Finance

2016-17 fiscal update reflects B.C.’s strong economic growth

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Finance

2016-17 fiscal update reflects B.C.’s strong economic growth

Contacts
Jamie Edwardson
Communications Director
Ministry of Finance
250 356-2821
(flickr.com)
Contacts
Jamie Edwardson
Communications Director
Ministry of Finance
250 356-2821

Backgrounders

2016-17 Fiscal Update

Surplus:

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.

Economic growth:

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.

Revenue:

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.

Expense:

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.

Debt:

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.

Capital:

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.

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