance Corporation of British Columbia (ICBC) has settled some
claims which require ICBC to provide claimants with periodic payments,
usually for a lifetime. ICBC has purchased annuities to make these
payments; however, if the annuities are insufficient, ICBC remains
responsible. The gross amount of these settlements at December 31, 2003,
was approximately $594 million (2002: $569 million).
The BC Transportation Financing Authority has contingent liabilities
of $92 million remaining after deducting the estimated settlement expense
currently accrued from gross claims outstanding for capital projects.
Powerex, a wholly-owned subsidiary of the British Columbia Hydro and
Power Authority, has been named as a defendant in a number of lawsuits
regarding alleged market manipulation of energy prices in the California
wholesale electricity markets. Estimates of claims against all market
participants could reach several billion US dollars. Management cannot
predict the outcome of the various claims; however, Powerex states the
terms of its sales were just and reasonable.
(c) COMMITMENTS
The government has ongoing operational and capital commitments to fund a
variety of programs for public welfare including health, education, social
services, protection of persons and property, and management of natural
resources. Any significant non-operating commitments of less than five years
duration and costing more than $50 million are detailed in this note.
(i) Restructuring plan
The province is in the final year of a three-year restructuring plan.
In each year, associated costs are determined, included in the
Estimates, and recorded in the financial statements.
<Page>
62 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
27. CONTINGENCIES AND COMMITMENTS--Continued
(ii) 2010 Winter Olympics
On July 2, 2003, the International Olympic Committee selected
Vancouver to host the 2010 Olympic and Paralympic Winter Games. A
comprehensive Multi-Party Agreement (MPA) between Canada, British Columbia,
the City of Vancouver, the Resort Municipality of Whistler, the Canadian
Olympic Committee, the Canadian Paralympic Committee, and the Vancouver
2010 Organizing Committee was signed November 14, 2002. This agreement
establishes the roles and relationships of all the parties, the contractual
arrangements, financial contributions, legal responsibilities, and the
sport legacies of the Games. On September 30, 2003 the "Vancouver
Organizing Committee for the 2010 Olympic and Paralympic Games" (VANOC) was
incorporated. The province has the power to appoint three of the twenty
board members. VANOCs mandate is to plan, organize, finance and stage the
Winter Games.
The province, has established a commitment of $600 million for the
2010 Olympic Games. The MPA outlines the province's obligations for the
Games. The obligations include: medical services for the Games; sharing
security costs with the Government of Canada; providing one half of the
costs of the venues; and providing $55 million to the Legacy Endowment
Fund. To date, the province has spent $111 million toward its $600 million
commitment. In addition, the province has guaranteed any potential
financial short fall that may be incurred by VANOC as a result of staging
the Games. A short fall is not anticipated at this time. The province has
also agreed to upgrade the Sea to Sky Highway at a cost estimated to be
$600 million.
(iii) Crown corporations
The province has committed to the construction of the expansion to the
Vancouver Convention Centre and other shared upgrades to adjacent
facilities. The cost is to be shared by the province ($230 million), the
Government of Canada ($223 million) and Tourism Vancouver ($90 million).
28. REVENUE
<Table>
<Caption>
In Millions
2004 2003
----- -----
TAXATION REVENUE INCLUDES $ $
Personal income 4,878 4,154
Corporation income 776 613
Social service 4,001 3,794
Property 1,576 1,541
Other 2,577 2,175
----- -----
13,808 12,277
====== ======
</Table>
SEE notes at end of the Schedule of Net Revenue by Source on page 94
for additional information on taxation revenue.
<Page>
PROVINCE OF BRITISH COLUMBIA 63
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
29. EXPENSE
<Table>
<Caption>
In Millions
2004 2003
----- -----
INTEREST EXPENSE BY FUNCTION $ $
Health 151 152
Education 446 453
Transportation 138 138
Interest(1) 1,451 1,493
----- -----
2,186 2,236
===== =====
</Table>
<Table>
<Caption>
In Millions
2004 2003
----- -----
TOTAL EXPENSE BY GROUP ACCOUNT CLASSIFICATION $ $
Government transfers 19,669 19,544
Operating costs 2,677 2,369
Salaries and benefits 2,370 2,281
Interest(1) 2,186 2,236
Other 466 583
Amortization 523 564
------ ------
27,891 27,577
====== ======
</Table>
(1) Includes foreign exchange gain amortization of $19 million (2003:
loss amortization of $7 million)
30. VALUATION ALLOWANCES
<Table>
<Caption>
In Millions
2004 2003
----- -----
$ $
Accounts receivable 165 152
Loans, advances and mortgages receivable 41 31
Investments 8 6
Tangible capital assets 14 7
------ ------
228 196
====== ======
</Table>
These amounts are included in Other in expense by group account
classification in Note 29 and represent the write-down of assets and liabilities
in the above Statement of Financial Position categories.
<Page>
64 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
31. COMPARISON TO ESTIMATES
The Estimates numbers on the Statement of Operations are taken from the
Estimated Statement of Operations on page 4 of the Estimates, Fiscal Year Ending
March 31, 2004. They do not include supplementary spending of $419 million
approved by the Legislature during the 2003/04 fiscal year. Of this amount, $319
million was additional Canadian Health and Social Transfer funds from the
federal government that were not known at the time of the budget, but were
included in the SUPPLY ACT passed on May 29, 2003.
32. TRUSTS UNDER ADMINISTRATION
<Table>
<Caption>
In Millions
2004 2003
----- -----
$ $
Public Trustee and Official Administrators
--administered by government officials 530 575
Supreme and Provincial Court (Suitors' Funds)
--administered by the Courts 32 22
Credit Union Deposit Insurance Corporation of B.C.
--administered by various government officials and a
non-government investment corporation 117 104
Other trust funds
--administered by various government officials 68 43
--- ---
747 744
=== ===
</Table>
33. WORKERS' COMPENSATION BOARD OF BRITISH COLUMBIA (WCB)
WCB administers the WORKERS' COMPENSATION ACT. Its main functions are
promotion of occupational health and safety, compensation for occupational
injury, death or disease, and rehabilitation of injured workers. WCB collects
funds necessary for its operations from employers covered under the Act, and
operates similar to a trust. It is excluded from the government reporting
entity. The audited financial statements of WCB at December 31 reflect the
following financial information:
<Table>
<Caption>
In Millions
December 31 December 31
2003 2002
----- -----
$ $
Assets 8,481 8,078
Liabilities 8,473 8,225
----- -----
NET EQUITY 8 (147)
===== =====
</Table>
<Table>
<Caption>
In Millions
December 31 December 31
2003 2002
----- -----
$ $
Revenue 1,573 795
Expense 1,419 1,366
----- -----
SURPLUS (DEFICIT) 154 (571)
===== =====
</Table>
<Page>
PROVINCE OF BRITISH COLUMBIA 65
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
34. SIGNIFICANT EVENTS
GOVERNMENT RESTRUCTURING
The province has stated its intentions to reorganize government. As part of
the reorganization, the province will discontinue some operations and invite
outside investors to participate in other operations. These include, among
others, liquor distribution, land registry operations, rail operations and
highway operations.
BRITISH COLUMBIA RAILWAY COMPANY (BCRC) OPERATIONS
On November 25, 2003, BCRC and BCR Properties signed an agreement with
Canadian National Railway Company (CN) under which CN will assume the operations
of the industrial freight railway business carried on by BC Rail Partnership, by
purchasing the shares of BC Rail Ltd., and the partnership interests of BC Rail
Partnership (collectively "BC Rail"), for proceeds of $1 billion (the
"Transaction").
Prior to closing, BC Rail will undergo a corporate restructuring to ensure
that only assets and liabilities of BC Rail's Industrial Freight Railway
business are owned by BC Rail at the time of the Transaction. Part of this
restructuring will involve transferring the railbed and related infrastructure
from BC Rail to BCRC. The BC Rail Partnership and BC Rail will continue to be
liable for certain inter-company debt owing to BCRC and BCR Properties.
As part of the Transaction, BCRC and CN will enter into a Revitalization
Agreement under which CN will lease the railbed and related infrastructure from
BCRC for a term of 60 years. The Revitalization Agreement also gives CN the
option to renew the lease for an additional 30 years at no cost to CN and allows
for further extensions of the term of the agreement beyond this time, should
BCRC not excercize its option to repurchase the rail operations.
The province and BCRC have provided commercial indemnities to CN with
respect to the Transaction including indemnities related to tax attributes of BC
Rail at closing.
The maximum payable under the indemnities related to tax attributes is
$367 million, plus interest at 9% from the date of closing and any taxes
payable by CN on the amounts received under the indemnities. These
indemnities remain in effect until 90 days after the last date on which a tax
assessment or reassessment can be issued in respect of the tax attributes. It
is unlikely the province and BCRC will ultimately be held liable for any
amounts under these indemnities.
The maximum payable under the other indemnities - not related to tax
attributes -is limited to $262 million. There are certain other specific
indemnities (including certain environmental indemnities and matters
unrelated to the industrial freight railway business) for which there are not
limits on the amounts payable thereunder.
At March 31, 2004, the book value of the net assets of these operations
held for sale was $755 million and annual net income was $86 million.
COLUMBIA BASIN TRUST
On January 16, 2004, the provincial government announced a regulation
to bring the COLUMBIA BASIN TRUST AMENDMENT ACT, 2003 into force. The
government's stated objective is to increase efficiency and deliver ongoing
savings, provide representation from Columbia Basin residents and continue
the mandate of the Columbia Basin Trust to invest its share of the power
project and other in come to further the economic, social and environmental
well-being of Columbia Basin residents. The development and management of
power projects, currently done through joint ventures between the Trust and
Columbia Power Corporation, will be consolidated under a single corporation
that will be a subsidiary of the Trust. The Trust will hold 100% of the
subsidiary's shares and will appoint a majority of the board of directors.
The man date of the power subsidiary and the continued 50/50 sharing of power
in come will be set out in agreements between the province and the Trust to
implement the power restructuring.
On May 3, 2004, the Arrow Lakes Generating Station (a joint venture of the
Columbia Basin Trust and Columbia Power Corporation) incurred damage to a
portion of the intake channel resulting in the temporary suspension of power
generation. The cause of the damage is currently under investigation and the
appropriate steps have been taken to prevent further damage and to carry out
necessary repairs. The financial impact of this can not be determined at this
time. Recourse under insurance policies and warranties under the Design-Build
Contract are currently under investigation.
<Page>
66 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
NOTES TO SUMMARY FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
35. RESTRUCTURING EXIT EXPENSE
Reported restructuring exit expenses of $122 million (2003: $169 million)
do not include an additional recovery ($16) million (2003: expenses of $78
million) for restructuring exit expenses of government organizations that were
consolidated using the modified equity basis. This consists of $8 million in
expenses (2003: expenses of $37 million) for British Columbia Hydro and Power
Authority, recoveries of ($25) million (2003: expenses of $26 million) for the
British Columbia Liquor Distribution Branch, nil (2003: expenses of $15 million)
for the Insurance Corporation of British Columbia and expenses of $1 million
(2003: nil) for British Columbia Lottery Corporation.
<Table>
<Caption>
In Millions
2004 2003
---- ----
RESTRUCTURING EXIT EXPENSE BY FUNCTION $ $
Health 10 6
Education 1 2
Social services 22 17
Protection of per sons and property 17 2
Transportation 5 14
Natural resources 25 69
Other 13 55
General government 29 4
--- ---
122 169
=== ===
</Table>
<Table>
<Caption>
In Millions
2004 2003
---- ----
RESTRUCTURING EXIT EXPENSE BY GROUP ACCOUNT CLASSIFICATION $ $
Government transfers 3 16
Operating costs 38 61
Salaries and benefits 78 89
Other 3 3
--- ---
122 169
=== ===
</Table>
36. COMPARATIVES
Certain of the comparative figures for the previous year have been restated
to conform with the current year's presentation. These restatements have had no
effect on the operating result as previously reported except as specifically
noted.
<Page>
PROVINCE OF BRITISH COLUMBIA 67
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS
REPORTING ENTITY
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
TAXPAYER-SUPPORTED CROWN CORPORATIONS AND AGENCIES
(GOVERNMENT ORGANIZATIONS)
RECORDED ON A CONSOLIDATED BASIS
CONSOLIDATED REVENUE FUND(1)
HEALTH SECTOR
Canadian Blood Services(2)
Forensic Psychiatric Services Commission
EDUCATION SECTOR
Industry Training and Apprenticeship Commission(3)
Industry Training Authority(4)
Private Post-Secondary Education Commission
NATURAL RESOURCES AND ECONOMIC DEVELOPMENT SECTOR
552513 British Columbia Ltd(5)
BC Immigrant Investment Fund Ltd
B.C. Pavilion Corporation
British Columbia Enterprise Corporation
British Columbia Trade Development Corporation(3)
Columbia Basin Trust
Creston Valley Wildlife Management Authority Trust Fund
Discovery Enterprises Inc
Forestry Innovation Investment Ltd(4)
Innovation and Science Council of British Columbia(6)
Land and Water British Columbia Inc
Oil and Gas Commission
Partnerships British Columbia Inc
Tourism British Columbia
Vancouver Convention Centre Expansion Project(4)
Vancouver Trade and Convention Centre Authority
TRANSPORTATION SECTOR
BC Transportation Financing Authority
British Columbia Ferry Corporation(7)
British Columbia Transit
Rapid Transit Project 2000 Ltd
Victoria Line Ltd(3)
PROTECTION OF PERSONS AND PROPERTY
British Columbia Securities Commission
Organized Crime Agency of British Columbia Society
SOCIAL SERVICES SECTOR
B.C. Community Financial Services Corporation
Interim Authority for Community Living British Columbia
Legal Services Society
<Page>
68 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS
REPORTING ENTITY
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
TAXPAYER-SUPPORTED CROWN CORPORATIONS AND AGENCIES
(GOVERNMENT ORGANIZATIONS)
RECORDED ON A CONSOLIDATED BASIS--CONTINUED
OTHER SECTOR
B.C. Festival of the Arts Society(3)
B.C. Games Society
British Columbia Arts Council
British Columbia Assessment Authority
British Columbia Buildings Corporation
British Columbia Heritage Trust(3)
British Columbia Housing Management Commission
First Peoples' Heritage, Language and Culture Council
Homeowner Protection Office
Pacific National Exhibition(7)
Provincial Rental Housing Corporation
Royal BC Museum(4)
SELF-SUPPORTED CROWN CORPORATIONS AND AGENCIES
(GOVERNMENT ENTERPRISES)
RECORDED ON A MODIFIED EQUITY BASIS
BCIF Management Ltd
British Columbia Hydro and Power Authority
British Columbia Liquor Distribution Branch
British Columbia Lottery Corporation
British Columbia Railway Company
Columbia Power Corporation
Insurance Corporation of British Columbia
Provincial Capital Commission
(1) The Consolidated Revenue Fund has been allocated to the appropriate
sector on the Statement of Financial Position by Sector (page 69) and Operations
by Sector (page 71).
(2) This organization reflects a government partnership amongst Canadian
provinces and is proportionally consolidated based upon the province's share
(14.67%) of the total provincial contributions to the partnership.
(3) These organizations were wound up during the fiscal year.
(4) These organizations began operations during the fiscal year.
(5) 552513 British Columbia Ltd was involved in the acquisition and
disposal of Skeena Cellulose Inc.
(6) This organization changed its name during the current year. It was
formerly known as Science Council of British Columbia.
(7) During the year, the government transferred control of these
organizations to outside the government reporting entity.
<Page>
PROVINCE OF BRITISH COLUMBIA 69
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL POSITION BY SECTOR
AS AT MARCH 31, 2004
<Table>
<Caption>
In Millions
General
Social Debt Transpor- NR and Govern- Adjust-
Health Education Services Servicing PPP(1) tation ED(2) Other(3) ment(4) ments(5) Total
----- --------- --------- --------- ------ -------- ------- -------- ------- -------- -----
FINANCIAL ASSETS $ $ $ $ $ $ $ $ $ $ $
Cash and temporary investments 15 1 11 238 14 157 (6) 430
Accounts receivable ........... 104 27 77 380 136 31 725 24 1,083 (45) 2,542
Inventories for resale ........ 7 10 192 20 9 238
Due from the Province of
British Columbia ............ 37 (37)
Due from other governments .... 19 36 7 13 17 22 29 201 344
Due from self-supported Crown
corporations and agencies ... 93 71 164
Equity in self-supported Crown
corporations and agencies ... 5 618 422 1,934 16 (6) 2,989
Loans, advances and mortgages
receivable .................. 3 303 1 5 428 85 59 164 1,048
Other investments ............. 27 23 76 268 59 453
Loans for purchase of assets,
recoverable from agencies ... 10,839 (3,237) 7,602
----- --------- --------- --------- ------ -------- ------- -------- ------- -------- -----
168 367 101 11,480 779 1,035 3,476 201 1,528 (3,325) 15,810
----- --------- --------- --------- ------ -------- ------- -------- ------- -------- -----
</Table>
<Page>
70 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL POSITION BY SECTOR
AS AT MARCH 31, 2004
<Table>
<Caption>
In Millions
General
Social Debt Transpor- NR and Govern- Adjust-
Health Education Services Servicing PPP(1) tation ED(2) Other(3) ment(4) ments(5) Total
------ --------- -------- --------- ------ -------- ------- -------- ------- -------- -----
LIABILITIES $ $ $ $ $ $ $ $ $ $ $
Accounts payable and
accrued liabilities ....... 527 87 139 805 230 225 659 301 640 (70) 3,543
Due to other governments .... 30 6 47 3 7 2 1,014 1,109
Due to Crown corporations,
agencies and funds ........ 1 78 44 123
Due to the Province of
British Columbia...........
Deferred revenue ............ 109 10 144 226 131 173 111 391 (3) 1,292
Unfunded pension
liabilities ............... 3 3
Taxpayer-supported debt ..... 5 5 29,245 4 2,851 60 508 1 (3,248) 29,431
Self-supported debt ......... 7,507 7,507
------ --------- -------- --------- ------ -------- ------- -------- ------- -------- -----
671 97 150 37,701 507 3,210 900 1,000 2,093 (3,321) 43,008
------ --------- -------- --------- ------ -------- ------- -------- ------- -------- -----
Net liabilities ............. (503) 270 (49) (26,221) 272 (2,175) 2,576 (799) (565) (4) (27,198)
------ --------- -------- --------- ------ -------- ------- -------- ------- -------- -----
NON-FINANCIAL ASSETS
Tangible capital assets ..... 83 13 30 65 8,438 676 1,037 140 10,482
Prepaid capital advances .... 1,670 5,466 7,136
Prepaid program costs ....... 15 1 4 22 18 13 9 82
Other assets ................ 105 21 15 3 144
------ --------- -------- --------- ------ -------- ------- -------- ------- -------- -----
1,768 5,479 31 105 90 8,475 697 1,050 149 0 17,844
------ --------- -------- --------- ------ -------- ------- -------- ------- -------- -----
ACCUMULATED SURPLUS (DEFICIT) 1,265 5,749 (18) (26,116) 362 6,300 3,273 251 (416) (4) (9,354)
====== ========= ======== ========= ====== ======== ======= ======== ======= ======== =====
</Table>
- ----------
(1) Protection of persons and property.
(2) Natural Resources and Economic Development.
(3) Includes housing, recreation and culture and other activities which cannot
be allocated to the specific sectors.
(4) Includes the Legislature,tax collection and administration,CHST and
equalization transfers from the federal government, liquor and gaming
profits, general administration and central agency services such as
accounting, auditing, budgeting, insurance and risk management to all
sectors.
(5) Represents sectoral adjustments to conform to government accounting
policies and to eliminate transactions between sectors.
<Page>
PROVINCE OF BRITISH COLUMBIA 71
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS BY SECTOR
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
<Table>
<Caption>
In Millions
General
Social Debt Transpor- NR and Govern- Adjust-
Health Education Services Servicing PPP(1) tation ED(2) Other(3) ment(4) ments(5) Total
------ --------- -------- --------- ------ -------- ------ -------- -------- -------- -----
REVENUE $ $ $ $ $ $ $ $ $ $ $
Taxation ........................ 446 24 62 13,276 13,808
Contributions from the
federal government ............ 45 148 57 215 24 22 117 2,718 3,346
Natural resources ............... 3,653 3,653
Fees and licences ............... 1,539 2 6 602 91 102 24 61 2,427
Contributions from the provincial
government/self-supported Crown
corporations and agencies ..... 299 58 105 311 1,442 (334) 1,881
Miscellaneous ................... 229 9 84 132 19 132 334 87 (49) 977
Investment earning .............. 2 4 1 703 1 28 25 7 7 (196) 582
------ --------- -------- --------- ------ -------- ------ -------- -------- -------- -----
Total revenue ................... 1,815 163 148 703 1,249 666 4,063 855 17,591 (579) 26,674
------ --------- -------- --------- ------ -------- ------ -------- -------- -------- -----
</Table>
<Page>
72 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS BY SECTOR
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
<Table>
<Caption>
In Millions
General
Social Debt Transpor- NR and Govern- Adjust-
Health Education Services Servicing PPP(1) tation ED(2) Other(3) ment(4) ments(5) Total
------ --------- -------- --------- ------ ---------- ------ -------- ------- --------- -------
EXPENSE $ $ $ $ $ $ $ $ $ $ $
Government transfers ...... 10,013 5,993 2,234 631 144 124 530 21 (21) 19,669
Operating costs ........... 372 364 241 318 482 793 505 (60) (338) 2,677
Salaries and benefits ..... 319 36 371 542 136 473 162 331 2,370
Interest .................. 1,434 143 1 70 538 2,186
Other ..................... 241 504 23 59 167 84 (20) 155 (747) 466
Amortization .............. 17 2 13 17 345 29 44 56 523
------ --------- -------- --------- ------ ---------- ------ -------- ------- --------- -------
Operating expense ......... 10,962 6,899 2,882 1,434 1,567 1,417 1,504 1,291 503 (568) 27,891
------ --------- -------- --------- ------ ---------- ------ -------- ------- --------- -------
Surplus (deficit) for the
year before unusual items (9,147) (6,736) (2,734) (731) (318) (751) 2,559 (436) 17,088 (11) (1,217)
Restructuring exit expense (7) (3) (3) (50) (74) 15 (122)
------ --------- -------- --------- ------ ---------- ------ -------- ------- --------- -------
SURPLUS (DEFICIT) FOR THE
YEAR 2003/04 ............ (9,140) (6,736) (2,734) (731) (315) (751) 2,562 (386) 17,162 (26) (1,095)
====== ========= ======== ========= ====== ========== ====== ======== ======= ========= =======
SURPLUS (DEFICIT) FOR THE
YEAR 2002/03 ............ (9,009) (6,754) (3,031) (728) (614) (918) 2,273 (281) 15,969 (106) (3,199)
====== ========= ======== ========= ====== ========== ====== ======== ======= ========= =======
</Table>
- ----------
(1) Protection of persons and property.
(2) Natural Resources and Economic Development.
(3) Includes housing, recreation and culture and other activities which cannot
be allocated to the specific sectors.
(4) Includes the Legislature, tax collection and administration, CHST and
equalization transfers from the federal government, liquor and gaming
profits, general administration and central agency services such as
accounting, auditing, budgeting, insurance and risk management to all
sectors.
(5) Represents sectoral adjustments to conform to government accounting
policies and to eliminate transactions between sectors.
<Page>
PROVINCE OF BRITISH COLUMBIA 73
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS
STATEMENT OF SELF-SUPPORTED CROWN CORPORATIONS AND AGENCIES
SUMMARY OF FINANCIAL POSITION
AS AT MARCH 31, 2004
<Table>
<Caption>
In Millions
Transpor- Natural 2004 2003
Utility(1) Insurance(2) Liquor(3) tation(4) Finance(5) Resources(6) Total Total
---------- ------------ --------- --------- ---------- ------------ ----- -----
ASSETS $ $ $ $ $ $ $ $
Cash and temporary investments ........ 77 6,490 (10) 56 73 4 6,690 5,838
Accounts receivable ................... 329 177 49 48 44 647 619
Inventories ........................... 87 69 36 6 198 242
Long-term investments ................. 88 31 119 396
Tangible capital assets ............... 10,088 84 24 891 55 15 11,157 11,079
Other assets .......................... 578 117 2 98 6 801 786
---------- ------------ --------- --------- ---------- ------------ ----- -----
11,247 6,899 134 1,129 184 19 19,612 18,960
---------- ------------ --------- --------- ---------- ------------ ----- -----
LIABILITIES
Accounts payable and accrued
liabilities ......................... 1,124 4,840 127 216 113 6,420 6,030
Deferred revenue ...................... 1,089 1,441 3 2,533 2,424
Due to the Province of British Columbia 93 71 164 402
Long-term debt due to the Province of
British Columbia .................... 6,900 467 7,367 7,270
Other long-term debt .................. 108 7 24 139 205
---------- ------------ --------- --------- ---------- ------------ ----- -----
9,314 6,281 134 707 184 3 16,623 16,331
---------- ------------ --------- --------- ---------- ------------ ----- -----
EQUITY
Investment by the Consolidated
Revenue Fund .......................... 296 258 554 534
Unremitted earnings--end of year ...... 1,637 618 164 16 2,435 2,095
---------- ------------ --------- --------- ---------- ------------ ----- -----
1,933 618 422 16 2,989 2,629
---------- ------------ --------- --------- ---------- ------------ ----- -----
TOTAL LIABILITIES AND EQUITY .......... 11,247 6,899 134 1,129 184 19 19,612 18,960
========== ============ ========= ========= ========== ============ ===== =====
</Table>
(1) Utility--British Columbia Hydro and Power Authority and Columbia Power
Corporation.
(2) Insurance--Insurance Corporation of British Columbia (ICBC).
(3) Liquor--British Columbia Liquor Distribution Branch.
(4) Transportation--British Columbia Railway Company.
(5) Finance--British Columbia Lottery Corporation and BCIF Management Ltd.
(6) Natural Resources--Provincial Capital Commission.
<Page>
74 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS
STATEMENT OF SELF-SUPPORTED CROWN CORPORATIONS AND AGENCIES
SUMMARY OF RESULTS OF OPERATIONS AND STATEMENT OF EQUITY
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
<Table>
<Caption>
In Millions
Transpor- Natural Re- 2004 2003
Utility(1) Insurance(2) Liquor(3) tation4 Finance(5) sources(6) Total Total(7)
---------- ------------ --------- -------- ---------- ----------- ----- --------
$ $ $ $ $ $ $ $
Revenue ................................... 3,455 3,300 2,004 374 1,891 4 11,028 10,279
Expense ................................... 3,370 2,998 1,280 323 1,172 4 9,147 8,513
---------- ------------ --------- -------- ---------- ----------- ----- --------
Net earnings of self-supported Crown
corporations and agencies ............... 85 302 724 51 719 1,881 1,766
Contributions paid to the Consolidated
Revenue Fund .............................. (95) (3) (724) (534) (1,356) (1,483)
Adjustments to contributions(8) ........... (185) (185) (174)
---------- ------------ --------- -------- ---------- ----------- ----- --------
Increase (decrease) in unremitted earnings
in self-supported Crown corporations
and agencies ............................ (10) 299 51 340 109
Unremitted earnings--beginning of year .... 1,647 319 113 16 2,095 1,986
Adjustment to unremitted earnings .........
---------- ------------ --------- -------- ---------- ----------- ----- --------
Unremitted earnings--end of year .......... 1,637 618 164 16 2,435 2,095
Investment by the Consolidated Revenue Fund 296 258 554 534
---------- ------------ --------- -------- ---------- ----------- ----- --------
EQUITY IN SELF-SUPPORTED CROWN CORPORATIONS
AND AGENCIES FOR THE YEAR ............... 1,933 618 0 422 0 16 2,989 2,629
========== ============ ========= ======== ========== =========== ===== ========
</Table>
- ---------
(1) Utility--British Columbia Hydro and Power Authority and Columbia Power
Corporation.
(2) Insurance--Insurance Corporation of British Columbia (ICBC).
(3) Liquor--British Columbia Liquor Distribution Branch.
(4) Transportation--British Columbia Railway Company.
(5) Finance--British Columbia Lottery Corporation and BCIF Management Ltd.
(6) Natural Resources--Provincial Capital Commission.
(7) BC Hydro has a change in accounting policy that requires electricity trade
income to be netted against corresponding energy costs. It has restated the
the 2002/03 amounts, decreasing revenue and increasing expenses by $1,189
million, netting to $0.
(8) This adjustment is for British Columbia Lottery Corporation transfers to
charities and local governments which is shown as a recovery by the
Consolidated Revenue Fund.
<Page>
PROVINCE OF BRITISH COLUMBIA 75
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS
STATEMENT OF TANGIBLE CAPITAL ASSETS(1)
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
<Table>
<Caption>
In Millions
Land and
Land Highway Transpor- Computer
Improve- Infra- tation Hardware/ 2004 2003
ments Buildings structure Ferries Equipment Software Other Total Total
-------- --------- --------- ------- --------- --------- ----- ----- -----
HISTORICAL COST(2) $ $ $ $ $ $ $ $ $
Opening cost .......................... 841 1,750 10,121 83 2,564 724 361 16,444 16,249
Additions ............................. 77 53 406 20 105 41 702 601
Disposals and valuation adjustments ... (12) (115) (19) (14) (5) (33) (59) (257) (406)
-------- --------- --------- ------- --------- --------- ----- ----- -----
906 1,688 10,508 69 2,579 796 343 16,889 16,444
-------- --------- --------- ------- --------- --------- ----- ----- -----
ACCUMULATED AMORTIZATION
Opening balance ....................... 71 806 3,960 68 476 467 215 6,063 5,745
Amortization expense .................. 5 51 285 2 52 89 42 526 564
Effects of disposals and valuation
adjustments ......................... (3) (90) (12) (2) (28) (47) (182) (246)
-------- --------- --------- ------- --------- --------- ----- ----- -----
73 767 4,245 58 526 528 210 6,407 6,063
-------- --------- --------- ------- --------- --------- ----- ----- -----
NET BOOK VALUE FOR THE YEAR ENDED
MARCH 31, 2004 ...................... 833 921 6,263 11 2,053 268 133 10,482 10,381
======== ========= ========= ======= ========= ========= ===== ===== =====
NET BOOK VALUE FOR THE YEAR ENDED
MARCH 31, 2003 ...................... 770 944 6,161 15 2,088 257 146 10,381
======== ========= ========= ======= ========= ========= ===== ===== =====
</Table>
- ----------
(1) This statement includes assets that are held on capital leases at March
31, 2004, at a net book value totalling $32 million (2003: $45 million)
comprised of: heavy equipment $0 million (2003: $4 million) and vehicles
$32 million (2003: $41 million).
(2) Historical cost includes work-in-progress at March 31, 2004, totalling
$295 million (2003: $191 million) comprised of: buildings $39 million
(2003: $21 million); land improvements $6 million (2003: $7 million); high
way infrastructure $190 million (2003: $106 million); transportation
equipment $1 million (2003: $3 million); computer hardware/software $58
million (2003: $50 million); and specialized equipment $1 million (2003: $4
million). Work-in-progress is not amortized.
<Page>
76 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS
STATEMENT OF GUARANTEED DEBT(1)
AS AT MARCH 31, 2004
Guaranteed debt represents that debt of municipalities and other
governments, private enterprises and individuals, and debt and minority
interests of provincial Crown corporations and agencies, which has been
explicitly guaranteed or indemnified by the government, under the authority of a
statute, as to net principal or redemption provisions.
<Table>
<Caption>
In Millions
2004 2003
----------- ------------
Net Net
Outstanding Outstanding(1)
TAXPAYER-SUPPORTED GUARANTEED DEBT $ $
Municipalities and other local governments
MUNICIPAL ACT debentures ............................. 1 1
----------- ------------
Subtotal, municipalities and other local governments .... 1 1
----------- ------------
Government services
HOMEOWNER PROTECTION ACT loan guarantees ............. 104 98
----------- ------------
Subtotal, government services ........................... 104 98
----------- ------------
Health and education
FINANCIAL ADMINISTRATION ACT student aid loans ....... 41 54
----------- ------------
Subtotal, health and education .......................... 41 54
----------- ------------
Economic development
SECURITIES ACT ....................................... 1
FINANCIAL ADMINISTRATION ACT
Business Development Bank Guaranteed Program ....... 1 1
Emergency Credit Enhancement Program ............... 3 7
Farm Distress Operating Loan Program ............... 1 3
Feeder Association's Loan Guarantee Program ........ 5 5
Miscellaneous guarantees each less than $1 million . 1
HOME MORTGAGE ASSISTANCE PROGRAM ACT mortgages ....... 10 15
HOME MORTGAGE ASSISTANCE PROGRAM ACT second
mortgages(2) ....................................... 1 1
----------- ------------
Subtotal, economic development .......................... 21 34
----------- ------------
Total taxpayer-supported guaranteed debt ................ 167 187
----------- ------------
</Table>
<Page>
PROVINCE OF BRITISH COLUMBIA 77
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS
STATEMENT OF GUARANTEED DEBT(1)
AS AT MARCH 31, 2004--Continued
<Table>
<Caption>
In Millions
2004 2003
------------- ------------
Net Net
Outstanding(1) Outstanding(1)
SELF-SUPPORTED GUARANTEED DEBT $ $
Economic development
BRITISH COLUMBIA RAILWAY FINANCE ACT capital leases(3) ................... 2
------------- ------------
Subtotal, economic development .............................................. 2
------------- ------------
Utilities
HYDRO AND POWER AUTHORITY ACT bonds and debentures(3) .................... 87
------------- ------------
Subtotal, utilities ......................................................... 87
------------- ------------
Total self-supported guaranteed debt ........................................ 89
------------- ------------
Grand total, all guaranteed debt ............................................ 167 276
Provision for probable payout ............................................... (11) (12)
------------- ------------
NET TOTAL, ALL GUARANTEED DEBT(4) ........................................... 156 264
============= ============
</Table>
- -----------
(1) Guaranteed debt includes gross principal debt less sinking fund balances,
and represents the total amount of contingent liability of the government
arising from relevant guarantees.
(2) The British Columbia Second Mortgage Program was sold to the Bank of
Montreal in June 1989, with the condition that the province will buy back
any mortgages which may become uncollectible in future years.
(3) See the financial statements of government organizations and enterprises
for details of maturity dates, interest rates and redemption features of
the outstanding debt of these Crown agencies and for details of
derivative financial products.
(4) Debentures totalling $0.3 million (2003: $0.3 million) have been defeased
and are considered extinguished for financial reporting purposes.
<Page>
<Page>
- --------------------------------------------------------------------------------
SUPPLEMENTARY INFORMATION
(UNAUDITED)
- --------------------------------------------------------------------------------
[BRITISH COLUMBIA LOGO]
<Page>
<Page>
PROVINCE OF BRITISH COLUMBIA 81
PUBLIC ACCOUNTS 2003/04
ADJUSTED NET INCOME OF CROWN CORPORATIONS AND AGENCIES
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
(Unaudited)
<Table>
<Caption>
In Millions
Policy Equity Adjusted
Revenue Expense Net Income Adjustments Adjustments Net Income
-------- -------- ---------- ----------- ----------- ----------
TAXPAYER-SUPPORTED (GOVERNMENT ORGANIZATIONS) $ $ $ $ $ $
552513 British Columbia Ltd ........................... 2 2
B.C. Community Financial Services Corporation ......... 1 (2) (1) 1
B.C. Games Society .................................... 2 (2)
B.C. Pavilion Corporation ............................. 35 (35) (6) (6)
BC Transportation Financing Authority ................. 604 (479) 125 (182) (57)
British Columbia Assessment Authority(1) .............. 65 (63) 2 2
British Columbia Buildings Corporation ................ 517 (470) 47 (4) (18) 25
British Columbia Housing Management Commission ........ 279 (279) 8 8
British Columbia Securities Commission ................ 23 (28) (5) (5)
British Columbia Transit .............................. 138 (138) (3) (3)
British Columbia Ferry Corporation .................... (503) (503)
Canadian Blood Services ............................... 119 (118) 1 3 4
Columbia Basin Trust .................................. 25 (28) (3) (3)
Creston Valley Wildlife Management Authority Trust Fund 1 (1)
Discovery Enterprises Inc ............................. (1) (1) (1)
First Peoples' Heritage, Language and Culture Council . 1 (1)
Forensic Psychiatric Services Commission .............. 55 (54) 1 (1)
Forestry Innovations Investment Ltd ................... 27 (27) 4 4
Homeowner Protection Office ........................... 24 (20) 4 4
Industry Training and Apprenticeship Commission(3) .... 54 (54)
Industry Training Authority ........................... 21 (19) 2 2
Innovation and Science Council of British Columbia .... 5 (4) 1 1
Interim Authority for Community Living British Columbia 4 (3) 1 1
</Table>
<Page>
82 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
ADJUSTED NET INCOME OF CROWN CORPORATIONS AND AGENCIES
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
(Unaudited)
<Table>
<Caption>
In Millions
Policy Equity Adjusted
Revenue Expense Net Income Adjustments Adjustments Net Income
------- ------- ---------- ----------- ----------- ----------
TAXPAYER-SUPPORTED (GOVERNMENT ORGANIZA- $ $ $ $ $ $
TIONS)--Continued
Land and Water British Columbia Inc ............... 51 (45) 6 1 7
Legal Services Society ............................ 71 (69) 2 2
Oil and Gas Commission ............................ 21 (21)
Organized Crime Agency of British Columbia Society 18 (18)
Pacific National Exhibition(2) .................... 38 (33) 5 (5)
Partnerships British Columbia Inc ................. 20 (12) 8 1 9
Private Post-Secondary Education Commission ....... 1 (1)
Provincial Rental Housing Corporation ............. 19 (12) 7 (2) 5
Rapid Transit Project 2000 Ltd .................... 29 (29)
Royal BC Museum ................................... 21 (20) 1 2 3
Tourism British Columbia .......................... 33 (37) (4) (4)
Vancouver Convention Center Expansion Project ..... 1 1 67 68
------- ------- ---------- ----------- ----------- ----------
NET IMPACT OF TAXPAYER-SUPPORTED CROWN CORPORATIONS
AND AGENCIES ...................................... 2,323 (2,123) 200 (110) (525) (435)
======= ======= ========== =========== =========== ==========
SELF-SUPPORTED (GOVERNMENT ENTERPRISES)
British Columbia Hydro and Power Authority ........ 3,459 (3,361) 98 (21) (93) (16)
British Columbia Liquor Distribution Branch ....... 2,004 (1,280) 724 (724)
British Columbia Lottery Corporation .............. 1,891 (1,164) 727 (8) (719)
British Columbia Railway Company(1) ............... 92 (72) 20 31 51
Columbia Power Corporation ........................ 31 (23) 8 (2) 6
Insurance Corporation of British Columbia(1) ...... 846 (764) 82 220 (3) 299
Provincial Capital Commission ..................... 3 (3)
------- ------- ---------- ----------- ----------- ----------
NET IMPACT OF SELF-SUPPORTED CROWN CORPORATIONS
AND AGENCIES ...................................... 8,326 (6,667) 1,659 222 (1,541) 340
======= ======= ========== =========== =========== ==========
</Table>
- -----------
(1) The revenues and expenses reported for the British Columbia Assessment
Authority, British Columbia Railway Company and Insurance Corporation
of British Columbia are as at December 31, 2003.
(2) This organization was transferred to the City of Vancouver during the
fiscal year 2003/04.
(3) These organizations were wound up during the fiscal year 2003/04.
<Page>
PROVINCE OF BRITISH COLUMBIA 83
PUBLIC ACCOUNTS 2003/04
IMPACT OF SUCH(1) SECTOR
ON THE SUMMARY FINANCIAL STATEMENTS STATEMENT OF FINANCIAL POSITION
AS AT MARCH 31, 2004
(Unaudited)
<Table>
<Caption>
In Millions
Health
Authorities Regional Universities,
Summary and Hospital Colleges and School Adjust-
Statements(2) Societies(3,4) Districts(5) Institutes(3) Districts(3) ments(6) Total Net Effect
------------- -------------- ------------ ------------- ------------ -------- ----- ----------
FINANCIAL ASSETS $ $ $ $ $ $ $ $
Cash and temporary investments .. 430 851 738 528 2,547 2,117
Accounts receivable ............. 2,542 119 160 36 (37) 2,820 278
Inventories for resale .......... 238 28 1 267 29
Due from the Province of
British Columbia .............. 174 17 1 (192)
Due from other governments ...... 344 29 21 7 401 57
Due from self-supported Crown
corporations and agencies ..... 164 164
Equity in self-supported Crown
corporations and agencies ..... 2,989 2,989
Loans, advances and mortgages
receivable .................... 1,048 4 1,052 4
Other investments ............... 453 94 1,217 24 1,788 1,335
Loans for purchase of assets,
recoverable from agencies ..... 7,602 (90) 7,512 (90)
------------- -------------- ------------ ------------- ------------ -------- ----- ----------
15,810 1,267 0 2,185 597 (319) 19,540 3,730
------------- -------------- ------------ ------------- ------------ -------- ----- ----------
</Table>
<Page>
84 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
IMPACT OF SUCH(1) SECTOR
ON THE SUMMARY FINANCIAL STATEMENTS STATEMENT OF FINANCIAL POSITION
AS AT MARCH 31, 2004--Continued
(Unaudited)
<Table>
<Caption>
In Millions
Health
Authorities Regional Universities,
Summary and Hospital Colleges and School Adjust-
Statements(2) Societies(3,4) Districts(5) Institutes(3) Districts(3) ments(6) Total Net Effect
------------- -------------- ------------ ------------- ------------ -------- ----- ----------
LIABILITIES $ $ $ $ $ $ $ $
Accounts payable and
accrued liabilities .... 3,543 1,396 442 340 (199) 5,522 1,979
Due to other governments . 1,109 4 16 9 1,138 29
Due to Crown corporations,
agencies and funds ..... 123 14 (14) 123
Due to the Province of
British Columbia ....... 3 9 3 (15)
Deferred revenue ......... 1,292 2,351 2,015 4,160 (7,135) 2,683 1,391
Unfunded pension
liabilities ............ 3 3
Taxpayer-supported debt .. 29,431 134 426 25 (92) 29,924 493
Self-supported debt ...... 7,507 7,507
------------- -------------- ------------ ------------- ------------ -------- ----- ----------
43,008 3,902 0 2,908 4,537 (7,455) 46,900 3,892
------------- -------------- ------------ ------------- ------------ -------- ----- ----------
Net liabilities .......... (27,198) (2,635) 0 (723) (3,940) 7,136 (27,360) (162)
------------- -------------- ------------ ------------- ------------ -------- ----- ----------
NON-FINANCIAL ASSETS
Tangible capital assets .. 10,482 3,087 3,396 5,288 22,253 11,771
Prepaid capital advances . 7,136 (7,136) (7,136)
Prepaid program costs .... 82 104 13 7 206 124
Other assets ............. 144 1 12 1 158 14
------------- -------------- ------------ ------------- ------------ -------- ----- ----------
17,844 3,192 0 3,421 5,296 (7,136) 22,617 4,773
------------- -------------- ------------ ------------- ------------ -------- ----- ----------
ACCUMULATED SURPLUS
(DEFICIT) .............. (9,354) 557 0 2,698 1,356 0 (4,743) 4,611
============= ============== ============ ============= ============ ======== ===== ==========
</Table>
- ----------
(1) School districts, Universities, Colleges and institutes, and Health
care authorities.
(2) See Summary Financial Statements, Statement of Financial Position, on
page 31.
(3) The province does not necessarily hold title to the assets of these
organizations.
(4) Included are assets of Denominational Health care facilities. These
organizations have a special relationship with government that
provides them with significant autonomy. While their assets are
consolidated, they are owned, managed and operated by the
Denominational Health Board.
(5) For fiscal 2002/03, legislative changes have resulted in the Regional
Hospital Districts being excluded from this schedule, which depicts
the Summary Financial Statements as if the SUCH sector had been
included.
(6) Represents adjustments to eliminate transactions that occurred within
the SUCH sector, and between the SUCH sector and other consolidated
entities included in the Summary Financial Statements.
<Page>
PROVINCE OF BRITISH COLUMBIA 85
PUBLIC ACCOUNTS 2003/04
IMPACT OF SUCH(1) SECTOR
ON THE SUMMARY FINANCIAL STATEMENTS STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
(Unaudited)
<Table>
<Caption>
In Millions
Health
Authorities Regional Universities,
Summary and Hospital Colleges and School Adjust-
Statements(2) Societies Districts(3) Institutes Districts ments(4) Total Net Effect
------------- ---------- ------------ ------------- --------- -------- ----- -----------
REVENUE $ $ $ $ $ $ $ $
Taxation ........................ 13,808 13,808
Contributions from the federal
government .................... 3,346 22 182 69 3,619 273
Natural resources ............... 3,653 3,653
Fees and licences ............... 2,427 224 781 110 (2) 3,540 1,113
Contributions from the provincial
government/self-supported Crown
corporations and agencies ..... 1,881 7,162 1,730 4,219 (13,111) 1,881
Miscellaneous ................... 977 271 640 87 (189) 1,786 809
Investment earnings ............. 582 39 58 21 (13) 687 105
------------- ---------- ------------ ------------- --------- -------- ----- -----------
Total revenue ................... 26,674 7,718 0 3,391 4,506 (13,315) 28,974 2,300
------------- ---------- ------------ ------------- --------- -------- ----- -----------
</Table>
<Page>
86 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
IMPACT OF SUCH(1) SECTOR
ON THE SUMMARY FINANCIAL STATEMENTS STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
(Unaudited)
<Table>
<Caption>
In Millions
Health
Authorities Regional Universities,
Summary and Hospital Colleges and School
Statements(2) Societies Districts(3) Institutes Districts Adjustments(4) Total Net Effect
------------- ---------- ----------- ------------ ---------- -------------- ----- ---------
EXPENSE $ $ $ $ $ $ $ $
Health ....................... 10,945 7,698 (7,321) 11,322 377
Education .................... 6,899 3,170 4,370 (5,924) 8,515 1,616
Social services .............. 2,871 (26) 2,845 (26)
Interest ..................... 1,451 9 29 1 (14) 1,476 25
Protection of persons and
property ................... 1,565 (15) 1,550 (15)
Transportation ............... 1,267 1,267
Natural resources and economic
development ................ 1,496 (10) 1,486 (10)
Other ........................ 906 (3) 903 (3)
General government ........... 491 (2) 489 (2)
------------- ---------- ----------- ------------ ---------- -------------- ----- ---------
Total operating expense ...... 27,891 7,707 0 3,199 4,371 (13,315) 29,853 1,962
------------- ---------- ----------- ------------ ---------- -------------- ----- ---------
Surplus (deficit) for the year
before unusual items ...... (1,217) 11 0 192 135 0 (879) 338
Restructuring exit expense ... (122) (1) (123) (1)
------------- ---------- ----------- ------------ ---------- -------------- ----- ---------
SURPLUS (DEFICIT) FOR THE YEAR
ENDED MARCH 31, 2004 ....... (1,339) 10 0 192 135 0 (1,002) 337
============= ========== =========== ============ ========== ============== ===== =========
SURPLUS (DEFICIT) FOR THE YEAR
ENDED MARCH 31, 2003 ....... (3,199) 152 (340) 233 150 0 (3,004) 195
============= ========== =========== ============ ========== ============== ===== =========
</Table>
- ----------
(1) School districts, Universities, Colleges and institutes, and Health
care authorities.
(2) See Summary Financial Statements, Statement of Operations, on page 32.
(3) For fiscal 2002/03, legislative changes have resulted in the Regional
Hospital Districts being excluded from this schedule, which depicts
the Summary Financial Statements as if the SUCH sector had been
included in the government reporting entity. The March 31, 2003
balance reflects the write-off of Regional Hospital Districts net
assets.
(4) Represents adjustments to eliminate transactions that occurred within
the SUCH sector, and between the SUCH sector and other consolidated
entities included in the Summary Financial Statements.
<Page>
PROVINCE OF BRITISH COLUMBIA 87
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS INCLUDING SUCH(1) SECTOR
STATEMENT OF FINANCIAL POSITION BY SECTOR
AS AT MARCH 31, 2004
(Unaudited)
<Table>
<Caption>
In Millions
Expanded General
Expanded Edu- Social Debt Transpor- NR and Govern- Adjust-
Health(2) cation(3) Services Servicing PPP(4) tation ED(5) Other(6) ment(7) ments(8) Total
--------- --------- -------- --------- ---- -------- ------ -------- ------- --------- -----
FINANCIAL ASSETS $ $ $ $ $ $ $ $ $ $ $
Cash and temporary investments 866 1,267 11 238 14 157 (6) 2,547
Accounts receivable ........... 209 211 77 380 136 31 725 24 1,083 (56) 2,820
Inventories for resale ........ 29 7 10 192 20 9 267
Due from the Province of
British Columbia ............ 2 37 (39)
Due from other governments .... 48 64 7 13 17 22 29 201 401
Due from self-supported Crown
corporations and agencies ... 93 71 164
Equity in self-supported Crown
corporations and agencies ... 5 618 422 1,934 16 (6) 2,989
Loans, advances and mortgages
receivable .................. 3 307 1 5 428 85 59 164 1,052
Other investments ............. 121 1,241 23 76 268 59 1,788
Loans for purchase of assets,
recoverable from agencies ... 10,839 (3,327) 7,512
--------- --------- -------- --------- ---- -------- ------ -------- ------- --------- -----
1,249 3,119 101 11,480 779 1,035 3,476 201 1,528 (3,428) 19,540
--------- --------- -------- --------- ---- -------- ------ -------- ------- --------- -----
</Table>
<Page>
88 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS INCLUDING SUCH(1) SECTOR
STATEMENT OF FINANCIAL POSITION BY SECTOR
AS AT MARCH 31, 2004--Continued
(Unaudited)
<Table>
<Caption>
In Millions
Expanded General
Expanded Edu- Social Debt Transpor- NR and Govern- Adjust-
Health(2) cation(3) Services Servicing PPP(4) tation ED(5) Other(6) ment(7) ments(8) Total
--------- --------- -------- --------- ---- ---------- ------ -------- -------- -------- ------
LIABILITIES $ $ $ $ $ $ $ $ $ $ $
Accounts payable and
accrued liabilities ....... 1,750 850 139 805 230 225 659 301 640 (77) 5,522
Due to other governments .... 34 25 6 47 3 7 2 1,014 1,138
Due to Crown corporations,
agencies and funds ........ 5 1 78 44 (5) 123
Due to the Province of
British Columbia ..........
Deferred revenue ............ 791 741 144 226 131 173 111 391 (25) 2,683
Unfunded pension liabilities 3 3
Taxpayer-supported debt ..... 138 451 5 29,245 4 2,851 60 508 1 (3,339) 29,924
Self-supported debt ......... 7,507 7,507
--------- --------- -------- --------- ---- ---------- ------ -------- -------- -------- ------
2,718 2,067 150 37,701 507 3,210 900 1,000 2,093 (3,446) 46,900
--------- --------- -------- --------- ---- ---------- ------ -------- -------- -------- ------
Net liabilities ............. (1,469) 1,052 (49) (26,221) 272 (2,175) 2,576 (799) (565) 18 (27,360)
--------- --------- -------- --------- ---- ---------- ------ -------- -------- -------- ------
NON-FINANCIAL ASSETS
Tangible capital assets ..... 3,170 8,697 30 65 8,438 676 1,037 140 22,253
Prepaid capital advances .... 22 (22)
Prepaid program costs ....... 119 20 1 4 22 18 13 9 206
Other as sets ............... 1 13 105 21 15 3 158
--------- --------- -------- --------- ---- ---------- ------ -------- -------- -------- ------
3,290 8,752 31 105 90 8,475 697 1,050 149 (22) 22,617
--------- --------- -------- --------- ---- ---------- ------ -------- -------- -------- ------
ACCUMULATED SURPLUS (DEFICIT) 1,821 9,804 (18) (26,116) 362 6,300 3,273 251 (416) (4) (4,743)
========= ========= ======== ========= ==== ========== ====== ======== ======== ======== ======
</Table>
- ----------
(1) School districts, Universities, Colleges and institutes, and Health
authorities.
(2) Comprised of Health Sector (per Summary Financial Statements) and
Health authorities.
(3) Comprised of Education Sector (per Summary Financial Statements),
Universities, Colleges and institutes, and School districts.
(4) Protection of Persons and Property.
(5) Natural Resources and Economic Development.
(6) Includes housing, recreation and culture and other activities that
cannot be allocated to the specific sectors.
(7) Includes the legislature, tax collection and administration, CHST and
equalization transfers from the federal government, liquor and gaming
profits, general administration and central agency services such as
accounting, auditing, budgeting, insurance and risk management to all
sectors.
(8) Represents sectoral adjustments to conform to government accounting
policies and to eliminate transactions between sectors.
<Page>
PROVINCE OF BRITISH COLUMBIA 89
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS INCLUDING SUCH(1) SECTOR
STATEMENT OF OPERATIONS BY SECTOR
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
(Unaudited)
<Table>
<Caption>
In Millions
Expanded General
Expanded Edu- Social Debt Transpor- NR and Govern- Adjust-
Health(2) cation(3) Services Servicing PPP(4) tation ED(5) Other(6) ment(7) ments(8) Total
--------- --------- -------- --------- ---- --------- ------ -------- -------- -------- -----
REVENUE $ $ $ $ $ $ $ $ $ $ $
Taxation ................ 446 24 62 13,276 13,808
Contributions from the
federal government .... 67 399 57 215 24 22 117 2,718 3,619
Natural resources ....... 3,653 3,653
Fees and licences ....... 1,763 893 6 602 91 102 24 61 (2) 3,540
Contributions from the
provincial government/
self-supported Crown
corporations and
agencies .............. 21 107 299 58 105 311 1,442 (462) 1,881
Miscellaneous ........... 449 713 84 132 19 132 334 87 (164) 1,786
Investment earnings ..... 41 83 1 703 1 28 25 7 7 (209) 687
--------- --------- -------- --------- ---- --------- ------ -------- -------- -------- -----
Total revenue ........... 2,341 2,195 148 703 1,249 666 4,063 855 17,591 (837) 28,974
--------- --------- -------- --------- ---- --------- ------ -------- -------- -------- -----
</Table>
<Page>
90 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
SUMMARY FINANCIAL STATEMENTS INCLUDING SUCH1 SECTOR
STATEMENT OF OPERATIONS BY SECTOR
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
(Unaudited)
<Table>
<Caption>
In Millions
Expanded General
Expanded Edu- Social Debt Transpor- NR and Govern- Adjust-
Health(2) cation(3) Services Servicing PPP(4) tation ED(5) Other(6) ment(7) ments(8) Total
--------- --------- -------- --------- ---- --------- ------- -------- ------- --------- -----
EXPENSE $ $ $ $ $ $ $ $ $ $ $
Government transfers ..... 3,999 553 2,234 631 144 124 530 21 (151) 8,085
Operating costs .......... 2,081 1,234 241 318 482 793 505 (60) (343) 5,251
Salaries and benefits .... 4,700 5,736 371 542 136 473 162 331 12,451
Interest ................. 9 29 1,434 143 1 70 (210) 1,476
Other .................... 356 615 23 59 167 84 (20) 155 (122) 1,317
Amortization ............. 332 437 13 17 345 29 44 56 1,273
--------- --------- -------- --------- ---- --------- ------- -------- ------- --------- -----
Operating expense ........ 11,477 8,604 2,882 1,434 1,567 1,417 1,504 1,291 503 (826) 29,853
--------- --------- -------- --------- ---- --------- ------- -------- ------- --------- -----
Surplus (deficit) for the
year before unusual
items .................. (9,136) (6,409) (2,734) (731) (318) (751) 2,559 (436) 17,088 (11) (879)
Restructuring exit expense (8) (3) (3) (50) (74) 15 (123)
--------- --------- -------- --------- ---- --------- ------- -------- ------- --------- -----
SURPLUS (DEFICIT) FOR THE
YEAR 2003/04 ........... (9,144) (6,409) (2,734) (731) (321) (751) 2,556 (486) 17,014 4 (1,002)
========= ========= ======== ========= ==== ========= ======= ======== ======= ========= =====
SURPLUS (DEFICIT) FOR THE
YEAR 2002/03 ........... (9,197) (6,371) (3,031) (728) (614) (918) 2,273 (281) 15,969 (106) (3,004)
========= ========= ======== ========= ==== ========= ======= ======== ======= ========= =====
</Table>
- ----------
(1) School districts, Universities, Colleges and institutes, and Health
authorities.
(2) Comprised of Health Sector (per Summary Financial Statements) and
Health authorities.
(3) Comprised of Education Sector (per Summary Financial Statements),
Universities, Colleges and institutes, and School districts.
(4) Protection of Persons and Property.
(5) Natural Resources and Economic Development.
(6) Includes housing, recreation and culture and other activities that
cannot be allocated to the specific sectors.
(7) Includes the legislature, tax collection and administration, CHST and
equalization transfers from the federal government, liquor and gaming
profits, general administration and central agency services such as
accounting, auditing, budgeting, insurance and risk management to all
sectors.
(8) Represents sectoral adjustments to conform to government accounting
policies and to eliminate transactions between sectors.
- -------------------------------------------------------------------------------
CONSOLIDATED REVENUE FUND
EXTRACTS
(UNAUDITED)
- -------------------------------------------------------------------------------
[BRITISH COLUMBIA LOGO]
93
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS
2003/04
CONSOLIDATED REVENUE FUND
OPERATING RESULT
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
(Unaudited)
In Millions
2004 2003
--------------------- ------
Estimated(1) Actual Actual
$ $ $
REVENUE
Taxation 12,755 13,219 11,846
Contributions from the federal government 3,625 2,987 3,276
Natural resource 3,367 3,616 3,255
Other 2,294 2,332 2,209
Contributions from Crown corporations and agencies 1,205 1,371 1,517
------ ------ ------
23,246 23,525 22,103
------ ------ ------
EXPENSE
Health(2) 10,408 10,607 10,377
Education(2) 6,906 6,813 6,817
Social services 2,785 2,807 3,096
Interest(2,3) 926 738 711
Protection of persons and property 1,087 1,168 1,104
Transportation(2) 833 819 750
Natural resources and economic development 1,023 1,345 1,357
Other 631 523 402
General government 304 328 377
------ ------ ------
24,903 25,148 24,991
------ ------ ------
Surplus (deficit) before unusual items (1,657) (1,623) (2,888)
Liquidation dividends 510
Restructuring exit expense (131) (131) (188)
------ ------ ------
SURPLUS (DEFICIT) FOR THE YEAR (1,788) (1,244) (3,076)
------ ------ ------
------ ------ ------
- ---------
(1) The estimated amount consists of the original Estimates presented
to the Legislative Assembly February 17, 2003. It does not contain any
appropriations granted in subsequent Supplementary Estimates.
(2) For 2003/04, interest expense of $526 million (2003: $453 million)
is included in education expense, $181 million (2003: $151 million) is
included in health expense and $158 million (2003: $139 million) is included
in transportation expense.
(3) Interest expense does not include the following: interest of $686
million (2003: $748 million) on cost of borrowing for relending to
government bodies; interest of $11 million (2003: $41 million) on cost of
unallocated borrowing under the Warehouse Program; interest of $6 million
(2003: $5 million) on borrowings under the Provincial Treasury Revenue
Program; and, interest of $0 million (2003: $6 million) on cost of financial
agreements entered into, on behalf of government bodies. These amounts are
not included because the interest expense and recovery are offsetting.
94
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
CONSOLIDATED REVENUE FUND
SCHEDULE OF NET REVENUE BY SOURCE
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
(Unaudited)
In Millions
2004 2003
--------------------- ------
Estimated Actual Actual
$ $ $
TAXATION REVENUE(1)
Personal income 4,725 4,878 4,154
Corporation income 755 776 613
Social service 3,962 3,966 3,770
Property 1,490 1,491 1,457
Fuel 451 461 393
Other 1,428 1,684 1,532
Commissions on collection of public funds (31) (29) (32)
Valuation adjustments (25) (8) (41)
------ ------ ------
Total taxation revenue 12,755 13,219 11,846
------ ------ ------
CONTRIBUTIONS FROM THE FEDERAL GOVERNMENT
Canada health and social transfer 2,763 3,044 2,606
Federal Equalization Program 675 (330) 543
Other contributions 187 273 127
------ ------ ------
Total contributions from the federal government 3,625 2,987 3,276
------ ------ ------
NATURAL RESOURCE REVENUE
Petroleum, natural gas and minerals 1,750 2,086 1,567
Forests 1,102 1,007 1,323
Water and other 528 524 371
Commissions on collection of public funds (2) (1) (1)
Valuation adjustments (11) (5)
------ ------ ------
Total natural resource revenue 3,367 3,616 3,255
------ ------ ------
OTHER REVENUE
Medical Services Plan premiums 1,412 1,415 1,358
Motor vehicle licences and permits 354 366 355
Other fees and licences 351 374 339
Investment earnings 67 63 18
Miscellaneous 242 277 245
Commissions on collection of public funds (14) (18) (13)
Valuation adjustments (118) (145) (93)
------ ------ ------
Total other revenue 2,294 2,332 2,209
------ ------ ------
95
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
CONSOLIDATED REVENUE FUND
SCHEDULE OF NET REVENUE BY SOURCE
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
(Unaudited)
In Millions
2004 2003
--------------------- ------
Estimated Actual Actual
$ $ $
CONTRIBUTIONS FROM GOVERNMENT ENTERPRISES
Taxpayer-supported Crown corporations and agencies
British Columbia Buildings Corporation 15 18 14
Other 20
------ ------ ------
Total contributions from taxpayer-supported Crown corporations and
agencies 15 18 34
------ ------ ------
Self-supported Crown corporations and agencies
British Columbia Hydro and Power Authority 0 93 338
British Columbia Liquor Distribution Branch 655 724 654
British Columbia Lottery Corporation 533 534 489
Other 2 2 2
------ ------ ------
Total contributions from self-supported Crown corporations and agencies 1,190 1,353 1,483
------ ------ ------
Total contributions from government enterprises 1,205 1,371 1,517
------ ------ ------
NET CONSOLIDATED REVENUE FUND REVENUE 23,246 23,525 22,103
------ ------ ------
------ ------ ------
LIQUIDATION DIVIDENDS 510
------
------
REVENUE COLLECTED FOR AND TRANSFERRED TO CROWN
CORPORATIONS, AGENCIES AND OTHER ENTITIES(2)
BC Transportation Financing Authority (418) (416) (222)
Greater Vancouver Transportation Authority (TransLink) (260) (258) (250)
Rural area property taxes (190) (183) (174)
Other Crown corporations, agencies and entities (54) (55) (144)
------ ------ ------
TOTAL (922) (912) (790)
------ ------ ------
------ ------ ------
- ---------
(1) Personal income tax and corporation income tax revenues are
recorded after adjustment for tax credits. These tax credits reduced personal
income tax by $110 million (2003: $101 million) and corporation income tax by
$199 million (2003: $146 million). The types of adjustments to personal
income tax and corporation income tax revenues are for foreign taxes, logging
taxes, venture capital, political contributions, low income rent reductions,
low income tax rebates and royalty tax rebates.
Personal income tax revenue is also reduced by $53 million (2003: $63
million) which represents that portion of the BC Family Bonus program costs
recorded against revenue.
Additional personal income tax and corporation income tax refunds are
issued under the INTERNATIONAL FINANCIAL BUSINESS (TAX REFUND) ACT. Personal
income tax refunds were $0.3 million (2003: $0.4 million) and corporation
income tax refunds less recoveries were $2.6 million (2003: $(0.5)million).
Property revenue is net of home owner grants of $511 million (2003:
$511 million).
(2) The revenue collected for and transferred to Crown corporations,
agencies and other entities has not been included in their revenue sources.
96
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
CONSOLIDATED REVENUE FUND
SCHEDULE OF COMPARISON OF ESTIMATED EXPENSES TO ACTUAL EXPENSES
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
(Unaudited)
In Thousands
Other Total
Estimated Authorizations Authorizations Actual
---------- -------------- -------------- ----------
$ $ $ $
SPECIAL OFFICES, MINISTRIES AND OTHER APPROPRIATIONS
Legislation 42,955 42,955 41,151
Officers of the Legislature 22,709 569 23,278 22,660
Office of the Premier 52,270 52,270 49,602
Advanced Education 1,899,007 1,899,007 1,897,252
Agriculture, Food and Fisheries 49,153 30,035 79,188 79,166
Attorney General 505,845 19,871 525,716 519,809
Children and Family Development 1,451,472 1,451,472 1,430,191
Community, Aboriginal and Women's Services 665,551 85,147 750,698 750,611
Education 4,859,939 4,859,939 4,786,636
Energy and Mines 56,631 20,299 76,930 76,930
Finance 54,870 558 55,428 53,562
Forests 564,899 277,737 842,636 839,089
Health Planning 24,154 (24,154)
Health Services 10,185,347 343,554 10,528,901 10,452,878
Human Resources 1,417,493 1,417,493 1,394,037
Management Services 46,679 14,479 61,158 61,158
Provincial Revenue 49,642 (25) 49,617 48,781
Public Safety and Solicitor General 506,684 92,737 599,421 598,850
Skills Development and Labour 25,637 25,637 19,925
Small Business and Economic Development 114,706 1,481 116,187 114,687
Sustainable Resource Management 92,297 92,297 91,384
Transportation 834,366 834,366 819,523
Water, Land and Air Protection 130,057 489 130,546 129,250
Management of Public Funds and Debt 926,000 926,000 738,430
Contingencies (All Ministries) and New Programs(1) 170,000 (107,258) 62,742
Government Restructuring (All Ministries) 190,000 190,000 167,843
BC Family Bonus 85,000 85,000 80,259
Citizens' Assembly 1,500 852 2,352 2,352
Commissions on Collection of Public Funds and Allowances
for Doubtful Revenue Accounts 1 1
Environmental Assessment Office 2,897 2,897 2,853
Environmental Appeal Board and Forest Appeals Commission 1,895 1,895 1,183
Forest Practices Board 4,344 4,344 4,226
Build BC Special Account 58,822 58,822 58,822
Transfer from the Build BC Special Account to the General
Account (58,822) (58,822) (58,822)
Insurance and Risk Management Special Account 4,083 4,083 4,083
---------- ---------- ---------- ----------
TOTAL EXPENSE INCLUDING RESTRUCTURING EXIT EXPENSE 25,034,000 760,454 25,794,454 25,278,361
Restructuring exit expense(2) (130,728) (130,728) (130,728)
---------- ---------- ---------- ----------
TOTAL EXPENSE 24,903,272 760,454 25,663,726 25,147,633
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
97
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
CONSOLIDATED REVENUE FUND
SCHEDULE OF COMPARISON OF ESTIMATED EXPENSES TO ACTUAL EXPENSES
FOR THE FISCAL YEAR ENDED MARCH 31, 2004--Continued
(Unaudited)
In Thousands
Other Total
Estimated Authorizations Authorizations Actual
---------- -------------- -------------- ----------
$ $ $ $
SUMMARY OF APPROPRIATIONS
Voted expense 24,680,861 810,771 25,491,632 24,981,442
Statutory
Various Acts 19,523 19,523 19,523
Special Accounts 438,074 677,547 1,115,621 1,085,481
Inter-account transfers (84,935) (747,387) (832,322) (808,085)
---------- ---------- ---------- ----------
TOTAL EXPENSE BY APPROPRIATION INCLUDING RESTRUCTURING
EXIT EXPENSE--2003/04 25,034,000 760,454 25,794,454 25,278,361
Restructuring exit expense(2) (130,728) (130,728) (130,728)
---------- ---------- ---------- ----------
TOTAL EXPENSE BY APPROPRIATION--2003/04 24,903,272 760,454 25,663,726 25,147,633
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
TOTAL EXPENSE BY APPROPRIATION--2002/03 25,367,730 306,302 25,674,032 24,991,223
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
- ---------
(1) Budget for Contingencies has been reallocated to ministries with
approved access.
(2) SEE Note 1--Significant Accounting Policies for information.
98
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
CONSOLIDATED REVENUE FUND
SCHEDULE OF FINANCING TRANSACTION DISBURSEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
(Unaudited)
In Thousands
Other Actual
Estimated Authorizations Total Disbursements
---------- -------------- -------------- -------------
$ $ $ $
SPECIAL OFFICES, MINISTRIES AND OTHER APPROPRIATIONS
Legislation 670 127 797 797
Officers of the Legislature 1,297 1,297 665
Office of the Premier 609 609 428
Advanced Education 423,525 423,525 351,762
Agriculture, Food and Fisheries 4,990 4,990 883
Attorney General 28,079 279 28,358 15,535
Children and Family Development 17,150 17,150 5,438
Community, Aboriginal and Women's Services 3,617 3,617 3,147
Education 200,129 938 201,067 145,045
Energy and Mines 68,460 3,711 72,171 72,171
Finance 5,876 5,876 3,315
Forests 50,300 11,484 61,784 61,784
Health Planning 600 (600) 0
Health Services 218,531 600 219,131 155,210
Human Resources 15,328 15,328 5,627
Management Services 58,665 58,665 33,323
Provincial Revenue 936,874 1,753 938,627 919,232
Public Safety and Solicitor General 7,430 7,430 4,455
Skills Development and Labour 3,512 3,512 739
Small Business and Economic Development 652 1,004 1,656 1,656
Sustainable Resource Management 9,342 9,342 6,571
Transportation 52,840 427,701 480,541 450,285
Water, Land and Air Protection 86,920 86,920 49,744
Contingencies (All Ministries) and New Programs 30,000 (2,289) 27,711
Government Restructuring (All Ministries) 15,000 15,000 10,810
Environmental Assessment Office 103 103 34
Environmental Appeal Board and Forest Appeals Commission 45 45
Forest Practices Board 100 100 35
Insurance and Risk Management 670 670 376
---------- ---------- ---------- ----------
TOTAL FINANCING TRANSACTION DISBURSEMENTS 2,241,314 444,708 2,686,022 2,299,067
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
SUMMARY OF APPROPRIATIONS
Loans, investments and other requirements 337,954 440,527 778,481 694,882
Prepaid capital advances 656,300 656,300 508,138
Revenue collected for, and transferred to, other entities 922,400 3,574 925,974 911,551
Capital Expenditures
Land and land improvements 84,100 84,100 48,568
Buildings 1,050 1,050 461
Specialized equipment 15,762 480 16,242 15,078
Office furniture and equipment 7,162 127 7,289 5,967
Vehicles 12,144 12,144 10,528
Information systems 150,862 150,862 91,114
Tenant improvements 18,580 18,580 12,780
Other 35,000 35,000
---------- ---------- ---------- ----------
TOTAL FINANCING TRANSACTIONS BY APPROPRIATION 2,241,314 444,708 2,686,022 2,299,067
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
99
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
CONSOLIDATED REVENUE FUND
SCHEDULE OF INFORMATION REQUIRED UNDER SECTION 9(2)(d)(ii),(iii) AND (iv)
OF THE BUDGET TRANSPARENCY AND ACCOUNTABILITY ACT
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
(Unaudited)
In Millions
Assets,
Debts and Debts and
Obligations Obligations Remissions
Written Off Extinguished Made
----------- ------------ ----------
$ $ $
MINISTRY
Advanced Education 1
Children and Family Development 1
Forests 3
Health Services 13 4
Human Resources 12
Management Services 7
Provincial Revenue 15
Public Safety and Solicitor General 4
Small Business and Economic Development 6
Sustainable Resource Management 1
----------- ------------ ----------
TOTAL 2003/04 57 6 4
----------- ------------ ----------
TOTAL 2002/03 180 8 1
----------- ------------ ----------
This statement includes amounts authorized by sections 17, 18, and 19 of
the FINANCIAL ADMINISTRATION ACT. Amounts authorized for write-off,
forgiveness or remission by other statutes are not shown separately in these
financial statements.
- -------------------------------------------------------------------------------
PROVINCIAL DEBT
SUMMARY
- -------------------------------------------------------------------------------
[BRITISH COLUMBIA LOGO]
103
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
OVERVIEW OF PROVINCIAL DEBT
(Unaudited)
The provincial government and its Crown corporations and agencies incur
debt to finance operations and capital projects. Borrowing for operations is
required when revenues fall short of expenditures and to meet other cash
requirements such as loans and investments. Borrowing for capital projects
finances the building of schools, hospitals, roads, public transit and other
social and economic capital assets. As these investments provide essential
services over several years, the government, like the private sector, borrows
to fund these projects and amortizes the cost over the asset's useful life.
Provincial debt is reported using two basic classifications: (1)
taxpayer-supported debt and (2) self-supported debt.
TAXPAYER-SUPPORTED DEBT--includes government direct debt, which is
incurred for government operating and capital purposes, and the debt of those
Crown corporations and agencies that require an operating or debt service
subsidy from the provincial government or that are fully consolidated in the
Summary Financial Statements. Examples include debt of the British Columbia
Buildings Corporation and the BC Transportation Financing Authority.
SELF-SUPPORTED DEBT--includes the debt of commercial Crown corporations
and agencies as well as the Warehouse Program. Commercial Crown corporations
and agencies generate sufficient revenues to cover interest costs and repay
principal and may pay dividends to the province. The British Columbia Hydro
and Power Authority and the British Columbia Railway Company are examples of
commercial Crown corporations. The Warehouse Program is used to take
advantage of borrowing opportunities in advance of requirements. Eventually,
this debt is allocated to the province, Crown corporations or agencies. In
the interim, these funds are invested at market rates.
The following provincial debt summary provides additional detailed
information and related key indicators and benchmarks to allow a more
informed assessment of the debt totals. A reconciliation is also provided to
explain the differences between the Summary of Provincial Debt and the
Summary Financial Statements.
The total provincial debt as at March 31, 2004 was $37,337 million which
consists of $36,938 million in the Summary Financial Statements, with $232
million in additional debt of self-supported Crown corporations and agencies
and $167 million in additional taxpayer-supported debt.
104
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
PROVINCIAL DEBT
AS AT MARCH 31, 2004
(Unaudited)
The accumulated provincial debt of $37,337 million has been incurred for
various purposes as shown in Chart 1 below. Over the years, borrowing
activity has contributed to economic development in the province and has
provided resources to deliver health, education and social programs, and
transportation infrastructure.
At March 31, 2004, taxpayer-supported debt totalled $29,598
million--including debt incurred for government operating purposes ($15,754
million), educational facilities ($6,072 million), health facilities ($2,084
million), transportation infrastructure ($4,880 million) and other debt ($808
million). Other debt is comprised mainly of British Columbia Buildings
Corporation, debt relating to social housing, and loans to universities and
colleges.
At March 31, 2004, self-supported debt relating to commercial Crown
corporations and agencies totalled $7,739 million. Commercial debt includes
the debt of British Columbia Hydro and Power Authority, British Columbia
Railway Company and debt relating to Columbia River power projects.
Chart 1
In Millions/Percent of Total
[Pie Chart
Taxpayer-supported: $29,598 million (79%)
Self-supported: $7,739 million (21%)
Commercial & other self-supported $ 7,379 21%
Highways, Ferries and Transit $ 4,880 13%
Health Facilities $ 2,084 6%
Government Direct(1) Operating $15,754 42%
Education $ 6,072 16%
Other $ 808 2%
TOTAL: $37,337 MILLION]
(1) Operating debt includes a portion of highway infrastructure debt
incurred prior to 1994/95, ferry infrastructure debt transferred in 1999/00
and amounts required to finance operating deficits.
105
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
CHANGE IN PROVINCIAL DEBT(1)
(Unaudited)
Provincial debt increased by $798 million in 2003/04; this included
increases in taxpayer-supported debt of $511 million and in self-supported
debt of $287 million (see Chart 2 below).
Taxpayer-supported Debt--The 2003/04 increase of $511 million was due to
an increase ($277 million) in government operating debt to finance the
operating deficit partially offset by higher cash balances at the start of
the year, cash flows for health accord funding and other working capital
sources. The increase also included new capital financing (partially offset
by changes in sinking fund balances) totalling $453 million, used to fund
various provincial infrastructures in the education ($279 million), health
($80 million), and transportation ($94 million) sectors. Other debt decreased
by $219 million mainly due to reductions in debt of the British Columbia
Buildings Corporation.
Self-supported Debt--The 2003/04 increase of $287 million consists of a
$256 million increase in British Columbia Hydro and Power Authority's debt
and a $97 million increase in debt relating to Columbia River power projects,
offset by reductions in other self-supported debt ($66 million) primarily
relating to British Columbia Railway Company and Columbia Power Corporation.
[Graphic]
- ----------------
(1) Includes gross new borrowings plus changes in sinking fund
balances, less debt maturities.
106
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
RECONCILIATION OF SUMMARY FINANCIAL STATEMENTS (SURPLUS) DEFICIT
TO CHANGE IN TAXPAYER-SUPPORTED DEBT AND TOTAL DEBT
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
(Unaudited)
In Millions
2004 2003(1)
------- -------
$ $
(Surplus) deficit for the year 1,339 3,199
------- -------
Taxpayer-supported debt decreased by:
Non-cash expenses included in (surplus) deficit (1,182) (1,380)
Accounts receivable, accounts payable and other working capital net decreases (1,191) (995)
------- -------
(2,373) (2,375)
------- -------
Taxpayer-supported debt increased by:
Self-supported Crown corporation and agency earnings in excess of contributions to the CRF 340 109
Prepaid capital advances 496 490
Tangible capital asset net acquisitions 73 392
Net increases in loans, advances and investments 636 79
------- -------
1,545 1,070
Net increase (decrease) in taxpayer-supported debt 511 1,894
Taxpayer-supported debt--beginning of year 29,087 27,193
------- -------
Taxpayer-supported debt--end of year 29,598 29,087
Self-supported debt(2) 7,739 7,452
------- -------
TOTAL DEBT(3) 37,337 36,539
------- -------
------- -------
RECONCILIATION OF TOTAL DEBT TO THE SUMMARY FINANCIAL STATEMENTS DEBT
AS AT MARCH 31, 2004
(Unaudited)
In Millions
2004 2003(1)
------- -------
$ $
Total debt 37,337 36,539
Debt included as part of equity in self-supported Crown corporations and agencies (232) (226)
Contingent liabilities for debt of individuals and organizations that have been guaranteed by the
province (167) (189)
------- -------
SUMMARY FINANCIAL STATEMENTS DEBT 36,938 36,124
------- -------
------- -------
Comprised of
Taxpayer-supported debt 29,431 28,899
Self-supported debt 7,507 7,225
------- -------
36,938 36,124
------- -------
------- -------
- ---------------
(1) Restated. SEE Note 26.
(2) SEE Summary of Provincial Debt, page 113.
(3) Total debt includes debt of self-supported Crown corporations and
agencies, and debt of individuals and organizations guaranteed by the
province.
107
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
CHANGE IN PROVINCIAL DEBT
COMPARISON TO BUDGET
(Unaudited)
The increase in provincial debt was $3,629 million less than originally
budgeted (per the Budget and Fiscal Plan presented in February 2003, adjusted
to reflect the restated Public Accounts balance at March 31, 2003). Chart 3
below shows the difference between the actual change in provincial debt and
the budgeted change by major category. The increase in taxpayer-supported
debt was $2,448 million less than budget and the increase in self-supported
debt was $681 million lower than budget. In addition, the $500 million
forecast allowance included in the budget was not required.
TAXPAYER-SUPPORTED DEBT--The increase was $2,448 million lower than
budget due to reduced borrowing for government operating purposes ($2,028
million) due to improved operating results, higher than forecast cash
balances at the start of the year, updated cash flow information for health
accord funding, and reduced financing transaction requirements; lower than
forecast capital spending and changes in sinking fund balances ($326 million)
on education, health and transit infrastructure and lower than expected debt
of the British Columbia Buildings Corporation and other agencies ($94
million).
SELF-SUPPORTED DEBT--The increase was $681 million lower than budget as
a result of reduced debt for British Columbia Power and Hydro Authority ($649
million) due to improved operating results and lower working capital
requirements, and lower debt of other self-supported Crown corporations and
agencies ($32 million).
[Graphic]
108
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
INTERPROVINCIAL COMPARISON OF TAXPAYER-SUPPORTED DEBT
AS A PERCENTAGE OF GROSS DOMESTIC PRODUCT
(Unaudited)
Chart 4 below shows the ratio of each province's taxpayer-supported debt
as a percentage of their Gross Domestic Product (GDP). The ratio of a
province's taxpayer-supported debt relative to its GDP highlights the ability
of a province to service its debt load. This rating is often used by
investors and credit rating agencies when assessing a province's investment
quality. British Columbia's taxpayer-supported debt ratio is one of the
lowest in Canada and this translates into a strong credit rating and
relatively low debt servicing costs. According to Moody's Investors Services
Inc., British Columbia has the second lowest taxpayer-supported debt to GDP
ratio of all provinces, based on May 2004 estimates.
Chart 4
Percent of GDP, at March 31, 2004
[Graphic]
Source: Moody's Investors Services Inc., based on May 2004 Estimates
109
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
INTERPROVINCIAL COMPARISON OF TAXPAYER-SUPPORTED DEBT
PER CAPITA
(Unaudited)
Chart 5 shows the inter-provincial taxpayer-supported debt per capita,
which is the amount of taxpayer-supported debt owing for each resident in a
province. According to the Moody's Investors Service, British Columbia has
the second lowest taxpayer-supported debt per capita of all provinces, based
on May 2004 estimates.
Chart 5
$ Per capita, at March 31, 2004
[Graphic]
Source: Moody's Investors Service Inc., based on May 2004 Estimates.
More comprehensive information on the debt of the province and its Crown
corporations and agencies is provided on the Debt Management Branch web-site.
This more detailed information can assist readers in assessing the
province's debt position. The web-site is available on the Internet at:
http//www.fin.gov.bc.ca/PT/dmb/index/shtml.
[Graphic]
Report of the Auditor General
of British Columbia
ON THE
SUMMARY OF PROVINCIAL DEBT,
KEY INDICATORS OF PROVINCIAL DEBT, AND
SUMMARY OF PERFORMANCE MEASURES
TO THE LEGISLATIVE ASSEMBLY
OF THE PROVINCE OF BRITISH COLUMBIA
PREAMBLE
Each year since 1995 the Auditor General has provided a special report to the
Legislative Assembly on the accuracy of debt-related statements prepared by
the Government. For the 2003/04 fiscal year these statements are the Summary
of Provincial Debt, Key Indicators of Provincial Debt, and Summary of
Performance Measures. Through these statements the Government reports on its
debt management by presenting five years of information on provincial debt
and debt indicators, and compares its actual results of Performance Measures
to its benchmark measures for the fiscal year ended March 31, 2004.
Consistent with prior years, in preparing these statements, and in the
2003/04 budget, the government reporting entity has been that which is
defined by the Canadian Institute of Chartered Accountants but excludes
schools, universities, colleges and institutes, and health care organizations
(SUCH sector). Accordingly, in these statements the provincial debt, whether
directly borrowed or guaranteed by the Government, does not include amounts
borrowed from private lenders by SUCH sector organizations. For the 2003/04
fiscal year, the outstanding balance of these excluded borrowings amounted to
$493 million ($368 million for 2002/03).
The preparation of the three statements named above is the responsibility of
the Government. My responsibility is to express an opinion on the accuracy of
such information based on the above definition of the reporting entity and
provincial debt.
. . . 2
Page 2
REPORT OF THE AUDITOR GENERAL
OF BRITISH COLUMBIA ON THE
SUMMARY OF PROVINCIAL DEBT,
KEY INDICATORS OF PROVINCIAL DEBT, AND
SUMMARY OF PERFORMANCE MEASURES
SCOPE
I examined financial and other information included in the statements titled
Summary of Provincial Debt for the five years ended March 31, 2004, Key
Indicators of Provincial Debt for the five years ended March 31, 2004, and
Summary of Performance Measures for the year ended March 31, 2004 in
accordance with procedures I considered necessary in the circumstances. These
procedures include the verification of financial information extracted from
financial statements audited by me or by other auditors whose work I have
reviewed on a test basis. These procedures also include confirming or
assessing the reasonableness of the non-financial and statistical data used
by the Government for the Province's credit rating, population and gross
domestic product; however, I did not perform an audit of such data.
OPINION
As a result of applying these procedures, I am of the opinion that the
information included in the statements titled Summary of Provincial Debt for
the five years ended March 31, 2004, Key Indicators of Provincial Debt for
the five years ended March 31, 2004, and Summary of Performance Measures for
the year ended March 31, 2004 are, in all significant respects, consistent
with the sources from which they are extracted, and are presented in a
consistent manner.
DISCLAIMER
I have not been associated with the development of the Government plans to
manage provincial debt, nor have I audited them. This is the responsibility
of the government. My responsibility is limited to examining the information
included in the statements specifically referred to in the above scope
paragraph, based on the definition of the reporting entity and provincial
debt as outlined in the preamble to this report.
[SIGNATURE]
VICTORIA, BRITISH COLUMBIA Wayne Strelioff, FCA
MAY 14, 2004 Auditor General
113
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
SUMMARY OF PROVINCIAL DEBT(1)
AS AT MARCH 31
In Millions
2004 2003 2002 2001 2000
---- ----- ---- ---- ----
$ $ $ $ $
TAXPAYER-SUPPORTED DEBT
Provincial government direct operating(2) 15,754 15,477 13,805 12,045 13,735
--------- --------- --------- --------- ---------
Education(3)
Schools 4,384 4,294 4,092 3,880 3,609
Post-secondary educational institutions 1,688 1,499 1,425 1,383 1,369
--------- --------- --------- --------- ---------
6,072 5,793 5,517 5,263 4,978
--------- --------- --------- --------- ---------
Health facilities(3) 2,084 2,004 1,920 1,780 1,451
--------- --------- --------- --------- ---------
Highways, ferries and public transit
BC Transportation Financing Authority 2,764 2,661 2,514 2,197 1,843
British Columbia Ferry Corporation(2) 19 21 24
British Columbia Transit 83 87 79 75 79
Public transit(3) 914 930 936 948 952
SkyTrain extension(3) 1,119 1,105 1,044 836 488
Rapid Transit Project 2000 Ltd. 3 47 114 101
--------- --------- --------- --------- ---------
4,880 4,786 4,639 4,191 3,487
--------- --------- --------- --------- ---------
Other
British Columbia Buildings Corporation 317 456 596 610 615
552513 British Columbia Ltd. (Skeena Cellulose Inc.)(4) 337
Social housing(5) 156 161 299 265 205
Homeowner Protection Office 129 123 113 71 34
Universities and colleges 90 105 114 124 130
577315 British Columbia Ltd. (Western Star Trucks
Holdings Ltd.) 62
580440 British Columbia Ltd. (Vancouver Trade and
Convention Centre)(2) 3
Other(6) 116 182 190 244 357
--------- --------- --------- --------- ---------
808 1,027 1,312 1,651 1,406
--------- --------- --------- --------- ---------
Total taxpayer-supported debt 29,598 29,087 27,193 24,930 25,057
--------- --------- --------- --------- ---------
114
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
SUMMARY OF PROVINCIAL DEBT(1)
AS AT MARCH 31--Continued
In Millions
2004 2003 2002 2001 2000
---- ----- ---- ---- ----
$ $ $ $ $
SELF-SUPPORTED DEBT
Commercial Crown corporations and agencies
British Columbia Hydro and Power Authority 7,040 6,784 6,670 6,649 6,880
British Columbia Railway Company 477 494 614 603 655
552513 British Columbia Ltd. (Skeena Cellulose Inc.)(4) 280
Columbia River power projects(7) 215 118 120 93 94
Columbia Power Corporation 47 64 20
British Columbia Liquor Distribution Branch 7 9 13 2 3
--------- --------- --------- --------- ---------
7,739 7,452 7,481 7,367 7,912
--------- --------- --------- --------- ---------
Warehouse Program 1,067 1,312 1,320
--------- --------- --------- --------- ---------
Total self-supported debt 7,739 7,452 8,548 8,679 9,232
--------- --------- --------- --------- ---------
TOTAL PROVINCIAL DEBT 37,337 36,539 35,741 33,609 34,289
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
- ------------------
(1) Debt is after deductions of sinking funds, unamortized discounts,
unrealized foreign exchange gains/(losses), and, excludes accrued interest.
Government direct and fiscal agency debt accrued interest is reported in the
government's accounts as an accounts payable. Figures for earlier years have
been restated to conform with the presentation used for 2004 and to reflect
changes in underlying data.
(2) Effective March 31, 2000, the provincial government assumed
responsibility for the fiscal agency loans of the British Columbia Ferry
Corporation ($1,080 million) and 580440 British Columbia Ltd. (Vancouver
Trade and Convention Centre--$70 million).
(3) Represents government direct debt incurred for capital financing of
education and health facilities and public transit infrastructure.
(4) Based on the outlook for world pulp prices and their potential
impact on 552513 British Columbia Ltd. (Skeena Cellulose Inc.), the debt was
reclassified as being taxpayer-supported in 2000/01. In fiscal 2001/02, the
company's debt was assumed by the provincial government ($260 million) and by
the minority shareholder ($94 million), as Skeena Cellulose Inc. was sold to
the private sector.
(5) Includes debt of the British Columbia Housing Management Commission
and the Provincial Rental Housing Corporation.
(6) Includes debt of Land and Water British Columbia Inc., the Pacific
National Exhibition, other taxpayer-supported Crown corporations and
agencies and the fiscal agency loans to local governments. Also includes
student loan guarantees, loan guarantees to agricultural producers,
guarantees under economic development and home mortgage assistance programs.
(7) Joint ventures of Columbia Power Corporation and Columbia Basin
Trust.
115
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
KEY INDICATORS OF PROVINCIAL DEBT(1)
FOR THE FISCAL YEARS ENDED MARCH 31
2004 2003 2002 2001 2000
-------------------- ---- ---- ---- ----
Budget
Estimate(2) Actual Actual Actual Actual Actual
DEBT TO REVENUE (PERCENT)
Total provincial 112.1 104.2 108.9 94.8 82.7 101.4
Taxpayer-supported 124.4 112.4 116.2 104.2 90.0 100.6
DEBT PER CAPITA ($)(3)
Total provincial 9,800 9,003 8,879 8,764 8,321 8,549
Taxpayer-supported 7,667 7,137 7,069 6,668 6,172 6,247
DEBT TO GDP (PERCENT)(4)
Total provincial 29.4 26.2 27.0 27.1 25.6 28.4
Taxpayer-supported 23.0 20.8 21.5 20.6 19.0 20.7
INTEREST BITE (CENTS PER DOLLAR OF REVENUE)(5)
Total provincial 7.3 6.3 6.7 6.4 6.4 7.5
Taxpayer-supported 7.7 6.5 6.6 6.6 6.8 7.2
INTEREST COSTS ($ MILLIONS)
Total provincial 2,666 2,241 2,233 2,423 2,604 2,528
Taxpayer-supported 1,982 1,707 1,662 1,724 1,871 1,785
INTEREST RATE (PERCENT)(6)
Taxpayer-supported 6.5 5.8 5.9 6.6 7.5 7.4
BACKGROUND INFORMATION
REVENUE ($ MILLIONS)
Total provincial(7, 8) 36,528 35,824 33,545 37,689 40,618 33,804
Taxpayer-supported(9) 25,757 26,334 25,034 26,108 27,690 24,909
<Page>
116
PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
KEY INDICATORS OF PROVINCIAL DEBT(1)
FOR THE FISCAL YEARS ENDED MARCH 31--Continued
2004 2003 2002 2001 2000
-------------------- ---- ---- ---- ----
Budget
Estimate(2) Actual Actual Actual Actual Actual
TOTAL DEBT ($ MILLIONS)
Total provincial 40,966 37,337 36,539 35,741 33,609 34,289
Taxpayer-supported(10) 32,046 29,598 29,087 27,193 24,930 25,057
PROVINCIAL GDP ($ MILLIONS)(11) 139,540 142,418 135,552 132,050 131,086 120,921
POPULATION (THOUSANDS AT JULY 1)(12) 4,180 4,147 4,115 4,078 4,039 4,011
- -----------------
(1) Figures for prior years have been restated to conform with the
presentation used for 2004 and to include the effects of changes in
underlying data and statistics.
(2) Represents the budget estimate as presented in the Budget and
Fiscal Plan tabled February 18, 2003.
(3) The ratio of debt to population (e.g. 2003/04 debt divided by
population at July 1, 2003).
(4) 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. 2003/04 debt divided by 2003 GDP).
(5) 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.
(6) Weighted average of the cost of all outstanding debt issues.
(7) Total provincial revenue has been restated to reflect a change in
accounting policy for power utilities. Electricity trade activities that are
supported by derivative purchases and sales are now reported on a net basis
(no bottom line impact). This resulted in a revenue decrease (and an
offsetting decrease in expense) of $1.3 billion in 2002/03 and $1.1 billion
in 2003/04 for BC Hydro. Amounts for previous years have not been restated as
in formation is not available. This restatement effects the calculation of
two indicators: total provincial debt to revenue and total provincial
interest bite.
(8) Includes revenue of the Consolidated Revenue Fund plus revenue of
all Crown corporations and agencies.
(9) Excludes revenue of commercial Crown corporations and agencies.
(10) Excludes debt of commercial Crown corporations and agencies, and
funds held under the province's Warehouse Borrowing Program.
(11) GDP for the calendar year ending in the fiscal year (e.g. GDP for
2003 is used for the fiscal year ending March 31, 2004).
(12) Population at July 1st within the fiscal year (e.g. population at
July 1, 2003 is used for the fiscal year ending March 31, 2004).
SUMMARY OF PERFORMANCE MEASURES(1)
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
2004 2004 2003
---- ---- ----
Target Actual Actual
Provincial credit rating(2) Aa2 Aa2 Aa2
Debt to GDP ratio(2) In the lowest 3 2nd lowest 2nd lowest
Debt service costs as a percentage of revenue(2) 2nd lowest 2nd lowest 2nd lowest
(1) Performance measures as presented in the Ministry of Finance
Service Plan in February 2003.
(2) Moody's Investor Service Inc., based on May 2004 estimates. The
debt to GDP and debt service costs as a percentage of revenue performance
measures represent inter-provincial comparisons.
PROVINCE OF BRITISH COLUMBIA 117
PUBLIC ACCOUNTS 2003/04
(Unaudited)
DEFINITIONS
CONSOLIDATED REVENUE FUND (CRF)--includes the taxpayer-supported
activities of the General Fund and special funds of government through which
the government delivers central government programs. It does not include the
activities of government operated through Crown corporations or agencies.
CONSOLIDATION--the methods used to combine the results of Crown
corporations and agencies with the Consolidated Revenue Fund. The two methods
used are:
(1) full or proportional consolidation--the accounts of the Crown
corporation or agency are adjusted to a basis consistent with the accounting
policies of the government. The operating result and financial position of
the Crown entities are combined on a "line-by-line" basis. Inter-entity
accounts and transactions are eliminated upon consolidation. Proportional
consolidation differs from full consolidation in that only the government's
portion of operating and financial results is combined on a "line-by-line"
basis.
(2) modified equity consolidation--the original investment of the
government in the Crown corporation or agency is initially recorded at cost
and adjusted annually to include the net earnings/losses and other net equity
changes of the entity. There is no adjustment to conform to government
accounting policies. Since the government ensures the ongoing activities of
self-supported Crown corporations and agencies, full account is taken of
losses in these entities, even when cumulative losses exceed the original
investment. Accounts and transactions between self-supported entities are not
eliminated; however, profit elements included in such transactions, including
certain increases in contributed surplus, are eliminated.
DEBT--represents the par value of the debt less sinking fund balances,
internally held debt, unamortized discount and premiums, and unrealized
foreign exchange gains or losses.
DEFICIT--meaning is dependent upon the statement to which it applies:
(i) Statement of Financial Position: the accumulated deficit is the
amount by which the total liabilities of the government exceed its total
assets.
(ii) Statement of Operations: the annual deficit is the amount by which
the total annual expenses for the operating year exceed total annual revenues
(SEE "Surplus" definition).
ENTITLEMENT--a government transfer that the government must make if the
recipient meets specified eligibility criteria. Entitlements are
non-discretionary in the sense that both eligibility and the amount of the
payment are prescribed in a statute or regulation.
FINANCIAL ASSETS--assets on hand at the end of the accounting period,
including cash and assets that are convertible into cash and are not intended
for consumption in the normal course of activities, that could provide
resources to discharge existing liabilities or finance future operations.
GOVERNMENT BUSINESS PARTNERSHIP--a government partnership that has all
the following characteristics:
(i) is a separate legal entity with the power to contract in its own
name and that can sue or be sued;
(ii) has been delegated the financial and operational authority to carry
on a business;
(iii) sells goods and/or services to individuals and organizations
outside the government reporting entity as its principal activity; and
(iv) can, in the normal course of its operation, maintain its operations
and meet its liabilities from revenue received from sources outside the
government reporting entity.
GOVERNMENT PARTNERSHIP--a contractual arrangement between the government
and a party or parties outside the government reporting entity that has all
the following characteristics:
(i) the partners co-operate toward achieving significant, clearly
defined common goals;
(ii) the partners make a financial investment in the government
partnership;
(iii) the partners share control of decisions related to the financial
and operating policies of the government partnership on an ongoing basis; and
(iv) the partners share, on an equitable basis, significant risks and
benefits associated with the operation.
<page>
118 PROVINCE OF BRITISH COLUMBIA
PUBLIC ACCOUNTS 2003/04
(Unaudited)
DEFINITIONS--Continued
GOVERNMENT TRANSFERS--transfers of money from government to an
individual, organization or another government from which the government
making the transfer does not:
(i) receive any goods or services directly in return;
(ii) expect to be repaid in the future; nor
(iii) expect a financial return.
GRANTS--a government transfer made at the sole discretion of the
government. The government has the discretion to decide whether or not to
make the grant, the conditions to be complied with, if any, the amount of the
grant and to whom to provide the grant.
NET LIABILITIES--the amount by which the total liabilities of the
government exceed its total financial assets. The separate calculation of
this number on the Statement of Financial Position is unique to financial
statements for Canadian senior governments. Can also be referred to as "net
debt"; however, as this term can be confused with the term "debt" (SEE
definition), the more descriptive net liabilities terminology is used by this
province. Excludes non-financial assets such as buildings and prepaid
expenses from total assets on the Statement of Financial Position.
PROVINCIAL GOVERNMENT DIRECT DEBT--combines the government direct
operating debt and the debt incurred to finance education, health facilities
and public transit. This combined portfolio represents the debt for which the
government has direct responsibility for the associated debt service costs.
SELF-SUPPORTED CROWN CORPORATIONS AND AGENCIES--all Crown corporations
and agencies that are accountable for the administration of their financial
affairs and resources either to a minister of the government or directly to
the Legislature and are owned or controlled by the government. In addition,
they must also carry on a business that sells goods and/or services to
persons outside the government reporting entity as their principal activity
and maintain operations and meet liabilities from revenue received outside
the government reporting entity in the normal course of operations. This also
includes the government's interest in government business partnerships.
SUMMARY ACCOUNTS--the financial position and operating result of the
government reporting entity including the Consolidated Revenue Fund and Crown
corporations and agencies; the amounts represented by the Summary Financial
Statements of the government.
SURPLUS--meaning is dependent upon the statement to which it applies:
(i) Statement of Financial Position: the accumulated surplus is the
amount by which the total assets of the government exceed its total
liabilities.
(ii) Statement of Operations: the annual surplus is the amount by which
the total annual revenues for the operating year exceed total annual expenses
(SEE "Deficit" definition).
TAXPAYER-SUPPORTED CROWN CORPORATIONS AND AGENCIES--all Crown
corporations and agencies outside the Consolidated Revenue Fund that are
accountable for the administration of their financial affairs and resources
either to a minister of the government or directly to the Legislature and are
owned or controlled by the government. In addition, they must not meet the
criteria for being self-supported. This also includes the government's
interest in government partnerships that are not government business
partnerships.
TRANSFERS UNDER AGREEMENTS (INCLUDING SHARED COST)--a government
transfer that is a reimbursement of eligible expenditures pursuant to an
agreement between the government and the recipient. The recipient usually
spends the money first, and the government has some input into how the money
is spent.