The British Columbia government invested an additional $1.9 billion in priority programs and services in 2016-17 compared to the previous year, making record investments in areas including housing, health and education, Finance Minister Michael de Jong announced today.
Government’s commitment to fiscal discipline and economic growth that supports jobs throughout B.C. helped reduce taxpayer-supported debt for the first time in almost 10 years, while allowing the Province to make priority investments, including:
- $758 million to fund housing initiatives.
- $486 million increase in health care spending.
- $256 million increase in education spending.
- $137 million increase in social service spending of for child, youth and community living.
- $193 million for the Lion’s Gate Waste Water Treatment Plant Project.
- $255 million increase in other sectors, partly offset by a $199 million decrease in debt service costs.
British Columbia finished 2016-17 with a $2.8 billion surplus, which contributed to substantially decreasing taxpayer-supported debt. Overall government direct operating debt decreased $3.4 billion, while taxpayer-supported debt, offset by new capital investments, decreased by $1.2 billion.
Stronger than forecast economic growth—including strong employment, retail sales and housing starts—increased government revenues by $3.9 billion over 2015-16. Taxation revenues overall were up $2.8 billion compared to last year, with personal income tax revenue up $1.3 billion (15.8%), sales tax revenue up $556 million (9.2%), property transfer tax revenue up $493 million (32.2%) and corporate income tax revenue up $216 million (7.8%).
Preliminary real GDP growth numbers for 2016 show that British Columbia’s economy grew by an estimated 3.7%, the strongest growth among provinces and an improvement on the Economic Forecast Council prediction of 2.7% in Budget 2016. Employment activity in B.C. was strong in 2016, growing at its fastest annual pace since 1994. Housing starts for 2016 totalled 41,843 units, an improvement of 33% over 2015.
British Columbia’s taxpayer-supported debt-to-GDP ratio—a key measure of affordability—ended the year at 15.9%, compared to the 17% forecast at Budget 2016. Taxpayer-supported debt-to-revenue for 2016-17 was 81.7%, compared to the 92.4% forecast at Budget 2016.
British Columbia is the only Canadian province rated triple-A credit by Moody’s (AAA) and Standard and Poor’s (AAA). B.C.’s strong fiscal performance also received the best rating among the provinces from Dominion Bond Rating Service (AA High). In April, Standard and Poor’s described British Columbia’s financial management practices as “the best among the Canadian provinces”.
Finance Minister Michael de Jong –
“We took the benefits of a strong, growing and job-creating economy and directed them to increased funding for services, helping families with the cost of living and taking new steps to help promote home ownership. Almost $500 million of the new investments in Budget 2016 were funded through savings realized by paying down the legacy of deficit budgets in years gone by.
“British Columbia saw the strongest economic growth among the provinces last year and some of the fastest job growth in more than 20 years. This level of economic activity helped provide the means to make key investments in services that matter most to people and ensures we have the resources to continue and enhance those investments.”
To see de Jong's presentation: https://news.gov.bc.ca/files/PPP_Fiscal_update.pdf
A backgrounder follows.
Jamie EdwardsonCommunications Director
Ministry of Finance
The Province ended the 2016-17 with a surplus of $2.8 billion, $1.3 billion more than forecast in the update provided with Budget 2017. Government remains on track to balance the 2017-18 budget.
British Columbia’s economy grew by an estimated 3.7% in 2016, which for the second consecutive year was the highest rate among the provinces and above the national average of 1.3%, according to preliminary GDP by industry data from Statistics Canada. GDP growth of 3.7% for B.C. in 2016 was higher than the government’s Budget 2016 forecast of 2.4%. Growth was spread across most industries, with notable gains in real estate and rental and leasing (3.9%), construction (5.1%) and manufacturing (5.8%). British Columbia is expected to continue to be among the top performers in economic growth in 2017 and 2018.
Provincial revenue totalled $51.5 billion in 2016-17, an increase of $3.9 billion over 2015-16, driven primarily by taxation revenue. The Province received $2.8 billion more taxation revenue than forecast at Budget 2016, reflecting B.C.’s strong economic performance. Provincial sales tax revenues increased by $305 million, in line with growth in consumer spending and business investment. Corporate income tax generated an additional $212 million compared to forecast, while personal income tax revenues came in $1.5 billion above budget, reflecting growth in the tax base. Increased activity and values in the property market yielded an additional $787 million in property transfer tax revenue, while all other taxes generated $3 million less than budgeted. Petroleum, natural gas and mineral revenues increased by $154 million compared to budget. Forestry revenue improved by $101 million.
Operating expenses totalled $48.7 billion, a $1.9 billion increase from 2015-16 and $1.3 billion more than forecast at Budget 2016. Expense was higher than budget primarily due to the cost of fighting forest fires and increases in the health, education and other sectors.
Taxpayer-supported debt to GDP, a key measure of affordability, declined to 15.9% from 2015-16’s ratio of 17.4%, a 1.1 percentage point decline from the Budget 2016 projection (17.0%).
Total provincial debt was $65.9 billion. Debt increased by $591 million over 2015-16 while taxpayer-supported debt decreased by $1.2 billion.
British Columbia is saving money by paying down the direct operating debt, which decreased by $3.39 billion compared to 2015-16 and ended 2016-17 at $4.6 billion. This moves up the anticipated elimination of B.C.’s operating debt to 2020, one year ahead of schedule – an accomplishment not achieved since 1976.
Taxpayer-supported debt-to-revenue was 81.7% in 2017, down from 91.3% in 2016. Total provincial debt-to-revenue was 99.2% in 2017, down from 106% in 2016.
Last fiscal, the Province invested $3.7 billion in taxpayer-supported capital projects like hospitals, schools, post-secondary facilities, transit and roads. Projects included numerous health facilities including hospitals in the Comox Valley and Campbell River, the Surrey Emergency/Critical Care Tower, Interior Heart and Surgical Centre, the Children’s and Women’s Hospital, the patient care tower at Penticton Regional Hospital and clinical services building at Royal Inland Hospital. Investments were made in transportation infrastructure, such as Highway 97 widening from Highway 33 to Edwards Road, the Highway 1 Admirals Road/McKenzie Avenue interchange in Victoria and Salmon Arm West Road. School projects included Centennial Secondary, Kitsilano Secondary and Salish Secondary, in addition to continuing the seismic mitigation program and a new campus for Emily Carr University at Great Northern Way in Vancouver.
A further $2.7 billion was spent on self-supported infrastructure including electrical generation, transmission and distribution projects and other capital assets. Of this total, BC Hydro invested $2.4 billion on electrical generation, transmission and distribution projects while the British Columbia Lottery Corporation invested $86 million in modernizing its business systems. ICBC invested $56 million in critical business systems.