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Balanced Budget 2014 March 7 Mike de Jong

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Information about Balanced Budget 2014 March 7 Mike de Jong
Business & Mgmt

Published on March 10, 2014

Author: FVCAA

Source: slideshare.net

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153 136 165 (255) (88) 100 110 84 59 175 June Update 2013 Q1 Forecast Q2 Forecast Taxation revenue Other revenue changes Lower ministry spending Lower tax transfers Prior year liability adjustments Other expense changes Q3 Forecast $ millions Surplus increased by $10 million since Second Quarterly Report 2013/14 updated forecast 1

Balanced Budgets in 2013/14 2

1.4 2.0 2.3 2.5 2.5 2.5 1.4 2.3 2.7 2.7 2.7 2.7 0.0 1.0 2.0 3.0 4.0 2013 2014 2015 2016 2017 2018 Ministry of Finance Economic Forecast Council BC real GDP per cent change BC’s economic outlook 3

2,180 2,220 2,260 2,300 2,340 BC employment (000s, sa) Source: Statistics Canada 201020092008 2011 2012 Jul 2008: 2,276 Mar 2009: 2,204 Jan 2014: 2,317 2013 BC Employment 2014 4

Source: Statistics Canada BC retail sales ($ millions, sa) 2010 2011 Jun 2008 4,968 201220092008 Mar 2009: 4,406 Nov 2013: 5,373 2013 BC retail sales 5

Source: Canada Mortgage and Housing Corporation *Historical average is from January 1990 to December 2013 Mar 2009: 11,600 Sep 2008: 40,000 BC housing starts (annualized units, sa) 2008 2009 2010 2011 2012 Dec 2013: 32,300 2013 BC housing starts Hist avg* = 28,900 6

Source: BC Stats BC merchandise exports ($ millions, sa) Sep 2009: 1,923 2010 2011 201220092008 Oct 2008: 3,068 Dec 2013: 2,908 2013 BC exports 7

US 46.8% Japan 12.1% China 19.6% Other Asia 9.1% Other 12.4% US 88.4% Asia 6.0% Other 5.6% US 78.4% Asia 5.3% Other 16.3% Source: BC Stats Average annual share of international goods exports by province, 2013 (per cent) BC Alberta Ontario BC’s trade diversity 8

US 69.8% Japan 12.8% China 2.3% Other Asia 4.3% Other 10.8% 20132001 US 46.8% China 19.6% Japan 12.1% Other Asia 9.1% Other 12.4% Source: BC Stats Annual share of BC’s international goods exports Over 40% of BC’s exports now go to Asia 9

• For the next two years, as was the case this year, a very thin margin for forecast error • Ongoing global economic uncertainty Risks to the fiscal plan 10

3 year fiscal plan Revenue ……………………………………………………………………………………..43,950 44,800 46,032 47,464 Expense …………….....…....………………..…………………………………………..(43,675) (44,116) (45,201) (46,113) Contingencies ….....…....……………..…………………………………………..- (300) (400) (575) Surplus (deficit) before forecast allowance ………………………………………………275 384 431 776 Forecast allowance …………………………………………………………..(100) (200) (225) (325) Surplus (deficit) ........................………………………………………………………………………….175 184 206 451 Plan 2015/16 Plan 2016/17($ millions) Budget Estimate 2014/15 Updated Forecast 2013/14 11

AAA AA+ AA AA- A+ A A- BBB BB B- CCC BC  Canada  Germany  United States*  France*  Japan*  Italy*  Greece**  Credit rating comparisons *Credit rating downgrades between 2009 and 2013. ** Greece upgraded in December 2012 from Selective Default. Source: Standard and Poor’s 12

Province AAA AA+ AA AA- A+ A British Columbia  Alberta  Saskatchewan  Manitoba  Ontario  Quebec  New Brunswick  Nova Scotia  Prince Edward Island  Newfoundland and Labrador  Canada  Credit rating comparisons Source: Standard and Poor’s 13

Debt-to-GDP comparisons Source: 2013/14 forecast from most recent Budget document for each jurisdiction. 14

• Comprehensive borrowing strategy – Diversification into global markets – First-mover into emerging Chinese market • Balance sheet management – Cash surpluses in government organizations – Investment management – Capital expenditure constraints Strategic debt management 15

• Estimated $1.6 billion in excess cash on Government’s balance sheet • Encouraging excess cash held by government organizations to be deposited with Provincial Treasury until needed – Cash remains property of government organizations – Provincial Treasury uses it for debt management purposes • Core Review initiative to induce further voluntary participation in Provincial Treasury deposit program – $18 million in savings achieved for 2014/15 Cash management 16

Taxpayer-supported debt to GDP ratio (per cent) Budget 2014 fiscal plan Return to balanced budgets Declining debt ratio 17

$ billions Revenue – 2.6% average annual growth Expense – 2.2% average annual growth Fiscal plan period Maintaining a balanced budget 18

BC public sector compensation base Health 168,924 44% Education K-12 82,348 21% Public Service 32,942 8% Universities 32,524 8% Crowns 21,473 6% Post Secondary 29,380 8% Community Social Services 18,390 5% Employees 385, 981 Data as per PSEC’s Quarterly Report published February 18, 2014 representing unionized and non-unionized employee totals in each of the seven sectors. 19

Keeping taxes low for BC families $9,947 $9,987 $12,805 $12,849 $12,983 $15,392 $15,987 $16,339 $16,523 $18,048 BC AB SK ON NL NB MB PE NS QC Lowest Provincial Personal Income Taxes for Individuals Earning up to $121,000 - 2014 Tax Year 20

• BC Training and Education Savings Grant – $1,200 per child born on or after January 1, 2007 • BC Early Childhood Tax Benefit – $55/month per child under six, starting April 2015 • Property Transfer Tax Relief Investment in families 21

• $350 million increase in funding over 3 years for: – Income Assistance – Community Living BC – Children and youth with special needs – Legal Aid Support for the vulnerable 22

Three-year health funding $385 2013/14 2014/15 2015/16 2016/17 3-year total increase: $2.5 billion $16,551 $16,936 $17,856 $17,402 Restated June Update 2013 base ($ millions) $851 $1,305 23

• Capital investment in support of skills training continues – Camosun College Trades Renewal – Okanagan College Trades Expansion – NorKam Secondary Trades and Technology Centre of Excellence Skills infrastructure investment 24

• Distant Location Tax Credit Extended to Capital Regional District • Scientific Research and Experimental Development Tax Credit Extended Three Years • Transitional Tax Relief for Credit Unions Targeted tax measures 25

Tobacco Tax Increase 26 40 cents

LNG taxation 27

LNG taxation 28

LNG taxation 29

LNG tax competitiveness 30

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