B.C. continues to weather the global economic storm, but declining natural gas revenues are having a major impact on provincial revenues and government will trim its spending taking action to ensure the 2013-14 budget is balanced, Finance Minister Michael de Jong announced today.
View photos of the announcement (flic.kr)
The deficit for 2012-13 is now projected to be $1.14 billion once new spending reductions are included, which is an increase of $173 million from Budget 2012. Natural resource revenue is down by $1.4 billion over the three-year fiscal plan compared to the Budget 2012 forecast. $1.1 billion is as a result of declining natural gas prices and volumes.
Government will need to find $241 million in 2012-13, $389 million in 2013-14 and $483 million in 2014-15 to manage the natural gas market impact on royalty revenues. Government is committed to implementing measures to mitigate the impacts of declining natural gas revenues and deliver a balanced budget in 2013-14 as required by law.
Budget 2012 included measures to keep government spending at an overall annual increase of two per cent over the three-year fiscal plan. Ministries are on track to meet their spending targets, but further measures are necessary to control spending and manage the effect of low natural gas prices and volumes.
Immediate measures to address the revenue shortfall include:
- Further spending reductions within government operations, such as travel budgets and other discretionary funding.
- Freezing salaries for public sector management, including government, Crown corporations, health authorities, universities and colleges, etc.
- Implementing a hiring freeze in the public service (government).
- Reviewing the bargaining mandate.
Government will continue to evaluate other measures over the coming months to manage the gap created by diminishing natural gas revenues.
The government of B.C. is investing $10.5 billion in infrastructure spending over the three-year fiscal plan, which includes $193 million in new capital approved since Budget 2012 to deliver essential services and maintain highway infrastructure.
New projects range from improvements at public schools and post secondary institutions, to health-care facilities and housing projects, as well as road and highway work. However, to keep debt affordable and help protect our triple-A credit rating, government will adjust its capital plan as necessary so the debt-to-GDP targets remain on track.
The government forecasts B.C.'s real GDP will grow by 2.0 per cent in 2012, 1.8 per cent in 2013, and about 2.4 per cent annually in the following years. This prudent forecast is mainly due to continued weakness in Europe, slow U.S. recovery and the potential for slowing demand from Asia.
Government has also released the 2013 Budget Consultation Paper, which asks British Columbians what their priorities are for the next provincial budget. The paper is available online, or by contacting the Select Standing Committee on Finance and Government Services, which is holding public consultations around the province in September and October. For more information about the 2013 Budget Consultation Paper and how to participate in the consultation process, please visit: www.fin.gov.bc.ca/budgetconsultation
People are also encouraged to try balancing B.C.'s budget using the online budget simulator at: www.fin.gov.bc.ca/mybcbudget
Once a balanced budget is achieved, they can send their solutions to the Finance minister.
Michael de Jong, Minister of Finance -
"We are committed to delivering a balanced budget. That's why we are taking additional steps to exercise greater fiscal restraint. This government respects taxpayers and we will not spend more of their money than we receive. We are looking for savings inside government, while protecting the programs and services B.C. families rely on."
- B.C. labour market improved through the first eight months of 2012. Year-to-date employment increased 1.9 per cent compared to 2011.
- 43,200 more jobs year-to-date to August 2012: decline of 13,100 part-time jobs more than offset by an increase of 56,300 full time jobs, compared to the same period of 2011.
- B.C. employment is forecast to increase 1.4 per cent in 2012, or 32,000 jobs.
- Retail sales advanced four per cent year-to-date to June 2012, ahead of the national average of 3.4 per cent.
Consumer price inflation in B.C. grew 1.5 per cent year-to-date to July 2012, and is forecast to be 1.9 per cent annually this year compared to 2011. The Canadian inflation rate is forecast to be 2.1 per cent in 2012.
British Columbia's 2012-13 First Quarterly Report is available online at: www.gov.bc.ca/fin
A backgrounder on the PST update follows.
Ministry of Finance
Sept. 13 - Return to PST progress update
PST re-implementation timeline
The B.C. government's action plan remains on track to return to the PST with all permanent exemptions on April 1, 2013.
Provincial systems development and administration
A new e-service called eTaxBC is being developed that will benefit businesses by allowing online PST registration, tax return filing and payment and self-service options.
The Ministry of Finance is also acquiring new telephone technology that will support multi-location call centres in both Victoria and Vancouver. The ministry's information and services on the main government webpage at www.gov.bc.ca are being redesigned and updated to improve access to information, based on consultations with businesses, individuals and tax professionals. Implementation is expected this fall.
Hiring is underway for tax administration positions required for the return of the PST.
Provincial business registration and outreach
Resources are being developed to promote and train businesses to use eTaxBC, a new e-service to make it easier for businesses by allowing online PST registration, tax return filing and payment, and account maintenance. Use of e-filing and payment is expected to be mandatory for businesses with total Canadian sales or leases over $1.5 million annually-approximately 10 per cent of B.C. businesses. This is similar to current GST/HST filing rules. Those under that threshold can still choose to file returns by paper. The e-services registration will be available Jan. 2, 2013.
Business outreach will begin in October, and will explain the timeline for re-implementation, what assistance is available to business, how to register, and promote the new eTaxBC services. Some outreach to business associations has already begun. Additional public information is under development and will be available in advance of the regulations to support businesses in their return to PST.
Businesses will need to adapt their systems for the implementation of the PST on Apr. 1, 2013. Initially outreach will focus on the general tax application of the PST Act, with more detailed information being released as the regulations and legislative amendments are announced.Provincial legislation/regulations
The Ministry of Finance continues to work on developing the regulations, and transitional and consequential amendments to other acts to support the provisions in the legislation introduced on May 14, 2012. Government plans to publicly release a final proposed version of the legislation in December.
Ministry of Finance