Spending controls brought in midway through last year to address falling revenues helped government reduce total spending by $668 million compared to the Budget 2012 forecast, Finance Minister Michael de Jong announced today with the release of the 2012-13 Public Accounts.

The Province ended the fiscal year with a deficit of $1.146 billion.

Government revenues were $1.1 billion lower than forecast in Budget 2012, primarily due to declining revenues in resource sectors including petroleum and natural gas, natural resources, and minerals. Government increased spending on health by $585 million, education by $300 million and social services by $50 million compared to 2011-12. Total program spending increased only 2.6 per cent over the previous year.

Government invested $3.3 billion in capital projects throughout the province such as schools, universities, health-care facilities and other capital infrastructure. Projects included the Fort St. John Hospital and Residential Care Centre, expansions to Kelowna General and Vernon Jubilee hospitals, the Centre for Drug Research and Development Building for the University of British Columbia, and the South Fraser Perimeter Road.

Total provincial debt increased by $5.6 billion to $55.8 billion as the Province continued to invest in capital projects. This includes an increase in taxpayer-supported debt of $3.5 billion to fund capital infrastructure and support working capital requirements for programs and services. The increase in taxpayer-supported debt was $427 million less than forecast in Budget 2012 due lower borrowing requirements for capital projects and for government operating purposes. Self-supported debt increased $2.1 billion, $418 million less than budget.

The Province's ratio of taxpayer-supported debt to GDP, a key measure of affordability, ended the year at 17 per cent-one of the lowest in North America and below the 17.6 per cent forecast in Budget 2012.

British Columbia continues to maintain the highest credit rating possible with Standard & Poor's and Moody's Investors Services Inc. at Triple-A. Dominion Bond Rating Service has affirmed the Province at a rating of AA (high).

The Balanced Budget and Ministerial Accountability Act requires a 20 per cent ministerial salary holdback for all members of cabinet to ensure ministries operate within their own budgets and government meets its overall financial commitment. As the government posted a deficit for 2012-13, cabinet members take a 10 per cent pay cut.

All ministers achieved their individual ministry fiscal targets and will receive the other 10 per cent of their salary holdback. The Ministerial Accountability Report, released today, outlines the specific financial targets ministers must achieve to receive their ministerial salary holdback.

Online versions of the public accounts and related documents can be found at the following link: http://www.fin.gov.bc.ca/ocg/pa/12_13/pa12_13.htm

Unaudited Public Accounts supplementary data sets including salary information, travel expenses and payments to suppliers are available on the Data B.C. website at: www.data.gov.bc.ca

Quote:

Michael de Jong, Minister of Finance -

"We acted quickly in the face of declining revenues to control spending and keep the fiscal plan on track."

"By maintaining fiscal discipline year after year, we have significantly reduced spending growth across government while protecting the public services that British Columbians rely on."

A backgrounder follows.

Media Contact:

Jamie Edwardson
Communications Director
Ministry of Finance
250 356-2821

(flickr.com)

BACKGROUNDER

Spending controls keep fiscal plan on track

Deficit

The Province ended the 2012-13 fiscal year with a deficit of $1,146 million, $82 million lower than the Feb. 19, 2013, updated forecast. Government remains on track to eliminate the deficit and deliver a surplus.

Economic Growth

British Columbia's economy grew by 1.7 per cent in the 2012 calendar year, in line with the national average of 1.8 per cent, according to preliminary data from Statistics Canada. A number of sectors saw strong gains including construction - up 4.5 per cent and real estate, rental and leasing services - up 2. 7 per cent. Retail sales, an indicator of consumer confidence, increased by 1.9 per cent in 2012. However, growth was down in a number of major industries including mining, quarrying, oil and gas extraction - down 0.5 per cent. Exports of goods and services from British Columbia fell 4.2 per cent due to slowing global demand and lower prices in some key commodity markets.

Revenue

Provincial revenue totalled $42,055 million in 2012-13, an increase of $223 million over 2011-12, primarily due to higher tax revenue as well as minor increases in fees and licences and investment income. These increases were offset by decreases in natural resource revenues and lower contributions from the federal government.

Tax revenue increased by $905 million (4.5 per cent) over 2011-12. Personal income tax revenue increased by $550 million, corporate income tax revenue increased by $202 million, and harmonized sales tax revenue increased by $171 million. These increases were offset by a $186 million decrease in Property transfer tax revenue over 2011-12. All other tax revenues increased by $168 million over the same period.

Contributions from the federal government were $665 million lower than contributions received in 2011-12. The Province did not receive HST transition funding in 2012-13, which was $580 million in 2011-12. Contributions under infrastructure programs were $94 million less than in 2011-12, and federal disaster financial assistance was $57 million less than in 2011-12. Federal contributions under other programs including, Canada health and social transfers increased by $66 million.

Natural resource revenues decreased by $339 million (12.1 per cent) from 2011-12 to 2012-13. Petroleum and natural gas royalties were $239 million less than in 2011-12, and mineral revenues were $214 million less than in 2011-12. These decreases were offset by an increase in forest revenues of $88 million (18.6 per cent) over 2011-12. All other sources of natural resource revenue increased by $27 million over 2011-12.

Expense

Operating expenses totalled $43,201 million, A decrease of $445 million over 2011-12 and $668 million less than forecast in Budget 2012. Total expenses decreased because the $1,599 million repayment of HST transition funding was included in total expenses for 2011-12. Excluding the effect of the HST repayment in fiscal 2011-12, program spending increased $1,154 million over the previous year. Overall program spending was held to an increase of 2.6 per cent.

Debt

The taxpayer-supported debt to GDP ratio, a key measure of affordability, was 17.0 per cent in 2012-13, lower than the 17.6 per cent forecast in Budget 2012.

Total provincial debt, the most commonly used measure of debt, was $55,816 million in 2012-13. Debt increased $5,623 million over 2011-12. This was due to increased borrowing to fund capital projects and working capital requirements.

British Columbia continues to maintain one of the strongest credit ratings among Canadian provinces. Standard and Poor's and Moody's Investment Services each rate the Province triple A, the highest-possible rating, while Dominion Bond Rating Service rates the Province AA(high).

Capital Spending

Net investment in taxpayer supported capital was $1,070 million to build and upgrade schools, universities, colleges, hospitals, roads, bridges and other infrastructure to deliver programs and services.

Media Contact:

Jamie Edwardson
Communications Director
Ministry of Finance
250 356-2821