Budget and Fiscal Plan
2017/18 – 2019/20
February 21, 2017
National Library of Canada Cataloguing in Publication Data
British Columbia.
Budget and fiscal plan. –- 2002/03/2004/05Annual
Also available on the Internet.
Continues: British Columbia. Ministry of Finance and
Corporate Relations. Budget ... reports. ISSN 1207-5841
ISSN 1705-6071 = Budget and fiscal plan — British Columbia.
1. Budget — British Columbia — Periodicals. 2. British
Columbia — Appropriations and expenditures — Periodicals.
I. British Columbia. Ministry of Finance. II. Title.
HJ12.B742 352.48’09711’05 C2003-960048-3
TABLE OF CONTENTS
Budget and Fiscal Plan 2017/18 – 2019/20
February 21, 2017
Attestation by the Secretary to Treasury Board
Summary ...........................................................................................................................................................
Part 1: Three Year Fiscal Plan
Introduction ........................................................................................................................................................
Revenue .............................................................................................................................................................
Major Revenue Sources .........................................................................................................................
Expense ..............................................................................................................................................................
Consolidated Revenue Fund Spending ...................................................................................................
Health Care ...................................................................................................................................
K–12 Education ............................................................................................................................
Post-Secondary Sector ...................................................................................................................
Supporting Families and Individuals in Need ...............................................................................
Investing in Housing Supply and Affordability .............................................................................
Support for Economic Development and Communities ...............................................................
Protecting the Environment .........................................................................................................
Accountability and Transparency ..................................................................................................
Management of the BC Public Service ...................................................................................................
Recovered Expenses ................................................................................................................................
Operating Transfers ................................................................................................................................
Service Delivery Agency Spending..........................................................................................................
Capital Spending ................................................................................................................................................
Taxpayer-supported Capital Spending ...................................................................................................
Self-supported Capital Spending ............................................................................................................
Projects over $50 million .......................................................................................................................
Provincial Debt ...................................................................................................................................................
Risks to the Fiscal Plan ........................................................................................................................................
Tables:
1.1 Three Year Fiscal Plan ...................................................................................................................
1.2 Comparison of Major Factors Underlying Revenue ......................................................................
1.3 Personal Income Tax Revenue ......................................................................................................
1.4 Corporate Income Tax Revenue ...................................................................................................
1.5 Sales Tax Revenue .........................................................................................................................
1.6 Federal Government Contributions ..............................................................................................
1.7 Revenue by Source .......................................................................................................................
1.8 Expense by Ministry, Program and Agency ...................................................................................
1.9 Mental Health and Substance Use Incremental Funding ..............................................................
1.10 Health Per Capita Costs and Outcomes: Canadian Comparisons .................................................
1.11 Funding Increases for the K–12 Sector .........................................................................................
1.12 Supporting the Technology Sector ................................................................................................
1.13 Additional Support for Children, Families and Individuals in Need .............................................
1.14 Funding for Economic Development and Communities ..............................................................
Budget and Fiscal Plan – 2017/18 to 2019/20
1
5
8
10
18
18
19
21
23
23
25
25
27
28
28
29
30
30
31
31
37
37
42
45
5
9
10
11
11
14
16
17
20
21
22
23
24
26
Table of Contents
ii
1.15
1.16
1.17
1.18
1.19
1.20
1.21
1.22
Protecting the Environment .........................................................................................................
Capital Spending ..........................................................................................................................
Provincial Transportation Investments .........................................................................................
Capital Expenditure Projects Greater Than $50 Million ................................................................
Provincial Debt Summary .............................................................................................................
Provincial Borrowing Requirements ..............................................................................................
Reconciliation of Summary Results to Provincial Debt Changes ...................................................
Key Fiscal Sensitivities ..................................................................................................................
28
31
35
38
43
44
44
45
Topic Boxes:
Liquefied Natural Gas – Update ............................................................................................................ 50
Addressing Housing Supply and Affordability ....................................................................................... 53
Child Care and Family Supports ............................................................................................................ 57
Part 2: Tax Measures
Tax Measures – Supplementary Information ...................................................................................................... 60
Tables:
2.1 Summary of Tax Measures ............................................................................................................ 59
2.2 Impact of Medical Services Plan Premium Changes ..................................................................... 63
Topic Boxes:
Carbon Tax Report and Plan .................................................................................................................. 66
Medical Services Plan Premiums ........................................................................................................... 69
Commission on Tax Competitiveness .................................................................................................... 72
Part 3: British Columbia Economic Review and Outlook
Summary ............................................................................................................................................................
British Columbia Economic Activity and Outlook ..............................................................................................
The Labour Market ...............................................................................................................................
Consumer Spending and Housing .........................................................................................................
Business and Government .....................................................................................................................
External Trade and Commodity Markets ...............................................................................................
Demographics .......................................................................................................................................
Inflation ................................................................................................................................................
Risks to the Economic Outlook .........................................................................................................................
External Outlook ...............................................................................................................................................
United States .........................................................................................................................................
Canada ..................................................................................................................................................
Europe ..................................................................................................................................................
Asia .......................................................................................................................................................
Financial Markets ..............................................................................................................................................
Interest Rates .........................................................................................................................................
Exchange Rate .......................................................................................................................................
Budget and Fiscal Plan – 2017/18 to 2019/20
75
75
76
77
79
80
81
82
82
83
83
85
87
88
89
89
90
Table of Contents
iii
Tables:
3.1
3.2
3.3
3.4
3.5
3.6.1
3.6.2
3.6.3
3.6.4
British Columbia Economic Indicators .......................................................................................
US Real GDP Forecast: Consensus vs Ministry of Finance ...........................................................
Canadian Real GDP Forecast: Consensus vs Ministry of Finance .................................................
Private Sector Canadian Interest Rate Forecasts ............................................................................
Private Sector Exchange Rate Forecasts ........................................................................................
Gross Domestic Product: British Columbia .................................................................................
Selected Nominal Income and Other Indicators: British Columbia .............................................
Labour Market Indicators: British Columbia ...............................................................................
Major Economic Assumptions ....................................................................................................
76
85
87
90
91
92
93
93
94
Topic Box:
The Economic Forecast Council, 2017 ................................................................................................... 95
Part 4: 2016/17 Updated Financial Forecast (Third Quarterly Report)
Introduction ........................................................................................................................................................ 99
Revenue .............................................................................................................................................................. 101
Expense .............................................................................................................................................................. 101
Government Employment (FTEs) ..................................................................................................................... 102
Provincial Capital Spending ................................................................................................................................. 102
Provincial Debt ................................................................................................................................................... 103
Risks to the Fiscal Forecast .................................................................................................................................. 104
Supplementary Schedules .................................................................................................................................. 105
Tables:
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
2016/17 Forecast Update ............................................................................................................. 99
2016/17 Financial Forecast Changes ............................................................................................. 100
2016/17 Capital Spending Update ............................................................................................... 102
2016/17 Provincial Debt Update .................................................................................................. 103
2016/17 Operating Statement ...................................................................................................... 105
2016/17 Revenue by Source .......................................................................................................... 106
2016/17 Expense by Ministry, Program and Agency ..................................................................... 107
2016/17 Expense by Function ....................................................................................................... 108
2016/17 Capital Spending ............................................................................................................ 109
2016/17 Provincial Debt ............................................................................................................... 110
2016/17 Statement of Financial Position ....................................................................................... 111
Appendix .......................................................................................................................................................... 113
Budget and Fiscal Plan – 2017/18 to 2019/20
February 21, 2017
As required by Section 7(1)(d) of the Budget Transparency and Accountability Act (BTAA), and Section 4(a)(v) of the Carbon
Tax Act, I confirm that Budget 2017 contains the following elements:
• Fiscal forecasts for 2017/18 to 2019/20 (provided in Part 1) and economic forecasts for 2017 to 2021 (provided in
Part 3).
• A report on the advice received from the Economic Forecast Council (EFC) in late November 2016 (updated
January 2017) on the economic growth outlook for British Columbia, including a range of forecasts for 2017 and 2018
(see Part 3, page 95).
• Material economic, demographic, fiscal, accounting policy and other assumptions and risks underlying Budget 2017
economic and fiscal forecasts. In particular:
−
The economic forecast reflects stable economic growth for British Columbia in an uncertain global economic
environment. Policy uncertainty weighs on the North American outlook, Europe’s economy remains fragile,
while China’s economy is going through a period of transition. Accordingly, the economic projections assumed in
Budget 2017 are prudent relative to the average of the forecasts provided by the Economic Forecast Council.
− Personal and corporate income tax revenue forecasts include the preliminary 2015 income tax assessments and
the latest projections for national corporate taxable income received from the federal government. The property
transfer tax forecast assumes the level of housing activity in 2016/17 does not fully carry forward.
− Natural gas royalty forecasts continue to adopt a lower natural gas price forecast compared to the private sector
average in order to maintain prudence against volatility.
−
The economic and revenue forecasts do not reflect any incremental activity or revenue from liquefied natural gas
development. In addition, the economic and revenue forecasts do not incorporate a settlement to the current
US-Canada softwood lumber dispute or any impacts of potential litigation that could arise.
− Ministry budgets include base increases for the costs arising from the second Economic Stability Dividend payable
under the current Economic Stability Mandate. 2018/19 represents the fifth and final year in the current wage
mandate. Budget 2017 does not incorporate any funding or cost estimates for a new mandate.
− Budget 2017 includes spending projections for the George Massey Tunnel Replacement Project.
− Budget 2017 includes $320 million to fund the Memorandum of Agreement with the BC Teachers’ Federation
regarding the recent Supreme Court of Canada decision in relation to Bill 22. Any incremental funding required
for a final settlement will be managed within the fiscal plan.
− The fiscal plan includes three-year financial projections for school districts, post-secondary institutions and health
authorities, as provided by the Ministries of Education, Advanced Education and Health, respectively, based on
plans submitted to the ministries by those entities, and for the other service delivery agencies and the commercial
Crown corporations, as submitted directly to the Ministry of Finance by those organizations.
− Forecast prudence totals $750 million in 2017/18 and $550 million in each of 2018/19 and 2019/20, being the
sum of the Contingencies vote and the forecast allowance in each fiscal year.
• A Revenue Neutral Carbon Tax Report for 2015/16 and 2016/17, and the Revenue Neutral Carbon Tax Plan for
2017/18 to 2019/20 (see Part 2: Tax Measures, page 66).
To the best of my knowledge, the three-year fiscal plan contained in Budget 2017 conforms to the standards and guidelines
of generally accepted accounting principles for senior governments as outlined in Note 1 of the 2015/16 Public Accounts.
I would like to recognize staff in government ministries and agencies for their contribution to this document. I
would like to especially acknowledge staff in the Ministry of Finance, whose professionalism, commitment and expertise
were essential to the completion of this budget.
Athana Mentzelopoulos
Deputy Minister and Secretary to Treasury Board
Budget and Fiscal Plan – 2017/18 to 2019/20
Summary: BUDGET AND FISCAL PLAN – 2017/18 to 2019/20
($ millions)
Updated
Forecast
2016/17
Revenue ………………………………………………… 50,890
Expense …………….....…....………………..………… (49,082)
(350)
Forecast allowance ……………………………………
Budget
Estimate
2017/18
50,838
(50,193)
(350)
Plan
2018/19
Plan
2019/20
51,196
(50,702)
(250)
52,045
(51,572)
(250)
Surplus ........................…………………………………
1,458
295
244
223
Capital spending:
Taxpayer-supported capital spending …………………
Self-supported capital spending ………………………
4,123
2,855
4,804
3,279
4,491
3,572
4,398
3,985
6,978
8,083
8,063
8,383
Provincial Debt:
Taxpayer-supported debt ……………………………… 42,027
Self-supported debt …………………………………… 24,289
43,302
26,135
45,184
28,023
47,201
30,237
Total debt (including forecast allowance) ………… 66,666
69,787
73,457
77,688
Taxpayer-supported debt to GDP ratio ………………
16.1%
15.9%
15.9%
16.0%
Taxpayer-supported debt to revenue ratio …………
84.0%
87.6%
91.1%
93.5%
Economic Forecast:
Real GDP growth ......................................................
Nominal GDP growth ................................................
Improving Affordability and Increasing
Competitiveness
Budget 2017 provides significant financial
relief for British Columbians and investment
in key program areas and new initiatives while
maintaining government’s ongoing commitment
to responsible fiscal management. Budget 2017
projects modest surpluses across the fiscal plan
period for the fifth year in a row.
In particular, Budget 2017 signals government’s
intention to eliminate Medical Services Plan (MSP)
premiums. The timing and structure of the change
will be influenced by the Province’s fiscal capacity.
As a first step, beginning January 1, 2018, British
Columbia will begin the process by reducing
premiums by 50 per cent for households with
annual family net income up to $120,000. In
addition, the income threshold below which
households are fully exempt from MSP premiums
is increased by $2,000. These changes will reduce
premiums by 50 per cent for up to 2 million
British Columbians, providing an annual benefit of
$845 million. MSP premiums will generally return
to levels they have not been at since 1993. In fact,
adjusting for inflation, households under $120,000
will pay lower premiums than at any time since the
1980s.
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table and Fiscal Plan –
2016
2017
2018
2019
3.0%
4.7%
2.1%
4.1%
2.1%
4.0%
2.0%
3.9%
Budget 2017 reflects government’s commitment to
expand social supports, improve public education,
and broaden economic development over the fiscal
plan period. Key areas for increased expenditures
over the next three years include:
• $740 million in additional funding to the
K–12 sector, including $320 million in interim
agreement funding to help address the recent
decision of the Supreme Court of Canada;
• $796 million in additional program funding
and income assistance for children, families and
individuals in need;
• $100 million more for mental health and
substance use treatment, focusing on youth;
• an additional $311 million for rural economic
development and community initiatives,
and the enhancement and protection of the
environment; and
• an additional $87 million to enhance
government’s technology strategy.
In 2016, government committed to $855 million
over the next five years to create 4,900 affordable
rental units with its partners. Leading up to
Budget 2017, government announced a further
$65 million to fund 380 more units largely in
support of individuals with mental health and
substance use issues, bringing housing investments
to $920 million in total.
2017/18 to 2019/20
2017-02-16 12:28 PM
2
Summary
Through the Housing Priority Initiatives Special
Account, government will be dedicating up to
$728 million of property transfer tax revenue to
provide BC Housing Management Commission
with financing as needed, to deliver the new
BC Home Owner Mortgage and Equity Partnership
Program; continue housing investments; and
maintain rental assistance and homelessness
programs.
In addition to the MSP premium reduction,
government will initiate a number of tax policy
measures in Budget 2017 to achieve social policy,
economic development and competitiveness
objectives, including:
• phasing out the provincial sales tax on electricity
purchases by businesses over the next two years;
• reducing the small business corporate income tax
rate to 2 per cent from 2.5 per cent;
• pausing the phase-out of the preferential tax
treatment for credit unions;
• extending the scientific research and
experimental development tax credit, BC mining
flow-through share tax credit, training tax credit
and book publishing tax credit;
• increasing the threshold for the first time
homebuyers’ exemption to $500,000 from
$475,000;
• increasing the threshold for the home
owner grant phase-out to $1.6 million from
$1.2 million;
• introducing a back-to-school tax credit; and
• introducing a tax credit for volunteer firefighters
and search and rescue volunteers.
These new commitments included in Budget 2017
are made from the strong revenues that result from
British Columbia’s diverse and resilient economy,
as well as ongoing interest cost savings stemming
from government’s focus on debt management
within an affordability framework. Reducing direct
operating debt and maintaining government’s AAA
credit rating results in an estimated half billion
dollars in interest cost savings over the fiscal plan.
Steady Economic Growth
Following an estimated increase of 3.0 per cent
in 2016, the Ministry of Finance forecasts British
Columbia’s economy to grow by 2.1 per cent in
both 2017 and 2018, and by 2.0 per cent annually
from 2019 to 2021.
Prudent economic forecast
4.0
3.0
BC real GDP
per cent change
Ministry of Finance
3.0
Economic Forecast Council
3.1
2.1
2.3
2.1
2.2
2.0
2.0
2.1
2.0
2.1
2.0
2.1
1.0
0.0
2016
2017
2018
2019
2020
2021
The Ministry’s forecast for BC real GDP growth is
0.2 percentage points below the outlook provided
by the Economic Forecast Council for 2017 and
0.1 percentage point below in 2018. This prudence
acknowledges the downside risks to the economic
forecast and is one of the levels of prudence built
into the fiscal plan.
The Ministry estimate for 2016 is higher than
forecast in Budget 2016 as growth in employment,
retail sales, and housing starts exceeded
expectations. While in subsequent years the
domestic economy is generally expected to grow
as previously anticipated, a weaker outlook for
external economies is weighing on export growth.
As such, the Ministry’s real GDP outlook for 2017
and beyond is lower than what was forecast in
Budget 2016.
Downside risks to BC’s economic outlook include:
• uncertainty regarding US fiscal and trade policy;
• fragility in Europe as governments and the
financial system deal with elevated sovereign debt
alongside weak economic growth and ongoing
uncertainty associated with Brexit;
• slower than anticipated economic activity in Asia
resulting in weaker demand for BC’s exports and
downward pressure on global commodity prices
(particularly as China’s economy transitions from
investment and export-led growth towards a
consumer-driven economy);
Budget and Fiscal Plan – 2017/18 to 2019/20
Summary
• exchange rate uncertainty; and
Risks to the Fiscal Plan
• potential for a slowdown in domestic and
Canadian economic activity.
The main risks to the government’s fiscal plan
include:
Capital Spending
Taxpayer-supported infrastructure spending
on hospitals, schools, post-secondary facilities,
transit, and roads is forecast to be $13.7 billion
over the fiscal plan period, the highest level ever.
These investments will be financed by $9.5 billion
in borrowing with the remainder funded by third
parties, such as the federal government, and from
internal cash sources.
Self-supported capital spending on power projects,
transportation infrastructure and other capital
assets will total $10.8 billion over the fiscal plan
period and will be financed by $6.7 billion in
borrowing, with the remainder funded internally.
Ongoing Debt Affordability
Investments made in Budget 2017 are within
government’s debt affordability framework.
Total taxpayer-supported debt is projected to
fall year-over-year in 2016/17 for the first time
since 2008/09. Direct operating debt is on track
to be eliminated by 2020/21, the first time since
1975/76.
As well, government’s key debt affordability metric,
the taxpayer-supported debt to GDP ratio, is
forecast to continue to decline from 17.1 per cent
in 2015/16 to end the fiscal plan period at
Debt to GDP trend stable and improved
16.0 per cent.
Debt to GDP
Per cent
17.1
Budget 2016 1
16.6
16.3
15.9
15.9
15.9
16.0
Budget 2017
15/16
1 Restated
16/17
17/18
• risks to the BC economic outlook, largely due
to the continued uncertainty surrounding global
economic activity;
• assumptions underlying revenue, including
Crown corporation net income forecasts, such as
economic factors, commodity prices and weather
conditions;
• potential changes to federal government
allocations for health and social transfers and
cost-sharing agreements, as well as impacts on
provincial income taxes arising from federal
government tax policy changes;
• utilization rates for government services such
as health care, children and family services, and
income assistance;
• impacts of the expiration of the 2006 Softwood
Lumber Agreement between Canada and the US;
and
• the outcome of litigation, arbitrations, and
negotiations with third parties.
To mitigate the risks to the fiscal plan, government
incorporates four main levels of prudence in its
projections:
• the Ministry of Finance outlook for BC’s
real GDP growth is lower than the outlook
provided by the Economic Forecast Council
(0.2 percentage points lower in 2017 and
0.1 percentage point lower in 2018);
• the natural gas revenue forecast incorporates
additional prudence by using a price forecast
that is within the 20th percentile of private sector
forecasts;
Debt to GDP trend steady
16.1
3
18/19
to reflect the impact of Statistics Canada GDP revisions.
19/20
• government has included a forecast allowance of
$350 million in 2017/18 and $250 million in
each 2018/19 and 2019/20 fiscal years to guard
against volatility, including revenue changes; and
• the fiscal plan also includes a Contingencies
vote allocation of $400 million in 2017/18, and
$300 million in each of 2018/19 and 2019/20,
to help manage unexpected pressures and fund
priority initiatives.
Budget and Fiscal Plan – 2017/18 to 2019/20
4
Summary
Conclusion
In summary, Budget 2017:
• significantly lowers the cost of MSP premiums
for up to two million British Columbians in
addition to the two million British Columbians
who do not pay any premiums;
• reflects improved program delivery and benefits
through higher funding to the health, education,
social services, and technology sectors;
• maintains a focus on debt management in
support of British Columbia’s enviable AAA
credit rating resulting in ongoing lower debt
interest costs;
• introduces tax measures targeted towards
achieving social policy and competitiveness
objectives, while supporting government’s
balanced budget commitment; and
• makes investments in government’s capital
infrastructure in support of government priority
initiatives and service delivery.
Budget and Fiscal Plan – 2017/18 to 2019/20
Part 1: THREE YEAR FISCAL PLAN
Table 1.1 Three Year Fiscal Plan
Updated
Forecast
2016/17
($ millions)
Revenue ………………………………………………… 50,890
Expense …………….....…....………………..………… (49,082)
(350)
Forecast allowance ……………………………………
Budget
Estimate
2017/18
50,838
(50,193)
(350)
Plan
2018/19
Plan
2019/20
51,196
(50,702)
(250)
52,045
(51,572)
(250)
Surplus .......................……………………………………
1,458
295
244
223
Capital spending:
Taxpayer-supported capital spending …………………
Self-supported capital spending ………………………
4,123
2,855
4,804
3,279
4,491
3,572
4,398
3,985
6,978
8,083
8,063
8,383
Provincial Debt:
Taxpayer-supported debt ……………………………… 42,027
Self-supported debt …………………………………… 24,289
43,302
26,135
45,184
28,023
47,201
30,237
Total debt (including forecast allowance) ………… 66,666
69,787
73,457
77,688
Taxpayer-supported debt to GDP ratio ………………
16.1%
15.9%
15.9%
16.0%
Taxpayer-supported debt to revenue ratio …………
84.0%
87.6%
91.1%
93.5%
Introduction
Budget 2017 provides significant financial relief for British Columbians while maintaining
government’s ongoing commitment to responsible fiscal planning. Budget 2017 projects
modest surpluses across the fiscal plan period for the fifth year in a row.
Budget 2017 signals government’s intention to eliminate Medical Services Plan (MSP)
premiums. The timing and structure of the change will be influenced by the Province’s
fiscal capacity.
As a first step, beginning January 1, 2018, British Columbia will begin the process
of eliminating MSP premiums by reducing premiums by 50 per cent for households
with annual family net income up to $120,000. In addition, the income threshold
below which households are fully exempt from MSP premiums is increased by $2,000
(e.g. from $24,000 to $26,000 for a single individual and from $33,000 to $35,000 for a
couple with two children). These changes will reduce premiums by 50 per cent for up to
2 million British Columbians, providing an annual benefit of $845 million, in addition to
the two million British Columbians who do not pay any premiums.
MSP premiums will generally return to levels they have not been at since 1993. In fact,
adjusting for inflation, households under $120,000 will pay lower premiums than at
any time since the 1980s. For more on the MSP changes, see the Medical Service Plan
Premiums topic box on page 69.
Government is able to make new commitments in Budget 2017 due to strong revenues
resulting from British Columbia’s diverse and resilient economy, as well as ongoing
interest cost savings stemming from government’s focus on debt management within an
affordability framework. In combination, the maintenance of government’s AAA credit
rating and the falling direct operating debt result in over a half billion dollars saved in
interest costs over the fiscal plan period. These savings provide ongoing fiscal room for
investments in key program areas of importance to British Columbians.
Budget and Fiscal Plan – 2017/18 to 2019/20
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2017-02-16 12:25 PM
6
Three Year Fiscal Plan
Government’s taxpayer-supported capital spending over the fiscal plan period will total
$13.7 billion, the highest level ever, reflecting investments in transportation, education
and health sector infrastructure. This total is $1.7 billion higher than Budget 2016, due in
part to an increase in cost-shared projects with the federal government under the Strategic
Investment Fund and the Public Transit Infrastructure Fund in the post-secondary and
transportation sectors, respectively.
Capital investments by self-supported commercial Crown corporations will total
$10.8 billion, $2.2 billion higher than the Budget 2016 estimate, mainly due to the
inclusion of the George Massey Tunnel Replacement Project.
Government’s total debt is forecast to end the fiscal plan period at $77.7 billion. Within
this overall balance, direct operating debt is projected to fall to $1.1 billion, the lowest
level since 1982/83. In addition, taxpayer-supported debt falls year-over-year in 2016/17
for the first time since 2008/09. Taxpayer-supported debt then grows in out years,
reflecting investment in priority infrastructure projects in the sectors noted above.
Budget to
2017
commitments
are made and
with aimproved
continuing emphasis on responsible fiscal
Debt
GDP
trend stable
management and the debt affordability framework. Government’s key debt metric,
debt to GDP, is forecast to fall from 17.1 per cent in 2015/16 to end the fiscal plan period
Debt to GDP
at 16.0 per cent.
Chart 1.1 Debt to GDP trend steady
Per cent
17.1
Budget 2016 1
16.6
16.3
15.9
16.1
15.9
15.9
16.0
Budget 2017
15/16
1 Restated
16/17
17/18
18/19
19/20
to reflect the impact of Statistics Canada GDP revisions.
As well, taxpayer-supported debt to revenue remains within a reasonable range over the
Budget 2017 fiscal plan track.
The major risks to the fiscal plan stem from changes in factors that government does not
directly control. These include:
• risks to the BC economic outlook, largely due to the continued uncertainty
surrounding global economic activity;
• assumptions underlying revenue, including commercial Crown corporation forecasts,
such as economic factors, commodity prices and weather conditions;
Budget and Fiscal Plan – 2017/18 to 2019/20
Debt to revenue
7
Three Year Fiscal Plan
Debt to revenue
Chart 1.2 Debt to revenue compared to Budget 2016
Per cent
92.7
Budget 2016
92.4
93.1
93.0
93.5
91.1
91.0
87.6
Budget 2017
84.0
15/16
16/17
17/18
18/19
19/20
• potential changes to federal government transfer allocations, cost-sharing agreements
with the federal government and impacts on the provincial income taxes arising from
federal government tax policy and budget changes;
• utilization rates for government services such as health care, children and family
services, and income assistance;
• impacts of the expiration of the 2006 Softwood Lumber Agreement between Canada
and the US; and
• the outcome of litigation, arbitrations, and negotiations with third parties.
Government incorporates four main levels of prudence in its projections to mitigate the
risks to the fiscal plan:
• the Ministry outlook for BC’s real GDP growth is lower than the outlook provided
by the Economic Forecast Council (0.2 percentage points lower in 2017 and
0.1 percentage point lower in 2018);
• the natural gas revenue forecast incorporates additional prudence by using a price
forecast that is within the 20th percentile of private sector forecasts;
• government has included a forecast allowance of $350 million in 2017/18 and
$250 million in each of 2018/19 and 2019/20 to guard against volatility, including
changes to revenue; and
• the fiscal plan includes a Contingencies vote allocation of $400 million in 2017/18,
and $300 million in 2018/19 and 2019/20, to help manage unexpected pressures and
fund priority initiatives.
A complete discussion of the risks to the fiscal plan can be found beginning on page 45.
Economic risks are discussed in Part 3: British Columbia Economic Review and Outlook.
Budget and Fiscal Plan – 2017/18 to 2019/20
8
Three Year Fiscal Plan
Revenue
Chart 1.3 Revenue trends
$ billions
52.0
50.9
51.2
50.8
47.6
46.1
43.7
Average annual
growth: 2.3%
42.0
41.8
40.7
Average annual
growth: 3.2%
Budget 2017
Fiscal Plan
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
Total revenue growth is expected to average 2.3 per cent annually over the four year
period to 2019/20. This reflects the impacts of 4.2 per cent average annual nominal
GDP growth on taxation revenues, projected increases in other fee revenues, investment
earnings, federal government contributions and commercial Crown net income. These
improvements are partly offset by an expected declining trend in natural resource revenues
and reductions to Medical Service Plan (MSP) premiums.
Chart 1.4 Revenue forecast
$ billions
$50.9
6.9%
$50.8
-0.1%
$51.2
0.7%
Commercial Crown
Net Income
2.7
2.9
3.1
3.0
Federal
Contributions
8.1
8.3
8.4
8.7
Other
Revenue
10.6
10.5
9.9
9.7
Natural
Resources
2.6
2.3
2.2
2.2
26.9
26.8
27.6
28.4
2016/17
2017/18
2018/19
2019/20
Total revenue
Annual % change
Taxation
Revenue
$52.0
1.7%
In 2017/18, taxation revenue is forecast to decline 0.4 per cent due to the effects of onetime income and property transfer tax revenues recorded in 2016/17 that are not expected
to fully carry forward. Over the next two years, taxation revenue sources are projected to
average 3.0 per cent annual growth, consistent with the Ministry of Finance economic
Budget and Fiscal Plan – 2017/18 to 2019/20
9
Three Year Fiscal Plan
growth projections for nominal GDP, household income, net operating surplus, consumer
expenditures and housing starts. The forecast also includes the impacts of tax measures
detailed in Part 2: Tax Measures.
Natural resource revenue is forecast to decline 9.4 per cent in 2017/18 compared to
2016/17 mainly due to reduced revenue from Crown land tenures. This revenue source
includes the revenue recognized from the bonus bids in the monthly auctions and rents
on drilling licences and leases. Excluding this revenue source, natural resource revenue
growth is 1.4 per cent in 2017/18 as the effect of higher natural gas prices is partly offset
by the impact of lower coal prices. Over the next two years, the average annual change
in natural resource revenues is projected to decline 2.9 per cent as the effects of declining
bonus bid revenue and lower coal prices offset the impacts of rising natural gas and
copper prices.
Revenue from MSP premiums is forecast to decline 8.2 per cent in 2017/18 and a
further 26.0 per cent in 2018/19 reflecting government’s decision to reduce premiums by
50 per cent for up to 2 million British Columbians. More information on MSP premium
changes can be found in the Medical Services Plan Premiums topic box on page 69.
Excluding MSP premiums, over the next three years, average annual growth in revenue
from fees and licences, investment earnings and miscellaneous sources is expected to be
relatively flat. The revenue forecast incorporates estimates provided by ministries and
taxpayer-supported agencies.
Federal government contributions are forecast to average 2.3 per cent annual growth
over the next three years mainly due to expected increases in the Canada Health Transfer
(CHT) and Canada Social Transfer (CST) disbursements.
Table 1.2 Comparison of Major Factors Underlying Revenue
February 21, 2017
Calendar Year
Per cent growth unless otherwise indicated
2016
Real GDP ……………………………………………
Nominal GDP …………………………………………
Household income …………………………………
Net operating surplus ………………………………
Consumer expenditures ……………………………
Consumer expenditures on durable goods ………
Business investment ………………………………
Residential investment ………………………………
Retail sales ……………………………………………
Employment …………………………………………
BC Housing starts ……………………………………
US Housing starts ……………………………………
3.0
4.7
3.7
8.5
5.8
7.9
8.5
15.4
6.3
3.2
33.1
4.9
SPF 2x4 price ($US/thousand board feet) ………
Pulp ($US/tonne) ……………………………………
Exchange rate (US cents/Canadian dollar) ………
$308
$803
75.4
2017
February 16, 2016
2019
2016
2017
2018
2019
2.1
4.0
3.8
2.4
4.6
2.4
5.1
5.3
3.7
1.2
-8.2
3.4
2.0
3.9
3.8
3.0
4.5
2.0
4.9
4.9
3.6
1.1
-2.0
0.0
2.4
4.0
3.6
3.7
4.8
2.5
5.6
6.8
4.3
1.2
-6.5
-1.0
2.3
4.3
3.9
5.0
4.7
1.9
5.1
6.0
3.7
1.2
-4.6
0.0
2.3
4.3
3.9
5.0
4.5
1.8
4.6
4.8
3.6
1.2
-3.6
0.0
2.3
4.3
3.9
5.4
4.6
1.5
4.6
4.9
3.6
1.2
0.0
0.0
$326
$806
73.7
$318
$800
75.3
$300
$800
78.4
$288
$840
73.1
$300
$825
76.8
$300
$825
79.7
$300
$825
81.8
2016/17
2017/18
2018/19
2019/20
2016/17
2017/18
2018/19
2019/20
Natural gas price ($Cdn/GJ at plant inlet) ………… $1.22
Bonus bid average bid price per hectare ($) ……… $163
Electricity price ($US/mega-watt hour, Mid-C) ……
$24
Metallurgical coal price ($US/tonne, fob west coast) … $141
Copper price ($US/lb) ……………………………… $2.26
$1.61
$140
$27
$140
$2.38
$1.53
$160
$25
$113
$2.48
$1.73
$200
$27
$110
$2.61
$1.04
$252
$24
$85
$2.27
$1.34
$290
$26
$93
$2.48
$1.61
$388
$29
$105
$2.58
$1.84
$362
$31
$121
$2.70
58.5
59.0
60.0
60.0
62.0
62.0
62.0
62.0
Fiscal Year
Crown harvest volumes (million cubic metres) ……
2.1
4.1
3.6
5.0
4.6
2.4
5.0
6.1
3.7
1.2
-28.4
-0.5
2018
Budget and Fiscal Plan – 2017/18 to 2019/20
10
Three Year Fiscal Plan
Commercial Crown net income is expected to average 3.6 per cent annual growth
over the next three years mainly reflecting relatively stable growth in net income for
BC Hydro, Liquor Distribution Branch and BC Lottery Corporation, and lower losses
expected for ICBC. More details on commercial Crown corporation net income are
provided beginning on page 14.
Major Revenue Sources
Key assumptions and sensitivities relating to revenue are provided in Appendix Table A5.
The assumptions and factors that are the major drivers for preparing projections of
individual revenue sources include sensitivities to provide the reader with a sense
of potential impacts to revenue projections if there are changes to these underlying
assumptions and factors. The following text references the forecasts of these assumptions
and factors in explaining individual revenue sources. An analysis of historical volatility of
the economic variables related to revenue sources can be found in the 2016 BC Financial
and Economic Review (pages 14-15). The major revenue components are detailed below.
Taxation revenue
Personal income tax base revenue (excluding tax measures and adjustments for prior years)
is forecast to average 4.4 per cent annual growth over the next three years, consistent with
Budget 2017 projections of household and employee compensation income growth.
Table 1.3 Personal Income Tax Revenue
($ millions)
2016/17
2017/18
2018/19
2019/20
8,784
9,153
9,570
10,003
17
-
28
-
28
-
9,598
9,170
9,598
10,031
14.5%
-4.5%
4.7%
4.5%
3.7%
4.1%
3.6%
4.1%
3.8%
4.1%
3.8%
4.0%
1.1
1.2
1.2
1.2
Base personal income tax revenue …………………………
Measures:
– Budget 2017 tax measures ……………………………………
Prior-Year adjustment .............................................................
Budget 2017 revenue ...........................................................
Annual growth ………………………………………………………
Household income growth (calendar year) ……………………
Employee compensation income growth (calendar year) ……
Elasticity1 (calendar year basis, policy neutral) …………………
1
(1)
815
Per cent growth in current year tax relative to per cent growth in personal income.
Personal income tax revenue is expected to decrease 4.5 per cent in 2017/18 mainly due
to the effects of prior-year adjustments in 2016/17. Over the next two years, revenue
is projected to average 4.6 per cent annual growth based on the economic projections
of household and employee compensation income. The impacts of the Budget 2017
tax policy measures are mainly due to the decrease in the dividend tax credit rate to
15 per cent from 17 per cent.
Corporate income tax revenue is mainly based on cash instalments received from the
federal government and settlement adjustments for prior years. The revenue forecast is
expected to increase 13.7 per cent in 2017/18 reflecting increases in instalments and the
settlement payment for prior years, partly offset by the effects of the reduction in the
small business corporate income tax rate to 2.0 per cent from 2.5 per cent. Average annual
growth over the next two years is forecast at just 1.5 per cent as increases in instalments
are partly offset by lower prior-year settlement payments.
Budget and Fiscal Plan – 2017/18 to 2019/20
11
Three Year Fiscal Plan
The revenue forecast incorporates the federal government’s latest projections of national
corporate taxable income. Revenue projections assume the reduction of the small business
income tax rate to 2.0 per cent from 2.5 per cent, effective April 1, 2017, while the
general corporate income tax rate remains at 11.0 per cent. BC corporate income tax
entitlement is forecast to rise in line with the economic projections of net operating
surplus of corporations.
Table 1.4 Corporate Income Tax Revenue
($ millions)
2016/17
Advance instalments from the federal government:
– Payment share ………………………………………… 11.6%
– Instalments ……………………………………………… 2,727
– less small business income tax rate measure ..........
(20)
International Business Activity Act refunds ………………
295
Prior-years' settlement payment ......................................
3,002
Corporate income tax revenue …………………………
Annual per cent growth ………………………………………
7.7%
2017/18
2018/19
2019/20
12.5%
3,013
(68)
(25)
493
13.3%
3,237
(72)
(25)
328
13.8%
3,416
(73)
(25)
198
3,413
3,468
3,516
13.7%
1.6%
1.4%
Provincial sales tax revenue growth is expected to average 3.5 per cent annually over
the next three years. The forecast incorporates a two-year phase out of tax applied to
electricity purchases as recommended by the Commission on Tax Competitiveness to
help businesses become more competitive and support increased investment, growth
and job creation. The tax rate is reduced to 3.5 per cent from 7.0 per cent effective
October 1, 2017, and effective April 1, 2019, electricity purchases are fully exempt
from provincial sales tax. This is expected to reduce revenue by $164 million once fully
implemented in 2019/20.
Table 1.5 Sales Tax Revenue
($ millions)
Provincial sales taxes ...............................................
Annual per cent change (calendar year)
2016/17
2017/18
2018/19
2019/20
6,544
6,785
7,061
7,257
2016
2017
2018
2019
Durable goods …………………………………………… 7.9%
Consumer goods and services ………………………… 5.8%
Residential investment ………………………………… 15.4%
Government expenditures ……………………………… 4.3%
4.7%
Nominal GDP ……………………………………………
6.3%
Retail sales ………………………………………………
2.4%
4.6%
6.1%
1.9%
4.1%
3.7%
2.4%
4.6%
5.3%
2.5%
4.0%
3.7%
2.0%
4.5%
4.9%
2.0%
3.9%
3.6%
Carbon tax revenue is forecast to average 1.5 per cent annual growth over the next three
years. The forecast assumes that purchased volumes of natural gas will grow in line with
real GDP and that consumption of gasoline will remain flat. Carbon tax revenue is fully
returned to taxpayers through tax reductions and credits. For more details on carbon tax
recycling, see the Carbon Tax Report and Plan topic box on page 66.
Tobacco tax revenue is expected to grow by an average of 1.1 per cent annually over the
three years of the fiscal plan. The forecast incorporates the Budget 2017 tobacco tax rate
increase of 0.8 cents per cigarette, effective October 1, 2017.
Budget and Fiscal Plan – 2017/18 to 2019/20
12
Three Year Fiscal Plan
Property tax revenue is expected to grow by an average of 4.6 per cent annually over the
three year plan, in line with the outlook for BC housing starts and inflation. The forecast
incorporates the impact of increasing the threshold for the phase-out of the home owner
grant to $1.6 million from $1.2 million for the 2017 tax year.
Property transfer tax revenue is forecast to decline 23.9 per cent in 2017/18 due to
expected slowing housing market activity. In 2017/18, market activity and revenue are
projected to be at 2015/16 levels. Over the next two years, revenue is forecast to average
3.9 per cent annual decline in line with the outlook for BC housing starts. Revenue from
the 15 per cent additional property transfer tax applied in Metro Vancouver is forecast at
$100 million in 2016/17 and $150 million in each of the next three years.
More information on tax measures are detailed in Part 2: Tax Measures.
Natural resource revenue
Natural gas royalties are expected to increase 49.1 per cent in 2017/18 due to the impact
of higher prices for natural gas and natural gas liquids, including butane and pentane.
Royalties are forecast to be relatively flat in 2018/19 as the effects of higher production
volumes are offset by lower natural gas prices and utilization of royalty program credits. In
2019/20, revenue increases 21.8 per cent due to the effects of rising prices and production
volumes.
The forecast assumes an average price of $1.61 ($Cdn/gigajoule, plant inlet) in 2017/18,
up from $1.22 in 2016/17. The 2017/18 assumption is within the 20th percentile of the
private sector forecasters, continuing the prudence incorporated since 2013/14. Prices are
expected to fluctuate over the next two years, averaging $1.53 in 2018/19 and $1.73 in
2019/20, in line with the growth of the average of the private sector forecasts. Over the
three-year fiscal plan period, the Budget 2017 natural gas price projection averages
52 cents lower than the average of the private sector forecasters. Natural gas royalty rates
are sensitive to prices in the $1.20 to $2.60 range. Hence the effective royalty rate is
generally expected to rise as prices increase, depending on the take up of royalty program
credits.
See Appendix Table A6 for more details regarding natural gas price forecasts.
Chart 1.6 Revenue from Energy, Metals and Minerals
Chart 1.5 Revenue from energy, metals and minerals
$ millions
1,213
1,005
877
837
Total
225
206
159
248
239
167
145
237
239
623
353
2016/17
2017/18
254
2018/19
250
Other energy
132
Metals, minerals
and other
291
164
2019/20
Budget and Fiscal Plan – 2017/18 to 2019/20
Natural gas
royalties
Sales/leases of
Crown land
drilling rights
Three Year Fiscal Plan
13
Revenue from bonus bids and rents on drilling licences and leases: Over the next three
years, this revenue is forecast to decline 73.7 per cent, from $623 million in 2016/17 to
$164 million in 2019/20. This is due to declining deferred revenue over the three years
and total cash sales expected at less than $10 million annually. More detail is provided in
Appendix Table A5 on page 123.
Mining and minerals: Revenue from mineral tax, fees and miscellaneous mining receipts
is expected to decline an average of 13.8 per cent annually over the next three years
mainly due to the impacts of lower assumed coal prices. Spot metallurgical coal prices
rose significantly in the latter half of 2016 reflecting short-term supply shortages due to
temporary mine closures in Australia and China. Prices are forecast to decline over the
forecast period as global production increases.
Other energy: Other energy revenue is comprised of electricity sales under the Columbia
River Treaty, petroleum royalties and fees collected by the Oil and Gas Commission.
These revenues are expected to increase 10.2 per cent in 2017/18 due to the effects
of higher assumed electricity and oil prices, followed by an average annual increase of
0.4 per cent over the next two years.
Forests revenue is expected to remain relatively flat over the three-year fiscal plan period,
with average annual growth of just 0.5 per cent. Total harvest levels on Crown land are
projected to increase from 58.5 million cubic metres in 2016/17 to 60.0 million cubic
metres by 2019/20. The effects of increasing harvest volumes are partly offset by projected
declining stumpage rates in the BC Timber sales program. The forecast does not explicitly
incorporate any impacts of duties that the US may impose on Canadian lumber exports
resulting from the recent dispute.
Other natural resource revenue is comprised of water rentals and fees for hunting and
fishing licenses collected under the Wildlife Act. These sources are expected to increase
by an annual average rate of 1.6 per cent over the fiscal plan mainly due to higher water
rentals collected under the Water Sustainability Act.
Other revenue
Medical Service Plan premiums: Budget 2017 signals government’s intention to eliminate
MSP premiums. The timing and structure of the change will be influenced by the
Province’s fiscal capacity.
As a first step, beginning January 1, 2018, British Columbia will begin by first reducing
premiums by 50 per cent for households with annual family net income up to $120,000.
In addition, the income threshold below which households are fully exempt from MSP
premiums is increased by $2,000 (e.g. from $24,000 to $26,000 for a single individual
and from $33,000 to $35,000 for a couple with two children). These changes will reduce
premiums by 50 per cent for up to 2 million British Columbians, providing an annual
benefit of $845 million, in addition to the two million British Columbians who do not
pay any premiums.
MSP premiums will generally return to levels they have not been at since 1993. In fact,
adjusting for inflation, households under $120,000 will pay lower premiums than at any
time since the 1980s.
As a result of these changes, revenue to government from MSP premiums is forecast
to decline 8.2 per cent in 2017/18 and a further 26.0 per cent in 2018/19. More
information on MSP premium changes can be found in the Medical Service Plan
Premiums topic box on page 69.
Budget and Fiscal Plan – 2017/18 to 2019/20
14
Three Year Fiscal Plan
Other fees and licences: Over the next three years, revenue from other fees and licences is
expected to average 2.0 per cent annual growth as higher fee revenue collected by postsecondary institutions and from motor vehicle licences and permits are partly offset by
lower revenue from other sources.
Investment earnings and miscellaneous revenue sources are projected to decline an average
2.2 per cent annually over the three year fiscal plan mainly reflecting the loss of one-time
revenue in 2016/17 related to the net gain of the transfer of selected lands and buildings
to non-profit societies. Excluding this one-time revenue, the average annual growth is flat
over the three years.
Federal government transfers
Health and social transfers are expected to average 3.3 per cent annual growth over the
three years of the fiscal plan, mainly reflecting national cash transfers and a rising BC
population share. The plan assumes the national Canada Health Transfer (CHT) cash
disbursement increases 3.0 per cent in 2017/18 followed by increases of 3.3 per cent
and 4.0 per cent in the last two years of the plan. The national CHT cash disbursement
in 2017/18 is based on a three year average (2015 to 2017) of Canada’s nominal GDP
growth, subject to a minimum annual growth rate of 3.0 per cent. The national Canada
Social Transfer (CST) cash disbursement is projected to increase 3.0 per cent annually,
consistent with the federal government forecast. The forecast does not include any
targeted funding for homecare and mental health that was recently offered by the federal
government.
Table 1.6 Federal Government Contributions
($ millions)
2016/17
2017/18
2018/19
2019/20
Canada Health Transfer …………………………………… 4,741
Deferred health equipment grants …………………………
3
Canada Social Transfer …………………………………… 1,751
4,868
1,802
5,035
1,859
5,246
1,918
Total health and social transfers …………………………
6,495
6,670
6,894
7,164
Ministry cost recoveries ……………………………………
Transfers to post-secondary institutions …………………
Transfers to taxpayer-supported Crown corporations …
Transfers to other SUCH sector agencies ………………
Disaster financial assistance contributions ………………
Other transfers ………………………………………………
Total other contributions ............................................
529
492
319
90
18
137
1,585
604
501
297
92
15
138
1,647
534
508
220
90
23
138
1,513
533
513
193
89
19
139
1,486
Total Federal Government Contributions ……………
8,080
8,317
8,407
8,650
Other federal contributions are expected to decline 2.1 per cent annually, on average,
over the next three years. Reduced funding includes declining contributions to the
BC Housing Management Commission in support of housing as well as lower ministry
vote recoveries, mainly reflecting a time-limited transfer in 2017/18 to support local
governments under the federal government’s Clean Water and Wastewater Fund.
Commercial Crown corporations
British Columbia Hydro and Power Authority: As required by regulation, BC Hydro’s net
income is set at $698 million in 2017/18 and $712 million in 2018/19. For 2019/20,
BC Hydro’s net income will remain at $712 million. Pursuant to the 10 Year Rates Plan,
BC Hydro forecasts include annual rate increases of 3.5 per cent for 2017/18, 3 per cent
for 2018/19 and 2.6 per cent for 2019/20.
Budget and Fiscal Plan – 2017/18 to 2019/20
Three Year Fiscal Plan
15
As part of the 10 Year Rates Plan, government is phasing out the payment of dividends
by BC Hydro starting in 2017/18 to assist with stabilizing rate increases and improve
BC Hydro’s capital structure to a 60:40 debt to equity ratio.
British Columbia Liquor Distribution Branch: The Liquor Distribution Branch’s net
income is projected to average $1,054 million over the fiscal plan period, based on an
average annual growth of 2.2 per cent in net sales revenue.
British Columbia Lottery Corporation: BCLC reflects moderate net income growth over
the fiscal plan period, from $1,284 million in 2017/18 to $1,314 million by 2019/20.
Growth in net income is mainly attributed to a continued focus on innovation to retain
existing players by supporting and enhancing existing products and to broaden the player
base and engage new demographics of players by developing new content and experiences.
The corporation continually manages costs and looks for ways to operate the business
more efficiently and effectively.
For each year of the fiscal plan, government will distribute approximately $255 million
(or approximately 20 per cent of the distribution paid to government) of its gaming
income to charities and local governments. This distribution is $5 million more per year
than Budget 2016. As well, $147 million of the gaming income retained by government
will be allocated each year to the Health Special Account in support of health services.
Insurance Corporation of British Columbia: A net loss is forecast to average $104 million
annually over the fiscal plan period. The outlook assumes average annual growth of
1.8 per cent in the number of insured vehicles and a 4.1 per cent average annual increase
in current year claims costs. The net loss forecasts for 2018/19 and 2019/20 also assume
preliminary planned savings targets related to an announced comprehensive independent
review. The forecast will be reassessed once government has reviewed the independent
review recommendations. The Budget 2017 plan assumes that ICBC will not pay any
dividends to government in 2016/17 and over the next three years.
Transportation Investment Corporation (TI Corp): TI Corp continues to forecast net
losses for the fiscal plan period, with profits expected for future years, consistent with
TI Corp’s long-term financing plan. Through tolls, TI Corp will recover capital costs for
the Port Mann/Highway 1 Improvement Project, and will pay for ongoing operations and
maintenance for the bridge and highway. Traffic forecasts indicate long term traffic growth
on the Port Mann Bridge, and TI Corp is expected to repay the Project debt and meet all
financial obligations by 2050.
TI Corp manages the TReO toll system on the Port Mann Bridge and highway operations
for 37 kilometers of Highway 1 between Langley and Vancouver. Bridge and highway
construction was completed in 2015, with some construction continuing off-highway
scheduled to be completed on time in 2016/17 and within the $3.3 billion project
budget.
Budget and Fiscal Plan – 2017/18 to 2019/20
16
Three Year Fiscal Plan
Table 1.7 Revenue by Source
Updated
Forecast
2016/17
($ millions)
Taxation revenue
Personal income …………………………………………………………………
Corporate income …………………………………………………………………
Sales 1 ………………………………………………………………………………
Fuel …………………………………………………………………………………
Carbon ……………………………………………………………………...........
Tobacco ……………………………………………………………………………
Property ……………………………………………………………………………
Property transfer …………………………………………………………………
Insurance premium ………………………………………………………………
Natural resource revenue
Natural gas royalties ………………………………………………………………
Forests ……………………………………………………………………………
Other natural resources 2 …………………………………………………………
Other revenue
Medical Services Plan premiums ………………………………………………
Other fees and licences 3 …………………………………………………………
Investment earnings ………………………………………………………………
Miscellaneous 4 ……………………………………………………………………
Contributions from the federal government
Health and social transfers ………………………………………………………
Other federal government contributions 5 ………………………………………
Commercial Crown corporation net income
BC Hydro …………………………………………………………………………
Liquor Distribution Branch ………………………………………………………
BC Lottery Corporation (net of payments to federal government) …………
ICBC ……………………………………………………………………….………
Transportation Investment Corporation .......................................................
Other 6 ………………………………………………………………………………
Total revenue ………………………………………………………………………
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
9,598
3,002
6,544
976
1,201
745
2,289
2,025
530
26,910
9,170
3,413
6,785
983
1,218
758
2,395
1,542
540
26,804
9,598
3,468
7,061
990
1,236
770
2,504
1,445
550
27,622
10,031
3,516
7,257
997
1,255
770
2,618
1,425
560
28,429
159
859
1,544
2,562
237
852
1,231
2,320
239
870
1,121
2,230
291
872
1,024
2,187
2,529
3,603
1,189
3,353
10,674
2,322
3,695
1,239
3,226
10,482
1,719
3,769
1,255
3,119
9,862
1,749
3,820
1,279
2,970
9,818
6,495
1,585
8,080
6,670
1,647
8,317
6,894
1,513
8,407
7,164
1,486
8,650
684
1,050
1,305
(396)
(88)
109
2,664
698
1,054
1,284
(144)
(90)
113
2,915
712
1,060
1,301
(25)
(86)
113
3,075
712
1,050
1,314
(143)
(86)
114
2,961
50,890
50,838
51,196
52,045
1
Includes provincial sales tax, HST/PST housing transition tax and harmonized sales tax related to prior years.
2
Columbia River Treaty, Crown land tenures, other energy and minerals, water rental and other resources.
3
Post-secondary, healthcare-related, motor vehicle, and other fees.
4
Includes reimbursements for healthcare and other services provided to external agencies, and other recoveries.
5
Includes contributions for health, education, community development, housing and social service programs, and transportation projects.
6
Includes Columbia Power Corporation, BC Railway Company, Columbia Basin Trust power projects, and post-secondary institutions self-supported
subsidiaries.
j:\FEP\ECB\Budget\Budget_06\Budget and Budget
3-Year Fiscal
Document\
and Plan
Fiscal
Plan – 2017/18
Fiscal Tables\part 1 - 3 year fiscal plan\Table 1.7 Revenue by source
to 2019/20
2017-02-16 8:52 PM
17
Three Year Fiscal Plan
Table 1.8 Expense by Ministry, Program and Agency
Updated
Forecast
2016/17 1
Budget
Estimate
2017/18
Office of the Premier ……………………………………………………………
9
Aboriginal Relations and Reconciliation ………………………………………
86
Advanced Education .................................................................................
1,981
Agriculture ………………………………………………………………..........
82
Children and Family Development ……………………………………………
1,451
Community, Sport and Cultural Development ………………………………
539
Education ………………………………………………………………………… 5,617
Energy and Mines ………………………………………………………………
28
Environment ……………………………………………………………………
151
Finance …………………………………………………………………………
1,171
Forests, Lands and Natural Resource Operations …………………………
887
Health …………………………………………………………………………… 17,965
50
International Trade ....................................................................................
Jobs, Tourism and Skills Training ……………………………………………
196
Justice .......................................................................................................
527
Natural Gas Development .........................................................................
454
Public Safety and Solicitor General .........................................................
684
Small Business and Red Tape Reduction ................................................
4
Social Development and Social Innovation ...............................................
2,738
Technology, Innovation and Citizens' Services .........................................
492
988
Transportation and Infrastructure ……………………………………………
Total ministries and Office of the Premier …………………………… 36,100
Management of public funds and debt ………………………………………
1,148
Contingencies ……………………………………………...……………………
450
Funding for capital expenditures ……………………………………………..
1,045
Refundable tax credit transfers ……………………………………………...… 1,031
146
Legislative Assembly and other appropriations ………………………………
9
91
2,066
85
1,596
318
5,923
74
171
374
703
18,840
54
212
515
458
742
4
2,981
564
868
9
91
2,062
86
1,592
269
5,969
35
160
607
696
19,341
55
206
521
461
741
4
3,039
505
874
9
91
2,080
86
1,592
269
5,970
35
158
613
698
19,913
55
206
521
460
741
4
3,056
505
874
36,648
1,181
400
1,485
1,166
179
37,323
1,169
300
1,580
1,187
136
37,936
1,162
300
1,432
1,208
137
41,059
(53)
-
41,695
(54)
-
42,175
(58)
-
41,006
2,969
(24,506)
19,469
41,641
2,854
(25,239)
19,256
42,117
2,900
(25,551)
19,466
Total service delivery agency expense ………………………………
6,048
4,461
1,215
14,161
4,459
30,344
6,248
4,619
1,224
14,352
4,281
30,724
6,315
4,771
1,245
14,707
4,408
31,446
6,358
4,885
1,250
15,086
4,527
32,106
Total expense …………………………………………………………………....
49,082
50,193
50,702
51,572
($ millions)
Total appropriations
39,920
2
(16)
Elimination of transactions between appropriations ………………………
(5)
Prior year liability adjustments …………………………………………………
Consolidated revenue fund expense ………………..……………………… 39,899
Expenses recovered from external entities …………………………….……
2,753
Funding provided to service delivery agencies ......................................... (23,914)
Total direct program spending ………………..……………………………… 18,738
Service delivery agency expense:
School districts …………………………………………………………………
Universities …………………………………………………...........................
Colleges and institutes ………………………………………………….........
Health authorities and hospital societies ……………………………………
Other service delivery agencies ………………………………………………
Plan
2018/19
1
Restated to reflect government's current organization and accounting policies.
2
Reflects payments made under an agreement where an expense from a voted appropriation is recorded as revenue by a special account.
Budget and Fiscal Plan – 2017/18 to 2019/20
Plan
2019/20
18
Three Year Fiscal Plan
Expense
Excluding the Ministry of Health increase, Budget 2017 provides new funding
commitments totaling almost $3 billion over the three year fiscal plan for important
ministry programs, compared to Budget 2016. The average annual growth in spending
is expected to be 2.4 per cent while maintaining modest surpluses across the fiscal plan
period.
Chart 1.6 Expense trends
51.6
$ billions
50.2
50.7
49.1
46.9
Average annual
growth: 2.4%
44.4
43.6
43.2
43.4
40.9
Average annual
growth: 2.8%
Budget 2017
Fiscal Plan
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
Government is able to provide funding increases within the balanced budget objective.
This is made possible due to revenue improvements that flow from a diverse and resilient
economy, as well as ongoing interest cost savings resulting from focused management of
debt within government’s affordability framework. The reduction in direct operating debt
from $10.2 billion in 2013/14 to a forecast $1.1 billion by 2019/20 results in over a half
billion dollars in interest cost savings over the fiscal plan period. These savings provide
ongoing fiscal room for investments in key program areas of importance to British
Columbians.
Consolidated Revenue Fund Spending
Given the recent relatively strong growth in provincial revenues, Budget 2017 affords the
opportunity to make significant investments in the K–12 education, health, and social
services sectors. In addition, new funding is added for housing programs, youth mental
health services, an enhanced technology strategy, several environmental initiatives, and
various other areas that support economic and community development. Further, there
is modest incremental funding for all unionized employees and other eligible groups in
the broader public sector, for the second Economic Stability Dividend (ESD). This wage
increase arises from BC’s real economic growth exceeding the private sector forecast that
was reported in Budget 2015. The general wage increase for these public sector workers
resulting from the second ESD is 0.35 per cent, beginning in early 2017.
Budget and Fiscal Plan – 2017/18 to 2019/20
19
Three Year Fiscal Plan
Health Care
Continued Funding Growth
Compared to 2016/17, the Ministry of Health’s annual budget will increase by
$875 million in 2017/18, and is targeted to reach almost $20 billion by 2019/20 as is
evident from Chart 1.7. Much of this increase is necessary to fund the scheduled wage
increases in the health sector which were negotiated as part of the five year 2014 Economic
Stability Mandate. As previously noted, there is also separate funding for the health
sector’s portion of the second Economic Stability Dividend.
The three year average growth rate for the Ministry of Health in Budget 2017 is
3.6 per cent. The added funding in 2017/18 includes $25 million to further reduce
surgery waiting lists in the Health Authorities.
Ministry of Health funding increases: Budget 2017
Chart 1.7 Ministry of Health budget increases
3-year total increase vs 2016/17: $4.2 billion
$19,913
$ millions
$19,341
Budget
2016
base
$18,840
$572
$501
$1,376
$875
$875
2017/18
2018/19
$17,965
2016/17
2019/20
A Renewed Emphasis on Youth Mental Health
Government recognizes the importance of mental health services with current spending
on the treatment of mental health and substance use issues in British Columbia estimated
at $1.5 billion annually. However, more can be done, particularly for young people.
In response, Budget 2017 adds $100 million to ministry budgets over three years primarily
for youth mental health needs and to address associated substance use issues. This is apart
from the considerable incremental expenditures that are being made from existing budgets
in order to respond to the opioid crisis. As seen in Table 1.9, the new funding consists of
the following initiatives:
• $45 million for the Ministry of Children and Family Development to provide
resources to allow for more mental health counselling and treatment for children,
with the objective of preventing and reducing the impact of mental health challenges
in later years;
• $12 million for the Ministry of Health to provide up to 28 highly specialized
addiction treatment beds for youth;
• $9 million to expand the reach of the Ministry of Health’s BC Integrated Youth
Service Centres to provide early intervention and specialized mental health and
substance use services in up to five sites, with each site expected to serve an additional
1,200 – 2,500 youth annually;
Budget and Fiscal Plan – 2017/18 to 2019/20
20
Three Year Fiscal Plan
• $3 million for a combination of expanding the Youth E–Mental Health online/phone
coaching for youth with mild to moderate depression as well as for treatment services
aimed at the aboriginal population, all within the Ministry of Health;
• up to $5 million over three years to support mental health initiatives for postsecondary students, to be supported by the Ministry of Advanced Education;
• as announced by the Premier in Fall 2016, $5 million is being allocated in 2016/17,
to be continued in 2017/18 (for the Ministries of Health and Public Safety and
Solicitor General) to fund several pro-active measures to mitigate the ongoing opioid
crisis, including Naloxone use/training, additional street outreach and enforcement,
and new supervised consumption facilities – this funding is expected to continue in
future years, with amounts to be finalized pending assessment of first year results;
• $11 million to flow through the Ministry of Health for the new BC Centre on
Substance Use that includes a one-time $5 million in 2017/18 (also part of the
Premier’s announcement) to establish the Centre as part of the St. Paul’s Hospital
Foundation, and an additional $2 million annually for operating costs – the Centre
will provide professional education for health care practitioners, undertake clinical
research in support of evidence-based addiction treatments, and produce guidelines
for addictions care for health and social services professionals; and
• $10 million for the Ministry of Health in 2017/18 to reduce wait lists for substance
use treatment services incremental to those provided by the Health Authorities.
Table 1.9 Mental Health and Substance Use Incremental Funding
2017/18
2018/19
2019/20
Expand child and youth mental health services ……………………...………………
($ millions)
15
15
15
Additional specialized youth treatment beds …………………………………………
4
4
4
Expand BC integrated youth services centres ……………………………….………
3
3
3
1
Additional youth and aboriginal mental health services ..……………………………
1
1
Mental health initiatives for post-secondary students ..….……………………………
1
2
2
Action Plan on overdose prevention ……………………………………………………
5
TBD
TBD
BC Centre on Substance Use …………………………………………………………
Addressing waitlists for substance use treatment ……………………………………
7
10
2
-
2
-
Total ………...…………………………………………………………………………
46
27
27
Note: For Action Plan on Overdose Prevention, additional assessment is required to finalize amounts for 2018/19 and ongoing.
Supplementing the above measures are the following:
• additional resources being added to address children’s mental health issues as part of
the funding being provided to school districts through the Ministry of Education
as a result of the January 2017 Memorandum of Agreement with the BC Teachers’
Federation, as discussed below; and
• a further $65 million ($50 million in 2016/17 and $15 million in 2017/18) for
the acquisition and renovation of buildings to house the homeless and those with
mental health or substance use issues. This funding is provided to the BC Housing
Management Commission through the Housing Priority Initiatives special account and
will result in 380 more housing units for these populations.
Budget and Fiscal Plan – 2017/18 to 2019/20
21
Three Year Fiscal Plan
At a higher level, BC still leads the nation in important health outcomes while continuing
to be third lowest in per capita health costs compared to other Canadian provinces,
at $4,050 per person. BC continues to rank best in terms of Life Expectancy, Cancer
Mortality, and Mortality related to Diseases of the Heart and second best for Infant
Mortality, according to the most recently available data as per Table 1.10.
Table 1.10 Health Per Capita Costs and Outcomes: Canadian Comparisons
2016 Per
Life
Infant Mortality Cancer Mortality Rate Diseases of the Heart
Capita Health Expectancy at per 1000 Live
per 100,000
Mortality Rate per
Care Costs ($) Birth (Years)
Births
Population
100,000 Population
Province
Quebec ..........................
Ontario ...........................
British Columbia ............
New Brunswick ..............
Nova Scotia ...................
Prince Edward Island ....
Saskatchewan ...............
Manitoba ........................
Alberta ...........................
Newfoundland ...............
3,718
3,888
4,050
4,101
4,272
4,411
4,741
4,774
4,793
5,333
81.6
81.9
82.2
80.8
80.4
80.9
79.8
79.9
81.3
79.6
5.0
4.9
3.8
5.7
4.6
3.5
5.5
5.9
4.3
5.5
170.1
148.1
140.4
157.4
174.1
171.1
152.7
159.3
142.2
175.0
84.8
88.4
83.7
100.4
98.5
105.9
113.3
110.9
111.2
121.0
Sources: Canadian Institute for Health Information, 2016 (cost data) and Statistics Canada (outcomes data).
Note: All outcomes data are as of 2012, which is the most recent data available.
K–12 Education
Increased Funding for Enrolment Growth and to Enhance the Education System
In Budget 2017, the Ministry of Education’s allocation will increase by $740 million over
the three-year fiscal plan period, including additional funding for enrolment growth,
rural education enhancement, student transportation needs, compensation costs, and to
address the recent Memorandum of Agreement (MoA) with the BC Teachers’ Federation
(BCTF).
In 2012, in response to a previous court decision, the government established a Learning
Improvement Fund (LIF) with an initial annual budget of $75 million to help address
class size and composition. In 2014 the annual LIF budget was increased to $100 million
as per the ratified BCTF and CUPE collective agreements. Budget 2017 continues
the $100 million annual LIF funding over three years while the employer continues
negotiations with the BCTF on a final agreement that addresses the fall 2016 Supreme
Court of Canada decision on Bill 22, the Education Improvement Act.
As an initial step the employer and the BCTF reached a negotiated MoA on
January 5, 2017. This MoA provided for an additional $50 million to be added to
school district funding during the last six months of the 2016/17 school year, ending
June 30, 2017. This funding enables districts to immediately begin hiring more teachers,
including specialty teachers who provide additional student support within the education
system.
As a consequence, in Budget 2017, a total of $320 million has been added to the Ministry
of Education’s budget over the next three years. This amount is the three year annualized
funding under the interim MoA and includes the amount for the 2016/17 school year.
The MoA funding is in addition to the $100 million annual LIF funding discussed
previously. The government expects that negotiations will reach a final agreement
Budget and Fiscal Plan – 2017/18 to 2019/20
22
Three Year Fiscal Plan
on specialty teacher, class size and composition language as required by the Letter of
Understanding (LoU No. 17) ratified by the parties in the last collective agreement with
respect to the Supreme Court’s decision to restore the provisions. Further funding will be
identified to manage the cost of a final agreement from within the fiscal plan to the extent
that it is required, for example from the Contingencies vote.
It is anticipated that 5 to 10 per cent of the $100 million in annual funding being added
to the K–12 system as a result of the Supreme Court of Canada decision will be used
to address students with mental health needs, which includes the hiring of educational
psychologists, school counselors, and other professionals whose role it is to assist with
such challenges.
As for the remainder of the ministry’s Budget 2017 allocations, after almost two decades of
enrolment decline, the number of students in BC schools is now increasing. In-migration
of families from other jurisdictions, combined with reduced drop-out rates, is causing
significant increases in enrolment. Budget 2017 provides $228 million over three years
in new funding to school districts to fund this growth in student numbers. This funding
represents the base annual amounts required that can be forecasted with relative certainty
at this time. Government will continue to monitor enrolment and will manage any
further growth from within the fiscal plan.
There is additional funding for other priority initiatives in the sector, as detailed in
Table 1.11, including a three-year total of $45 million to eliminate fees for busing services
(except for international students or those outside of catchment areas), $9 million for
rural education enhancement funding to mitigate against school closures in eligible areas,
and a total of $94 million to relieve the K–12 sector from a variety of operational cost
pressures.
Budget 2017 also includes new funding for the second Economic Stability Dividend for
public school teachers and unionized support staff. This amount totals $44 million over
the fiscal plan period.
Table 1.11 Funding Increases for the K-12 Sector
2017/18
2018/19
Funding for preliminary estimates of enrolment growth in public schools …………
($ millions)
76
76
2019/20
76
Annualized cost of interim agreement with the BCTF ..….……………………………
120
100
100
Increased funding for student transportation …………………………………………
15
15
15
Rural education enhancement funding ..….……………………………………………
3
3
3
Relief of various school district and other pressures ..….……………………………
Second Economic Stability Dividend salary increases ………………………………
28
14
32
15
34
15
Total ………...…………………………………………………………………………
256
241
243
Finally, $27.4 million is being provided immediately in 2016/17 to school districts to
assist with the provision of new learning resources and supplies to help defray the costs
of implementing the new curriculum, purchase needed athletic equipment, and/or other
ancillary costs. An additional $2 million will be provided to independent schools for the
same purposes. Where possible, funding will first be used on items that will help defray
costs to parents.
Budget and Fiscal Plan – 2017/18 to 2019/20
23
Three Year Fiscal Plan
Post-Secondary Sector
Additional Operating Funding, a Lower Rate for Student Loans, and an Emphasis on
Technology Career Education
In addition to $27 million over three years for the second Economic Stability Dividend,
Budget 2017 also provides a three year total of $14 million to the Ministry of Advanced
Education for increased operating funding for the Emily Carr University of Arts and
Design that is scheduled to open its new Vancouver campus at Great Northern Way
in September 2017. Further, there is an $8 million increase over the fiscal plan period
to fund an improved “BC Net” service, which will increase network/internet capacity,
security and reliability for at least 20 post-secondary institutions.
The government is also increasing affordability and access to post-secondary education by
reducing the interest rate on BC Student Loans by almost half, to the prime rate, down
from prime rate plus 2.5 per cent. Further, the student loan process will be made more
streamlined and predictable by implementing a fixed student contribution model that will
allow students, particularly adult learners, to hold jobs while in study, gaining valuable
work experience and earning a paycheque without affecting their student financial
assistance.
Finally, significant funding is being added to the ministry’s budget as part of government’s
enhanced technology strategy, with additional allocations to other ministries. These
amounts are broken out in Table 1.12, with an overall total of $87 million over the three
years, and are in addition to the costs of tax changes to support BC’s technology sector
that can be found in Part 2: Tax Measures. Further details on the specific uses for this
funding will follow in the coming weeks.
Table 1.12 Supporting the Technology Sector
($ millions)
2017/18
2018/19
2019/20
Ministry of Advanced Education ………………………………………………………
14
7
25
Ministry of Technology, Innovation and Citizen's Services …………………………
16
2
2
Ministry of Jobs, Tourism and Skills Training ..….……………………………………
4
1
7
1
7
1
35
17
35
Ministry of International Trade .…………………………………………………………
Total ………...……………………………………………………………………………
The foregoing incremental operating funding is in addition to the significant capital
investments that are being made by the provincial and federal governments, augmented
by the sector itself, for 30 BC post-secondary capital projects that have been approved
over the past year as part of the Strategic Investment Fund initiative that was first
announced in the March 2016 federal budget. The provincial contribution alone is
$269 million and is further discussed in the capital spending section.
Supporting Families and Individuals in Need
Budget 2017 provides an additional $796 million over the next three years for the
Ministry of Social Development and Social Innovation and for the Ministry of Children
and Family Development to support families and individuals most in need, as detailed in
Table 1.13 and as described below.
Budget and Fiscal Plan – 2017/18 to 2019/20
87
24
Three Year Fiscal Plan
Table 1.13 Additional Support for Children, Families and Individuals in Need
($ millions)
2017/18
2018/19
2019/20
– Increase to monthly Persons With Disabilities income assistance rates ..….………
64
66
69
– Income assistance supports for those in need ……………………………………...…
49
61
65
– Increased contribution provided to Community Living Services ……………………
38
43
54
– Services and programs for children, youth and their families ………………………
109
89
89
Total ………...…………………………………………………………………………
260
259
277
Ministry of Social Development and Social Innovation:
Ministry of Children and Family Development:
Increase to Disability Assistance Rates for Persons with Disabilities
In support of goals established in Accessibility 2024 – government’s plan to make BC the
most progressive province in Canada for people with disabilities – Budget 2017 provides
$199 million over the next three years to increase disability assistance rates for Persons
with Disabilities. The $50 per month rate increase will take effect April 1, 2017.
Additional Funding for Income Assistance Caseload and Exemptions
Budget 2017 provides an additional $175 million over the next three years for individuals
and families in need to address caseload pressures for temporary income assistance,
disability assistance, and related supplementary benefits. This includes $8 million to
exempt additional child-related benefits that are expected to benefit approximately
600 families and 1,000 children per year.
With Budget 2015, BC became the first province in Canada to fully exempt child-support
payments for families receiving income assistance and in 2016/17 became only the second
province to exempt Employment Insurance maternity and parental benefits from monthly
income assistance. Budget 2017 builds on the changes the Province has made over the last
two years to further support families receiving income assistance.
Community Living BC
In Budget 2017, government’s contribution to Community Living Services will increase
by $135 million over the fiscal plan period. The additional funding will support services
for individuals with developmental disabilities and their families, and to address
continued caseload growth and demand for services.
Caring for Children and Families
New investments provided for the Ministry of Children and Family Development in
Budget 2017 build on the $217 million that was provided to the ministry in Budget 2016
to support the needs of those most vulnerable, and respond to recommendations from the
Plecas review of BC’s child welfare system. Budget 2017 provides $287 million over the
next three years for the ministry as follows:
• $147 million to reduce waitlists and strengthen programs and services which provide
for the welfare of children and youth, including: child protection, children and youth
in care, autism programs, and services for children and youth with special needs;
• $120 million for family supports and reunification, culturally appropriate services,
and additional staff within Indigenous communities that will begin to address the
recommendations of the Grand Chief Ed John Report on Indigenous Child Welfare;
and
Budget and Fiscal Plan – 2017/18 to 2019/20
Three Year Fiscal Plan
25
• $20 million in 2017/18 for child care, including up to 2,000 new child care spaces
that are in addition to government’s current goal of creating 13,000 new licensed child
care spaces between 2014 and 2020, announced as part of the BC Early Years Strategy.
Note that the above amounts and those in Table 1.13 are incremental to the $45 million
over three years to provide the ministry with additional children and youth mental health
resources as detailed in Table 1.9.
In addition to the 300 front-line social workers added over the past two years, these new
investments will fund another 100 front-line support workers and more than 120 child
and youth mental health workers in communities across the Province.
Investing in Housing Supply and Affordability
In 2016, government committed $855 million in support of the construction of 4,900
units of affordable housing in communities throughout the Province. In addition,
leading up to Budget 2017, government announced a further $65 million in support of
individuals with mental health and substance use issues, bringing housing investments to
$920 million in total.
Through the Housing Priority Initiatives Special Account, Budget 2017 will provide
$728 million in property transfer tax revenue to BC Housing Management Commission
over three years to support first-time home buyers, continue housing investments, and
maintain rental assistance and homelessness programs.
Launched in January 2017, the BC Home Owner Mortgage and Equity Partnership
program provides down payment assistance loans to first-time home buyers and is
expected to benefit 42,000 individuals and families over the next three years.
Rental assistance programs for low-income families and seniors continue to support over
33,000 households each year.
Support for Economic Development and Communities
Budget 2017 adds $162 million to ministries to support communities and their
economies, as shown below.
Budget 2017 provides $40 million in 2017/18 in additional funding for the Connecting
British Columbia program to extend high-speed internet access to rural and remote BC
communities and bring higher speeds to support community economic growth. This
funding is to be administered by the Ministry of Technology, Innovation and Citizens’
Services and is in addition to the $10 million that government provided in 2015.
Provincial funding will be leveraged by other levels of government and the private sector.
Funding of $6 million over three years has also been provided to the Ministry of
Agriculture in support of the Buy Local program to support the continued growth of local
demand for BC agrifoods.
$10 million in 2017/18 funding is added to the Ministry of Jobs, Tourism and Skills
Training to provide an infusion to the Island Coastal Economic Trust, a community
economic development organization representing central and north Vancouver Island
and the south coast region of the province north of Greater Vancouver. The Trust was
originally established in 2006, and has provided leadership and funding assistance for a
wide variety of economic development initiatives since that time.
Budget and Fiscal Plan – 2017/18 to 2019/20
26
Three Year Fiscal Plan
Continued support to expand overseas markets for the province’s export products is
important to all regions of British Columbia. Therefore, Budget 2017 provides the
Ministry of International Trade with another $6 million over three years to support three
new trade and investment offices in Southeast Asia, specifically in Jakarta, Manila, and
Johor Bahru in Malaysia.
Budget 2017 also confirms the continuation of the $25 million in annual funding to the
Ministry of Forests, Lands and Natural Resource Operations for the Rural Dividend
program into 2019/20. This application-driven program recognizes the ongoing
challenges faced by rural communities as they work to diversify their local economies.
Investing in Communities
Under the New Building Canada Fund: Small Communities Component, the provincial and
the federal governments are each allocating approximately $109 million over ten years to
support infrastructure projects in BC communities with populations of less than 100,000.
Given that investments will occur over many years, $10 million is added to the budget
of the Ministry of Community, Sport and Cultural Development for 2017/18; out-year
funding will be addressed in future budgets as progress on these local government-owned
projects is tracked.
Similarly, $40 million for the 2017/18 provincial component of the Clean Water and
Wastewater Fund local infrastructure projects is provided. Under this program the
provincial and federal governments are assisting communities by partnering to invest in
the rehabilitation of water, wastewater and stormwater infrastructure, the planning and
design of future facilities, and upgrades to existing systems.
An additional $5 million per year is being added to community gaming grants, bringing
the total annual amount for this program up to $140 million. The new funding will be
directed to capital projects undertaken by not-for-profit agencies.
Given the importance of the province’s highways network, especially to British
Columbians outside of the major metropolitan areas, it is critical that highways be
maintained to the appropriate standards. Therefore in addition to an already sizeable
annual maintenance budget, a further $12 million is added to the Ministry of
Transportation and Infrastructure for this purpose over the fiscal plan period.
Table 1.14 Funding for Economic Development and Communities
($ millions)
2017/18
2018/19
2019/20
Rural internet connectivity ………………………….……………………………
Buy Local BC ……………………….……………………………………………
Island Coastal Economic Trust …………………………………………………
40
2
10
2
-
2
-
Support for international trade offices …………………………………………
Building Canada Small Communities Fund ……………………………………
Clean Water and Wastewater Fund ………………………………...…………
Increased Community Gaming Grants …………………………………………
Increased funding for highways maintenance ……………………………….…
2
2
2
10
40
5
4
8
5
4
8
5
4
7
121
21
20
Guns and Gangs Strategy and community safety ……………………………
Total ………………………………………………………………………………
Budget and Fiscal Plan – 2017/18 to 2019/20
Three Year Fiscal Plan
27
The government will invest an additional $23 million over the next three years for the
Province’s expanded Guns and Gangs Strategy and other community safety initiatives, to
be held within the Ministries of Justice and Public Safety and Solicitor General. This will
extend the funding for two additional anti-gang police units and dedicated prosecutors to
prioritize cases linked to gangs and organized crime, further reducing the risk to citizens
from such activities.
Protecting the Environment
A total of $149 million over three years is added to ministries in Budget 2017 in order to
preserve and protect the environment.
In support of the BC Parks’ Future Strategy, announced in December 2016, Budget 2017
provides the Ministry of Environment with $36 million in new funding over three years.
This includes base budget increases totaling $26 million to increase the number of park
rangers across the province to enhance recreation, conservation and stewardship activities,
and one-time funding of $10 million is provided in 2017/18 for an endowment for the
new BC Parks Foundation.
Demonstrating the province’s commitment to species-at-risk, Budget 2017 provides
the Ministry of Forests, Lands and Natural Resource Operations with $27 million over
three years for a comprehensive caribou recovery program. Under the federal Species at
Risk Act, all woodland caribou populations in Canada have been identified as needing
special management because of their declining population trends due to numerous factors
including habitat alteration, climate change, increased predation and competition from
moose, deer and elk. This funding will support enhanced recovery efforts targeted to
achieve and maintain self-sustaining caribou populations in British Columbia.
Budget 2017 provides the Ministry of Forests, Lands and Natural Resource Operations
with funding of $10 million in 2017/18 to support enhanced efforts to control and
contain high risk invasive plant species across the province and replace Crown-owned
range fencing.
A further $18 million is allocated to the Ministry of Energy and Mines over three years in
support of mine permitting and related compliance and enforcement activities along with
$9 million for the Ministry of Environment in support of Environmental Management Act
authorizations, compliance and enforcement activities.
There is also an injection of $150 million in funding from the 2016/17 fiscal year
as a transfer to the Forest Enhancement Society of British Columbia to continue forest
rehabilitation initiatives. The Society was established in 2016 to advance environmental
and resource stewardship of British Columbia’s forests, and was provided with $85 million
at that time.
Program funding of $9 million over three years is provided to the Ministry of Forests,
Lands and Natural Resource Operations to support implementation of the Forest Carbon
Initiative, a suite of activities under BC’s Climate Leadership Plan targeted to reduce
carbon emissions in the forest sector and capture carbon through the restoration of forests
damaged by disease and wildfire.
Budget and Fiscal Plan – 2017/18 to 2019/20
28
Three Year Fiscal Plan
Finally, Budget 2017 provides the Ministry of Energy and Mines with funding of
$40 million in 2017/18 in support of the Clean Energy Vehicle Program to continue to
provide British Columbians with financial incentives to help make zero-emission vehicles
more affordable, and encourage the build out of charging infrastructure to support a
higher number of vehicles.
Table 1.15 Protecting the Environment
($ millions)
2017/18
2018/19
2019/20
New park rangers …………………………………………………………………
BC Parks Foundation endowment ………...……………………………………
Caribou recovery program ……………..…………………………………………
Invasive plant management ………………………….…………………………
Environmental Management Act compliance and enforcement ……………
Mines permitting and oversight ……………………………………..……………
Enhanced reforestation work …………………...………………………………
Clean Energy Vehicle Program ………………………….………………………
8
9
9
10
8
10
3
6
3
40
9
3
6
3
-
10
3
6
3
-
Total ……………………………………………………………………………
88
30
31
Accountability and Transparency
In support of government’s commitment to openness and transparency, and to continue
to address the recommendations from the Office of the Information and Privacy
Commissioner and David Loukidelis’ F15-03 investigative report, Budget 2017 provides
an additional $7.5 million over the next three years to support the Corporate Information
and Records Management Office in the Ministry of Finance.
The Financial Institutions Commission will receive an additional $4 million over the next
three years to support increased financial services sector oversight. Government has also
increased its financial commitment to the Office of the Superintendent of Real Estate
from $4.2 million to $9.7 million over the next three years funded by increased fees
paid by realtors. This funding supports the office’s expanded mandate under a dedicated
superintendent with an increase to the staffing complement to 18 full-time equivalent
staff members.
Management of the BC Public Service
Full-time equivalent (FTE) staff utilization in core government ministries is projected to
increase slightly from 27,455 FTEs in 2016/17 to 28,000 FTEs in 2017/18 due mainly
to the hiring of additional social workers; records management as well as financial and real
estate oversight staff; park rangers; and employees for other environmental management,
compliance and enforcement activities.
FTE staff utilization is projected to increase slightly in 2018/19 due to the continued
hiring of additional social workers, before stabilizing in 2019/20.
Public Sector Compensation: The Second Economic Stability Dividend
There are about 310,000 members covered by more than 180 collective agreements
throughout the BC public sector. Nearly all have now reached ratified settlements under
the 5-year, 2014 Economic Stability Mandate (ESM), with contracts not expiring until
2018. Beginning with Budget 2015, ministries have received budget increases to fund the
additional wage costs.
Budget and Fiscal Plan – 2017/18 to 2019/20
29
Three Year Fiscal Plan
Chart 1.8 Managing FTEs
FTEs
30,295
26,679
2001/02 1
(Actual)
2014/15
(Actual)
27,192
2015/16
(Actual)
27,455
2016/17
(Forecast)
28,000
2017/18
(Plan)
28,100
28,100
2018/19
(Plan)
2019/20
(Plan)
1
2001/02 FTE count has been restated to reflect the 2011/12 transfer of approximately 3,200 BC Ambulance Service FTEs from the
Ministry of Health to the Provincial Health Services Authority.
A key opportunity provided to encourage negotiated settlements within the ESM was
the commitment for additional wage increases if actual annual provincial real economic
growth (GDP) exceeds the independent Economic Forecast Council’s forecasted growth
for that year as published in provincial budgets. As a result, in Budget 2016, ministries
received additional funds to pay for a 0.45 per cent general wage increase to eligible
groups in the broader public sector. This was the first Economic Stability Dividend (ESD)
paid under the 2014 ESM.
There is now a second ESD payable, which is funded in Budget 2017. As background,
in Budget 2015, the Council’s forecast was for 2.6 per cent real GDP growth for
2015, while actual 2015 growth reported by Statistics Canada in November 2016 was
3.3 per cent. As a result, all individuals in the provincial public sector who have reached
finalized labour agreements are entitled to an additional general wage increase equivalent
to one-half of the 0.7 percentage point positive difference, or an ongoing wage increase of
0.35 per cent annually.
In Budget 2017, ministries have received budget increases totaling $208 million over the
three year fiscal plan to fund the ESD in respect of that 2015 result. This represents a
very small fraction of government’s $26.7 billion annual compensation base.
Going forward, the Council’s forecast of 2.7 per cent real GDP growth for 2016,
as published in Budget 2016, will be the benchmark for comparing against Statistics
Canada results in November 2017 and consequently the eligibility for an Economic
Stability Dividend based on the 2016 economic forecast. Should actual growth turn out
to be higher than the Council’s forecast, any resulting costs for a third ESD will again be
managed within the fiscal plan.
Recovered Expenses
Government projects it will incur $8.7 billion in program spending over the fiscal plan
period whose costs will be recovered from third parties.
Recovered costs include an estimated $3.0 billion in interest payments from commercial
Crown corporations through the fiscal agency loan program and from sinking fund
investment returns.
Budget and Fiscal Plan – 2017/18 to 2019/20
30
Three Year Fiscal Plan
A total of $1.7 billion of programs will be delivered with funding from the federal
government, such as the Labour Market Development Agreement, the Canada Jobs Fund,
integrated workplace solutions, and child and family support programs.
$1.6 billion in government spending is supported by other miscellaneous sources,
including hospital expansion costs recovered from regional hospital districts, MSP and
PharmaCare costs paid by agencies and other jurisdictions, and employee health benefits
costs collected from participating government agencies.
$2.4 billion in remaining cost recoveries will be invested in a variety of programs,
including industry-funded regulatory programs recovered through fees and fees recovered
for collections services rendered.
Government reports the expenses incurred and the recoveries as revenue. The offsetting
nature of these amounts results in no net impact to government’s fiscal plan.
Operating Transfers
Approximately 60 per cent of ministry spending takes the form of transfers paid to service
delivery agencies for the provision of services on behalf of government. These transfers
will total $75.3 billion over the three year fiscal plan period and will support education,
health care, social services, housing, and transportation programs delivered by the
agencies. These service delivery agencies include the SUCH sector (schools, universities,
colleges and health organizations), Community Living BC, BC Housing Management
Commission, BC Transit, and the BC Transportation Financing Authority.
Service Delivery Agency Spending
Service delivery agency spending is projected to total $32.1 billion by 2019/20,
reflecting an increase of $1.8 billion over the fiscal plan period.
School district spending is projected to rise from $6.1 billion in 2016/17 to $6.4 billion
by 2019/20 – an increase of $310 million, or 5.1 per cent over the three year period.
This spending increase is primarily due to salary and benefits cost increases relating to
higher projected student enrolment and the agreement reached to fund the hiring of
new teachers.
Post-secondary institutions spending is projected to rise from $5.7 billion in 2016/17 to
$6.1 billion by 2019/20 – an increase of $459 million, or 8.1 per cent over the three year
period. The spending increase is primarily due to increased salary costs relating to the
Economic Stability Mandate agreements, higher amortization costs in line with ongoing
self-funded capital asset investments, and higher operating costs due to inflationary
pressures and higher enrolment.
Health authority and hospital society spending is projected to rise from $14.2 billion
in 2016/17 to $15.1 billion by 2019/20 – an increase of $925 million, or 6.5 per cent
over the three year period. In addition to the Opioid Crisis and higher drug costs, this
spending increase is due to increasing staffing and operating costs incurred to meet the
projected volume growth in healthcare services delivered by these organizations.
Projected spending by other service delivery agencies is forecast to increase by $68 million
by 2019/20. This 1.5 per cent increase is largely due to increased debt servicing costs and
higher spending in transportation and social services sectors, offset by reduced spending
from BC Housing Management Commission due to one-time new housing priority
initiatives in 2016/17.
Budget and Fiscal Plan – 2017/18 to 2019/20
31
Three Year Fiscal Plan
Capital Spending
In Budget 2017 capital spending on schools, hospitals, roads, bridges, hydro-electric
projects and other infrastructure across the province is expected to total $24.5 billion over
the fiscal plan period. These investments will support the ongoing implementation of the
BC Jobs Plan, and key infrastructure needs in communities across the province.
Table 1.16 Capital Spending
Updated
Forecast
2016/17
Budget
Estimate
2017/18
504
816
1,245
941
66
374
138
39
687
987
917
1,344
161
519
134
55
678
880
962
1,226
113
442
139
51
597
757
782
1,546
115
442
114
45
Total taxpayer-supported ………………………………
4,123
4,804
4,491
4,398
Self-supported
BC Hydro ……………………………………………………
Columbia River power projects 3…………………………
Transportation Investment Corporation …………………
BC Railway Company ……………………………………
ICBC …………………………………………………………
BC Lotteries …………………………………………………
Liquor Distribution Branch …………………………………
2,613
5
46
9
63
90
29
2,421
12
592
22
60
90
82
2,434
7
959
13
40
90
29
2,961
18
837
12
40
90
27
Total self-supported commercial ………………………
2,855
3,279
3,572
3,985
Total capital spending …………………………………
6,978
8,083
8,063
8,383
($ millions)
Taxpayer-supported
Education
Schools (K–12) …………………………………………
Post-secondary institutions ……………………………
Health ………………………………………………………
BC Transportation Financing Authority …………………
BC Transit ………………………………………..…………
Government ministries ……………………………………
Housing 1 ……………………………………………………
Other 2………………………………………………………
1
Includes BC Housing Management Commission and Provincial Rental Housing Corporation.
2
Includes BC Pavilion Corporation and other service delivery agencies.
3
Joint ventures of the Columbia Power Corporation and Columbia Basin Trust.
Plan
2018/19
Plan
2019/20
Taxpayer-supported Capital Spending
Taxpayer-supported capital spending over the next three years will total $13.7 billion,
the highest level ever, and includes completion of existing approved projects along with
new investments to expand and sustain provincial infrastructure including schools,
post-secondary facilities, roads and hospitals. This total is $1.7 billion higher than
Budget 2016 due in part to an increase in cost-shared projects with the federal government
under the Strategic Investment Fund and the Public Transit Infrastructure Fund in the
post-secondary and transportation sectors, respectively.
Investments in Schools
Over the three years of the capital plan, $2.0 billion will be invested to maintain, replace,
renovate or expand K–12 facilities, including continued investment in new school space
to accommodate increasing enrolment in growth districts, and continued investment in
the program to seismically upgrade or replace schools.
Budget and Fiscal Plan – 2017/18 to 2019/20
32
Three Year Fiscal Plan
Current and planned capital investments in Budget 2017 include:
• A new Grandview Heights Secondary School will provide 1,500 new spaces in Surrey.
The school design will allow for future classroom additions to accommodate future
growth. This school is expected to be completed in 2020.
• Up to 5,200 new student seats in Surrey with an investment of $217 million over the
next three years to address the substantial enrolment growth in this area.
• Smiling Creek Elementary in Coquitlam will provide 430 student spaces, as well as a
Neighbourhood Learning Centre. In addition, students will be able to access a new
park and sports field next to the school through an agreement with the city. The new
school is expected to open in September 2018.
• A seismic upgrade to Alpha Secondary in Burnaby will include the replacement of two
classroom wings with more efficient and modern space; the remainder of the existing
building will be retained and seismically strengthened. It is expected that the project
will be completed in 2018.
• $52.7 million over the three year fiscal plan period to address capital needs for the
Conseil scolaire francophone de la Colombie-Britannique school district (CSF).
A funding envelope has been established, with the value of future funds established
through the long-term capital planning process.
Spending to Support Post-secondary Education
Budget 2017 includes $2.6 billion in capital spending over the next three years by
post-secondary institutions across the province. Investments in priority projects will
build capacity and help meet the province’s future workforce needs in key sectors, as
outlined in BC’s Skills for Jobs Blueprint, the BC Jobs Plan, and the #BCTECH Strategy.
A significant portion of this capital investment is funded through other sources, including
foundations, donations, cash balances, revenues generated from services and federal
funding.
This investment includes projects supported by the Federal Government’s Post-Secondary
Institutions Strategic Investment Fund. This targeted, short-term funding program will
promote economic activity across Canada and help Canada’s universities and colleges
develop highly skilled workers, act as engines of discovery, and collaborate on innovations
that help Canadian companies compete and grow internationally.
Examples of current and planned investments in the post-secondary sector include:
• Construction of a new Sustainable Energy and Environmental Engineering Building
at the Surrey campus of Simon Fraser University for 515 students that will create jobs,
expand research and foster innovation.
• Construction of a new Industrial Training and Technology Centre at Thompson Rivers
University in Kamloops for 550 additional students that will accommodate a range
of new and existing trades, technology and industrial programs that will prepare the
students for in-demand careers in the region.
• Renewal of trades facilities at the College of the Rockies in Cranbrook which includes
expansion for an increased capacity of 325 students.
• Construction of a new Heavy Duty Mechanics building at the College of New
Caledonia in Prince George to accommodate 251 existing students and up to 48 new
students in the heavy-duty equipment technician and truck and transport mechanics
program.
Budget and Fiscal Plan – 2017/18 to 2019/20
Three Year Fiscal Plan
33
• Renovation and renewal of the trades facilities at Selkirk College in Nelson to improve
the current delivery of trades education and meet future trades training requirements
for the region.
• $71.2 million of capital infrastructure investments in rural areas of BC, including:
– North Island College, Campbell River Campus trades facilities replacement and
campus consolidation;
– Northwest Community College, Terrace Campus trades facilities renewal;
– Northern Lights College, Dawson Creek, trades campus replacement; and
– Okanagan College, Vernon Campus new trades training facility.
Expanding and Upgrading Health Facilities
Capital spending on infrastructure in the health sector will total $2.7 billion over the next
three years. These investments support new major construction projects and upgrading
of health facilities, medical and diagnostic equipment, and information management/
technology systems. These investments are supported by funding from the Province as
well as other sources, such as regional hospital districts and foundations.
Key capital investments in the health sector include:
• A new 107-bed patient care tower at the Royal Inland Hospital in Kamloops that
will improve patient experience and outcomes by significantly increasing the number
of single-patient rooms, providing new and larger operating rooms and expanding
the existing emergency department. Construction on the new patient care tower is
expected to start in 2018 and be open to patients in 2022. Internal renovations to the
emergency department, pediatric unit and morgue are scheduled to begin in 2022 and
complete in 2024.
• Phase 1 of the Royal Columbian Hospital Redevelopment which includes a new
75-bed mental health and substance use centre, a new energy centre, a multilevel underground parkade, associated tunnel and bridge connections to the
existing hospital, an IT network perimeter pathway, and IT communications hub.
Construction is expected to start in early 2017 and finish in late 2019.
• Replacement of the Burnaby Centre for Mental Health and Addictions (CMHA) with
a new purpose-built, 105-bed facility (an increase of 17 beds) for the Severely Addicted
and Mentally Ill (SAMI) patient population, to be constructed on the Riverview Lands
in Coquitlam. Construction of the new CMHA is expected to begin in fall 2017.
• A new patient care tower, including a surgical services centre, at the Penticton Regional
Hospital that will improve patient experience and outcomes. Construction on the new
patient care tower began in 2016 and is scheduled to complete in early 2019. Internal
renovations to the emergency department and pharmacy are scheduled to begin in
2019 and complete in 2021.
• Phase 2 of the redevelopment of Children’s and Women’s Hospital which includes
the new Teck Acute Care Centre to replace 179 acute care beds and expand service
to 221 beds, plus expand the emergency department, maternity, pediatric operating
rooms and diagnostic imaging and procedures areas. Construction of the Teck Acute
Care Centre is underway with completion planned for summer 2017. Phase 3, which
will relocate the Sunny Hill Health Centre for Children to the Oak Street Campus and
expand Single Room Maternity Care by 10 beds, is expected to start in early 2018 and
complete in late 2019.
Budget and Fiscal Plan – 2017/18 to 2019/20
34
Three Year Fiscal Plan
• Construction of two new hospitals (one located in Courtenay/Comox and one in
Campbell River) to replace existing North Island hospitals and provide a total of 248
patient beds, an increase of 62 beds on the North Island. Construction of the hospitals
commenced in August 2014 and both are scheduled to be open to patients in fall
2017.
• Construction of the new 100-bed Joseph and Rosalie Segal Family Health Centre
to replace and consolidate specialized mental health services at Vancouver General
Hospital. Construction started in January 2015 and is expected to complete in spring
2017.
Supporting the Transportation Investment Plan
Budget 2017 includes continued investments in government’s Transportation Investment
Plan. The Province has secured federal cost sharing on projects and has also leveraged
investments through partnerships with private partners. Over the coming months BC will
continue to work with the federal and municipal governments to identify priorities and
confirm details around project criteria, timelines and cost-sharing arrangements for the
new federal infrastructure funding.
Key capital investments in the transportation sector include:
• Realigning 2 km of Highway 16 and grade separating the CN 28 Mile level crossing,
the last remaining level rail crossing on Highway 16, to reduce delays, improve safety
and improve the flow of goods to and from the Port in Prince Rupert.
• Four-laning 3.4 km of Highway 16 to the west of Prince George, including
intersection improvements and center-line median, from Bunce Road to east of
Jensen Road to reduce congestion, improve safety and facilitate access to and from the
highway.
• Four-laning 6.3 km of Highway 1 to the west of Salmon Arm, including intersection
improvements and replacement of the Salmon River Bridge, between IR#3 and
10th Street SW to reduce congestion, improve safety, support economic development
opportunities and facilitate the movement of goods.
• Six-laning 4.5 km of Highway 97 in Kelowna, including upgrades to major
intersections, from Highway 33 to Edwards Road to reduce congestion, improve safety
and facilitate access to and from the highway.
• A new interchange on Highway 1 at the intersection with Admirals Road and
McKenzie Avenue, including transit, pedestrian and cycling facilities, to reduce
congestion, improve safety and facilitate the movement of goods, services and people.
• Four-laning 5 km of Highway 1 through the Malahat Village, including access
consolidation, frontage roads and 3 km of median barrier, from Shawnigan Lake Road
to Aspen Road to reduce congestion, improve safety and facilitate access to and from
the highway.
• An interchange on Highway 1 at 216th Street in Langley and six-laning of the
highway between 202nd Street and the new interchange to reduce congestion, increase
capacity and improve connectivity between communities to the north and south of
the highway. The widening of Highway 1 from 216th Street to Highway 11 remains
a priority, and BC will continue to work to secure funding with federal and local
partners.
Budget and Fiscal Plan – 2017/18 to 2019/20
35
Three Year Fiscal Plan
• A new 7th lane on the Alex Fraser Bridge, including a moveable median barrier to
allow counter-flow during peak periods and dynamic messaging signs to provide users
real-time traffic information, and a new interchange on Highway 91 at 72nd Avenue to
reduce congestion and improve mobility.
The public and private sector will provide a total of over $7 billion for transportation
investments over the next three years, including:
• $3.3 billion of provincial investment in transportation infrastructure;
• $1.4 billion of investment leveraged through federal cost sharing and partnerships with
private partners, local governments and other agencies; and
• $2.4 billion of investment from the Transportation Investment Corporation, mainly
the George Massey Tunnel Replacement project.
Further information is provided in Table 1.17.
Table 1.17 Provincial Transportation Investments
Updated
Forecast
2016/17
($ millions)
2017/18
2018/19
2019/20
3-Year
Total
Provincial investments:
– Highway rehabilitation ……………………………………………………
– Side road improvement program …………………………………………
– Natural gas road upgrade program ………………………………………
– Highway 1 (Kamloops to Alberta border) ………………………………
– Okanagan Valley corridor …………………………………………………
– Cariboo connector program ………………………………………………
– Major highway corridors and roads ………………………………………
– Other transportation programs ……………………………………………
– Transit infrastructure ………………………………………………………
206
94
20
47
37
37
189
63
133
213
90
20
66
51
42
274
94
231
215
90
20
72
33
39
295
65
176
215
90
20
123
38
52
260
51
324
643
270
60
261
122
133
829
210
731
Total provincial investment 1……………………………………………
826
1,081
1,005
1,173
3,259
other partners ……………………………………………………………
278
459
383
556
1,398
Total investment in transportation infrastructure ……………………
1,104
1,540
1,388
1,729
4,657
Transportation Investment Corporation
– George Massey Tunnel Replacement project …………………………
– Port Mann Bridge/Highway 1 capital project ……………………………
– Port Mann Bridge/Highway 1 rehabilitation ……………………………
25
19
2
583
9
957
2
834
3
2,374
14
Total investments ………………………………………………………
46
592
959
837
2,388
1,150
2,132
2,347
2,566
7,045
Investments funded through contributions from
Total investment in transportation infrastructure including
investments from the Transportation Investment Corporation …
1
Total provincial investment includes operating and capital spending.
Ministry Capital Spending
Budget 2017 includes $1.4 billion in capital spending by government ministries over
the plan period. This will support investments in maintaining, upgrading or expanding
infrastructure such as courthouses, correctional centres, office buildings, and information
systems.
Budget and Fiscal Plan – 2017/18 to 2019/20
36
Three Year Fiscal Plan
Key capital investments made by government ministries include:
• In support of the BC Parks Future Strategy, the province continues to invest in
maintaining and refurbishing existing campsites. In addition, over the next five years
more than 1,900 new campsites will be developed in provincial parks and recreation
sites.
• A new Abbotsford courthouse, expected to be completed in late 2020, will double the
number of courtrooms available in the current facility and increase courtroom capacity
in the Lower Fraser Valley Region.
• A new building will also be constructed in Coquitlam to accommodate the Maples
Adolescent Treatment Centre and the Provincial Assessment Centre.
Capital Project Reserves
The Province has included $202 million in project reserves in its three year capital plan
as a prudent planning measure. In addition to covering risks from unforeseen costs for
ministry capital projects, the reserves will be used to fund emerging capital priorities of
government ministries.
Financing Capital Projects
Provincial capital infrastructure spending is financed through a combination of sources:
• cash balances within the organizations;
• partnerships with the private sector (public-private partnerships, or P3s);
• cost sharing with partners (e.g. federal government, regional hospital districts); and
• direct borrowing.
Chart 1.9Chart
Financing
government’s
capital plan
1.10 Financing
government’s
capital plan
Total taxpayer-supported
capital spending
$ millions
$4,123
$633
Sources of financing:
Cash and working
capital
Other contributions
Federal contributions
P3 liabilities
Direct borrowing
$4,804
$631
$552
$475
$793
$413
$195
$4,491
$4,398
$458
$192
$227
$332
$495
$26
$609
$5
$84
$2,819
$3,180
$3,365
$2,332
2016/17
2017/18
2018/19
Budget and Fiscal Plan – 2017/18 to 2019/20
2019/20
Three Year Fiscal Plan
37
Self-supported Capital Spending
Self-supported capital spending is projected to total $10.8 billion over the fiscal plan
period. This is an increase of $2.2 billion over Budget 2016 forecasted amounts, mainly
due to the inclusion of Transportation Investment Corporation’s George Massey Tunnel
Replacement project. Self-supported capital investments include:
• $7.9 billion (73 per cent) of total self-supported capital spending will be used for
electrical generation, transmission and distribution projects to meet growing customer
demand and to enhance reliability. Included in this total is initial construction of a
third power facility on the Peace River through the Site C Clean Energy project.
•
•
•
•
The majority of BC Hydro’s hydroelectric system was built between the 1960s and
early 1980s and provides over 95 per cent of the total electricity generated by the
corporation. This vast system is ageing and requires a broad range of investments to
maintain reliability – from seismic and safety improvements at dams, to expanding
and strengthening the transmission system. Roughly half of BC Hydro’s capital
spending represents measures to address ageing infrastructure. In addition, BC Hydro
is investing in new generation to meet expected growth in the need for energy and
dependable capacity.
$2.4 billion in self-supported capital spending is forecast for Transportation
Investment Corporation. This spending includes the estimated three year costs for the
George Massey Tunnel Replacement project, as well as costs for routine rehabilitation
on the Port Mann Bridge and on Highway 1.
$270 million will be used for BC Lottery Corporation projects including the
modernization of business systems, expansion of the lottery distribution network, and
acquisition of gaming equipment to support lottery, PlayNow internet gaming, casino
and community gaming activities.
$140 million will be used for ICBC projects including investment in information
technology and facility maintenance and upgrades.
$138 million will be invested by the Liquor Distribution Branch for costs related
to the Liquor Distribution Branch Warehouse project, updates and improvements
to retail stores, technology-related projects and ongoing operating equipment
replacements.
Table 1.18 provides information on major capital projects, and further details on
provincial capital investments are shown in the service plans of ministries and Crown
agencies.
Projects Over $50 Million
Approved major capital projects with multi-year budgets totaling $50 million or more,
including provincial funding, are shown in Table 1.18. Annual allocations of the full
budget for these projects are included as part of the provincial government’s capital
spending shown in Table 1.16.
In addition to financing through provincial sources, major projects may be cost-shared
with the federal government, municipalities and regional districts, and/or the private
sector. Total capital spending for these major projects is $32.2 billion, reflecting provincial
financing of $29.0 billion including internal sources and P3 liabilities, as well as
$3.2 billion in contributions from the federal government and other sources including
private donations.
Budget and Fiscal Plan – 2017/18 to 2019/20
38
Three Year Fiscal Plan
Table 1.18 Capital Expenditure Projects Greater Than $50 million 1
Note: Information in bold type denotes changes from the 2016/17 second Quarterly Report released on November 29, 2016.
($ millions)
Year of
Project
Cost to
Estimated
Cost to
Anticipated
Total
Internal/
Completion
Dec 31, 2016
Complete
Cost
Borrowing
Project Financing
P3
Federal
Liability
Gov't
Other
Contrib'ns
Taxpayer-supported
School districts
Oak Bay Secondary 2 …………………………………
Centennial Secondary ………………………………
Kitsilano Secondary …………………………………
Salish Secondary ……………………………………
Grandview Heights Secondary ………………………
New Westminster Secondary ………………………
Willoughby Slope Secondary …………………………
Seismic mitigation program …………………………
Total school districts ………………………………
Post-secondary institutions
Emily Carr University of Art and Design –
Campus redevelopment at Great Northern Way
– Direct procurement …………………………………
– P3 contract …………………………………………
University of British Columbia –
Undergraduate Life Science Teaching
Laboratories Redevelopment …………………..
Simon Fraser University –
Energy Systems Engineering Building 3…………
50
45
47
27
1
143
2
16
18
28
60
107
55
1,157
52
61
65
55
61
107
55
1,300
50
61
61
45
47
107
35
1,300
-
-
2
4
10
14
20
-
313
1,443
1,756
1,706
-
-
50
2017
9
82
10
22
19
104
15
27
60
-
4
17
2018
12
80
12
-
32
36
2019
5
68
121
126
45
-
45
36
108
221
329
99
60
77
93
2015
2016
47
51
44
15
4
6
62
55
50
38
46
31
-
-
24
9
19
2018
2014
148
318
46
-
194
318
174
139
179
-
20
-
2016
2024
53
-
27
417
80
417
47
202
-
-
33
215
2021
-
102
102
35
-
-
67
2017
2017
36
441
90
39
126
480
73
60
232
-
53
188
2018
2015
140
133
108
-
248
133
213
4
79
-
35
50
2017
51
31
82
57
-
-
25
2019
2017
111
310
198
59
309
369
177
168
187
-
132
14
2021
2023
4
39
7
1
180
76
193
252
100
300
80
232
259
101
480
22
250
101
480
139
-
-
58
93
9
-
2017
69
31
100
-
-
-
100
2,183
2,094
4,277
2,317
816
-
1,144
2015
2017
2017
2017
2020
2020
2019
2030
2017
Total post secondary institutions …………………
Health facilities
Lions Gate Hospital (Mental Health)
Redevelopment 2 ……………………………………
Lakes District Hospital 2 ………………………………
Queen Charlotte/Haida Gwaii Hospital 2……………
Surrey Emergency/Critical Care Tower
– Direct procurement …………………………………
– P3 contract …………………………………………
Royal Inland Hospital Clinical Services
Building 2…………………………………………………
Royal Inland Hospital Patient Care Tower ………
Vancouver General Hospital - Jim Pattison
Pavilion Operating Rooms ……………………………
North Island Hospitals
– Direct procurement …………………………………
– P3 contract …………………………………………
Interior Heart and Surgical Centre
– Direct procurement …………………………………
– P3 contract …………………………………………
Vancouver General Hospital – Joseph and
Rosalie Segal Family Health Centre ………………
Children's and Women's Hospital
– Direct procurement …………………………………
– P3 contract …………………………………………
Penticton Regional Hospital – Patient Care
Tower
– Direct procurement …………………………………
– P3 contract …………………………………………
Royal Columbian Hospital ……………………………
Centre for Mental Health and Addictions ……………
Clinical and systems transformation …………………
iHealth Project – Vancouver Island Health
Authority…………………………………………..
Total health facilities ………………………………
2014
2019
2019
2019
Budget and Fiscal Plan – 2017/18 to 2019/20
39
Three Year Fiscal Plan
Table 1.18 Capital Expenditure Projects Greater Than $50 million 1 (continued)
Note: Information in bold type denotes changes from the 2016/17 second Quarterly Report released on November 29, 2016.
($ millions)
Year of
Project
Cost to
Estimated
Cost to
Anticipated
Total
Internal/
Completion
Dec 31, 2016
Complete
Cost
Borrowing
Project Financing
P3
Federal
Liability
Gov't
Other
Contrib'ns
Transportation
Evergreen Line Rapid Transit 2
– Direct procurement …………………………………
– P3 contract …………………………………………
Highway 97 widening from Highway 33 to
Edwards Road …………………………..…………
Highway 1 widening and 216th Street
Interchange …………………………..……………
Highway 91 Alex Fraser Bridge Capacity
Improvements …………………………..…………
Highway 1 – Admirals Road/McKenzie Avenue
Interchange …………………………………………
Highway 99 10-Mile Slide …………………………
Highway 1 Lower Lynn Corridor
Improvements ……………………………..………
Salmon Arm West ……………………………………
Highway 1 Kicking Horse Canyon Phase 4 …………
2016
425
922
6
-
431
922
2017
34
26
60
2019
6
53
59
2018
1
69
70
2019
19
2
66
58
15
19
11
2016
2018
2021
2022
2024
Total transportation …………………………………
Other taxpayer-supported
Single Room Occupancy Hotel renewal initiative
– Direct procurement …………………………………
– P3 contract …………………………………………
2017
2017
Okanagan Correctional Centre2
– Direct procurement …………………………………
2016
– P3 contract …………………………………………
2016
Abbotsford courthouse ………………………………… 2020
Natural Resource Permitting Project 4………………
Maples Adolescent Treatment Centre
2018
and Provincial Assessment Centre ………………
2019
Total other ……………………………………………
Total taxpayer-supported ...........
216
42
23
292
74
350
141
280
-
18
-
-
22
14
-
34
-
85
60
36
52
60
-
33
-
-
183
144
439
198
163
450
77
115
235
-
66
48
215
55
-
1,454
1,044
2,498
856
292
860
490
26
119
2
-
28
119
26
1
91
2
27
-
91
119
1
49
3
4
156
29
94
123
157
78
94
2
151
78
121
-
-
6
-
5
410
70
264
75
674
75
427
212
29
6
4,468
5,065
9,533
5,404
1,380
966
1,783
Self-supported
Transportation
Port Mann Bridge / Highway 1 2 .............................
George Massey Tunnel Replacement 5..................
Total transportation …………………………………
2017
2024
3,302
16
17
3,484
3,319
3,500
3,319
3,500
-
-
-
3,318
3,501
6,819
6,819
-
-
-
Budget and Fiscal Plan – 2017/18 to 2019/20
40
Three Year Fiscal Plan
Table 1.18 Capital Expenditure Projects Greater Than $50 million 1 (continued)
Note: Information in bold type denotes changes from the 2016/17 second Quarterly Report released on November 29, 2016.
($ millions)
Year of
Project
Cost to
Estimated
Cost to
Anticipated
Total
Internal/
Completion
Dec 31, 2016
Complete
Cost
Borrowing
Project Financing
P3
Federal
Liability
Gov't
Other
Contrib'ns
Power generation and transmission
BC Hydro
– Mica SF6 gas insulated switchgear
replacement 2 ……………...................................
– Northwest transmission line 2…………….............
– Iskut extension project 2……………………………
– Merritt area transmission 2 …………………………
2014
2014
2014
2015
186
694
168
58
5
10
1
2
191
704
169
60
191
317
110
60
-
130
-
257
59
-
– Smart metering and infrastructure program 2 ……
2015
779
1
780
780
-
-
-
– Interior to Lower Mainland Transmission Line 2…
– G.M. Shrum units 1 to 5 turbine replacement 2…
2015
2015
714
175
29
10
743
185
743
185
-
-
-
2015
111
4
115
115
-
-
-
2015
586
37
287
79
61
506
17
615
19
1
9
15
11
242
76
478
605
38
296
94
72
748
93
1,093
605
38
296
94
72
748
93
1,093
-
-
-
2019
13
33
61
53
137
74
53
170
74
53
170
-
-
-
2019
5
71
76
76
-
-
-
2021
2024
12
1,453
48
7,322
60
8,775
60
8,775
-
-
-
2018
329
16
345
345
-
-
-
6,918
8,621
15,539
15,093
-
130
316
301
-
57
301
57
301
57
-
-
-
301
57
358
358
-
-
-
Total self-supported ....................
10,537
12,179
22,716
22,270
-
130
316
Total $50 million projects ...........
15,005
17,244
32,249
27,674
1,380
1,096
2,099
– Hugh Keenleyside spillway gate reliability
upgrade 2……………………………………………
– Upper Columbia capacity additions at
Mica units 5 and 6 project 2 ………………………
– Long Beach area reinforcement 2…………………
– Dawson Creek/Chetwynd area transmission 2……
– Surrey area substation project 2……………………
– Big Bend substation …………………………………
– Ruskin Dam safety and powerhouse upgrade …
– Horne Payne substation upgrade project…………
– John Hart generating station replacement ………
– Cheakamus unit 1 and 2 generator
replacement …………………………………………
– Fort St. John and Taylor Electric Supply..............
– W.A.C. Bennett Dam riprap upgrade project........
– South Fraser Transmission
Relocation project …………………………………
– G.M. Shrum Units G1-G10 control system
upgrade 6…………………………………………....
– Site C clean energy project …………………………
Columbia River power projects
– Waneta Dam power expansion 2, 7…………………
2015
2015
2016
2017
2017
2018
2019
2019
2019
Total power generation and transmission ………
Other self-supported
Insurance Corporation of British Columbia
– Business transformation program .......................
Liquor Distribution Branch Warehouse …………
2016
2019
Total other ……………………………………………
1
Only projects that receive provincial funding and have been approved by Treasury Board and/or Crown corporation boards are included in this table. Ministry
service plans may highlight projects that still require final approval. Capital costs reflect current government accounting policy.
2
Assets have been put into service and only trailing costs remain.
3
Simon Fraser University and private donors will contribute $26 million toward the project, and the university is also contributing land valued at $10 million.
4
Reflects approved capital costs to date, subject to change if future scope components are approved by government.
5
Figures shown are based on preliminary Treasury Board approvals and reflect the capital project budget only, planning costs of $44 million have been
expensed as per accounting policy. These amounts will change after P3 contracts are finalized.
The G.M. Shrum Units G1-G10 control system upgrade project has three phases. The total authorized capital amount of $60M represents partial implementation
funding as at December 31, 2016 for phases I and II and definition funding for phase III.
6
7
Reflects the combined shares of Columbia Power Corporation (32.5 per cent) and Columbia Basin Trust (16.5 per cent) in their partnership with Fortis Inc. for the
development of an electricity generating facility at the Waneta Dam south of Trail.
Budget and Fiscal Plan – 2017/18 to 2019/20
Three Year Fiscal Plan
41
Major capital investments include:
• $1.8 billion for school replacement projects including Oak Bay Secondary, Centennial
Secondary, Kitsilano Secondary, Salish Secondary, Grandview Heights Secondary,
New Westminster Secondary, Willoughby Slope Secondary and continuation of the
seismic mitigation program;
• $329 million for post-secondary institutions including the Emily Carr University of
Art and Design campus redevelopment project, the University of British Columbia
Undergraduate Life Science Teaching Laboratories redevelopment project, and the
Simon Fraser University Energy Systems Engineering Building project;
• $4.3 billion for health facilities including the Lions Gate Hospital redevelopment,
the Lakes District Hospital in Burns Lake, the Queen Charlotte/Haida Gwaii
Hospital, the Surrey Memorial Hospital – Emergency Department/Critical Care
Tower, Royal Inland Hospital redevelopment, the Vancouver General Hospital
Jim Pattison Pavilion Operating Rooms project, the North Island hospitals, the
Interior Heart and Surgical Centre in Kelowna, the Joseph and Rosalie Segal Family
Health Centre at Vancouver General Hospital, the Children’s and Women’s Hospital
redevelopment, the Penticton Regional Hospital patient care tower, the first phase
of the redevelopment of Royal Columbian Hospital, the Centre for Mental Health
and Addictions in Coquitlam, the clinical systems transformation project, and the
Vancouver Island Health Authority – iHealth project;
• $9.3 billion for major transportation capital infrastructure including the Evergreen
Line Rapid Transit project, Highway 97 widening from Highway 33 to Edwards
Road, the Highway 1 Widening and 216th Street Interchange project, the Highway
91 Alex Fraser Bridge Capacity Improvements project, the Highway 1 Admirals
Road/McKenzie Avenue Interchange project, the Highway 99 10-Mile Slide project,
Highway 1 Lower Lynn Corridor Improvements project, the Highway 1 Kicking
Horse Canyon Phase 4 project, the Highway 1 Salmon Arm West improvement
project, the Port Mann Bridge/Highway 1 project, and the George Massey Tunnel
Replacement project;
• $674 million for projects in other sectors including the upgrade of 13 Single
Room Occupancy hotels in Vancouver’s Downtown Eastside, the new Okanagan
Correctional Centre, the Natural Resource Permitting Project, the Maples Adolescent
Treatment Centre and Provincial Assessment Centre in Coquitlam, and the
Abbotsford courthouse replacement;
• $15.5 billion primarily for power generation and transmission capital projects by
BC Hydro and for Columbia River power projects including construction of a dam
and generating facilities at Site C on the Peace River and a 49 per cent share in the
expansion of the Waneta Dam (a public-private partnership with Fortis Inc.);
• $301 million for the capital component of ICBC’s $385 million business
transformation program, to upgrade its claims, insurance, customer, and business
processes and technologies; and
• $57 million (plus leasing costs) for material handling equipment, racking and
conveyors as well as a new computerized warehouse management system for the
Liquor Distribution Branch’s new Vancouver Distribution Centre warehouse.
The following changes have occurred since the second Quarterly Report:
• The completion of the Centennial Secondary School project is extended to 2017
from 2016.
• The Clayton North Secondary project name was changed to Salish Secondary.
Budget and Fiscal Plan – 2017/18 to 2019/20
42
Three Year Fiscal Plan
• A $10 million reduction in Grandview Heights Secondary project costs to date, as this
was a separate project for the initial land acquisition in 2013.
• Completion of the seismic mitigation program is extended to 2030 from 2023.
• The Royal Inland Hospital project name was changed to Royal Inland Hospital
Clinical Services Building.
• The $417 million Royal Inland Hospital Patient Care Tower project has been added.
• The $102 million Vancouver General Hospital Jim Pattison Pavilion Operating Rooms
project has been added.
• The $69 million Highway 1 widening project from Monte Creek to Pritchard was
completed on budget and removed from the table.
• The Evergreen Line Rapid Transit project has been put into service with only trailing
costs remaining, and $78 million under the approved project budget.
• The Highway 1 widening and 216th Street Interchange project completion date is
changed to 2019 from 2018.
• Four projects have been added in the transportation sector. A $70 million Highway 91
Alex Fraser Bridge Capacity Improvements project, a $60 million Highway 99 10-Mile
Slide project in the Lillooet area, a $198 million Highway 1 Lower Lynn Corridor
improvements project in North Vancouver, and the $450 million Highway 1 Kicking
Horse Canyon Phase 4 project.
• Completion of the Single Room Occupancy Hotel renewal initiative is extended to
2017 from 2016 with a $4 million increase to the project budget related to additional
environmental and building condition costs.
• The Okanagan Correctional Centre direct procurement costs increased $3 million
drawn from project reserves for unforeseen construction and information technology
related costs. The total project budget is unchanged at $217 million.
• A $157 million project to replace the Abbotsford courthouse has been added.
• An additional $14 million of capital funding was approved for the Natural Resource
Permitting Project in 2017/18 for the next scope component of the project. Phase one
of the project is still expected to be completed in 2018 at the previously approved
$57 million.
• BC Hydro’s $76 million South Fraser Transmission Relocation project was added.
• ICBC’s business transformation program is now complete at a total cost of
$385 million, $15 million less than the program budget of $400 million. Of the
$385 million cost, $301 million is capital ($12 million lower than in the second
Quarterly Report) and $84 million is operating ($3 million lower).
• The Liquor Distribution Branch Warehouse project for $57 million (plus leasing costs)
has been added.
Provincial Debt
Total provincial debt will increase by $11.0 billion over the fiscal plan period to reach
$77.7 billion by 2019/20. The increase over the plan period is $4.4 billion higher
than forecast for Budget 2016, largely due to higher taxpayer-supported capital plan
investments cost shared with the federal government, and the inclusion of the George
Massey Tunnel Replacement project in self-supported borrowing. Capital plan debt
increases continue to be partially offset by ongoing reductions in direct operating debt
over the plan period.
Budget and Fiscal Plan – 2017/18 to 2019/20
43
Three Year Fiscal Plan
Table 1.19 Provincial Debt Summary 1
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
3,609
2,350
1,066
14,329
8,012
13,280
4,072
39,693
15,249
8,658
14,482
4,445
42,834
16,092
9,214
15,977
4,852
46,135
42,027
24,289
43,302
26,135
45,184
28,023
47,201
30,237
66,316
350
69,437
350
73,207
250
77,438
250
Total provincial debt …………………………………… 66,666
69,787
73,457
77,688
($ millions unless otherwise indicated)
Taxpayer-supported debt
5,167
Provincial government direct operating ..............
Other taxpayer-supported debt (mainly capital)
Education 2……………………………………………… 13,414
Health 3…………………………………………………… 7,553
Highways and public transit 4 ………………………… 12,251
Other 5 …………………………………………………… 3,642
Total other taxpayer-supported debt ……………… 36,860
Total taxpayer-supported debt ………………………
Self-supported debt ……...........................................
Total debt before forecast allowance ………………
6
Forecast allowance ……………………………………
Debt as a per cent of GDP
Provincial government direct operating ………………
Taxpayer-supported ……………………………………
Total provincial …………………………………………
Taxpayer-supported debt per capita ($) ……………
Taxpayer-supported interest bite (cents per
dollar of revenue) ……………………………………
1
2
2.0%
16.1%
25.5%
8,845
3.2
1.3%
15.9%
25.6%
9,009
3.4
0.8%
15.9%
25.9%
9,288
0.4%
16.0%
26.4%
9,588
3.6
3.7
Provincial debt is prepared in accordance with Generally Accepted Accounting Principles and presented consistent with the Debt
Summary Report included in the Public Accounts . Debt is shown net of sinking funds and unamortized discounts, excludes
accrued interest, and includes non-guaranteed debt directly incurred by commercial Crown corporations and debt guaranteed by
the Province.
Post-secondary institutions' debt includes public-private partnership obligations of $55 million for fiscal 2016/17, $60 million for
fiscal 2017/18, $60 million for fiscal 2018/19, and $60 million for fiscal 2019/20.
3
Health facilities' debt includes public-private partnership obligations of $1,590 million for fiscal 2016/17, $1,649 million for fiscal
2017/18, $1,651 million for fiscal 2018/19, and $1,624 million for fiscal 2019/20.
4
BC Transportation Financing Authority's debt includes public-private partnership obligations of $824 million for fiscal 2016/17,
$783 million for fiscal 2017/18, $752 million for fiscal 2018/19, and $725 million for fiscal 2019/20.
Social housing's debt includes public-private partnership obligations of $82 million for fiscal 2016/17, $73 million for fiscal
2017/18, $63 million for fiscal 2018/19, and $54 million for fiscal 2019/20.
5
6
Reflects the operating statement forecast allowance for each year (amounts are not cumulative). Since it is unknown as to
which agency would require this debt, the forecast allowance is shown as a separate item over the plan.
Government’s borrowing requirements over the fiscal plan period will total $20.9 billion.
This total is required to finance government’s taxpayer-supported ($9.5 billion) and
self-supported ($6.7 billion) capital investments and to refinance existing debt maturities
($4.7 billion). In addition to outstanding debt needs, $5.2 billion in maturing debt will
be retired as government’s direct operating debt falls, P3 liabilities are reduced as annual
service payments are made, and the lower forecast allowances in 2018/19 and 2019/20
(see Table 1.20).
Taxpayer-supported debt is forecast to increase by $5.2 billion to $47.2 billion by
2019/20, over 2016/17. The increase is attributed to significant investment in capital
infrastructure over the next three years, including an increase in debt of $4.3 billion
for education and health facilities, $3.7 billion for transportation sector projects, and
a $1.3 billion increase for other initiatives over the three year period. These increases
are partially offset by a $4.1 billion reduction in government direct operating debt now
forecast to end the fiscal plan period at $1.1 billion – its lowest point since 1982/83.
Budget and Fiscal Plan – 2017/18 to 2019/20
44
Three Year Fiscal Plan
Table 1.20 Provincial Borrowing Requirements
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
65,292
66,666
69,787
73,457
3,172
206
873
(3,227)
350
1,374
5,787
90
(378)
(2,378)
3,121
7,607
33
(2,546)
(1,324)
(100)
3,670
7,368
11
(1,795)
(1,353)
4,231
Total provincial debt 1 at year end ………………………… 66,666
69,787
73,457
77,688
2.1
4.7
5.3
5.8
($ millions)
Total provincial debt 1 at beginning of year ……………
2
New borrowing ……………………………………………
Direct borrowing by Crown corporations and agencies .
Retirement provision 3 requiring refinancing………………
Retirement provision 3 funded internally…………………
Change in forecast allowance ........................................
Net change in total debt ……………..……………………
Annual growth in debt (per cent) ...................................
1
2
3
Provincial debt is prepared in accordance with Generally Accepted Accounting Principles and presented consistent with the Debt
Summary Report included in the Public Accounts . Debt is shown net of sinking funds and unamortized discounts, excludes
accrued interest, and includes non-guaranteed debt directly incurred by commercial Crown corporations and debt guaranteed by
the Province.
New long-term borrowing plus net change in short-term debt.
Sinking fund contributions, sinking fund earnings and net maturities of long-term debt (after deduction of sinking fund balances
for maturing issues).
The self-supported debt of commercial Crown corporations is forecast to increase by
$5.9 billion to $30.2 billion by 2019/20. The increase is primarily due to $4.0 billion in
financing requirements for capital investments related to improving and expanding British
Columbia’s hydro generation assets and the George Massey Tunnel Replacement project.
Total provincial debt is presented consistent with the Debt Summary Report included
in the Public Accounts. Debt is shown net of sinking fund investments and unamortized
discounts, excludes accrued interest, and includes non-guaranteed debt directly
incurred by commercial Crown corporations and debt guaranteed by the Province.
The reconciliation between provincial debt and the financial statement debt is shown in
Appendix Table A15.
Additional details on government’s outstanding debt are provided in Appendix Tables A17
to A19.
Table 1.21 Reconciliation of Summary Results to Provincial Debt Changes
Updated
Forecast
2016/17
($ millions)
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
Taxpayer-supported debt:
Annual surplus (before forecast allowance and
allocations to debt reduction or BC Prosperity Fund) ..
Reduction in cash balances ............................................
Other working capital changes ........................................
Net increase in capital and other assets .........................
(1,808)
71
(1,036)
2,073
(700)
(645)
(693)
1
2,612
1,275
(494)
(27)
112
2,291
1,882
(473)
(99)
459
2,130
2,017
Annual change in forecast allowance .............................
1,423
301
1,724
350
1,654
192
1,846
-
1,369
519
1,888
(100)
2,216
(2)
2,214
-
Annual increase in total provincial debt …………………
1,374
3,121
3,670
4,231
Self-supported debt:
Commercial Crown corporation capital financing ............
Other commercial debt ………………………………………
Budget and Fiscal Plan – 2017/18 to 2019/20
45
Three Year Fiscal Plan
Relationship between surplus and debt
In addition to operating results, the change in debt is impacted by reductions in cash and
other working capital changes as well as the debt financing requirements of government’s
capital plan. Table 1.21 reconciles the forecast surpluses with changes in debt.
Risks to the Fiscal Plan
Table 1.22 provides the estimated fiscal impacts of the identified sensitivities for some
of the key variables in the fiscal plan projections on an individual basis. However, interrelationships between the variables may cause the actual variances to be higher or lower
than the estimates shown in the table. For example, an increase in the US/CDN dollar
exchange rate may be partly offset by higher commodity prices.
Table 1.22 Key Fiscal Sensitivities
Annual Fiscal Impact
Variable
Increases of
Nominal GDP ………………………………………
1%
Lumber prices (US$/thousand board feet) ………
$50
Natural gas prices (Cdn$/gigajoule) ………………
25 cents
US exchange rate (US cent/Cdn $) ………………
1 cent
Interest rates ………………………………………… 1 percentage point
Debt …………………………………………………
$500 million
1
Sensitivity relates to stumpage revenue only.
2
Sensitivities can vary significantly especially at lower prices.
($ millions)
$150 – $250
$75 – $100 1
$60 – $70 2
-$25 to -$50
-$89
-$11
The assumptions and risk sensitivities for individual revenue sources and major program
areas can be found in Appendix Tables A5 and A6, beginning on page 123.
Own Source Revenue
The main areas that may affect own source revenue forecasts are BC’s overall economic
performance, the relative health of its major trading partners, the exchange rate and
commodity prices.
Revenues are sensitive to economic performance. For example, taxation and other revenue
sources are driven by economic factors such as household income, consumer expenditures,
housing starts, employment, population growth and the exchange rate. The revenue
forecast contained in the fiscal plan is based on the economic forecast detailed in Part 3:
British Columbia Economic Review and Outlook. As well, it incorporates commodity price
forecasts developed by the Ministry of Forests, Lands and Natural Resource Operations,
the Ministry of Energy and Mines, and the Ministry of Natural Gas Development based
on private sector information.
Income tax revenue forecasts are based on projections of household income and net
operating surplus of corporations. The forecasts are updated from reports on tax
assessments provided by the Canada Revenue Agency. As a result, revenue estimates can
be affected by timing lags in the reporting of current and prior year tax assessments by the
Canada Revenue Agency.
Adjustments to the harmonized sales tax entitlements for the years 2010/11 to 2012/13
will continue until 2019/20. These changes, determined by the federal government, could
affect the revenue forecast over the three-year plan. However it is expected that the size of
these changes will diminish over time.
Budget and Fiscal Plan – 2017/18 to 2019/20
46
Three Year Fiscal Plan
Revenues in British Columbia can also be volatile, largely due to the influence of the
cyclical natural resource sector in the economy and the importance of natural resource
revenues in the Province’s revenue base. Changes in commodity prices such as natural gas,
lumber or coal may have a significant effect on natural resource revenues and economic
growth.
Details on major assumptions and sensitivities resulting from changes to those
assumptions are outlined in Appendix Table A5.
Softwood Lumber Dispute
The Budget 2017 fiscal plan does not explicitly incorporate any impacts of duties that
the US may impose on Canadian softwood lumber exports resulting from the recent
trade dispute. Trade negotiations between Canada and the US are still ongoing and
Canada prefers a fair managed settlement. The US Department of Commerce has not
issued any specific determination of duties on subsidy or dumping at this time. If the US
does impose countervailing or anti-dumping duties, it is not known what rates could be
enacted nor is it clear what the potential effects this could have on BC lumber producers
and exporters. As a result of these uncertainties, the Budget 2017 economic and fiscal plan
does not incorporate any estimates of potential impacts associated with the current trade
dispute involving softwood lumber exports to the US. In the absence of a settlement, it is
expected that the US Department of Commerce will issue its preliminary determinations
on subsidy at the end of April and on dumping at the end of June. Canada has steadfastly
maintained and argued that lumber exports to the US are not subsidized and NAFTA
tribunals have generally ruled in its favour. The BC government continues to support
Canada’s efforts to negotiate with the US, prepare its defense for any new litigation if
necessary, and to develop other markets for BC forest products. The impacts of any trade
actions taken by the US, including the imposition of countervailing and anti-dumping
duties on Canadian softwood lumber, represent a key risk to the economic and fiscal
projections.
Federal Government Contributions
Potential policy changes regarding federal government allocations, including health and
social transfers and cost-sharing agreements, could affect the revenue and the expenditure
forecasts.
Crown Corporations
Crown corporations have provided their own forecasts. These forecasts, as well as their
statements of assumptions, were used to prepare the fiscal plan. The boards of those
corporations and agencies have also included these forecasts, along with further details
on assumptions and risks, in the service plans being released with the budget. Net
income from the BC Lottery Corporation may be impacted from the results of ongoing
consultations with stakeholders concerning any transitional changes to the commission
structure in its Casino and Community Gaming division.
SUCH Sector
Health authorities have submitted an overall balanced financial plan for 2017/18 to
2019/20 based on policy assumptions provided by the Ministry of Health. The individual
plans have been signed off by the board chairs of the respective health authorities. The
Ministry of Health will continue to work with the health authorities to manage any
emerging revenue and spending risks and spending pressures.
Budget and Fiscal Plan – 2017/18 to 2019/20
Three Year Fiscal Plan
47
Forecasts for the universities, colleges, and institutions have been signed off by chairs of
the board or audit committee and lead financial officers.
Forecasts for the combined school districts have been compiled by the Ministry of
Education based on the requirements of the School Act, the current year plans developed
by the school districts, and ministry policy assumptions respecting future funding
allocations. Variances from these assumptions could impact the fiscal plan.
Spending
Government funds a number of demand-driven programs, including those delivered
through third party delivery agencies, such as health care, K-12 and post-secondary
education, income assistance, and community social services. The budgets for these
programs reflect reasonable estimates of demand and other factors such as price inflation.
If demand is higher than estimated, this will result in a spending pressure to be managed.
The spending plans for the Ministry of Forests, Lands and Natural Resource Operations
and the Ministry of Transportation and Infrastructure include base amounts to fight
wildfires and deal with other emergencies such as floods. Unanticipated or unpredictable
occurrences may affect expenses in these ministries.
Details on major assumptions and sensitivities resulting from changes to those
assumptions are shown in Appendix Table A7 and in ministry service plans.
Treaty Negotiations and Revenue Sharing
BC continues to negotiate treaties and incremental treaty agreements with a number of
First Nations. While implementation and settlement costs associated with existing Final
Agreements have been accounted for in the fiscal plan, the outcomes of other treaty
negotiations and their ratification process would need to be managed within the fiscal
plan.
Government is also committed to negotiating new revenue-sharing agreements and
other reconciliation agreements with First Nations to streamline consultation on natural
resource decisions, provide increased certainty for investors, and provide new economic
opportunities to First Nations communities. Where agreements have been concluded,
the costs of those agreements have been accounted for in the fiscal plan. Any future
agreements will need to be accommodated within the fiscal plan.
The Province is also involved in litigation with First Nations relating to aboriginal rights.
Settlement of these issues, either in or out of court, may result in additional costs to
government.
Capital Risks
The capital spending forecasts included in the fiscal plan may be affected by subsequent
planning (i.e. design development) and procurement activities (i.e. receipt/review of
construction bids) resulting in project costs that are higher than the initial approved
budgets. For large capital projects, government will review the budget and scope risks,
and the strategies to mitigate these risks.
Budget and Fiscal Plan – 2017/18 to 2019/20
48
Three Year Fiscal Plan
Other risks impacting capital spending forecasts include:
• weather and geotechnical conditions, including the outcome of environmental impact
studies, causing project delays and/or unexpected costs;
• changes in market conditions, including service demand, the impact of inflation on
building material costs, the availability of and wage rates for skilled workers, and
borrowing costs;
• the accuracy of capital project budget and construction schedule forecasts;
• the successful negotiation/timing of cost-sharing agreements with the federal
government and other funding partners; and
• the timing and outcomes of public-private sector partnership negotiations.
Pending Litigation
The spending plan for the Ministry of Justice contains provisions for payments under the
Crown Proceeding Act based on estimates of expected claims, judgments, and related costs
of settlements likely to be incurred. Litigation developments may occur that are beyond
the assumptions used in the plan (for example, higher-than-expected volumes, or size of
claim amounts and timing of judgments and settlements). These developments may affect
government revenues and/or expenditures in other ministries.
Write-downs and Other Adjustments
Ministry budgets provide for anticipated levels of asset or loan write-downs where
estimates can be reasonably predicted. The overall spending forecast does not make
allowance for extraordinary items other than the amount provided in the Contingencies
vote.
Prudence and Risk
The economic, financial and external variables and factors that impact the estimates of
revenues, expenditures, capital spending and debt will change throughout the year as
new information becomes available with potentially material impacts. As a result, the
actual operating surplus, capital expenditure and debt figures may differ from the current
forecast. Government will continue to update the fiscal plan throughout the year.
Government incorporates four main levels of prudence to help mitigate risks to the
budget plan projections:
• The Ministry of Finance’s economic outlook is lower than the average of the
forecasts provided by the members of the Economic Forecast Council (EFC).
The Budget 2017 plan assumes annual real GDP growth of 2.1 per cent in 2017 and
2018 and 2.0 per cent over the medium term. This is lower than the EFC average by
0.2 percentage points in 2017 and 0.1 percentage point in each following year of the
Budget 2017 plan. The prudent outlook compared to the private sector acknowledges
the downside risks to the economic forecast over the forecast horizon.
• The Budget 2017 natural gas price forecast is lower than the private sector average over
the next three years reflecting the recommendation of Dr. Tim O’Neill in 2013 to
adopt more caution in preparing the natural gas royalty forecast. Over the next three
years, the Budget 2017 natural gas price projection averages 52 cents lower than the
average of the private sector forecasters (see Appendix Table A6 for details).
Budget and Fiscal Plan – 2017/18 to 2019/20
Three Year Fiscal Plan
49
• Budget 2017 includes forecast allowances of $350 million in 2017/18, and
$250 million in each of 2018/19 and 2019/20. The forecast allowance helps guard
against unanticipated revenue volatility and statutory spending such as additional
costs to fight wildfires, to deal with other emergencies such as floods and for litigation
developments under the Crown Proceeding Act.
• The Budget 2017 expense forecast also includes a Contingencies vote allocation
of $400 million in 2017/18, $300 million in each of 2018/19 and 2019/20. The
Contingencies vote is a prudent measure to help protect the plan from unforeseen and
unbudgeted costs that may arise and to fund priority initiatives.
In its deliberations throughout the year, Cabinet and Treasury Board consider the impacts
of its decisions on debt affordability and the levels of prudence and the operating surplus.
The Minister of Finance meets with the EFC annually to discuss issues facing the global
economy and BC’s economic outlook including areas of concern, risks and opportunities
for the BC economy. The Minister of Finance consults with staff and colleagues on
the various levels of prudence incorporated in the fiscal plan, tax policy initiatives for
consideration and the potential risks that could arise over the next three years. Since
the risks could be ongoing or one-time in nature and could impact both revenues and
expenditures, consideration is given to both the forecast allowance and Contingencies
vote allocations. However, since a number of these risks are not readily quantifiable, there
is no specific formulaic approach in the determination of the forecast allowance and
Contingencies vote allocations.
Following advice provided by staff and colleagues, the Minister of Finance determines the
levels of additional prudence to incorporate in the forecast allowance and Contingencies
vote; tax policy measures to implement; and a credible level of operating surplus
underlying the budget and fiscal plan. The determination of the level of any of these is
not done in isolation as all of the above elements must be considered in the fiscal plan
projections. A discussion of fiscal risks is included in this section of the budget document
and risks to the economic outlook are summarized on page 82. See Part 2: Tax Measures
for a discussion on tax policy initiatives in Budget 2017.
Budget and Fiscal Plan – 2017/18 to 2019/20
50
Three Year Fiscal Plan
Liquefied Natural Gas – Update
Long Term Outlook for LNG
investment and hundreds of jobs. Construction
is expected to commence in 2017 with the first
LNG shipments anticipated in 2020.
According to the most recent International
Energy Agency forecast, global natural gas use
continues its upward trend and is expected
to be the fastest growing fossil fuel over the
next 25 years. By 2040, it is anticipated that
consumption of natural gas will surpass coal
to become the second most consumed fuel
globally after oil.
China and the Middle East are expected to
be the main centres of gas demand growth.
With that, the global trade in natural gas is set
to continue expanding, and it is anticipated
that LNG demand and trade will increase
more rapidly than pipeline gas. As illustrated
in Chart 1, between 2014 and 2030, demand
for LNG is forecast to nearly double. As older
LNG facilities around the world wind down
production, the gap between global LNG
demand and the available or anticipated supply
is expected to grow.
Chart 1 Global LNG supply-demand gap
2000 to 2035
600
Million of Tonnes per annum
500
Supply-Demand Gap
400
In conjunction with Woodfibre LNG’s
decision, the Province announced a new
BC Hydro eDrive rate. This rate will be offered
to LNG projects that connect to the BC Hydro
integrated grid to supply clean renewable
electricity for the liquefaction process at their
facilities. This rate – equal to the existing
industrial rate – creates an incentive for LNG
developers to use electricity instead of natural
gas for their compression needs, and supports
the Province’s Climate Leadership Plan to
encourage electrification, reduce greenhouse
gas emissions, and enable the development of a
new, low-carbon economy.
Today, there are approximately 20 LNG export
proposals at various stages of development for
which the National Energy Board has approved
eighteen export licenses. Four LNG export
facilities have been granted both provincial and
federal environmental approval, while another
five are at various stages of the environmental
assessment (EA) process. Also, five of the
natural gas pipelines proposed to support LNG
facilities have been granted EA certificates.
LNG projects in British Columbia touch
over 40 First Nations. To date, the Province
and proponents have negotiated over 105
agreements with First Nations.
300
200
100
0
2000
2005
2010
Source: Wood Mackenzie - LNG Tool, Q4 2016
2015
2020
2025
2030
2035
With its close proximity to Asia, LNG facilities
in British Columbia will be well positioned to
help meet this growing supply-demand gap.
The Province is continuing its consultations
with First Nations, communities and local
governments as each of them have an
important role in the province’s LNG future.
A Competitive Tax and Policy Framework
Activity Update
British Columbia’s aspirations for a new LNG
industry reached a historic milestone on
November 4, 2016, when Woodfibre LNG
announced its intention to move forward.
This project represents $1.6 billion in new
The Province has created a tax and policy
framework that is competitive with Australia
and comparable US jurisdictions while also
ensuring that British Columbians benefit from
LNG development.
Budget and Fiscal Plan – 2017/18 to 2019/20
Three Year Fiscal Plan
As reported in Budget 2015, the Liquefied
Natural Gas Income Tax Act that set out the key
components of the LNG Income Tax received
Royal Assent on November 27, 2014. The
legislation also included an amendment to the
Income Tax Act to introduce a Natural Gas Tax
Credit for payers of LNG income tax with a
permanent establishment in British Columbia.
Under the Liquefied Natural Gas Income Tax Act,
the amount of the credit is based on the cost of
natural gas at an LNG facility inlet.
These Agreements provide financial
security to industry from changes to three
industry-specific taxes and changes to
industry-specific greenhouse gas regulatory
requirements.
As announced in Budget 2017, the Province will
begin phasing out the Provincial Sales Tax on
electricity, effective October 1, 2017. The phase
out, along with the expanded BC Hydro
industrial rate, will encourage LNG proponents
to use electric drives for compression.
Using electricity instead of natural gas to power
LNG facilities will help reduce greenhouse gas
emissions and make BC’s cleanest LNG in the
world even cleaner.
BC’s new Greenhouse Gas Industrial
Reporting and Control Act and regulations
came into force on January 1, 2016,
helping to ensure that LNG facilities in
BC will have an emissions benchmark
(0.16 carbon dioxide equivalent tonnes
for each tonne of LNG), making them the
cleanest facilities in the world. The Act
includes the ability to set a greenhouse gas
emissions intensity benchmark for regulated
industries. It also enables the benchmark
to be met through flexible options, such
as purchasing offsets or paying a set price
per tonne of greenhouse gas emissions that
would be dedicated to a technology fund.
The Province has also assisted local governments
in negotiating benefit agreements with LNG
proponents. These agreements help ensure that
local communities see lasting benefits from LNG
development and help provide tax certainty for
both proponents and local governments.
Project Development Agreements
LNG is a capital intensive industry that requires
substantial investment. LNG proponents have
asked for assurance that the Province will not
increase industry-specific taxes or CO2e emission
regulatory requirements once an LNG facility
has been constructed and substantial investment
has been made by the proponent.
On July 21, 2015, the Liquefied Natural Gas
Project Agreements Act received Royal Assent.
The Act gives the Minister of Finance authority
to enter into project development agreements
(Agreements) with respect to LNG projects.
As of Budget 2017, the Province (through
the Minister of Finance) has signed an
Agreement with Pacific NorthWest LNG.
Greenhouse Gas Emissions
To manage cost implications of greenhouse
gas compliance and address competitiveness
of the BC LNG industry, the government
has created an LNG Environmental
Incentive Program. By incenting investment
in advanced technology and rewarding
achievement of world-leading performance,
the program will help ensure the
development of the cleanest LNG facilities
in the world consistent with government’s
commitment.
LNG Environmental Stewardship
Initiative
The LNG Environmental Stewardship
Initiative (Stewardship Initiative) was
launched in 2014 to address a First Nations
desire for a government commitment to
more collaborative ways of dealing with
Budget and Fiscal Plan – 2017/18 to 2019/20
51
52
Three Year Fiscal Plan
monitoring of the cumulative impacts
related to LNG and resource development
in traditional territories. The LNG
Environmental Stewardship Initiative has
made positive progress since its launch
with about 30 First Nations engaged in
Regional Stewardship Forums that have
been established in the Skeena, Omineca,
Northeast and North Coast areas. These
forums are intended to carry out stewardship
projects aimed at creating positive
environmental legacies from the development
of a safe and sustainable LNG industry.
The Stewardship Initiative complements
the existing regulatory process and advances
a collaborative relationship between First
Nations, governments and industry on key
environmental management topics.
Environmental Assessment
The Province has set high standards for its
environmental assessments. This has resulted
in conditions being placed on the EA
certificates issued that help ensures industrial
projects are responsibly developed in the
province. Furthermore, as the regulator
for the industry, the BC Oil and Gas
Commission makes sure that the exploration,
development, pipeline transportation and
any reclamation continues to meet BC’s high
standards. As noted earlier, to date provincial
EA certificates have been issued for nine
LNG related projects – four export facilities
and five natural gas pipelines. Other projects
are under EA review. This is a clear sign of
progress in this emerging British Columbia
industry.
Budget and Fiscal Plan – 2017/18 to 2019/20
Three Year Fiscal Plan
Addressing Housing Supply and Affordability
Increased demand, a restricted supply of units
for sale or rent, and low rental vacancy rates
have caused housing market conditions to
tighten – particularly in Metro Vancouver and
in some other areas – resulting in rapid home
price appreciation and increased rental rates.
Building on Budget 2016, government is
continuing to take meaningful actions to
address housing supply and affordability in
the province.
July 2016 legislation
Last July, Bill 28, Miscellaneous
Statutes (Housing Priority Initiatives)
Amendment Act, 2016, was passed by the
legislature. The legislation established new
measures to help make home ownership more
affordable by: creating a new provincial special
account to fund housing, rental, or shelter
initiatives; strengthening consumer protection;
and giving the City of Vancouver the tools it
requested to increase rental property supply.
Specifically, the legislation provided for:
• Introduction of the additional property
transfer tax at a rate of 15 per cent effective
August 2, 2016. The tax applies to foreign
nationals, foreign corporations, or taxable
trustees who register an interest in residential
real estate in Metro Vancouver;
• Creation of a new Housing Priority
Initiatives special account for provincial
housing, rental, shelter programs and
initiatives;
• Amendments to the Real Estate
Services Act to substantially implement
key recommendations of the independent
advisory group report, and to end selfregulation of the real estate industry; and
• Amendments to the Vancouver Charter to
provide requested legislative authority for
the City of Vancouver to implement and
administer a tax on vacant homes.
15 per cent additional Property Transfer Tax
As expected, introduction of the additional tax
rate was successful in helping to cool the real
estate market in Metro Vancouver, by reducing
the volume of residential real estate purchases
by foreign nationals or foreign-controlled
corporations.
Prior to the introduction of the additional
tax on August 2, 2016, the rate of foreign
investment in residential real estate in Metro
Vancouver was higher than the rate in the rest
of the province. Since the introduction of the
additional tax, the rate of foreign investment
in Metro Vancouver has fallen significantly and
is now relatively consistent with the provincial
average.
Record investments in affordable rental
housing
Budget 2016 committed $355 million over
five years for BC Housing to support new
construction of more than 2,000 affordable
rental housing units.
Building on that commitment, last fall the
government committed a further $500 million
to create more than 2,900 additional affordable
rental units in partnership with non-profit
societies, local governments, agencies,
community organizations and the private
sector. As of November 2016, 53 projects
were announced under this commitment
and remaining projects will be approved by
March 31, 2017.
Leading up to Budget 2017, government
has also announced a further $65 million
investment over 2016/17 and 2017/18, to
create 380 more housing units for people with
mental health and substance use challenges.
Chart 1 provides details of the allocations
announced in the fall and leading up to
Budget 2017.
Budget and Fiscal Plan – 2017/18 to 2019/20
53
54
Three Year Fiscal Plan
Chart 1 $565 Million Additional Investment in Housing Supply
Housing for
Women and
Children
(224 units)
Youth Transitional
Housing
(82 units)
Mental Health and
Substance Use
Housing
Aboriginal Housing
(380 units)
(469 units)
Student Housing
(200 units)
Specialty Housing
(324 units)
Rural Seniors
Housing
(121 units)
Affordable Rental
Housing
(1,059 units)
Non-Rural Seniors
Housing
(421 units)
A mix of purchases from the private sector
and construction of new and refurbished
housing will help meet the needs of a wide
variety of people across the province. In
addition to people with mental health and
substance use challenges, this includes low-to
moderate-income renters, seniors, youth and
students, adults with developmental disabilities,
Aboriginal people and women and children.
As shown in Table 1, taken together provincial
investments in affordable and supportive
housing total $920 million and will create an
estimated 5,280 more housing units.
BC Home Owner Mortgage and Equity
(HOME) Partnership program
Saving for a mortgage down payment can be
hard for first-time buyers. The new BC HOME
Partnership program contributes to the amount
first-time homebuyers have already saved
for their first mortgage down payment by
providing up to $37,500, or up to 5 per cent of
the purchase price, through a 25-year loan that
is interest and payment free for the first 5 years.
Through this program, government expects to
invest about $703 million in loans over the next
three years ending March 31, 2020, to help an
estimated 42,000 B.C. households enter the
housing market for the first time.
Since the start of the program on
January 16, 2017, more than 250 applications
and over $1 million in loans have been
conditionally approved by BC Housing (as of
February 1, 2017) for purchases closing on or
after February 15, 2017.
First-Time Home Buyers’ Program
First-time home buyers have been able to save
up to $7,500 of property transfer tax when
purchasing a home valued up to $475,000.
Between January 1, 2016 and January 31, 2017,
almost 22,000 families saved an average of
$4,011 on their first homes. Total savings to
families is estimated at $87 million.
In Budget 2017, the First-Time Home Buyers’
Program threshold is raised to $500,000, up
from $475,000. First-time home buyers can
now save up to $8,000 of property transfer
tax when purchasing a home valued up to
$500,000.
Newly Built Home Exemption
Available to everyone, the Newly Built
Home Exemption allows families to save up
to $13,000 of property transfer tax when
purchasing a newly constructed or subdivided
home valued at up to $750,000.
Budget and Fiscal Plan – 2017/18 to 2019/20
55
Three Year Fiscal Plan
Between February 17, 2016, when
the exemption was introduced, and
January 31, 2017, more than 9,700 families
saved an average of $7,400 on newly built
homes. Total savings to families is estimated at
$72 million.
Property Tax Deferment Program
This low-interest loan program allows
qualifying BC homeowners to use the equity
in their homes to defer payment of the annual
property taxes on their principal residence.
Approximately 44,000 homeowners are
currently registered with the program.
On average, homeowners are currently
deferring about $3,500 in property taxes
per year.
Homeowner Grants
In January 2017, the government increased the
home owner grant threshold to $1.6 million,
up from $1.2 million the previous year,
helping keep property taxes affordable for
families and ensuring most home owners
continue to receive the full grant in 2017.
Maintaining affordable housing services
Budget 2017 provides an additional
$159 million to maintain assistance levels
for low-income families and seniors, to help
make rent more affordable in private market
rental units. Services are also maintained for
the homeless in the existing permanent shelter
system.
Rental assistance programs support over
33,000 households per year, as well as for
14,470 emergency shelter and housing units
for those who are homeless or most at risk of
homelessness.
Included are almost 1,100 new transitional and
temporary and year-round shelter spaces, with
an annual cost of approximately $20 million to
provide operating and support services.
As previously announced, government is also
investing $176 million in capital funding to
construct two new state-of-the-art facilities at
the Riverview site in Coquitlam; a 105-bed
mental health facility to replace the Burnaby
Centre for Mental Health and Addictions; a
new facility to accommodate the 28-bed Maples
Adolescent Treatment Centre; and the 10-bed
Provincial Assessment Centre.
Partnering with local governments to
accelerate housing supply
Both provincial and local governments share a
common interest in finding ways to bring more
supply of affordable housing into the market.
In July 2016, the Province engaged Deloitte
to survey six jurisdictions in the Lower
Mainland on the number of development
projects at various stages of planning, review
and contemplation within those jurisdictions.
Deloitte has updated its review and Chart 2
shows that as of February 14, 2017, there
were projects covering an estimated 115,000
units of housing at various stages of planning,
review and contemplation. This compares to
approximately 108,000 in July 2016.
Chart 2 Development Application Survey
and Review 1
Housing units
115,000
108,000
Deloitte July 2016 Review
1 Jurisdictions
Deloitte February 2017 Review
reviewed: City of Richmond; City of Surrey; City of Burnaby;
City of Coquitlam: City of New Westminster; and City of Vancouver.
Data is based on publicly available information available from the local
government websites.
Budget and Fiscal Plan – 2017/18 to 2019/20
56
Three Year Fiscal Plan
Timely processes and approvals of housing
development projects are key in helping to
address growing population demands in the
province as well as housing affordability.
In the coming year, the government intends
to implement a number of measures to help
expedite housing development application,
approval and permitting processes in
partnership with local governments. Key
elements include:
• supporting improvements to local
government capacity, where needed, to
process applications in a more timely way;
• using incentives to reward jurisdictions for
achieving efficiencies and target outcomes
in the application, approval and permitting
processes; and
• adopting a performance-based approach in
providing provincial assistance.
Housing Priority Initiatives Special Account
As noted earlier, the Housing Priority Initiatives
Special Account was established in summer 2016.
Funded mainly through transfers of property
transfer tax revenue approved by Treasury Board,
the Account will continue to serve as a flexible
vehicle to help fund priority housing/rental/
shelter programs and initiatives as and when
needed within the Fiscal Plan, so that a need
for additional taxpayer-supported borrowing is
avoided.
Table 1 Investments in Housing Supply
($ millions)
2016/17
2017/18 to
2020/21
Total
Housing
Units #
Provincial investment in affordable housing ( Budget 2016 ) ……………
Investment in housing innovation initiative
50
305
355
2,000
(Sept./Nov. 2016 announcement) 1 ...................................................
Housing for mental health and substance use ( Budget 2017 ) 1 ..........
500
50
15
500
65
2,900
380
Total .................................................................................................
600
320
920
5,280
1
Investments funded through the Housing Priority Initiatives Special Account.
Budget and Fiscal Plan – 2017/18 to 2019/20
Three Year Fiscal Plan
Child Care and Family Supports
Government continues to invest in the
BC Early Years Strategy – the Province’s
long-term plan to support and improve early
childhood development, help families with
child care, and ensure the youngest British
Columbians have the best possible start in life.
The BC Early Years Strategy is building on the
$1 billion per year that government spends on
early childhood development, child care and
early learning, including support for children
and youth with special needs and full-day
kindergarten for five-year-olds.
During the development of the BC Early
Years Strategy, ideas from parents and early
childhood experts helped shape a plan that
addresses the most difficult issues parents
face when looking for quality child care:
affordability and accessibility.
Child Care Accessibility
The goal of the BC Early Years Strategy is to
create 13,000 new licensed child care spaces by
2020. The Child Care Major Capital Funding
program helps parents balance the demands of
work and raising a family by providing up to
$500,000 towards total project costs to eligible
child care operators to create new licensed
child care spaces. Since 2014, government
has invested over $26 million and created
approximately 4,300 new child care spaces.
Budget 2017 provides an additional $20 million
for this program to help build up to 2,000
more licensed child care spaces and increases
total provincial Early Years spending to
approximately $330 million.
The BC Online Child Care Map helps parents
find available child care at convenient locations
near their home or work:
http://maps.gov.bc.ca/ess/hm/ccf/
Child Care Affordability
The Child Care Operating Fund provides
financial support for day-to-day operations
of licensed child care to help keep parent fees
affordable and to ensure access to quality child
care. Ongoing monthly support is provided to
over 100,000 licensed child care spaces to help
cover an average of 13 per cent of operating
costs. In Budget 2017, $11 million over
three years is provided to support projected
growth in the number of child care spaces,
bringing total spending on this program to
approximately $92 million per year.
The BC Child Care Subsidy is available to
help eligible families that earn up to $55,000
with the cost of child care. Monthly subsidy
payments vary depending on the family’s
circumstances. Annual spending on this
program is over $100 million.
There are also additional benefits available
to support families such as the BC Early
Childhood Tax Benefit, the federal Canada
Child Benefit, and a federal and provincial
child care expenses deduction.
Announced as part of the BC Early Years
Strategy, the BC Early Childhood Tax Benefit
assists families with the cost of raising children
under the age of six. Starting in 2015, eligible
families with net incomes under $100,000
receive a maximum refundable tax credit of
$55 per month ($660 per year) per child, while
families with net incomes between $100,000
and $150,000 are eligible for partial payments.
Total benefits provided are estimated to be
$139 million in 2016/17 and $145 million in
2017/18, and support approximately 180,000
families per year.
Budget and Fiscal Plan – 2017/18 to 2019/20
57
58
Three Year Fiscal Plan
of British Columbia, the University of
Victoria, Vancouver Island University,
Langara College, and Simon Fraser
University. Since 2002, more than 1,800
youth have received bursaries under
the Youth Educational Assistance Fund
for Former Youth in Care, with over
$14 million in funding provided by the
Province.
Continued Federal Support and Commitment
to Early Years
The Province will continue to work with the
federal government to support early learning and
child care programs and services in communities,
including Indigenous communities.
Improving Learning Opportunities for Youth
in Transition
Former children in care are eligible to have
tuition waived at 11 post-secondary institutions
in British Columbia, including the University
Total Monthly Child Supports and Benefits (2017)
Single Parent with one child (under 19 months)
Family Net Income1
$
25,000
$
50,000
$
80,000
BC Child Care Subsidy 2 …………………………… $
BC Early Childhood Tax Benefit ……………………$
750
$
78
$
-
55
$
55
$
55
$
33
Canada Child Benefit ……………………………… $
533
$
417
$
289
$
183
Child Care Expenses Deduction ………………… $
53
$
188
$
207
$
269
Total ............................................................ $
1,392
$
738
$
551
$
484
1
2
$ 120,000
$
-
Net income represents Line 236 from personal income tax returns.
Analysis assumes that children attend a licensed group child care facility with a monthly median cost of $1,050
per child, do not have special needs or a disability and do not live with seniors.
Couple with two children (under 19 months)
Family Net Income1
$
25,000
$
50,000
$
80,000
$ 120,000
BC Child Care Subsidy 2 …………………………… $
BC Early Childhood Tax Benefit ……………………$
1,500
$
691
$
-
$
110
$
110
$
110
$
Canada Child Benefit ……………………………… $
1,067
$
842
$
602
$
412
Child Care Expenses Deduction ………………… $
60
$
310
$
322
$
376
Total ............................................................ $
2,737
$
1,953
$
1,034
$
854
66
1
Net income represents Line 236 from personal income tax returns. It is assumed that each parent earns half of
the family income.
2
Analysis assumes that children attend a licensed group child care facility with a monthly median cost of $1,050
per child, do not have special needs or a disability and do not live with seniors.
Budget and Fiscal Plan – 2017/18 to 2019/20
Part 2: TAX MEASURES
Table 2.1 Summary of Tax Measures
Taxpayer Impacts
Effective Date
Income Tax Act
• Introduce tax credit for volunteer firefighters and search and rescue
volunteers ..........................................................................................................
• Introduce BC back-to-school tax credit .............................................................
• Eliminate education tax credit ...........................................................................
• Reduce small business corporate income tax rate to 2 per cent .......................
• Pause phase-out of preferential tax benefit for credit unions ............................
• Decrease dividend tax credit rate for ineligible dividends .................................
• Extend scientific research and experimental development tax credit ................
• Extend BC mining flow-through share tax credit ...............................................
• Extend training tax credits .................................................................................
• Extend book publishing tax credit ......................................................................
• Expand interactive digital media tax credit to augmented reality and
virtual reality products designed to entertain .....................................................
• Adjust interactive digital media tax credit principal business
requirement .......................................................................................................
• Allow eligible business corporations participating in the small
business venture capital program to claim interactive digital media
tax credit ............................................................................................................
• Adjust boundary for regional film tax credits .....................................................
• Expand mining exploration tax credit to include costs incurred for
environmental studies and community consultations ........................................
2017 tax year
2016 tax year
2018 tax year
April 1, 2017
January 1, 2017
2017 tax year
September 1, 2017
January 1, 2017
January 1, 2018
April 1, 2017
2017/18
2018/19
($ millions)
(1)
(5)
2
(68)
(4)
25
(96)
(4)
(6)
(3)
(1)
(5)
9
(72)
(7)
26
(175)
(1)
(25)
(3)
February 22, 2017
*
(1)
February 22, 2017
(4)
(4)
February 22, 2017
January 25, 2017
*
*
*
*
March 1, 2015
(2)
(2)
Small Business Venture Capital Act
• Increase equity tax credit budget by $3.5 million ..............................................
2017 tax year
(4)
(4)
Medicare Protection Act
• Set Medical Services Plan premiums for 2017 ..................................................
• Reduce Medical Services Plan premiums for 2018 ...........................................
January 1, 2017
January 1, 2018
(107)
(211)
(108)
(845)
Motor Fuel Tax Act
• Exempt natural gas used as locomotive fuel .....................................................
October 1, 2017
Provincial Sales Tax Act
• Phase out tax on electricity ...............................................................................
October 1, 2017
(41)
(82)
Tobacco Tax Act
• Increase tobacco tax rates to 24.7 cents per cigarette/gram of tobacco ...........
October 1, 2017
13
25
(2)
(2)
(48)
(48)
Property Transfer Tax Act
• Increase threshold for First Time Home Buyers' Program
exemption to $500,000 ...................................................................................... February 22, 2017
*
*
Home Owner Grant Act
• Increase threshold for home owner grant phase-out to $1.6 million .................
2017 tax year
School Act
• Set provincial residential class school property tax rates ..................................
• Set provincial non-residential class school property tax rates ...........................
2017 tax year
2017 tax year
*
*
*
*
Taxation (Rural Area) Act
• Set provincial rural area property tax rates .......................................................
2017 tax year
*
*
Home Owner Grant Act and Income Tax Act
• Improve information sharing ..............................................................................
Royal Assent
-
-
Total .......................................................................................................................
* Denotes measures that have no material impact on taxpayers.
Budget and Fiscal Plan – 2017/18 to 2019/20
(566)
(1,325)
60
Tax Measures
Tax Measures — Supplementary Information
For more details on tax changes see:
www.gov.bc.ca/budgettaxchanges
Income Tax Act
Tax Credit for Volunteer Firefighters and Search and Rescue Volunteers Introduced
As announced on February 11, 2017, a new non-refundable volunteer firefighter and
search and rescue volunteer tax credit is introduced.
The tax credit is available to British Columbians who provide at least 200 hours of
volunteer service to either a volunteer fire department, an eligible search and rescue
organization or a combination of both. The credit amount is $3,000, providing a tax
benefit of up to $151.80 per eligible taxpayer. The tax credit is available for the 2017 and
subsequent taxation years.
BC Back-to-School Tax Credit Introduced
As announced on September 1, 2016, a new non-refundable BC back-to-school tax credit
is introduced. The credit is available to individuals with school-aged children (five to
17 years of age). The tax credit amount is $250 per child, providing a tax benefit of up
to $12.65 per child. The credit is available for the 2016, 2017 and 2018 tax years, after
which the credit will be reviewed.
Education Tax Credit Eliminated
The education tax credit is eliminated effective January 1, 2018. Unused education
amounts carried forward from years prior to 2018 remain available to be claimed in 2018
and subsequent tax years.
The savings will offset the cost of improvements to student financial assistance.
Small Business Corporate Income Tax Rate Reduced to 2 Per Cent
The small business corporate income tax rate is reduced to 2 per cent from 2.5 per cent
effective April 1, 2017, a reduction of 20 per cent.
Phase-Out of Preferential Tax Benefit for Credit Unions Paused
Prior to 2013, credit unions received federal and provincial preferential corporate income
tax treatment by way of a lower tax rate on a portion of their income. In 2013, the federal
government began a 5-year phase-out of its preferential tax treatment. Budget 2014
announced that the provincial preferential tax treatment for credit unions would be
extended three years, after which it would be phased out over five years beginning in
2016.
As announced on January 24, 2017, Budget 2017 pauses the phase-out of the provincial
preferential income tax treatment for credit unions pending the completion of the
Financial Institutions Act and Credit Union Incorporation Act review. This change means
that for the 2017 tax year, credit unions will continue to receive 80 per cent of the full
preferential tax treatment instead of having its value reduced to 60 per cent, as was
previously scheduled.
Budget and Fiscal Plan – 2017/18 to 2019/20
Tax Measures
61
Dividend Tax Credit Rate for Ineligible Dividends Decreased
British Columbia provides a dividend tax credit to prevent double taxation of dividend
income that has already been taxed at the corporate level. As a result of reducing the small
business corporate income tax rate to 2 per cent from 2.5 per cent, the dividend tax credit
rate on ineligible dividends is also decreased to 15 per cent from 17 per cent, effective for
the 2017 and subsequent tax years.
Scientific Research and Experimental Development Tax Credit Extended
The scientific research and experimental development tax credit is extended for five years
to August 31, 2022.
BC Mining Flow-Through Share Tax Credit Extended
As announced on January 23, 2017, the BC mining flow-through share tax credit is
extended to the end of 2017.
Training Tax Credits Extended
The BC training tax credits are extended for three years to the end of 2020.
Book Publishing Tax Credit Extended
As announced on February 15, 2017, the book publishing tax credit is extended for
two years to March 31, 2019.
Interactive Digital Media Tax Credit Expanded to Augmented Reality and Virtual
Reality Products Designed to Entertain
Effective February 22, 2017, qualifying BC labour employed in the development of
augmented reality and virtual reality products will be eligible for the interactive digital
media tax credit. The tax credit is calculated as 17.5 per cent of qualifying BC labour
expenses.
For the purposes of this credit, augmented reality product means a product that enhances
a user’s perception of reality by superimposing digital information onto the user’s field of
view for the primary purpose of entertainment. Likewise, virtual reality product means
a product that immerses the user in an artificial environment for the primary purpose of
entertainment. The tax credit does not apply to films or videos that provide the user with
limited or no immersion, including 360°, 270° and 180° videos, spherical videos and
panoramic videos.
Interactive Digital Media Tax Credit Principal Business Requirement Adjusted
Currently, to be eligible for the interactive digital media tax credit, a corporation’s
principal business must be the development of interactive digital media products.
Effective for tax years that end on or after February 22, 2017, corporations that have
annual qualifying BC labour expenses greater than $2 million do not need to meet this
requirement.
Budget and Fiscal Plan – 2017/18 to 2019/20
62
Tax Measures
Eligible Business Corporations Participating in the Small Business Venture Capital
Program Allowed to Claim Interactive Digital Media Tax Credit
Effective for tax years that end on or after February 22, 2017, interactive digital media
corporations participating in the small business venture capital program are eligible for
the interactive digital media tax credit.
Boundary for Regional Film Tax Credits Adjusted
For the purposes of the regional film tax credits, the southern part of the eastern
boundary of the designated Vancouver area is moved from 200th Street in Langley to the
border between Surrey and Langley. This change is effective for productions with principal
photography beginning on or after January 25, 2017. As a result, the regional film tax
credits apply in all of the City of Langley and the Township of Langley. This change
applies to both the Film Incentive BC tax credit and the production services tax credit.
Mining Exploration Tax Credit Expanded to Include Costs Incurred for
Environmental Studies and Community Consultations
As announced on January 23, 2017, the mining exploration tax credit is expanded to
allow the costs of environmental studies and community consultations incurred after
February 28, 2015 to be included in the calculation of the mining exploration tax credit.
The credit is calculated as 20 per cent of eligible BC mining exploration expenditures, or
30 per cent if exploration is in the mountain-pine-beetle-affected area.
Small Business Venture Capital Act
Equity Tax Credit Budget Increased by $3.5 Million
Effective for 2017 and subsequent years, the budget for the small business venture
capital tax credit is increased to $38.5 million from $35 million. This allows for up to
$11.7 million in additional equity financing for qualifying corporations annually.
Medicare Protection Act
Medical Services Plan Premiums Set for 2017
As announced on September 15, 2016, the planned 4 per cent increase in the maximum
Medical Services Plan premium for 2017 is not implemented and the rate remains at $75
per month per adult. In addition, premium rates for those receiving premium assistance
are lowered to slightly below the levels announced in Budget 2016.
Medical Services Plan Premiums Reduced for 2018
Effective for 2018, Medical Services Plan (MSP) premiums are reduced by 50 per cent for
households with annual net incomes up to $120,000.
To receive the 50 per cent reduction, households will need to register. This is necessary so
that the government can use income information to determine eligibility. Individuals and
families currently receiving premium assistance will be automatically registered.
In addition, the income threshold at which households are fully exempt from MSP
premiums is increased by $2,000 (see Table 2.2).
Budget and Fiscal Plan – 2017/18 to 2019/20
63
Tax Measures
With these changes, more than 2 million British Columbians are exempt from MSP
premiums and an additional 2 million will see their premiums reduced by 50 per cent.
Table 2.2 Impact of Medical Services Plan Premium Changes
(For premium and premium assistance changes effective January 1, 2018)
Annual Household Net Income
Monthly
Premiums in
2017
Monthly
Premiums in
2018
Monthly
Decrease
Annual
Decrease
-------------------------------------- $ -------------------------------------Single Adult
Up to $24,000 ……………………………
$24,001 to $26,000 ………………………
$26,001 to $28,000 ………………………
$28,001 to $30,000 ………………………
$30,001 to $34,000 ………………………
$34,001 to $38,000 ………………………
$38,001 to $42,000 ………………………
$42,001 to $120,000 ……………………
Over $120,000 ……………………………
0.00
11.00
23.00
35.00
46.00
56.00
65.00
75.00
75.00
0.00
0.00
11.50
17.50
23.00
28.00
32.50
37.50
75.00
0.00
(11.00)
(11.50)
(17.50)
(23.00)
(28.00)
(32.50)
(37.50)
0.00
0.00
(132.00)
(138.00)
(210.00)
(276.00)
(336.00)
(390.00)
(450.00)
0.00
Couple
Up to $27,000 ……………………………
$27,001 to $29,000 ………………………
$29,001 to $31,000 ………………………
$31,001 to $33,000 ………………………
$33,001 to $37,000 ………………………
$37,001 to $41,000 ………………………
$41,001 to $45,000 ………………………
$45,001 to $120,000 ……………………
Over $120,000 ……………………………
0.00
22.00
46.00
70.00
92.00
112.00
130.00
150.00
150.00
0.00
0.00
23.00
35.00
46.00
56.00
65.00
75.00
150.00
0.00
(22.00)
(23.00)
(35.00)
(46.00)
(56.00)
(65.00)
(75.00)
0.00
0.00
(264.00)
(276.00)
(420.00)
(552.00)
(672.00)
(780.00)
(900.00)
0.00
Senior Couple
Up to $33,000 ……………………………
$33,001 to $35,000 ………………………
$35,001 to $37,000 ………………………
$37,001 to $39,000 ………………………
$39,001 to $43,000 ………………………
$43,001 to $47,000 ………………………
$47,001 to $51,000 ………………………
$51,001 to $120,000 ……………………
Over $120,000 ……………………………
0.00
22.00
46.00
70.00
92.00
112.00
130.00
150.00
150.00
0.00
0.00
23.00
35.00
46.00
56.00
65.00
75.00
150.00
0.00
(22.00)
(23.00)
(35.00)
(46.00)
(56.00)
(65.00)
(75.00)
0.00
0.00
(264.00)
(276.00)
(420.00)
(552.00)
(672.00)
(780.00)
(900.00)
0.00
Single Parent – Two Children *
Up to $30,000 ……………………………
$30,001 to $32,000 ………………………
$32,001 to $34,000 ………………………
$34,001 to $36,000 ………………………
$36,001 to $40,000 ………………………
$40,001 to $44,000 ………………………
$44,001 to $48,000 ………………………
$48,001 to $120,000 ……………………
Over $120,000 ……………………………
0.00
11.00
23.00
35.00
46.00
56.00
65.00
75.00
75.00
0.00
0.00
11.50
17.50
23.00
28.00
32.50
37.50
75.00
0.00
(11.00)
(11.50)
(17.50)
(23.00)
(28.00)
(32.50)
(37.50)
0.00
0.00
(132.00)
(138.00)
(210.00)
(276.00)
(336.00)
(390.00)
(450.00)
0.00
Couple – Two Children *
Up to $33,000 ……………………………
$33,001 to $35,000 ………………………
$35,001 to $37,000 ………………………
$37,001 to $39,000 ………………………
$39,001 to $43,000 ………………………
$43,001 to $47,000 ………………………
$47,001 to $51,000 ………………………
$51,001 to $120,000 ……………………
Over $120,000 ……………………………
0.00
22.00
46.00
70.00
92.00
112.00
130.00
150.00
150.00
0.00
0.00
23.00
35.00
46.00
56.00
65.00
75.00
150.00
0.00
(22.00)
(23.00)
(35.00)
(46.00)
(56.00)
(65.00)
(75.00)
0.00
0.00
(264.00)
(276.00)
(420.00)
(552.00)
(672.00)
(780.00)
(900.00)
0.00
* Income thresholds may vary for families who claim child care expenses on their tax returns.
Budget and Fiscal Plan – 2017/18 to 2019/20
64
Tax Measures
Motor Fuel Tax Act
Natural Gas Used as Locomotive Fuel Exempted
Effective October 1, 2017, natural gas for use in an internal-combustion engine for
any rolling stock or vehicle when run on rails is exempt from the 3 cent per litre tax on
locomotive fuel.
The motor fuel tax exemption for natural gas used as locomotive fuel is consistent with
the motor fuel tax exemptions for natural gas used in motor vehicles or used in a ship.
Provincial Sales Tax Act
Tax on Electricity Phased Out
The provincial sales tax on taxable electricity is phased out. Effective October 1, 2017,
the tax rate on electricity is reduced to 3.5 per cent from 7 per cent of the purchase price.
Effective April 1, 2019, electricity is fully exempt from provincial sales tax.
Tobacco Tax Act
Tobacco Tax Rates Increased to 24.7 Cents per Cigarette/Gram of Tobacco
Effective October 1, 2017, the tax rate on cigarettes is increased to $49.40 from $47.80
per carton of 200 cigarettes, and the tax rate on fine-cut tobacco is increased to 24.7 cents
from 23.9 cents per gram.
Property Transfer Tax Act
Threshold for First Time Home Buyers’ Program Exemption Increased to $500,000
Effective for registrations on or after February 22, 2017, the fair market value threshold
for eligible residential property under the First Time Home Buyers’ Program is increased
to $500,000 from $475,000. The partial exemption continues and now applies to homes
valued between $500,000 and $525,000.
With this change, eligible first time home buyers can save up to $8,000 in property
transfer tax on the purchase of their home.
Home Owner Grant Act
Threshold for Home Owner Grant Phase-Out Increased to $1.6 Million
As announced on January 10, 2017, the threshold for the phase-out of the home owner
grant is increased to $1.6 million from $1.2 million for the 2017 tax year. For properties
valued above the threshold, the grant is reduced by $5 for every $1,000 of assessed value
in excess of the threshold.
Budget and Fiscal Plan – 2017/18 to 2019/20
Tax Measures
65
School Act
Provincial Residential Class School Property Tax Rates Set
The longstanding rate-setting policy is that average residential class school property taxes,
before application of the home owner grant, increase by the previous year’s provincial
inflation rate. This rate-setting policy has been in place since 2003 and will continue in
2017. The rates will be set when revised assessment roll data are available in the spring.
Provincial Non-Residential Class School Property Tax Rates Set
A single province-wide school tax rate is set for each of the non-residential property
classes. Consistent with longstanding policy, the rates for 2017, except the rate for the
industrial property classes, will be set so that non-residential class school tax revenue will
increase by inflation plus tax on new construction. This rate-setting policy has been in
place since 2005. The rates will be set when revised assessment roll data are available in
the spring.
The major industry class tax rate and the light industry class tax rate will be set at
the same rate as the business class tax rate, consistent with the policy announced in
Budget 2008.
Taxation (Rural Area) Act
Provincial Rural Area Property Tax Rates Set
A single rural area residential property tax rate applies province-wide. The longstanding
rate-setting policy that average residential rural property taxes increase by the previous
year’s provincial inflation rate will continue for 2017.
Consistent with longstanding policy, non-residential rural area property tax rates will be
set so that non-residential rural area tax revenue will increase by inflation plus tax on new
construction. The rates will be set when revised assessment roll data are available in the
spring.
Home Owner Grant Act and Income Tax Act
Information Sharing Improved
To improve administration and enforcement of the Income Tax Act and Home Owner
Grant Act, these acts are amended to allow for information sharing between the two acts.
The Income Tax Act is also amended to provide income tax administrators with access to
assessment data.
Budget and Fiscal Plan – 2017/18 to 2019/20
66
Tax Measures
Carbon Tax Report and Plan
As required under Part 2 of the Carbon
Tax Act, the following tables show the Revenue
Neutral Carbon Tax Report for 2015/16 and
2016/17 and the Revenue Neutral Carbon Tax
Plan for 2017/18 to 2019/20.
the revenue reductions due to personal income
tax rate cuts increase with increases in personal
income tax revenues for each year.
Revenue Neutral Carbon Tax Report
Revenue neutrality means that tax reductions
must be provided that fully return the
estimated revenue from the carbon tax to
taxpayers in each fiscal year. Table 1, Revenue
Neutral Carbon Tax Report for 2015/16 and
2016/17, reports the carbon tax revenues and
the cost of the tax reductions for the 2015/16
and 2016/17 fiscal years. For the 2015/16 fiscal
year, this report is based on the 2015/16 Public
Accounts. For the 2016/17 fiscal year, this report
is based on preliminary actuals for the fiscal
year.
Material Assumptions and Policy
Decisions
In the Report and the Plan the estimates and
forecasts of carbon tax revenue and the cost of
tax reductions to return revenues to taxpayers
are consistent with, and have the same material
assumptions and policy decisions underlying
them, as the revenue estimates and forecasts
prepared for Budget 2017. The only material
assumption specific to the Revenue Neutral
Carbon Tax Report and Plan is that the cost of
Table 1 Revenue Neutral Carbon Tax Report 2015/16 and 2016/17
Revised
Forecast
2016/17
($ millions)
2015/16 1
Carbon tax revenue
2
...............................................................................................................................................
1,190
1,201
3
Reduction in provincial revenues due to designated measures
Personal tax measures:
• Low income climate action tax credit of $115.50 per adult plus $34.50 per child effective July 1, 2011 .................
• Reduction of 5% in the first two personal income tax rates .....................................................................................
• Northern and rural home owner benefit of up to $200 4 ..........................................................................................
• Home renovation tax credit for seniors and persons with disabilities 5 ……............................................................
• Children's fitness credit and children's arts credit ...................................................................................................
• Small business venture capital tax credit budget increased ...................................................................................
• Training tax credit extended – individuals ...............................................................................................................
Total personal tax measures ...................................................................................................................................
(192)
(283)
(83)
(1)
(8)
(3)
(9)
(579)
(195)
(307)
(84)
(2)
(8)
(5)
(4)
(605)
Business tax measures:
• General corporate income tax rate reduced from 12% to 11% effective July 1, 2008,
to 10.5% effective January 1, 2010, to 10% effective January 1, 2011 and increased
to 11% effective April 1, 2013 ..................................................................................................................................
• Small business corporate income tax rate reduced from 4.5% to 3.5% effective July 1, 2008 and
to 2.5% effective December 1, 2008 .......................................................................................................................
• Corporate income tax small business threshold increased from $400,000 to $500,000 .........................................
• Industrial property tax credit of 60% of school property taxes payable by major industry .......................................
• School property taxes reduced by 50% for land classified as "farm" ......................................................................
• Interactive digital media tax credit ...........................................................................................................................
• Training tax credit extended – businesses ..............................................................................................................
• Scientific research and experimental development tax credit extended in 2014 .....................................................
• Film Incentive BC tax credit extended in 2009 and enhanced in 2010 ...................................................................
• Production services tax credit extended in 2009 and enhanced in 2010 ................................................................
Total business tax measures ..................................................................................................................................
(218)
(232)
(226)
(21)
(23)
(2)
(33)
(5)
(131)
(106)
(385)
(1,150)
(230)
(21)
(23)
(2)
(65)
(8)
(148)
(51)
(340)
(1,120)
Total designated revenue measures .......................................................................................................................
(1,729)
(1,725)
1
Based on 2015/16 Public Accounts.
2
The carbon tax applies to fuels and combustibles at rates based on the carbon dioxide equivalent emission of each particular fuel or combustible.
3
Designated measures are measures designated to return carbon tax to taxpayers. Designated measures for 2015/16 are set out in the Carbon Tax
Plan presented with Budget 2015 and designated measures for 2016/17 are set out in the Carbon Tax Plan presented with Budget 2016.
4
Eligible homeowners are those in areas outside the Capital, Greater Vancouver and Fraser Valley Regional Districts.
5
In Budget 2016 , this credit was expanded and renamed from the BC seniors' home renovation tax credit.
Budget and Fiscal Plan – 2017/18 to 2019/20
Tax Measures
Carbon tax revenues for 2015/16 are
$1,190 million. The tax reductions for
2015/16 are those that were designated in the
Revenue Neutral Carbon Tax Plan presented
with Budget 2015. The personal tax measures
are the low income climate action tax credit,
the five per cent reductions in the first two
personal income tax rates, the northern and
rural home owner benefit, the BC seniors’
home renovation tax credit, the children’s
fitness credit and children’s arts credit, the
increase in the small business venture capital
tax credit budget, and the extension of the
training tax credit for individuals. The business
tax measures are the reductions in each of the
general and small business corporate income
tax rates, the corporate income tax small
business threshold increase, the industrial
school property tax credit for major industry,
the 50 per cent reduction in school property
tax for land classified as “farm,” the interactive
digital media tax credit, the extension of
the training tax credit for businesses, the
extension of the scientific research and
experimental development tax credit, the
2009 extension and 2010 enhancement of
the Film Incentive BC tax credit, and the
2009 extension and 2010 enhancement of the
production services tax credit.
The estimated reduction in provincial revenues
for 2015/16 as a result of the designated
revenue measures is $579 million for the
personal tax measures and $1,150 million for
the business tax measures, for a total reduction
of $1,729 million. Based on these revenue and
tax reduction estimates, revenue neutrality has
been met for 2015/16. In fact, the reduction in
provincial revenue exceeds the $1,190 million
in carbon tax revenue by $539 million.
Carbon tax revenues for 2016/17 are estimated
to be $1,201 million.
The tax reductions shown for the 2016/17
fiscal year are those that were designated in the
Revenue Neutral Carbon Tax Plan presented
with Budget 2016. The personal tax measures
are the low income climate action tax credit,
the five per cent reductions in the first two
personal income tax rates, the northern
and rural home owner benefit, the home
renovation tax credit for seniors and persons
with disabilities (formerly the BC seniors’
home renovation tax credit), the children’s
fitness credit and children’s arts credit, the
increase in the small business venture capital
tax credit budget, and the extension of the
training tax credit for individuals. The business
tax measures are the reductions in each of the
general and small business corporate income
tax rates, the corporate income tax small
business threshold increase, the industrial
school property tax credit for major industry,
the 50 per cent reduction in school property
tax for land classified as “farm,” the interactive
digital media tax credit, the extension of
the training tax credit for businesses, the
extension of the scientific research and
experimental development tax credit, the
2009 extension and 2010 enhancement of
the Film Incentive BC tax credit, and the
2009 extension and 2010 enhancement of the
production services tax credit.
The estimated reduction in provincial revenues
for 2016/17 as a result of the designated
revenue measures is $605 million for the
personal tax measures and $1,120 million for
the business tax measures, for a total reduction
of $1,725 million. Based on these revenue and
tax reduction estimates, revenue neutrality has
been met for 2016/17. In fact, the reduction in
provincial revenue exceeds the $1,201 million
in carbon tax revenue by $524 million.
The Budget 2018 Revenue Neutral Carbon Tax
Report for 2016/17 will be based on actual
carbon tax revenues for 2016/17 as reported in
the 2016/17 Public Accounts.
Budget and Fiscal Plan – 2017/18 to 2019/20
67
68
Tax Measures
Revenue Neutral Carbon Tax Plan
Table 2, Revenue Neutral Carbon Tax Plan
2017/18 to 2019/20, shows carbon tax
revenue and tax reduction cost estimates for
the revenue measures designated as those that
return the carbon tax revenues to taxpayers for
2017/18 to 2019/20.
Carbon tax revenues for 2017/18 to 2019/20
are now forecast to be slightly lower than
estimated when Budget 2016 was prepared.
The three-year fiscal plan for Budget 2017
assumes the cost of tax measures with sunset
dates continues, for purposes of the plan,
beyond their expiry dates. The Carbon
Tax Plan presented in Table 2 reflects this
assumption.
As shown in Table 2, revenue from the
carbon tax and the cost of the tax reductions
are now estimated to be $1,218 million and
$1,551 million, respectively, for 2017/18.
Carbon tax revenues are now estimated at
$1,236 million in 2018/19 and $1,255 million
in 2019/20. This means the Carbon Tax Plan
is revenue neutral for all years, with the tax
cuts in 2018/19 and 2019/20 exceeding the
carbon tax revenues by $392 million and
$481 million, respectively.
Table 2 Revenue Neutral Carbon Tax Plan 2017/18 to 2019/20
2017/18
Carbon tax revenue 1 .......................................................................................................................................
Designated revenue measures:
Personal tax measures:
• Low income climate action tax credit of $115.50 per adult plus $34.50 per child effective July 1, 2011 ……
• Reduction of 5% in the first two personal income tax rates ...........................................................................
• Northern and rural home owner benefit of up to $200 2 .................................................................................
• Home renovation tax credit for seniors and persons with disabilities …….....................................................
• Children's fitness credit and children's arts credit ..........................................................................................
• Small business venture capital tax credit budget increased 3 ........................................................................
• Training tax credit extended – individuals 4 ....................................................................................................
Total personal tax measures ..........................................................................................................................
Forecast
2018/19
($ millions)
1,236
1,218
2019/20
1,255
(195)
(320)
(85)
(2)
(8)
(9)
(15)
(634)
(195)
(334)
(85)
(2)
(8)
(9)
(15)
(648)
(195)
(350)
(86)
(2)
(8)
(9)
(15)
(665)
(295)
(300)
(300)
(292)
(295)
(293)
(68)
(21)
(23)
(2)
(10)
(165)
(72)
(21)
(23)
(2)
(10)
(175)
(73)
(21)
(23)
(2)
(10)
(185)
October 1, 2017, and the elimination of provincial sales tax on electricity effective April 1, 2019 5 ..............
Total business tax measures .........................................................................................................................
(41)
(917)
(82)
(980)
(164)
(1,071)
Total revenue measures ..................................................................................................................................
(1,551)
(1,628)
(1,736)
Business tax measures:
• General corporate income tax rate reduced from 12% to 11% effective July 1, 2008,
to 10.5% effective January 1, 2010, to 10% effective January 1, 2011 and increased
to 11% effective April 1, 2013 ........................................................................................................................
• Small business corporate income tax rate reduced from 4.5% to 3.5% effective
July 1, 2008, and to 2.5% effective December 1, 2008 .................................................................................
• Small business corporate income tax rate reduced from 2.5% to 2% effective
April 1, 2017 ...................................................................................................................................................
• Corporate income tax small business threshold increased from $400,000 to $500,000 ...............................
• Industrial property tax credit of 60% of school property taxes payable by major industry .............................
• School property taxes reduced by 50% for land classified as "farm" .............................................................
• Training tax credit extended – businesses 4 ...................................................................................................
• Scientific research and experimental development tax credit extended in 2014 and 2017 4 .........................
• Reduction of the provincial sales tax rate on electricity from 7% to 3.5% effective
1
2
3
4
5
The carbon tax applies to fuels and combustibles at rates based on the carbon dioxide equivalent emission of each particular fuel or combustible.
Eligible homeowners are those in areas outside the Capital, Greater Vancouver and Fraser Valley Regional Districts.
Forecasted amounts include the cost of the $3.5 million budget increase announced in Budget 2017 .
The Plan assumes that the cost of tax measures with sunset dates continues beyond their expiry dates.
This is considered a business tax measure because electricity purchased for residential use is already exempt from provincial sales tax.
Budget and Fiscal Plan – 2017/18 to 2019/20
69
Tax Measures
Medical Services Plan Premiums
Since the 1960s, Medical Services Plan (MSP)
premiums have played a vital role in financing
the publicly funded medical services that
British Columbians have come to rely on.
As health care costs have increased over the
years MSP premiums have also increased,
creating an important link between health care
and its costs.
However, MSP premiums are also very
complex to administer, requiring significant
amounts of time and resources from
individuals, businesses and government.
The MSP premium structure also receives
frequent criticism for being outdated, unfair
and difficult to understand. For all of these
reasons, it is the government’s intention
to begin the process of eliminating MSP
premiums.
As a first step, effective January 1, 2018,
premiums will be cut by 50 per cent for
households with annual family net income
up to $120,000. This change will benefit up
to 2 million British Columbians who will see
their premiums reduced by 50 per cent from
the amount they pay in 2017.
Budget 2016
In Budget 2016 the government made the
following changes to MSP premiums effective
January 1, 2017:
• MSP premiums were eliminated for all
children (over 900,000 children);
• premium assistance was enhanced, benefiting
more than 300,000 British Columbians;
• the adult rate was adjusted so that couples
pay exactly twice the rate paid by a single
individual; and
• premium rates were set to increase by
4 per cent effective January 1, 2017
(as announced on September 15, 2016,
this increase was cancelled).
Budget 2017
British Columbia is the only jurisdiction in
Canada that requires residents to pay health
premiums. Other provinces fund 100 per cent
of health care costs through other revenue
sources. Effective January 1, 2018, British
Columbia will begin the process of eliminating
MSP premiums by first reducing premiums by
50 per cent for households with annual family
net income up to $120,000.
Chart 1 MSP Premium Rates 2017 and 2018 (Single Individual)
$1,000
$900
$900
$800
2017
$900
$780
2018
$700
$600
$500
$450
$420
$450
$390
$400
$300
$200
$210
$132
$100
$0
$0
$25,000
$30,000
$40,000
$60,000
Net Income
Budget and Fiscal Plan – 2017/18 to 2019/20
$120,000
70
Tax Measures
In addition, the income threshold below
which households are fully exempt from MSP
premiums is increased by $2,000 (e.g. from
$24,000 to $26,000 for a single individual and
from $33,000 to $35,000 for a couple with
two children).
These changes will result in annual reductions
of up to $450 per year for single individuals
and up to $900 per year for families. Examples
of the changes in 2018 for various family types
are shown in Table 2.2 in Part 2: Tax Measures
on page 63.
The 2018 changes will reduce premiums
by 50 per cent for up to 2 million British
Columbians,
providing an
annual benefit of Effective January 1, 2018,
up to 2 million people
$845 million.
will see their premiums
reduced by 50 per cent,
Historical
providing savings of
Context
$845 million annually.
MSP premium
rates have
increased gradually since their introduction in
the 1960s. First set at $60 per year for single
individuals and $150 per year for couples
with children, for 2017 premium rates have
increased to $900 for single individuals and
$1,800 for couples.
With the 50 per cent reduction announced in
Budget 2017, MSP premiums will generally
return to levels they have not been at
since 1993. In fact, adjusting for inflation,
households under $120,000 will pay lower
premiums than at any time since the 1980s.
How to Register for the 50 Per Cent
Reduction
To receive the 50 per cent reduction,
individuals and families will need to register
for the reduction. This is necessary so that the
government can use income information to
determine eligibility. Individuals and families
currently receiving premium assistance will be
automatically registered.
Many British Columbians pay premiums
directly to the government. In order to benefit
from the 50 per cent reduction in premiums,
persons that pay directly will need to register.
Once eligibility is established, premium billing
will be adjusted to reflect the reduced rates for
2018.
(Income under $120,000)
Chart 2 Maximum Annual MSP Premium Rates 1993* and 2018 (Family Net Income Under $120,000)
$1,000
$900
1993
$900
2018
$864
$900
$768
$800
$864
$768
$700
$600
$500
$432 $450
$450
$450
$400
$300
$200
$100
$0
Single individual
Couple without
children
Couple with
two children
Single parent
with one child
* Rates as of October 1, 1993.
Budget and Fiscal Plan – 2017/18 to 2019/20
Single parent
with two
children
Tax Measures
Many British Columbians pay premiums
through a group plan administrator who is
an employer (in the case of employees) or
a pension plan administrator (in the case
of pension beneficiaries). In some cases the
group plan administrator deducts premiums
from wages/pensions and remits them to the
government. In other cases the group plan
administrator pays premiums on behalf of
their employees or pension beneficiaries as a
taxable benefit.
In order to benefit from the 50 per cent
reduction in premiums, British Columbians
whose premiums are paid by group plans
will need to register through their group plan
administrator. Systems are in place for group
plan administrators to accept registrations and
incorporate lower rates in remittances to the
government. This ensures the proper amount
is withheld in the case of deductions from
wages/pensions and the proper amount is
reported in the case of a taxable benefit.
The government encourages British
Columbians to discuss registration for the
50 per cent reduction with their group plan
administrator over the course of the next year
to ensure they benefit from the reduction
beginning January 1, 2018.
In cases where premiums are paid by employers
as a taxable benefit, it is expected that some
discussions will take place between employers
and employees about the sharing of the benefit
from the 50 per cent reduction in premiums.
Looking Forward
The government’s intention is to eliminate
MSP premiums completely. The timing and
structure of the change will be influenced by
the Province’s fiscal capacity.
The government intends to consult further with
British Columbians and conduct additional
analysis.
Budget and Fiscal Plan – 2017/18 to 2019/20
71
72
Tax Measures
Commission on Tax Competitiveness
In Budget 2016 the government announced
that an independent Commission on Tax
Competitiveness would be established to advise
the Province on how to modernize British
Columbia’s business taxes.
The Commission was asked to make
recommendations regarding the provincial sales
tax (PST) and other business taxes that would
help drive business competitiveness, increase
investment, and enhance British Columbia’s
standard of living.
The Commission was also instructed that
recommendations should respect the results
of the 2011 province-wide referendum on the
harmonized sales tax.
Commission’s Report
The Commission on Tax Competitiveness
presented its report, Improving British
Columbia’s Business Tax Competitiveness, to the
Minister of Finance on November 15, 2016,
following public consultations with major
industry groups, businesses, individuals, and
other interested stakeholders.
Key Findings
Similar to the findings of the 2012
Expert Panel, the Commission on Tax
Competitiveness reported that the PST and its
negative effects on business investment remains
the primary area of business tax concern in
the province. This conclusion was a common
theme in the stakeholder consultations carried
out.
Areas of lesser concern included corporate
income tax and property tax. However,
property tax was a concern in some
municipalities with large industrial property
owners.
Recommendations
The Commission’s report included four
key recommendations to improve British
Columbia’s business tax competitiveness:
1. Exempt business capital expenditures,
including machinery and equipment, from
PST;
2. Exempt business use of electricity
and other energy inputs, software and
telecommunications services from PST;
3. In the long-term, engage the public
in a process to consider and design a
made-in-BC value added tax; and
4. Introduce a framework within which major
investors and municipalities can negotiate
long-term property tax arrangements to
increase certainty.
Outcomes/Decisions
PST on Electricity
Government has carefully considered the
Commission’s recommendations on improving
business tax competitiveness, with a particular
focus on addressing the Commission’s
shorter-term recommendations that the PST
be emoved from capital expenditures and
other business inputs including electricity,
software, and telecommunications services.
The Commission noted that no other
jurisdiction in North America levies a
similar retail sales tax on electricity. This puts
BC businesses at a unique competitive
disadvantage. By removing PST on electricity,
businesses will have more resources to reinvest,
improving their ability to compete globally.
Budget and Fiscal Plan – 2017/18 to 2019/20
73
Tax Measures
Estimated
PST PaidPST
on Electricity
by Business
Size – 2015/16
Chart
1 Estimated
Paid on Electricity
by Business
Size – 2015/16
Large
industrial
users
$49 million
Large business
$51 million
Government
$14 million
Small and medium sized
business
$50 million
Consistent with the Commission’s
recommendations and with input received
from stakeholders, and in the context of
the province’s fiscal
situation and competing “As a first step, the
funding priorities, the
Business Council
government will first
recommends the
phase out PST on
province eliminate
electricity.
the PST on electricity
purchased by
Effective
businesses.”
October 1, 2017, the
rate of tax on electricity – Business Council of
British Columbia
will be reduced to
3.5 per cent from
7 per cent. Effective April 1, 2019, electricity
will be fully exempt from PST.
When fully implemented, the exemption for
electricity will provide businesses with savings
of more than $150 million annually. These
savings will be shared across all sectors and by
businesses of all sizes and should help make BC
businesses more competitive, both nationally
and internationally. The reduced costs will
support new investment, growth, and job
creation.
Once fully exempt, large businesses, including
industrial users, will save about $100 million
annually while small and medium sized
businesses will save about $50 million. The
provincial, municipal and federal governments
will also see modest tax savings.
Eliminating PST on electricity is also consistent
with the province’s commitment to reduce
greenhouse gas emissions and promote a low
carbon economy. Government agrees with a
common assessment expressed by industry
groups in their submissions to the Commission
that, as 98 per cent of British Columbia’s
electricity is hydro-electric, charging PST on
electricity works against a low carbon economy
and removing it would encourage green energy
consumption.
Budget and Fiscal Plan – 2017/18 to 2019/20
74
Tax Measures
Future Considerations
Government acknowledges that further
improvements to the PST are a priority of the
business community. Future steps to mitigate
the negative effects of the PST and other
business taxes will be considered in the context
of the province’s fiscal situation and competing
funding priorities.
Government endorses the Commission’s
recommendation for broad public consultation
and engagement with British Columbians prior
to considering any substantive changes to the
PST.
“Put simply, charging the PST on electricity is an outdated and uncompetitive tax measure
that should be removed in the 2017 provincial budget when it is delivered in February.”
– Steve Hunt, United Steelworkers District 3; Brian Cochrane, International Union of Operating
Engineers Local 115; Rob Ashton, International Longshore and Warehouse Union Canada; Tom
Sigurdson, B.C. Building Trades.
Chart 2 Estimated PST Paid on Electricity by Sector – 2015/16
Arts, entertainment and recreation
$5 million
Education and health care, $11 million
Accommodation and food services
$11 million
Local government, $3 million
Other government, $1 million
Transportation and warehousing
$11 million
Services
Goods
Wholesale and retail trade
$21 million
Manufacturing
$46 million
Other services
$27 million
Primary industry (agriculture, forestry,
mining, etc.), $21 million
Construction, $2 million
Utilities, $2 million
Budget and Fiscal Plan – 2017/18 to 2019/20
Part 3: BRITISH COLUMBIA ECONOMIC REVIEW AND OUTLOOK
1
Summary
Following an estimated increase of 3.0 per cent in 2016, the Ministry of Finance
(Ministry) forecasts British Columbia’s economy to grow by 2.1 per cent annually in
both 2017 and 2018, and by 2.0 per cent annually from 2019 to 2021.
The Ministry’s forecast for BC real GDP growth is 0.2 percentage points below the
outlook provided by the Economic Forecast Council for 2017 and 0.1 percentage point
below in 2018. This prudence acknowledges the downside risks to the economic forecast
and is one of the levels of prudence built into the fiscal plan.
Chart 3.1 British Columbia’s economic outlook
4.0
3.0
BC real GDP
per cent change
Ministry of Finance
3.0
Economic Forecast Council
3.1
2.1
2.3
2.1
2.2
2.0
2.0
2.1
2.0
2.1
2.0
2.1
1.0
0.0
2016
2017
2018
2019
2020
2021
Downside risks to BC’s economic outlook include the potential for a slowdown in North
American economic activity, uncertainty associated with US fiscal and trade policy,
ongoing fragility in Europe, and slower than anticipated Asian demand, particularly in
China. Additional risks include uncertainty in the outlook for the Canadian dollar.
British Columbia Economic Activity and Outlook
Indicators of BC’s economic performance in 2016 reveal strong domestic activity
relative to 2015, with the exception of non-residential building permits (see Table 3.1).
Most indicators show that BC performed well compared to other provinces in 2016
and, as such, an average of six private sector forecasters2 estimate that BC experienced
the strongest growth in real GDP among provinces last year. The same private sector
forecasters expect BC’s economic growth to rank among the top provinces in 2017
and 2018. While provincial outlooks are uncertain, there is a general expectation that
provinces such as Alberta and Saskatchewan will begin to recover from the oil-related
declines of the past couple of years, potentially shifting the rankings of provincial real
GDP growth.
1
Reflects information available as of February 10, 2017, unless otherwise indicated.
2
A subset of the Economic Forecast Council that regularly forecasts economic performance in all provinces (BMO, RBC, CIBC, TD, Scotiabank,
IHS Markit), as of February 10, 2017.
Budget and Fiscal Plan – 2017/18 to 2019/20
76
British Columbia Economic Review and Outlook
Table 3.1 British Columbia Economic Indicators
Third Quarter
Jul. to Sep. 2016
change from
Apr. to Jun. 2016
Data seasonally adjusted unless
otherwise noted
Fourth Quarter
Oct. to Dec. 2016
change from
Jul. to Sep. 2016
Annual
Jan. to Dec. 2016
change from
Jan. to Dec. 2015
Per cent change
Employment ……………………………
Manufacturing shipments 1 ………………
Exports ……………………………………
Retail sales1 ………………………………
Housing starts ……………………………
Non-residential building permits ………
* annual non-seasonally adjusted data
1
0.6
4.2
15.2
1.3
-6.4
-4.7
0.5
1.6
13.8
1.9
-7.6
-8.5
3.2*
3.7
9.8*
6.5
33.1*
-7.8*
data to November
The Labour Market
Employment activity in BC was strong in 2016, growing at its fastest annual pace since
1994. Employment in the province grew by 73,300 jobs (or 3.2 per cent) in 2016,
as a gain of 38,500 full-time jobs was supported by a gain of 34,800 part-time jobs.
Significant gains were seen in wholesale and retail trade (+17,000 jobs), information,
culture and recreation (+12,100 jobs) and business, building and other support services
(+11,200 jobs), while losses were concentrated in accommodation and food services
(-3,300 jobs), manufacturing (-2,400 jobs), and transportation and warehousing (-2,100
jobs).
The provincial unemployment rate averaged 6.0 per cent in 2016, down 0.2 percentage
points from 2015. BC’s labour force increased 3.0 per cent in 2016, also its fastest annual
growth since 1994.
In January 2017, BC’s economy created 11,200 jobs compared to the previous month
(an increase of 0.5 per cent), while the monthly unemployment rate fell 0.2 percentage
points to 5.6 per cent. BC’s labour force increased by 5,900 persons compared to
December 2016.
Chart 3.2 BC employment
BC employment (thousands, sa)
2,450
Jan 2017: 2,419
2,400
2,350
Jun 2008: 2,256
2,300
2,250
2,200
Mar 2009: 2,184
2,150
2008
2009
2010
2011
2012
2013
2014
Source: Statistics Canada
Budget and Fiscal Plan – 2017/18 to 2019/20
2015
2016
2017
77
British Columbia Economic Review and Outlook
Outlook
The Ministry forecasts employment in BC to increase by 1.2 per cent in 2017, or
approximately 29,300 jobs. The pace of employment growth is expected to remain
at 1.2 per cent in 2018. Over the medium-term, employment growth is expected to
average 1.1 per cent annually. The province’s unemployment rate is expected to average
6.1 per cent in both 2017 and 2018. The rate is then forecast to edge up to around
6.3 per cent over the medium-term.
Consumer Spending and Housing
Consumer spending was strong for the third consecutive year, as BC retail sales grew by
a solid 6.5 per cent year-to-date to November 2016 compared to the same period of the
previous year, after growing by 6.0 per cent in 2015 and 5.6 per cent in 2014. Last year,
retail sales growth was broad-based and increases were seen in every retail segment.
Notable year-to-date gains occurred at motor vehicle and parts dealers, health and
personal care stores, and building material and garden equipment and supplies dealers.
In general, BC retail sales were supported by strong employment growth, increased
tourism, interprovincial migration and low interest rates.
Chart 3.3 BC retail sales
6,500
BC retail sales ($ millions, sa)
6,000
5,500
Nov 2016: 6,373
Jun 2008: 4,957
5,000
4,500
Dec 2008: 4,379
4,000
2008
2009
2010
2011
2012
2013
2014
2015
2016
Source: Statistics Canada
BC housing starts grew by 33.1 per cent in 2016 to reach 41,843 units. While this
number of housing starts is higher than the historical average of 29,465 annualized
units from 1990 to 2016, housing starts moderated slightly in the second half of 2016.
More recently, there were 28,738 annualized housing units started in January 2017,
which was 17.1 per cent lower than in January 2016. Meanwhile, residential building
permits (a leading indicator of future home construction) grew 3.9 per cent in 2016.
Furthermore, the number of home sales and the average home price in BC have been
weaker in the last three quarters of 2016 following a strong start to the year. However,
despite the slowdown that began last spring, BC home sales grew 9.5 per cent in 2016
compared to 2015, and home prices rose 8.6 per cent. Home price growth in BC was
widespread in 2016, with only the northern regions posting declines. Eight of the
Budget and Fiscal Plan – 2017/18 to 2019/20
78
British Columbia Economic Review and Outlook
Chart 3.4 BC housing starts
60,000
BC housing starts (annualized units, sa)
2016 Annual: 41,843
50,000
40,000
30,000
20,000
10,000
0
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Source: Canada Mortgage and Housing Corporation
province’s twelve real estate regions posted double-digit increases in average home price
compared to 2015 with Chilliwack (+18.4 per cent), the Fraser Valley (+17.2 per cent)
and Powell River (+15.3 per cent) leading the pack, while the average home price in
Greater Vancouver was up 12.7 per cent. Improving housing activity has helped support
the provincial economy in recent years. However, momentum is expected to ease with
tighter mortgage financing rules and the eventual increase in interest rates.
Chart 3.5 BC housing market activity
1,200,000
BC MLS average home price
(dollars, sa)
BC MLS home sales
(units, sa)
Sales Dec 2016: 7,649
1,000,000
12,000
10,000
800,000
8,000
600,000
6,000
400,000
200,000
Price Dec 2016: $656,980
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
4,000
2,000
Source: Canadian Real Estate Association / Haver Analytics
Since Budget 2016, the BC government has announced various measures to help address
the complex issue of housing affordability in the province. Following the introduction
of the 15 per cent additional property transfer tax in August 2016, the average rate of
foreign investment in residential real estate decreased in BC, particularly in the Metro
Vancouver area. Since the introduction of the tax, the proportion of property transactions
involving foreign nationals in Metro Vancouver has fallen to proportions near those seen
in the province as a whole.
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British Columbia Economic Review and Outlook
79
The value of non-residential building permits, which tend to be volatile, fell 7.8 per cent
in 2016 compared to 2015, after registering an annual decline of 1.3 per cent in 2015.
The decline last year reflected a 20.1 per cent decrease in the industrial category, and
more modest declines in commercial (-6.1 per cent) and institutional and government
(-4.1 per cent) building permits.
Outlook
The Ministry forecasts real household consumption of goods and services to increase by
2.6 per cent in 2017 after growing by an estimated 3.8 per cent in 2016. A 2.6 per cent
increase in real household spending is also expected for 2018, followed by further annual
gains of around 2.5 per cent over the medium-term.
Following last year’s estimated increase of 6.3 per cent in BC retail sales, an annual gain of
3.7 per cent is forecast for both 2017 and 2018. Retail sales are then expected to grow by
3.6 per cent annually from 2019 to 2021.
A moderation in residential construction activity is projected this year, as the Ministry
forecasts housing starts to total 29,977 units in 2017 – a decrease of 28.4 per cent from
2016. Starts are expected to slow further in 2018, reaching about 27,500 units, and then
average around 27,000 units per year from 2019 to 2021.
Business and Government
Real business investment is estimated to have grown by 6.9 per cent in 2016, with a large
increase in residential investment and supporting gains in non-residential investment
and machinery and equipment investment offsetting a decline in intellectual property
investment.
Total real expenditures by federal, provincial and municipal governments are estimated to
have increased by 3.2 per cent in 2016.
Outlook
Real business investment is projected to rise by 3.8 per cent in 2017, with gains in
residential, non-residential, and machinery and equipment investment again outweighing
a decline in intellectual property investment. Total business investment is forecast to
increase by 4.0 per cent in 2018, and then grow by around 3.5 per cent per year in the
medium-term.
The Ministry expects the net operating surplus of corporations to grow by 5.0 per cent
in 2017, after an estimated increase of 8.5 per cent in 2016. Moderating annual growth
of 2.4 per cent is forecast in 2018, followed by around 3.0 per cent annual growth in the
medium-term.
Combined real spending by the three levels of government (federal, provincial and
municipal) on goods and services is expected to increase by 0.2 per cent in 2017, followed
by a gain of 0.6 per cent in 2018. Government spending growth is then projected to
average about 0.2 per cent annually in the medium-term.
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British Columbia Economic Review and Outlook
External Trade and Commodity Markets
After a subdued first half of 2016, the value of BC international merchandise exports
expanded rapidly in the second half, resulting in a 9.8 per cent increase in 2016 compared
to 2015. Strong growth in the second half of 2016 was due, in part, to BC exports
of energy products (which include natural gas, coal and electricity), which increased
73.0 per cent in the third quarter and 61.5 per cent in the fourth quarter, after declining
in the second quarter. By destination, exports to the US grew 12.9 per cent in 2016,
while exports to other countries grew 6.3 per cent. On a commodity basis, notable annual
export gains were observed in exports of energy products (+29.5 per cent), solid wood
products (+19.2 per cent) and metallic mineral products (+8.8 per cent), while export
losses were concentrated in pulp and paper products (-9.9 per cent).
Chart 3.6 BC exports
BC international merchandise exports ($ millions, sa)
4,000
Dec 2016: 3,990
3,500
Oct 2008: 3,050
3,000
2,500
2,000
May 2009: 1,916
1,500
2008
2009
2010
2011
2012
2013
2014
2015
2016
Source: BC Stats
Shipments of manufactured goods from BC expanded rapidly in the third quarter of
2016 after a modest first half of the year. Year-to-date to November 2016 manufacturing
shipments were up 3.7 per cent compared to the same period of the prior year. Notable
year-to-date gains were recorded in shipments of wood products (+10.8 per cent) and
primary metals (+33.7 per cent) while a considerable decline was observed in paper
shipments (-12.5 per cent).
Commodity prices were mixed in 2016, following widespread declines in 2015. The price
of Western spruce-pine-fir (SPF) 2x4 lumber started the year at $267 US/000 board feet
in January and finished at $322 US/000 board feet in December. Overall, the price rose
9.2 per cent in 2016 compared to 2015, averaging $308 US/000 board feet for the year.
The price of pulp rose somewhat through 2016 after trending lower through 2015.
The price began the year at $795 US per tonne in January and rose to $810 US per tonne
in December. However, at an average of $803 US per tonne in 2016, the price of pulp
was 5.4 per cent lower than it was in 2015.
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British Columbia Economic Review and Outlook
81
After falling by more than 70 per cent from mid-2014 through early 2016, the
daily West Texas Intermediate (WTI) crude oil price began a slow recovery from an
average of $30.32 US/barrel in February 2016 to an average of $51.97 US/barrel in
December 2016. Overall, the daily WTI crude oil price averaged $43.29 US/barrel in
2016, a decrease of 11.0 per cent compared to the average price of $48.66 US/barrel
observed in 2015.
The Plant Inlet price of natural gas fell to historic lows around the second quarter of 2016
before increasing through the end of the year. On an annual average basis, the price of
natural gas fell from $1.37 C/GJ in 2015 to $1.00 C/GJ in 2016. Meanwhile, the prices
of metals and minerals were mixed in 2016. Annual declines were observed in prices for
copper (-11.5 per cent), aluminum (-3.4 per cent) and molybdenum (-2.8 per cent),
while increases were seen in the prices for silver (+9.4 per cent), zinc (+8.7 per cent),
gold (+7.9 per cent) and lead (+4.9 per cent).
Outlook
Real exports of goods and services are forecast to rise by 1.4 per cent in 2017, following
an estimated increase of 0.9 per cent in 2016. Real exports are then expected to grow by
1.3 per cent in 2018 and around 1.9 per cent per year over the medium-term.
The price of lumber is projected to increase in 2017, averaging $326 US/000 board feet
for the year. The price is then forecast to average $318 US/000 board feet in 2018 and
$300 US/000 board feet per year from 2019 to 2021.
The price of natural gas is expected to rise to $1.61 C/GJ in 2017/18 and average
$1.73 C/GJ in 2019/20.
Commodity prices and export market activity may experience some instability over the
coming years due to ongoing global economic uncertainty associated with a number of
factors. These factors include the possibility of shifting trade policies in the US limiting
access to BC’s largest market, the potential for further slowing and rebalancing of the
Chinese economy, and fluctuations in petroleum markets.
Demographics
BC’s population on July 1, 2016 was 4.75 million people, 1.2 per cent higher than
the 4.69 million people counted on the same date in 2015. During the first three
quarters of 2016, BC saw a net inflow of 50,306 people, as the province welcomed
33,572 individuals from other countries and 16,734 individuals from other provinces.
Outlook
The forecast calls for BC’s July 1st population to increase by 1.2 per cent in 2017
(to reach a total of 4.81 million people) and by 1.2 per cent annually in 2018 and over
the medium-term.
Total net migration is expected to reach a net inflow of about 51,300 persons in 2017.
Net entry of about 17,100 people from other provinces is forecast in 2017, along with an
anticipated net gain of about 34,200 people from other countries. For 2018, the Ministry
forecasts a total net inflow of around 49,600 individuals, followed by continued net
inflows averaging about 50,100 individuals per year over the medium-term.
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Inflation
Consumer prices in BC increased by 1.8 per cent in 2016 compared to the previous
year, the fastest pace of inflation in five years. Durable goods prices saw the strongest
growth (+3.4 per cent), with prices rising for automobiles and furniture. Prices for
services (+2.2 per cent) also grew solidly, supported by higher prices at restaurants.
Higher clothing and footwear prices provided upward inflationary pressure for semidurable goods (+1.5 per cent). Meanwhile, the price for non-durable goods increased
modestly (+0.5 per cent) in 2016 as price gains for items such as food and electricity were
dampened by lower prices for gasoline and natural gas.
Chart 3.7 BC inflation
BC Consumer Price Index (2002 = 100, y/y per cent change)
4
Jul 2008: 3.3%
Mar 2011: 3.1%
Dec 2016: 1.9%
3
2
1
0
Jul 2009: -1.6%
-1
-2
2008
2009
Source: Statistics Canada
2010
2011
2012
2013
2014
2015
2016
Outlook
Consumer price inflation in BC is forecast to be 2.0 per cent each year from 2017 to
2021. The Canadian rate of inflation is assumed to also be 2.0 per cent annually from
2017 to 2021, in line with the Bank of Canada’s inflation target.
Risks to the Economic Outlook
Risks to the BC economic outlook continue to be weighted to the downside. The main
risks to the current outlook include the following:
• potential for a slowdown in domestic and Canadian economic activity;
• uncertainty regarding US fiscal and trade policy;
• fragility in Europe as governments and the financial system deal with elevated
sovereign debt alongside weak economic growth and ongoing uncertainty associated
with Brexit;
• slower than anticipated economic activity in Asia resulting in weaker demand for BC’s
exports and downward pressure on global commodity prices (particularly as China’s
economy transitions from investment and export-led growth towards a consumerdriven economy); and
• exchange rate uncertainty.
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External Outlook
United States
US economic growth was uneven in 2016. After a slow first half of the year, the US
economy grew faster in the third quarter, before slowing in the fourth quarter. For 2016
as a whole, US real GDP grew 1.6 per cent, slower than the 2.6 per cent observed in 2015
and the slowest growth rate in five years. On the year, personal consumption expenditures
on goods and services provided the biggest boost to US real GDP growth with residential
investment, investment in intellectual property products, exports and government
spending also providing support. Meanwhile, declining inventory stocks, decreasing
investment in non-residential structures and equipment, as well as increasing imports
(which detract from GDP) weighed on growth.
Chart 3.8 US economic growth
8.0
US real GDP (annualized q/q per cent change)
6.0
3.9
4.0
2.0
2.0
1.3
4.6
3.9
1.7
2.9
2.7 2.5
2.7
0.8
1.9
0.5
0.0
-0.5
-2.0
-4.0
-2.7
-8.0
-10.0
0.1
5.0
3.5
2.3 2.0 2.6 2.0
0.9 0.8
0.8
1.4
1.9*
-1.2
-1.5
-1.9
-6.0
3.1
2.8
4.0
4.0
-5.4
-8.2
2008
2009
2010
2011
2012
2013
Source: US Bureau of Economic Analysis
2014
2015
2016
* Advance estimate, subject to revision
The US labour market continued to strengthen in 2016 but at a slower pace than in
2015. The economy added about 187,000 jobs each month on average, resulting in a
1.7 per cent annual increase in US employment. At the same time, the unemployment
rate decreased to 4.9 per cent from an average of 5.3 per cent in 2015 and average hourly
earnings grew 2.5 per cent in 2016 after increasing 2.3 per cent the year prior. However,
the labour force participation rate remained near historic lows in 2016 at 62.8 per cent.
In January 2017, the US added 227,000 jobs from the previous month and the
unemployment rate was 4.8 per cent.
The American housing market trended upward through 2016 and built on the growth
seen in 2015. There were 1,166,400 US housing starts in 2016, up 4.9 per cent compared
to 2015. While growth was modest for most of 2016, the pace of homebuilding picked
up at the end of the year increasing 6.2 per cent in the October to December quarter of
2016, compared to the preceding quarter. New home sales saw strong growth in 2016,
expanding by 12.2 per cent compared to the previous year. Meanwhile, existing home
sales increased 4.0 per cent in 2016 compared to 2015.
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Chart 3.9 US housing starts
US housing starts (thousands of annualized units, sa)
2,500
Jan 2006: 2,273
2,000
1,500
1,000
Dec 2016: 1,226
500
Apr 2009: 478
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Source: US Census Bureau
Retail activity in the US increased by 3.3 per cent in 2016. The major contributors to
US retail sales growth last year were motor vehicle and parts dealers (+3.8 per cent),
food services and drinking places (+6.0 per cent) and health and personal care stores
(+7.4 per cent). Also in 2016, sales at gasoline stations (-6.3 per cent) subtracted from
annual retail sales growth; however, they have increased or been flat in each of the last
three quarters of 2016. Meanwhile, consumer confidence among American consumers
rebounded in the latter half of 2016 after a relatively flat first half of the year. American
consumer confidence was near its highest level in over a decade in January 2017,
according to the Conference Board index of consumer confidence.
Chart 3.10 US Consensus outlook for 2017
3.0
Forecast annual per cent
change in US real GDP, 2017
2.5
2.4
2.4
2.4
Feb
Mar
Apr
2.3
2.3
May
Jun
2.2
2.3
2.3
Aug
Sept
2.2
2.2
Oct
Nov
2.3
2.3
Dec
Jan
2.0
1.0
0.0
Jan
July
2017
2016
Source: Consensus Economics
The chart above represents forecasts for real GDP growth in 2017 as polled on specific dates. For example,
forecasters surveyed on January 11, 2016 had an average 2017 US growth forecast of 2.5 per cent, while on
January 9, 2017 they forecast 2017 US growth at 2.3 per cent.
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British Columbia Economic Review and Outlook
Outlook
The January 2017 Consensus Economics (Consensus) forecasts the US economy to grow
by 2.3 per cent this year and next year. While the forecast for 2017 is slightly lower
than it was in January 2016 (2.5 per cent), Consensus summarized current private sector
sentiment as positive, based on anticipated fiscal stimulus, tax reform and deregulation by
the new US administration. However, industrial production was soft at the end of 2016,
potentially the result of the strong US dollar.
In recognition of uncertainty regarding the US outlook (including fiscal and trade policy),
the Ministry’s assumptions for US growth are prudent compared to the January 2017
Consensus. The Ministry assumes that US real GDP will expand by 1.9 per cent in 2017,
2.1 per cent in 2018 and then 2.0 per cent per year through the remainder of the forecast
horizon.
Table 3.2 US Real GDP Forecast: Consensus vs Ministry of Finance
2017
2018
Per cent change in real GDP
Ministry of Finance …………………………...………………
Consensus Economics (January 2017) ……………………
1.9
2.3
2.1
2.3
Canada
Canada experienced uneven growth through the first three quarters of 2016. Canadian
real GDP grew at an annualized rate of 3.5 per cent in the July to September quarter of
2016, an improvement from the 1.3 per cent contraction in the April to June quarter.
The improvement in the third quarter was largely due to a significant increase in energy
exports as the economy began to recover from the impact of the Fort McMurray wildfires.
Household final consumption grew steadily through the first three quarters of the year,
while business gross fixed capital formation declined in each quarter (business gross fixed
capital formation has fallen in every quarter since the third quarter of 2014).
Chart 3.11 Canadian economic growth
Canadian real GDP (annualized q/q per cent change)
6.0
4.8 4.9
4.0
3.4
2.0
0.0
1.8
1.4
5.7
4.6
2.1
2.9
4.2
3.2
3.0
0.8
0.2
2.6
1.3
0.1
3.3
0.8 0.5
4.2
4.1
1.9
2.4
0.5
0.2
-0.4
-1.0
-2.0
3.5
2.7
2.3
-1.3
-4.0
-4.5
-6.0
-4.3
-8.0
-10.0
-8.8
2008
2009
2010
2011
2012
2013
Source: Statistics Canada
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2015
2016
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British Columbia Economic Review and Outlook
Following an annual gain of 144,400 jobs (or 0.8 per cent) in 2015, Canadian
employment increased by 133,300 jobs (or 0.7 per cent) in 2016. Job gains were
concentrated in the services-producing sector (+170,700 jobs), while the goodsproducing sector experienced job losses (-37,400 jobs). The national unemployment rate
averaged 7.0 per cent in 2016, up 0.1 percentage point from 2015. In January 2017, the
Canadian labour market gained 48,300 jobs compared to December 2016, while the
unemployment rate edged down to 6.8 per cent from 6.9 per cent the previous month.
Also on the domestic front, retail sales grew 3.7 per cent year-to-date to November 2016,
a stronger pace of consumer spending than the 1.7 per cent annual growth observed in
2015. Meanwhile, annual residential construction activity increased 1.2 per cent, with
Canadian builders breaking ground on 197,915 new homes in 2016. In January 2017,
there were 207,408 annualized Canadian housing starts, an 18.2 per cent increase from
January 2016. Home sales also advanced in 2016, up 6.3 per cent over the previous
year as sales activity increased in every province except Alberta, Saskatchewan and
Newfoundland and Labrador. Meanwhile, Canadian home prices rose 10.7 per cent in
2016 compared to 2015.
Soft global demand and weak commodity prices continued to weigh on Canada’s trade
sector last year. In 2016, Canadian merchandise exports fell 2.7 per cent compared
to 2015. Weakness was concentrated in exports of energy products (-17.2 per cent),
continuing the trend of double-digit losses observed in 2015. Meanwhile sizable gains
occurred in exports of motor vehicles and parts (+8.3 per cent) and consumer products
(+4.6 per cent). Canadian manufacturing shipments gained little ground in the first
eleven months of 2016, rising 0.6 per cent year-to-date to November compared to
the same period of 2015. Shipments of motor vehicles (+13.2 per cent) and food
(+5.3 per cent) saw major gains in Canada through the first eleven months of 2016, while
petroleum and coal product shipments (-16.6 per cent) saw a significant decline.
Chart 3.12 Consensus outlook for Canada in 2017
3.0
Forecast annual per cent
change in Canadian real GDP, 2017
2.2
2.1
2.1
Feb
Mar
2.2
2.2
2.2
2.1
2.1
2.1
July
Aug
Sept
2.0
2.0
1.9
1.9
Nov
Dec
2.0
1.0
0.0
Jan
Apr
May
Jun
2016
Oct
Jan
2017
Source: Consensus Economics
The chart above represents forecasts for real GDP growth in 2017 as polled on specific dates. For example,
forecasters surveyed on January 11, 2016 had an average 2017 Canadian growth forecast of 2.2 per cent, while on
January 9, 2017 they forecast 2017 Canadian growth at 2.0 per cent.
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British Columbia Economic Review and Outlook
Outlook
Consensus forecasts for Canadian real GDP growth in 2017 were relatively steady for
most of last year but started to trend downward in the fall, with the Consensus forecasting
growth of 2.0 per cent in January 2017. The Consensus anticipates Canadian real GDP
growth of 2.0 per cent in 2018 as well, noting that the new US administration’s trade
policies could be significant for Canada, since the US is Canada’s largest trading market.
Due to the potential for greater than anticipated weakness in commodity markets, the
global economy and domestic activity, the Ministry assumes that the Canadian economy
will expand by 1.6 per cent in 2017, 1.8 per cent in 2018, and then 1.9 per cent per year
over the medium-term.
Table 3.3 Canadian Real GDP Forecast: Consensus vs Ministry of Finance
Ministry of Finance …………………………...………………
Consensus Economics (January 2017)………………………
2017
2018
Per cent change in real GDP
1.6
2.0
1.8
2.0
Europe
The pace of annual economic growth in the euro zone was modest in 2016, expanding
by 1.7 per cent, following growth of 1.9 per cent in 2015. Meanwhile, euro zone
industrial production grew 1.3 per cent year-to-date to November 2016 compared to
the same period the year before. Economic conditions continue to vary widely across
the currency union. Recent unemployment rates ranged from 4.0 per cent in Germany
to 23.0 per cent in Greece. Consumer price inflation picked up considerably in January
2017, reaching 1.8 per cent across the euro zone, the strongest inflation rate since
February 2013. Meanwhile, the aggregate government debt to GDP ratio across the
currency union declined in the third quarter of 2016 compared to the same period a year
ago, despite ongoing increases in Greece, Portugal and other nations.
Chart 3.13 Consensus outlook for the euro zone in 2017
3.0
2.0
Forecast annual per cent change
in euro zone real GDP, 2017
1.7
1.7
1.6
1.6
1.6
1.6
1.3
1.2
1.3
1.3
1.3
Sept
Oct
Nov
1.4
1.4
Dec
Jan
1.0
0.0
Jan
Feb
Mar
Apr
May
Jun
July
Aug
2016
2017
Source: Consensus Economics
The chart above represents forecasts for real GDP growth in 2017 as polled on specific dates. For example,
forecasters surveyed on January 11, 2016 had an average 2017 euro zone growth forecast of 1.7 per cent, while
on January 9, 2017 they forecast 2017 euro zone growth at 1.4 per cent.
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British Columbia Economic Review and Outlook
In January 2017, the European Central Bank (ECB) said that economic expansion in the
euro zone was strengthening somewhat but noted that risks to the outlook remained tilted
to the downside and were primarily global in nature. As such, the ECB opted to maintain
its mix of policy measures, including the lengthening of their asset purchase program
from its previously planned end date (March 2017) to December 2017, as announced in
December 2016. The ECB also reiterated its willingness to increase the level of monetary
stimulus if the outlook becomes less favourable.
In February 2017, the Bank of England held its benchmark interest rate steady and
decided to continue its asset purchase program. The Bank also increased its economic
outlook for UK growth in 2017, 2018 and 2019 from its November projections, due to
stronger domestic demand than previously anticipated. The value of the pound sterling
fell following the UK referendum vote in June 2016 and the Bank expects that rising
import prices will lead to higher inflation over the next few years. While recent data
suggests that economic activity has improved, the Bank warned that slower wage growth
and higher import prices will likely lead to slowing real consumer spending.
Outlook
Consensus expectations for euro zone economic growth in 2017 have edged down over the
past year, registering at 1.7 per cent in January 2016 and then 1.4 per cent one year later.
For 2018, the January 2017 Consensus pegged euro zone real GDP growth at 1.5 per cent.
Meanwhile, the Ministry prudently assumes that the euro zone’s economy will expand by
1.0 per cent in 2017 and 1.2 per cent in 2018.
Asia
Economic activity in Japan remains relatively weak. Last year, annualized real GDP
growth in Japan slowed in each quarter following the strong pace (2.8 per cent) set at the
beginning of 2016, to expand by only 1.3 per cent in the third quarter. More recently,
exports likely supported economic growth in the fourth quarter of 2016. Furthermore,
in December, Japan’s government approved a record $830 US billion spending budget for
the 2017 fiscal year aimed, in part, at improving Japan’s economy. This announcement
followed other policy measures introduced in the summer of 2016 that included new
infrastructure spending and a delay in a sales tax hike. However, despite large-scale fiscal
stimulus and highly accommodative monetary policy, price inflation in Japan remains
negative.
China’s economy grew by 6.7 per cent in 2016, the slowest pace in over 25 years but
within the government’s target range of 6.5 to 7.0 per cent. Real investment in fixed
assets grew 8.8 per cent in 2016, while retail sales saw 9.6 per cent real growth. At the
same time, the total value of Chinese exports fell on the year, down 2.0 per cent and the
value of imports was up 0.6 per cent. While the economy’s growth profile continued to
transition towards service-based industries and consumer spending in 2016 (consistent
with China’s official national plans), there are considerable challenges facing the Chinese
economy, including a weakening currency, a potentially over-valued housing market and
the prospect of trade disputes with the new US administration.
Outlook
Japan’s economy is forecast to grow by 1.1 per cent in 2017 and 0.9 per cent in 2018
according to the January 2017 Consensus report. The Ministry of Finance prudently
assumes Japan’s real GDP growth of 0.6 per cent in 2017 and 0.7 per cent in 2018.
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British Columbia Economic Review and Outlook
The January 2017 Consensus forecasts China’s real GDP to grow by 6.4 per cent in
2017 and 6.1 per cent in 2018. Due to the potential for greater-than-expected slowing
in the Chinese economy, the Ministry assumes that China’s real GDP will expand by
6.1 per cent in 2017 and then 5.9 per cent the following year.
Financial Markets
Interest rates
In January 2017, the Bank of Canada announced that it will continue to hold its target
for the overnight rate at 0.50 per cent (where the rate has remained since July 2015).
In its January Monetary Policy Report, the Bank expected the Canadian economy to be
running at full capacity by around mid-2018 but it also warned that exports could be held
back by the recent appreciation of the Canadian dollar, and that residential investment
will likely moderate as mortgage rates rise and changes to housing finance rules impact
resale activity.
In contrast to the Bank of Canada, the US Federal Reserve (Fed) increased its intended
federal funds rate from the 0.25 to 0.50 per cent range to the 0.50 to 0.75 per cent range
in December 2016 (this increase follows the 0.25 percentage point increase that was
announced the prior year, in December 2015). In its accompanying press release, the
Fed noted further improvement in the labour market and that inflation, while below the
Fed’s objective, has increased. More recently, the Fed opted to leave the federal funds rate
unchanged in February 2017 and reiterated its expectation that future rate increases will
be gradual.
Outlook
Based on the average of six private sector forecasts as of January 3, 2017, the Ministry
assumes that the Bank of Canada will hold the overnight target rate at 0.5 per cent until
the second quarter of 2018. The rate is expected to average 0.5 per cent in 2017 and
0.7 per cent in 2018.
Chart 3.14 Interest rate forecasts
6
Per cent
Forecast
5
3.50%
4
3
3.25%
2
Bank of Canada
Overnight Target Rate 0.50%
1
US Intended Federal
Funds Rate 0.38%
0
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Sources: Bank of Canada, US Federal Reserve and BC Ministry of Finance forecasts.
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2021
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British Columbia Economic Review and Outlook
The same six private sector forecasters anticipate that the federal funds rate will
increase slowly through 2017 and 2018. They forecast the federal funds rate to average
0.9 per cent in 2017 and 1.5 per cent in 2018.
Canadian three-month Treasury bill interest rates are expected to average 0.5 per cent
in 2017 and 0.7 per cent in 2018, according to the same six private sector forecasters.
Meanwhile, ten-year Government of Canada bond rates are forecast at 1.8 per cent in
2017 and 2.2 per cent in 2018 on average.
Table 3.4 Private Sector Canadian Interest Rate Forecasts
3-month Treasury Bill
Average annual interest rate (per cent)
IHS Markit …………………………………
CIBC ………………………………………
BMO ………………………………………
Scotiabank ………………………………
TD …………………………………………
RBC ………………………………………
Average (as of January 3, 2017) ……
10-year Government Bond
2017
2018
2017
2018
0.5
0.5
0.5
0.5
0.5
0.5
0.5
1.0
0.5
0.6
0.8
0.5
0.8
0.7
2.1
1.6
1.9
1.6
1.8
1.9
1.8
2.8
1.8
2.1
1.9
2.0
2.6
2.2
Exchange rate
The Canadian dollar averaged 75.4 US cents in 2016, down 2.8 US cents
(or 3.5 per cent) from 2015. This slight depreciation continued a trend underway
since late 2012 when the dollar was near parity with its US counterpart. However, the
annual pace of depreciation has slowed as the Canadian dollar gained value in the first
few months of 2016, climbing as high as 78.0 US cents for the month of April before
softening to average 75.0 US cents in December. The loonie has increased since the
beginning of 2017, hitting a four-month high of 76.9 US cents on February 3, 2017,
before decreasing slightly to 76.5 US cents as of February 10, 2017.
Chart 3.15 Private sector expectations for the Canadian dollar
110
Forecast
US cents/Canadian $ (noon rate)
100
First Quarterly Report 2016*
90
82.6¢
80
81.8¢
70
60
Budget 2017*
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Sources: Bank of Canada and BC Ministry of Finance forecasts
* Based on the average of private sector forecasts. Budget 2017 as of January 3, 2017 and First Quarterly Report 2016 as of
July 18, 2016.
Budget and Fiscal Plan – 2017/18 to 2019/20
91
British Columbia Economic Review and Outlook
Outlook
On average, six private sector forecasters as of January 3, 2017 expect the Canadian dollar
to average 73.7 US cents in 2017 and 75.3 US cents in 2018. The Ministry’s exchange
rate outlook is based on these private sector forecasts.
Table 3.5 Private Sector Exchange Rate Forecasts
Average annual exchange rate (US cents/Can $)
2017
2018
IHS Markit ………………………………………………………
CIBC ………………………………………………………………
BMO …………………………………………………………….
Scotiabank …………………………………………….…………
TD ………………………………………………………………
RBC ………………………………………………………………
Average (as of January 3, 2017) ……………………………
75.5
73.5
73.0
72.5
74.4
73.2
73.7
79.6
73.0
75.0
74.8
75.7
73.6
75.3
Budget and Fiscal Plan – 2017/18 to 2019/20
92
British Columbia Economic Review and Outlook
Table 3.6.1 Gross Domestic Product (GDP): British Columbia
2017
2018
Forecast
2019
2020
2021
238.2
3.0
243.3
2.1
248.4
2.1
253.5
2.0
258.4
2.0
263.6
2.0
250.0
3.8
261.8
4.7
272.5
4.1
283.4
4.0
294.6
3.9
306.2
3.9
318.2
3.9
108.1
0.5
109.9
1.7
112.0
1.9
114.1
1.9
116.2
1.9
118.5
1.9
120.7
1.9
Real GDP per person (chained 2007 $) ……… 49,286
(% change) ………………………………
2.3
50,135
1.7
50,623
1.0
51,059
0.9
51,486
0.8
51,876
0.8
52,314
0.8
2.1
-0.2
0.9
0.8
1.0
0.8
1.0
0.6
1.1
1.9
2.0
1.9
2.0
1.9
2015
2016
Gross Domestic Product at Market Prices:
– Real (chained 2007 $ billions) …………
(% change) ………………………………
231.3
3.3
– Nominal (current prices, $ billions) ………
(% change) ………………………………
– GDP price deflator (2007 = 100) …………
(% change) ………………………………
Real GDP per employed person
(% change) ………………………………
1
Unit labour cost (% change) …………………
e
Components of Real GDP at Market Prices (chained 2007 $ billions)
Household expenditure on
goods and services …………………………
(% change) ………………………………
145.2
3.1
150.7
3.8
154.7
2.6
158.8
2.6
162.8
2.5
166.9
2.5
171.2
2.5
– Goods ……………………………………
(% change) ………………………………
58.9
3.8
61.7
4.7
63.0
2.1
64.4
2.2
65.7
2.0
67.0
2.1
68.4
2.1
– Services ………..…………………………
(% change) ………………………………
86.2
2.7
89.0
3.3
91.7
3.0
94.3
2.9
97.0
2.8
99.7
2.8
102.5
2.8
NPISH2 expenditure on
goods and services ……..…………………
(% change) ………………………………
3.4
1.7
3.4
0.7
3.5
0.5
3.5
0.7
3.5
0.7
3.5
0.7
3.6
0.7
Government expenditure on
goods and services ……..…………………
(% change) ………………………………
39.9
2.8
41.1
3.2
41.2
0.2
41.5
0.6
41.5
0.2
41.6
0.1
41.7
0.2
Investment in fixed capital …………...…………
(% change) ………………………………
52.7
-0.3
56.7
7.7
58.7
3.5
60.2
2.5
62.1
3.2
63.7
2.5
65.4
2.7
Final domestic demand …………………..…
(% change) ………………………………
241.0
2.3
251.9
4.5
257.9
2.4
263.7
2.3
269.6
2.3
275.4
2.1
281.4
2.2
Exports of goods and services …………………
(% change) ………………………………
93.4
2.8
94.3
0.9
95.6
1.4
96.9
1.3
98.6
1.8
100.5
1.9
102.5
2.0
Imports of goods and services …………………
(% change) ………………………………
102.6
0.3
106.5
3.8
109.0
2.4
111.4
2.2
113.9
2.2
116.5
2.3
119.3
2.4
Inventory change ……………...………………
0.8
-0.2
0.1
0.4
0.2
0.2
0.2
Statistical discrepancy …………………………
-0.1
-0.1
-0.1
-0.1
-0.1
-0.1
-0.1
231.3
3.3
238.2
3.0
243.3
2.1
248.4
2.1
253.5
2.0
258.4
2.0
263.6
2.0
Real GDP at market prices ………...…………
(% change) ………………………………
1
2
e
Unit labour cost is the nominal cost of labour incurred to produce one unit of real output.
Non-profit institutions serving households.
Ministry of Finance estimate.
B.C. Ministry of Finance
Budget and Fiscal Plan – 2017/18 to 2019/20
93
British Columbia Economic Review and Outlook
Table 3.6.2 Selected Nominal Income and Other Indicators: British Columbia
2017
2018
Forecast
2019
2020
2021
128,161
4.1
e
133,360
4.1
138,862
4.1
144,357
4.0
150,054
3.9
155,925
3.9
Household income ($ millions) ……………… 221,137
(% change) ………………………………
5.3
229,319
3.7
e
237,578
3.6
246,555
3.8
255,846
3.8
265,470
3.8
275,455
3.8
26,222
Net operating surplus ($ millions) …………
(% change) ………………………………
-0.5
28,458
8.5
e
29,891
5.0
30,615
2.4
31,523
3.0
32,478
3.0
33,498
3.1
Retail sales ($ millions) ……………………… 70,272
(% change) ………………………………
6.0
74,678
6.3
e
77,452
3.7
80,341
3.7
83,213
3.6
86,178
3.6
89,281
3.6
Housing starts (units) ………………………… 31,446
(% change) ………………………………
10.9
41,843
33.1
29,977
-28.4
27,512
-8.2
26,969
-2.0
26,985
0.1
26,990
0.0
122.4
1.8
124.9
2.0
127.4
2.0
130.0
2.0
132.6
2.0
135.3
2.0
2015
2016
Compensation of employees ($ millions) … 123,130
(% change) ………………………………
3.9
1
Consumer price index (2002 = 100) ………
(% change) ………………………………
120.2
1.1
1
Domestic basis; wages, salaries and employers' social contributions.
e
Ministry of Finance estimate.
Table 3.6.3 Labour Market Indicators: British Columbia
2015
2016
2017
2018
Forecast
2019
2020
2021
4,693
1.0
4,752
1.2
4,807
1.2
4,865
1.2
4,923
1.2
4,981
1.2
5,039
1.2
12.1
33.0
e
34.2
34.8
35.6
36.7
37.6
– Interprovincial ……………………………
21.5
18.5
e
17.1
14.8
14.7
13.6
12.0
– Total ………………………………………
33.6
51.5
e
51.3
49.6
50.3
50.3
49.6
Labour force population (thousands) ………
(% change) …………………………………
3,877
1.2
3,931
1.4
3,978
1.2
4,028
1.3
4,077
1.2
4,127
1.2
4,176
1.2
Labour force (thousands) ………………………
(% change) …………………………………
2,458
1.3
2,532
3.0
2,564
1.3
2,597
1.3
2,631
1.3
2,660
1.1
2,689
1.1
Participation rate 3 (%) …………………………
63.4
64.4
64.5
64.5
64.5
64.5
64.4
Employment (thousands) ………………………
(% change) …………………………………
2,306
1.2
2,380
3.2
2,409
1.2
2,439
1.2
2,465
1.1
2,492
1.1
2,518
1.1
6.2
6.0
6.1
6.1
6.3
6.3
6.3
Population (thousands at July 1) ………………
(% change) …………………………………
Net migration (thousands)
– International 1,4 ……………………………
4
2
Unemployment rate (%) ………………………
1
International migration includes net non-permanent residents and returning emigrants less net temporary residents abroad.
2
The civilian, non-institutionalized population 15 years of age and over.
Percentage of the labour force population in the labour force.
4
Components may not sum to total due to rounding.
3
e
BC Stats estimate.
B.C. Ministry of Finance
Budget and Fiscal Plan – 2017/18 to 2019/20
94
British Columbia Economic Review and Outlook
Table 3.6.4 Major Economic Assumptions
2015
2016
Real GDP
Canada (chained 2007 $ billions) ………
1,770
(% change) ………………………………
0.9
US (chained 2009 US$ billions) ………… 16,397
(% change) ………………………………
2.6
Japan (chained 2011 Yen trillions) ………
517
1.2
(% change) ………………………………
1,791
1.2
16,660
1.6
521
0.8
e
e
2017
2018
Forecast
2019
2020
2021
1,820
1.6
16,977
1.9
524
0.6
1,853
1.8
17,333
2.1
528
0.7
1,888
1.9
17,680
2.0
533
1.0
1,924
1.9
18,033
2.0
538
1.0
1,960
1.9
18,394
2.0
544
1.0
China (constant 2010 US$ billions) ………
(% change) ………………………………
8,798
6.9
9,387
6.7
9,960
6.1
10,548
5.9
11,170
5.9
11,829
5.9
12,527
5.9
Euro zone1 (% change) ……………………
1.9
1.7
1.0
1.2
1.3
1.3
1.3
Industrial production index
US (2012 = 100) ……………………………
(% change) ………………………………
105.2
0.3
104.2
-1.0
105.4
1.2
107.3
1.8
109.6
2.1
111.9
2.1
114.2
2.1
Japan (2010 = 100) ………………………
(% change) ………………………………
97.4
-1.4
96.9
-0.6
97.6
0.8
98.4
0.8
99.4
1.0
100.4
1.0
101.4
1.0
China (% change) …………………………
6.1
6.0
Euro zone1 (2010 = 100) …………………
(% change) ………………………………
103.4
2.0
104.5
1.1
Housing starts2 (thousands)
Canada ……………………………………
(% change) ………………………………
US ……………………………………………
(% change) ………………………………
Japan ………………………………………
(% change) ………………………………
196
3.3
1,112
10.8
909
1.9
Consumer price index
Canada (2002 = 100) ……………………
(% change) ………………………………
5.2
5.0
5.0
5.0
5.0
105.6
1.1
107.1
1.4
108.6
1.4
110.1
1.4
111.7
1.4
198
1.2
1,166
4.9
967
6.4
175
-11.6
1,160
-0.5
880
-9.0
175
0.0
1,200
3.4
880
0.0
180
2.9
1,200
0.0
880
0.0
180
0.0
1,200
0.0
880
0.0
180
0.0
1,200
0.0
880
0.0
126.6
1.1
128.4
1.4
131.0
2.0
133.6
2.0
136.3
2.0
139.0
2.0
141.8
2.0
Canadian interest rates (%)
3-month treasury bills ……………………
10-year government bonds ………………
0.5
1.5
0.5
1.3
0.5
1.8
0.7
2.2
1.3
2.6
2.1
3.4
3.1
4.2
United States interest rates (%)
3-month treasury bills ……………………
10-year government bonds ………………
0.1
2.1
0.3
1.8
0.8
2.5
1.4
2.9
1.8
3.3
2.6
3.9
3.2
4.3
Exchange rate (US cents / Canadian $) …
78.2
75.4
73.7
75.3
78.4
80.4
81.8
British Columbia goods and services
Export price deflator (% change) …………
-0.2
3.6
3.0
2.8
2.7
2.6
e
4.0 e
1
Euro zone (19) is Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg,
Malta, Netherlands, Portugal, Slovakia, Slovenia and Spain.
2
British Columbia housing starts appear in Table 3.6.2.
e
Ministry of Finance estimate.
Budget and Fiscal Plan – 2017/18 to 2019/20
95
British Columbia Economic Review and Outlook
The Economic Forecast Council, 2017
Introduction
In accordance with the Budget Transparency
and Accountability Act, the Minister of Finance,
in preparing each year’s provincial budget,
consults the Economic Forecast Council (the
Council) on British Columbia’s economic
outlook. The Council is comprised of
13 leading economists from several of Canada’s
major banks and private research institutions.
The most recent meeting between the
Minister and the Council occurred on
November 25, 2016, with forecasters
presenting their estimates for economic
performance in 2016 as well as their forecasts
for 2017 and beyond. The main issues
discussed by the Council included BC’s
housing market and natural resource sector,
the significant uncertainty surrounding the US
economic outlook, and the evolving trajectory
of domestic and external potential output.
forecast from one year ago. Council members
now forecast BC’s economy to grow by
2.3 per cent in 2017 and by 2.2 per cent
in 2018, followed by average growth of
2.1 per cent annually from 2019 to 2021.
Compared to its January 2016 projections,
the Council’s forecasts are higher for 2016
and lower for 2017 and beyond (see Chart 1).
Some members indicated that the decline
in their medium-term expectations reflected
an anticipated reduction in potential output
(or productive capacity) of the BC economy,
in part due to aging demographics.
Council members estimate that BC’s economic
growth significantly outpaced Canada’s in
2016 and, on average, expect BC’s economy
to continue to grow faster than the national
average throughout the forecast horizon (see
Chart 2).
Chart 2 – EFC Outlook for BC and Canada
4.0
Subsequent to the meeting in November,
participants were welcome to submit revised
forecasts until January 10, 2017 (11 of the
13 members chose to revise). Forecast details
from the Council’s surveys are summarized in
the table at the end of this topic box.
Real GDP
Annual per cent change
BC
Canada
3.1
3.0
2.3
2.2
2.0
1.9
2.0
2.1
1.8
1.3
1.0
0.0
British Columbia Outlook
2016
2017
2018
2019-21
Source: Average of Economic Forecast Council forecasts
On average, the Council estimates that BC’s
economic growth in 2016 was 3.1 per cent,
up 0.4 percentage points from its previous
Chart 1 – EFC Outlook for BC
BC Real GDP
Annual per cent change
Source: Average of Economic Forecast Council forecasts
NOTE: Forecast from November 2015 EFC for 2018 and 2019-2021 is average growth for the
years 2018-2020.
The Council was upbeat about several aspects
of BC’s economy, including employment,
interprovincial migration, and retail sales. Some
members credited strong tourism and a robust
housing market for providing support to retail
sales, while a struggling Alberta economy was
cited as a key factor behind interprovincial
population inflows to BC. Overall strength
in BC’s economy contributed to notable
employment growth in the province.
The complexity of BC’s housing market was
discussed at length by the Council. Participants
noted that it was still too early to measure the
effects of the various provincial and federal
Budget and Fiscal Plan – 2017/18 to 2019/20
96
British Columbia Economic Review and Outlook
housing policies that were implemented in
2016. Overall, members generally expect
housing activity to moderate from the elevated
levels of construction and sales observed in
recent years. Several members anticipate a
transition towards a soft landing for BC’s
housing market, supported by underlying
fundamentals such as steady employment and
in-migration. Many Council members also
noted that initiatives to increase the supply and
density of housing in the Greater Vancouver
region may help improve affordability.
Participants highlighted the importance of
streamlining the permitting process to help
address tight supply, while some members
noted that upgrades in transportation
infrastructure would allow for improved
commuting from neighbouring areas. In
addition, a few members cautioned that
relatively high household debt levels in BC
compared to other provinces may expose some
homeowners to financial vulnerabilities once
interest rates eventually rise.
competitiveness challenges, supply constraints,
and uncertainty due to the expiration of the
2006 Softwood Lumber Agreement. Some
members also mentioned the increased
uncertainty for all BC exporters due to the
potential for trade barriers if the incoming US
administration moves to tighten trade policies.
A few participants noted that strength in other
areas of BC’s broad-based economy (such
as tourism and the service sector) may help
counterbalance transitory challenges faced by
some of BC’s resource sectors.
Discussions were mixed regarding BC’s natural
resource sector. Many members anticipate
liquefied natural gas (LNG) development to
occur in the province, with varied expectations
regarding the timing of projects and the extent
of development. Meanwhile, several Council
members noted that the forestry sector faced
The Council estimates that the Canadian
economy expanded by 1.3 per cent in 2016,
and projects real GDP growth of 1.9 per cent
in 2017 and 2.0 per cent in 2018. The Council
is calling for the Canadian economy to expand,
on average, by 1.8 per cent annually from 2019
to 2021.
Other topics discussed by the Council include
BC’s vibrant service industry, the importance of
attracting and retaining a skilled workforce, and
rising asset and debt levels among households.
Some members also noted BC’s strong fiscal
position relative to other provinces, while others
emphasized the importance of a broadly based
competitive tax environment.
Canadian Outlook
British Columbia Economic Forecast Council:
Summary of BC real GDP forecasts, annual per cent change
Average
Participant
Organization
2016
2017
2018
2019-2021
Doug Porter ………………… Bank of Montreal 1…………………………
Cameron Muir ……………… BC Real Estate Association ……………
Ken Peacock ……………… Business Council of BC 1…………………
Helmut Pastrick …………… Central 1 Credit Union 1…………………
Avery Shenfeld ………………CIBC 1………………………………………
Marie-Christine Bernard ……Conference Board 1………………………
Arlene Kish ………………… IHS Markit 1 ………………………………
Sébastien Lavoie ……………Laurentian Bank Securities ………………
Stéfane Marion ………………National Bank 1……………………………
Craig Wright …………………RBC 1………………………………………
Jean-François Perrault …… Scotiabank 1………………………………
Aaron Stokes ……………… Stokes Economic Consulting 1…………
Derek Burleton ………………TD 1…………………………………………
Average ……………………………………………………………………
3.0
3.5
2.9
3.5
2.6
3.3
3.0
2.7
2.8
3.3
3.1
3.0
3.3
3.1
2.5
2.5
2.2
2.7
2.2
2.2
2.5
2.0
2.3
1.7
2.3
2.5
2.0
2.3
2.3
2.8
2.2
3.0
2.2
2.1
2.5
2.2
2.1
1.8
2.3
1.8
1.8
2.2
2.2
2.4
2.2
2.4
1.9
2.0
2.3
2.2
2.0
2.2
2.3
2.1
1.7
2.1
Standard Deviation …………………………………………………………
0.3
0.3
0.4
0.2
1
Updated subsequent to the November 25, 2016 meeting.
Budget and Fiscal Plan – 2017/18 to 2019/20
British Columbia Economic Review and Outlook
Members expect real GDP growth in Canada
to lag behind both BC and the US in the
coming years, partly due to weakness in
business investment and the potential for
reduced competitiveness relative to the US.
Participants also discussed topics related to
Canada’s potential output and productivity
going forward. Some members highlighted
the importance of negotiations between the
federal and provincial government with regards
to potential infrastructure projects as a key
medium-term opportunity for BC.
International Outlook
On average, Council members estimate that
US real GDP increased by 1.6 per cent in
2016 and project growth of 2.3 per cent for
both 2017 and 2018, followed by average
annual growth of 2.0 per cent during the 2019
to 2021 period.
Participants discussed the high degree of
uncertainty surrounding the US economic
outlook given the changing political landscape
and perceived unpredictability of the
incoming administration. Several members
raised concerns about the negative effects of
potential trade barriers on Canadian exports,
and reiterated the importance of BC’s diverse
export market.
Similar to last year, Council members expressed
expectations of slower growth in China over the
medium-term as China’s economy continues its
transition towards consumer driven growth.
Canadian Dollar
Consistent with previous forecasts, participants
submitted divergent projections for the value
of the Canadian dollar, with estimates for 2017
ranging from 72.8 US cents to 81.0 US cents.
For 2018, forecasts ranged from 73.0 US cents
to 82.0 US cents and from 75.0 US cents to
85.3 US cents over the 2019 to 2021 period.
Chart 3 – EFC Outlook for the Dollar
US cents/ C$
Source: Economic Forecast Council forecasts
Budget and Fiscal Plan – 2017/18 to 2019/20
97
98
British Columbia Economic Review and Outlook
Forecast Survey – Participants’ Opinions
All figures are based
on annual averages
2016
Range
2018
2017
Average 1
Range
Average 1
Range
2019 to 2021
Average 1
Range
Average 1,2
British Columbia
Real GDP (% change) …………………
2.6 – 3.5
3.1 (13)
1.7 – 2.7
2.3 (13)
1.8 – 3.0
2.2 (13)
1.7 – 2.4
2.1 (13)
Nominal GDP (% change) ………………
3.6 – 7.6
4.8 (13)
3.4 – 5.3
4.3 (13)
3.0 – 5.0
4.1 (13)
3.0 – 4.9
4.0 (12)
GDP Deflator (% change) ………………
0.6 – 4.1
1.7 (13)
1.1 – 2.8
2.0 (13)
1.2 – 2.2
1.8 (13)
1.3 – 2.5
1.9 (12)
Real business non-residential
investment (% change) ........................
Real business machinery and
-21.7 – 7.8
-2.8 (7)
0.3 – 13.0
4.8 (7)
-1.4 – 12.6
4.4 (7)
1.8 – 12.1
5.1 (7)
equipment investment (% change) …
-1.0 – 13.2
3.1 (6)
3.0 – 9.5
5.3 (6)
3.5 – 7.4
4.9 (6)
3.0 – 6.2
4.2 (6)
Household Income (% change) ………
3.8 – 7.1
5.3 (9)
3.3 – 5.0
4.4 (9)
2.9 – 4.5
3.9 (9)
3.5 – 4.7
4.0 (9)
Net Migration (thousand
persons) ………………………………
47.0 – 57.9
50.8 (10)
45.1 – 54.8
49.7 (10)
35.3 – 58.7
48.2 (10)
36.0 – 58.7
47.7 (10)
Employment (% change) ………………
2.0 – 3.2
3.0 (13)
1.0 – 1.7
1.3 (13)
0.3 – 1.8
1.3 (13)
0.7 – 1.7
1.2 (13)
Unemployment rate (%) …………………
5.8 – 6.2
6.0 (13)
5.5 – 6.2
5.9 (13)
5.2 – 6.3
5.8 (13)
4.3 – 6.2
5.5 (13)
Net operating surplus
of corporations (% change) ………… -19.3 – 33.5
4.7 (7)
-2.5 – 19.9
5.8 (7)
-1.2 – 8.7
5.5 (7)
0.3 – 9.0
4.3 (7)
Housing starts (thousand
units) …………………………………… 40.6 – 43.0
41.9 (13)
29.5 – 38.3
35.7 (13)
30.0 – 37.2
33.3 (13)
27.0 – 36.0
31.1 (13)
Retail sales (% change) …………………
4.9 – 6.8
6.2 (11)
2.4 – 5.2
4.2 (11)
2.1 – 5.3
3.9 (11)
2.0 – 4.9
3.8 (11)
Consumer price index (% change) ……
1.8 – 2.2
1.9 (13)
1.6 – 2.6
2.1 (13)
1.5 – 2.2
1.9 (13)
1.6 – 2.2
2.0 (13)
United States
1.5 – 1.8
1.6 (13)
2.2 – 2.4
2.3 (13)
2.0 − 2.6
2.3 (13)
1.8 − 2.2
2.0 (13)
Intended Federal Funds
rate (%) ………………………………… 0.33 – 0.56
0.44 (12)
0.68 – 1.13
0.88 (12)
1.19 – 1.88
1.49 (12)
1.50 – 2.88
2.29 (12)
Housing starts (million units) …………… 1.15 – 1.20
1.17 (13)
1.20 – 1.35
1.27 (13)
1.29 – 1.56
1.37 (13)
1.30 – 1.66
1.45 (13)
1.2 – 1.4
1.3 (13)
1.7 − 2.1
1.9 (13)
1.7 − 2.4
2.0 (13)
1.4 − 2.2
1.8 (13)
Bank of Canada overnight
target rate (%) ………………………… 0.50 – 0.50
0.50 (12)
0.50 – 0.50
0.50 (12)
0.50 – 0.98
0.69 (12)
1.00 – 2.85
1.72 (12)
Exchange rate (US cents/C$) …………
74.5 – 76.0
75.5 (13)
72.8 – 81.0
74.6 (13)
73.0 – 82.0
76.0 (13)
75.0 – 85.3
79.3 (13)
Housing starts (thousand units) ………
189 – 198
196 (13)
176 – 195
184 (13)
165 – 206
181 (13)
165 – 201
181 (13)
Consumer price index (% change) ……
1.4 – 1.7
1.5 (13)
1.8 – 2.5
2.1 (13)
1.9 – 2.2
2.1 (13)
1.5 – 2.1
2.0 (13)
Real GDP (% change) …………………
Canada
Real GDP (% change) …………………
1
Based on responses from participants providing forecasts. Number of respondents shown in parentheses.
2
Participants provided an average forecast for 2019 to 2021.
Budget and Fiscal Plan – 2017/18 to 2019/20
Part 4: 2016/17 UPDATED FINANCIAL FORECAST
(THIRD QUARTERLY REPORT)
Introduction
Table 4.1 2016/17 Forecast Update
Budget
2016
($ millions)
Revenue ………………………………………………………… 48,066
Expense …………….....…....………………..………………… (47,452)
Allocation to debt reduction ……………………………………
Allocation to the BC Prosperity Fund …………………………
Surplus after allocations to debt reduction and
the BC Prosperity Fund ……………………………………
614
Add back debt reduction and BC Prosperity Fund
allocations …………………………………………………..
(350)
Forecast allowance ……………………………………………
264
Surplus ……………………………………………………………
First
Quarterly
Report
50,543
(48,252)
(1,000)
(400)
Second
Quarterly
Report
50,915
(48,323)
(1,000)
(400)
Third
Quarterly
Report
50,890
(49,082)
(1,000)
(400)
891
1,192
408
1,400
(350)
1,941
1,400
(350)
2,242
1,400
(350)
1,458
4,251
3,108
7,359
4,585
2,938
7,523
4,442
2,895
7,337
4,123
2,855
6,978
Provincial Debt:
Taxpayer-supported debt ……………………………………… 43,227
Self-supported debt …………………………………………… 24,113
Total debt (including forecast allowance) ……………… 67,690
41,939
24,229
66,518
41,114
24,292
65,756
42,027
24,289
66,666
Capital spending:
Taxpayer-supported capital spending ………………………
Self-supported capital spending ………………………………
Taxpayer-supported debt to GDP ratio:
As previously forecast ………………………………………
Impact of Statistics Canada update ………………………
Restated and updated projections …………………………
17.0%
-0.4%
16.6%
16.4%
-0.3%
16.1%
15.8%
16.1%
Taxpayer-supported debt to revenue ratio …………………
92.4%
85.0%
82.8%
84.0%
The third quarter fiscal outlook for 2016/17 forecasts a surplus of $1,458 million –
$784 million lower than the projection in the second Quarterly Report. The lower outlook
is due mainly to increased statutory spending in the areas of housing priority initiatives,
fire management costs, and proposed cost-shared priority infrastructure projects.
Chart 4.1 2016/17 surplus – major changes from second Quarterly Report
Chart 4.1 2016/17 operating results – changes from second Quarterly Report
$ millions
2,242
Surplus decreased by $784 million
159
(257)
73
(902)
54
Second
Quarterly
Report
Higher
taxation
revenue
Lower
commerical
Crown net
income
Other
revenue
changes
Higher
statutory
spending
89
Lower third
Lower
party
agency net
recoveries,
spending
other spending changes
Budget and Fiscal Plan – 2017/18 to 2019/20
1,458
Forecast
allowance
unchanged
Third
Quarterly
Report
100
2016/17 Updated Financial Forecast (Third Quarterly Report)
Table 4.2 2016/17 Financial Forecast Changes
($ millions)
2016/17 surplus – Budget 2016 (February 16, 2016) ……………………………………………
264
2016/17 surplus – first Quarterly Report (September 15, 2016) ………………………………
264
1,941
2016/17 surplus – second Quarterly Report (November 29, 2016) ……………………………
2,242
Q1
Update
Revenue changes:
Personal income tax – mainly higher 2015 tax assessments ..............................................
Corporate income tax – mainly increased prior-year settlement payment reflecting
higher 2015 tax assessments for BC ..............................................................................
Property transfer tax – stronger year-to-date sales results and an additional 15% tax ........
Provincial sales tax – stronger year-to-date results, consistent with improved retail sales ..
Other taxation sources …………………………………..........................................................
Natural gas royalties – higher prices and production volumes partly offset by lower
natural gas liquid royalties and higher utilization of royalty programs ………………………
Coal, metals and other mineral revenue – mainly higher coal prices ...................................
Forests – higher stumpage rates, partly offset by lower Crown harvest volumes ................
Other natural resources .......................................................................................................
Fees and miscellaneous – mainly higher taxpayer-supported agency projections, partly
offset by the impact of cancelling the MSP rate increase scheduled for January 2017 …
Investment earnings – mainly changes in interest recoveries …………………………………
Health and social transfers – changes in BC population share of the national total …………
Other federal government transfers – mainly improved contributions in support of
affordable housing initiatives ……………………………………………………………………
Commercial Crown agencies operating results:
ICBC – mainly increased claims costs .............................................................................
BCLC – stronger year-to-date activity ..............................................................................
Other commercial Crown agencies – mainly stronger LDB sales ....................................
1,111
191
965
100
(17)
22
(204)
74
(5)
(2)
25
74
1
211
786
248
(21)
61
3
88
5
35
69
5
5
(65)
66
(46)
(11)
31
138
47
(1)
84
(48)
(2)
50
50
26
146
(13)
-
280
(11)
24
54
(2)
(4)
(157)
39
2,477
(17)
47
7
372
(317)
25
35
(25)
(491)
72
81
2,824
500
66
14
81
8
16
-
3
8
14
(2)
293
315
150
78
14
22
26
4
(22)
(3)
793
315
216
95
103
22
26
8
16
4
(8)
(5)
(5)
54
(595)
(3)
(26)
(32)
(26)
(37)
(981)
38
12
20
39
485
71
301
8
(13)
12
118
(182)
759
(784)
2016/17 surplus – first Quarterly Report …………………………………………………………
1,941
Budget and Fiscal Plan – 2017/18 to 2019/20
Total
Changes
61
141
36
23
206
146
800
1,677
2016/17 surplus – third Quarterly Report …………………………………………………………
Q3
Update
210
Total revenue changes …………………………………………………………………………
Less : expense increases (decreases):
Consolidated Revenue Fund changes:
Statutory spending:
New Housing Priority Initiatives special account measures ……………..……………
Proposed cost-shared priority infrastructure projects ……………………………………
Wildfire Act - fire management costs .........................................................................
Emergency Program Act – emergency program flood-related costs .........................
Increased compensation obligations ………………………………………………………
Insurance and Risk Management Account ………………………………………………
Crown Proceeding Act ………………………………………………………………………
BC Training and Education Savings Grant – higher anticipated eligibility .................
Elections BC ...............................................................................................................
Other statutory spending ……………………………………………………………………
Refundable tax credit transfers ..................................................................................
Prior year liability adjustments …………………………………………………………………
Management of public debt (net) – reflects lower interest rates and revisions to
scheduled borrowing ..................................................................................................
Spending funded by third party recoveries ...........................................................................
(Increase) decrease in operating transfers to service delivery agencies .............................
Changes in spending profile of service delivery agencies:
School districts .................................................................................................................
Universities .......................................................................................................................
Colleges ...........................................................................................................................
Health authorities and hospital societies ..........................................................................
Other service delivery agencies .......................................................................................
Total expense increases (decreases) ………………………………………………………
Total changes …….............................................................................……………………………
2016/17 surplus – second Quarterly Report ………………………………………………………
Q2
Update
(18)
(65)
(354)
1,382
48
187
35
55
363
449
1,630
1,194
2,242
1,458
1,458
2016/17 Updated Financial Forecast (Third Quarterly Report)
101
Other changes from the second Quarterly Report discussed below include a $319 million
reduction in taxpayer-supported capital spending and a $913 million increase in
taxpayer supported debt.
Revenue
Total government revenue is now forecast to be net $25 million lower than the second
Quarterly Report. Major changes include:
• a $159 million improvement in taxation revenue, mainly reflecting stronger year-todate information in personal income, provincial sales and property transfer taxes;
• a $56 million decline in natural resource revenue as the effects of higher take up of
natural gas royalty program credits and weaker forest harvest volumes were partly
offset by the impact of stronger coal prices and mining tax instalments;
• a $129 million increase in revenue from fees, licences, investment earnings,
miscellaneous sources and federal government contributions mainly due to an
improvement in SUCH sector projections; and
• a $257 million decrease in commercial Crown corporations’ net income resulting from
the impacts of continuing increases in estimated ICBC’s claims costs, partially offset by
the effects of improved sales from the Liquor Distribution Branch and the BC Lottery
Corporation.
Table 4.2 provides a detailed breakdown of changes in the revenue by quarter from
Budget 2016.
Expense
Total government spending is now forecast to be $759 million higher than the second
Quarterly Report. Higher spending is due mainly to $902 million in higher statutory
spending including:
• $293 million in property transfer tax revenue dedicated to housing priority initiatives
and other housing, rental, or shelter programs;
• $315 million for proposed cost-shared priority infrastructure projects;
• $150 million in new commitments for continued forest rehabilitation activities;
• $78 million in higher spending for emergency prevention and preparedness;
• $26 million under the Crown Proceeding Act;
• $22 million under the Insurance and Risk Management special account;
• $14 million for compensation settlements; and
• $4 million in spending in other areas.
These investments are offset by $143 million lower spending in other areas including:
• $26 million in reduced spending funded by third parties;
• $22 million in lower refundable tax credits;
• $89 million in lower service delivery agency net spending; and
• $6 million changes in other areas.
Table 4.2 provides a detailed breakdown of changes in the operating results by quarter
from Budget 2016.
Budget and Fiscal Plan – 2017/18 to 2019/20
102
2016/17 Updated Financial Forecast (Third Quarterly Report)
Contingencies
Budget 2016 included a Contingencies vote allocation of $450 million in 2016/17
to help manage unexpected costs and pressures as well as fund priority initiatives.
The Contingencies forecast is unchanged in the third Quarterly Report forecast.
Government Employment (FTEs)
The level of core government employment for 2016/17 remains unchanged at 27,455
from the second Quarterly Report. Further details on FTEs are provided in Table A13.
Provincial Capital Spending
Capital spending is projected to total $7.0 billion in 2016/17 – $359 million lower than
the forecast in the second Quarterly Report (see Table 4.3).
The forecast for taxpayer-supported capital spending is $319 million lower than in the
second Quarterly Report, mainly due to changes in the timing of capital spending in
health, changes to the timing of federal contributions to transportation projects, and
timing of self-funded post-secondary project spending.
Self-supported capital spending is expected to be $40 million lower than the forecast in
the second Quarterly Report, mainly due to lower capital spending by ICBC.
Table 4.3 2016/17 Capital Spending Update
($ millions)
2016/17 capital spending – Budget 2016 (February 16, 2016) …………………… 7,359
7,359
7,523
2016/17 capital spending – first Quarterly Report (September 15, 2016) ………
7,337
2016/17 capital spending – second Quarterly Report (November 29, 2016) ……
Q1
Update
Q2
Update
Q3
Update
140
85
133
(24)
(59)
(77)
(7)
(29)
(190)
(67)
(33)
140
(88)
(105)
133
(144)
(64)
334
(143)
(319)
(128)
(219)
49
(37)
(6)
1
(41)
(219)
(36)
2
Total self-supported ………………………………..………………………………… (170)
164
Total changes ………………………………………………………………………………
(43)
(40)
(253)
(186)
(359)
(381)
Taxpayer-supported changes:
Primarily higher routine capital maintenance spending by health authorities ...........
Changes to timing of capital spending in health …………………………………………
Timing of self-funded post-secondary institution spending ……………………………
Additional transportation sector spending ………………………………………………
Changes to timing of Federal contributions in transportation …………………………
Other net adjustments to capital schedules ……………………………………………
Total taxpayer-supported ……………………………………………………………
Self-supported changes:
BC Hydro – timing of capital spending …………………………………….……………
LDB – timing of capital spending …………………………………………………………
Other ………………………………...………………………………………………………
Total
Changes
2016/17 capital spending – first Quarterly Report …………………………………… 7,523
2016/17 capital spending – second Quarterly Report ………………………………
2016/17 capital spending – third Quarterly Report …………………………………
Budget and Fiscal Plan – 2017/18 to 2019/20
(253)
7,337
6,978
6,978
103
2016/17 Updated Financial Forecast (Third Quarterly Report)
Provincial Debt
The provincial debt, including the $350 million forecast allowance, is projected to total
$66.7 billion by the end of the fiscal year – $910 million higher than the projection in the
second Quarterly Report.
Taxpayer-supported debt is projected to be $42.0 billion – $913 million higher than the
projection in the second Quarterly Report. The increase is mainly due to higher financing
needs prior to year-end in anticipation of borrowing requirements early in 2017/18.
Taxpayer-supported capital debt is now forecasted to end the fiscal year at $36.9 billion,
$112 million lower compared to the second Quarterly Report. The decrease is mainly due
to capital project scheduling changes.
Self-supported debt is projected to be $24.3 billion – virtually unchanged from the
second Quarterly Report with a $3 million reduction.
The forecast allowance of $350 million remains unchanged from the second Quarterly
Report to mitigate risks of fluctuations for the remainder of the fiscal year.
Details on changes in provincial debt by quarter are shown in Table 4.4.
Table 4.4 2016/17 Provincial Debt Update
($ millions)
2016/17 provincial debt – Budget 2016 (February 16, 2016) ………………… 67,690
67,690
66,518
2016/17 provincial debt – first Quarterly Report (September 15, 2016) ……
65,756
2016/17 provincial debt – second Quarterly Report (November 29, 2016) …
Q1
Update
Taxpayer-supported changes:
Government operating:
– lower debt level from 2015/16 .....................................................................
(34)
– improved operating surplus ......................................................................... (1,677)
– net financing requirements prior to year end...............................................
322
– other working capital changes ....................................................................
Total operating debt changes ......................................................................... (1,389)
Capital debt:
– higher debt level from 2015/16 ...................................................................
– impacts from level of capital spending ........................................................
– changes in contributions from external parties ………………………………
Q2
Update
(336)
(348)
(684)
Q3
Update
563
300
162
1,025
Total
Changes
(34)
(1,450)
300
136
(1,048)
52
334
(285)
(143)
2
(319)
207
52
(128)
(76)
101
Total capital debt changes ..............................................................................
(1,288)
Total taxpayer-supported …………………………………………….……………
Self-supported changes:
– higher debt level from 2015/16 ...................................................................
234
– changes in timing of capital spending …………………………………………
(170)
52
– decrease in internal financing ……………………………………………………
116
Total self-supported …………………………………...……………………………
Total changes ………………………………………………………………………… (1,172)
(141)
(825)
(112)
913
(152)
(1,200)
(43)
106
(41)
38
234
(254)
196
63
(762)
(3)
910
176
(1,024)
2016/17 provincial debt – first Quarterly Report …………………………………66,518
2016/17 provincial debt – second Quarterly Report ……………………………
2016/17 provincial debt – third Quarterly Report ………………………………
Budget and Fiscal Plan – 2017/18 to 2019/20
65,756
66,666
66,666
104
2016/17 Updated Financial Forecast (Third Quarterly Report)
Risks to the Fiscal Forecast
There are a number of risks and pressures to the fiscal plan including risks to the BC
economic outlook, which are largely due to the continued uncertainty surrounding global
economic activity. The forecasts of revenues, expenditures, capital spending and debt are
estimates based on a number of economic, financial and external factors. In addition,
capital spending and debt figures may be influenced by a number of factors including
design development, procurement activity, weather, geotechnical conditions and interest
rates. As a result, the actual operating surplus, capital expenditure and debt figures
may differ from the current forecast. Variables will change throughout the year as new
information becomes available, with potentially material impacts.
Revenues can be volatile due in part to the influence of the cyclical nature of the natural
resource sector in the economy. Changes in energy or commodity prices, such as
natural gas and lumber, may have a significant effect on revenue and the fiscal forecast.
Uncertainty and volatility in the BC housing market could impact property transfer tax
revenue. In addition, personal and corporate income tax assessments for the 2015 tax year
will not be finalized until March 2017 and could result in further revenue and tax credit
transfer spending adjustments.
The Provincial government and school district employers are responding to the recent
Supreme Court of Canada ruling on specific provisions of Bill 22, the Education
Improvement Act (2012). The ruling reaffirmed that governments can legislate changes to
collective agreements provided both parties engage in a process of good faith consultations
prior to the enactments. Under the current collective agreement with the British
Columbia Teachers’ Federation (BCTF), the effect of the ruling is to reopen negotiations
on specific matters of teacher workload and class organization. Subject to the timing and
outcome of discussions with the BCTF, any costs that arise as a result will be managed
within the fiscal plan.
On October 12, 2015, the 2006 Softwood Lumber Agreement expired. As part of that
agreement between Canada and the US, the US committed not to launch countervailing
duty or anti-dumping litigation against Canadian lumber products before October 2016.
As the first step in launching a new trade case, the US industry filed its allegations of
Canadian subsidies and dumping with the US Department of Commerce on November
25, 2016. Following the US Department of Commerce’s investigation, the US
International Trade Commission announced a preliminary finding on January 6, 2017
that Canadian lumber is materially injuring the US industry. These US actions increase
uncertainty and could negatively impact investment, economic growth and provincial
revenues. In the absence of a settlement, it is expected that the US Department of
Commerce will issue its preliminary determinations on subsidy at the end of April and on
dumping at the end of June. Canada has steadfastly maintained and argued that lumber
exports to the US are not subsidized and NAFTA tribunals have generally ruled in its
favour. The BC government is supporting Canada’s efforts to continue discussions and
negotiations with the US, preparing its defense for any new litigation, and continuing to
develop other markets for BC forest products.
The spending forecast in the fiscal plan is based on ministry and service delivery agency
plans and strategies. The main risks are changes to planning assumptions, such as
utilization or demand rates for government services in the health care, education, or
community social services sectors, and costs associated with natural disaster responses.
The potential fiscal impact from these risks is expected to be covered by the $450 million
Contingencies vote and the $350 million forecast allowance.
Budget and Fiscal Plan – 2017/18 to 2019/20
105
2016/17 Updated Financial Forecast (Third Quarterly Report)
Supplementary Schedules
The following tables provide the financial results for the nine months ended
December 31, 2016 and the 2016/17 full-year forecast.
Table 4.5 2016/17 Operating Statement
($ millions)
Revenue ……………………………………………
Expense …………….....…....………………..……
Surplus before forecast allowance ………………
Forecast allowance …………………………………
Surplus ………………………………………………
Accumulated surplus beginning of the year ………
Accumulated surplus before comprehensive
income ……………………………………………
Accumulated other comprehensive income
from self-supported Crown agencies …………
Accumulated surplus end of period ……………
Year-to-Date to December 31
2016/17
Actual
Budget
Actual
Variance
2015/16
Full Year
2016/17
Forecast
Variance
Budget
35,229
(34,278)
48,066
(47,452)
50,890
(49,082)
37,664
(34,689)
2,435
(411)
34,795
(33,442)
951
-
2,975
-
2,024
-
1,353
-
614
(350)
1,808
(350)
1,194
-
730
-
951
2,975
2,024
1,353
264
1,458
1,194
730
2,728
3,379
651
3,073
2,728
3,379
651
3,073
3,679
6,354
2,675
4,426
2,992
4,837
1,845
3,803
426
4,105
(381)
5,973
(807)
1,868
(496)
3,930
568
3,560
246
5,083
(322)
1,523
(424)
3,379
Budget and Fiscal Plan – 2017/18 to 2019/20
2,824
(1,630)
Actual
2015/16
47,606
(46,876)
106
2016/17 Updated Financial Forecast (Third Quarterly Report)
Table 4.6 2016/17 Revenue by Source
Year-to-Date to December 31
2016/17
($ millions)
Taxation
Personal income ………………………………
Corporate income ……………………………
Sales 1 …………………………………………
Fuel ……………………………………………
Carbon …………………………………………
Tobacco …………………………………………
Property …………………………………………
Property transfer ………………………………
Insurance premium ……………………………
Natural resources
Natural gas royalties ……..…………………..
Forests …………………………………………
Other natural resources 2 ……………………
Other revenue
Medical Services Plan premiums ……………
Other fees 3 ……………………………………
Investment earnings …………………………
Miscellaneous 4 …………………………………
Contributions from the federal government
Health and social transfers ……………………
Other federal contributions 5…………………
Commercial Crown corporation net income
BC Hydro ………………………………………
Liquor Distribution Branch ……………………
BC Lotteries (net of payments to the
federal government) …………………………
ICBC 6………………………………….………
Transportation Investment Corporation ……
Other 7……………………………………………
Full Year
2016/17
Actual
Actual
6,085
1,769
4,799
736
893
598
1,714
977
390
17,961
7,255
1,790
5,046
758
861
598
1,693
1,632
396
20,029
1,170
21
247
22
(32)
(21)
655
6
2,068
6,176
1,768
4,677
730
866
577
1,645
1,149
383
17,971
8,216
2,791
6,296
948
1,234
755
2,305
1,239
520
24,304
9,598
3,002
6,544
976
1,201
745
2,289
2,025
530
26,910
1,382
211
248
28
(33)
(10)
(16)
786
10
2,606
8,380
2,787
5,990
973
1,190
734
2,219
1,533
520
24,326
96
557
1,041
1,694
89
621
1,187
1,897
(7)
64
146
203
129
626
1,173
1,928
128
812
1,407
2,347
159
859
1,544
2,562
31
47
137
215
139
865
1,567
2,571
1,894
2,468
876
2,216
7,454
1,928
2,617
896
2,264
7,705
34
149
20
48
251
1,809
2,421
802
2,165
7,197
2,549
3,446
1,200
3,210
10,405
2,529
3,603
1,189
3,353
10,674
(20)
157
(11)
143
269
2,434
3,402
1,226
3,298
10,360
4,853
1,079
5,932
4,876
1,137
6,013
23
58
81
4,610
966
5,576
6,471
1,537
8,008
6,495
1,585
8,080
24
48
72
6,149
1,498
7,647
383
785
329
877
(54)
92
349
816
692
983
684
1,050
(8)
67
655
1,031
905
114
(74)
75
2,188
1,005
(232)
(54)
95
2,020
100
(346)
20
20
(168)
992
(19)
(56)
41
2,123
1,233
95
(102)
101
3,002
1,305
(396)
(88)
109
2,664
Total revenue …………………………………… 35,229
37,664
Variance
2,435
2015/16
34,795
Budget
48,066
Forecast
Actual
Budget
50,890
Variance
72
(491)
14
8
(338)
2,824
2015/16
1,304
(293)
(82)
87
2,702
47,606
1
Includes provincial sales tax and social services tax/hotel room tax related to prior years.
2
Columbia River Treaty, other energy and minerals, water rental and other resources.
3
Post-secondary, healthcare-related, motor vehicle, and other fees.
4
Includes reimbursements for health care and other services provided to external agencies, and other recoveries.
5
Includes contributions for health, education, community development, housing and social service programs, and transportation projects.
6
Amount represent ICBC's earnings during government's fiscal year.
7
Includes Columbia Power Corporation, BC Railway Company, Columbia Basin Trust power projects, and post-secondary institutions' self-supported subsidiaries.
Budget and Fiscal Plan – 2017/18 to 2019/20
107
2016/17 Updated Financial Forecast (Third Quarterly Report)
Table 4.7 2016/17 Expense by Ministry, Program and Agency 1
Year-to-Date to December 31
2016/17
Actual
($ millions)
Budget
Actual
Variance
2015/16 2
Full Year
2016/17
Budget
Forecast
Actual
Variance
2015/16 2
7
55
1,460
63
1,066
232
4,154
19
106
182
7
108
1,470
62
1,037
254
4,245
21
113
640
53
10
(1)
(29)
22
91
2
7
458
7
77
1,436
57
1,011
207
4,087
20
106
101
9
86
1,986
81
1,451
259
5,609
28
150
253
9
86
1,986
82
1,451
539
5,617
28
151
1,171
1
280
8
1
918
9
90
1,959
82
1,379
226
5,544
42
151
235
459
13,475
40
143
373
339
513
1
2,036
360
636
540
13,349
39
159
388
336
530
4
2,081
364
663
81
(126)
(1)
16
15
(3)
17
3
45
4
27
643
12,850
38
152
362
330
498
2
1,964
356
627
671
17,968
50
197
491
453
681
4
2,739
492
858
887
17,968
50
197
517
453
683
4
2,739
492
988
216
26
2
130
921
17,443
48
195
472
442
680
3
2,594
478
920
Total ministries and Office of the Premier … 25,719
Management of public funds and debt …………
888
Contingencies ………………………………………
719
Funding for capital expenditures …………………
Refundable tax credit transfers …………………
779
96
Legislative Assembly and other appropriations …
26,410
860
2
510
767
96
691
(28)
2
(209)
(12)
-
24,931
883
4
427
869
90
34,516
1,168
450
1,303
1,039
132
36,098
1,148
450
1,045
1,031
148
1,582
(20)
(258)
(8)
16
33,913
1,415
350
831
1,140
127
28,201
28,645
444
27,204
38,608
39,920
1,312
37,776
(11)
(5)
28,629
1
(5)
440
(11)
(8)
27,185
(16)
38,592
(16)
(5)
39,899
(5)
1,307
(15)
(44)
37,717
2,118
(17,668)
13,079
132
(793)
(221)
2,003
(16,439)
12,749
2,790
(23,185)
18,197
2,753
(23,914)
18,738
(37)
(729)
541
2,891
(22,586)
18,022
4,183
3,124
830
9,975
2,866
20,978
4,317
3,093
865
10,455
2,880
21,610
134
(31)
35
480
14
632
4,227
2,991
836
9,928
2,711
20,693
5,861
4,426
1,160
13,798
4,010
29,255
6,048
4,461
1,215
14,161
4,459
30,344
187
35
55
363
449
1,089
5,922
4,237
1,169
13,733
3,793
28,854
Total expense ……………………………………… 34,278
34,689
411
33,442
47,452
49,082
1,630
46,876
Office of the Premier ………………………………
Aboriginal Relations and Reconciliation …………
Advanced Education ………………………………
Agriculture ..........................………………………
Children and Family Development ………………
Community, Sport and Cultural Development …
Education ……………………………………………
Energy and Mines ...............................…………
Environment ………………………………………
Finance ……………………………………………
Forests, Lands and Natural Resource
Operations ………………………………………
Health ........................……………………………
International Trade ............................................
Jobs, Tourism and Skills Training ………………
Justice ...............................................................
Natural Gas Development .................................
Public Safety and Solicitor General ………………
Small Business and Red Tape Reduction ………
Social Development and Social Innovation ……
Technology, Innovation and Citizens' Services …
Transportation and Infrastructure ………………
Subtotal ………………..…………………………
Elimination of transactions between
(12)
appropriations 3 …………………………………
Prior year liability adjustments ……………………
28,189
Consolidated revenue fund expense ……………
Expenses recovered from external entities ……
1,986
Funding provided to service delivery agencies … (16,875)
Total direct program spending ………………..… 13,300
Service delivery agency expense
School districts ……………………………………
Universities …………………………………………
Colleges and institutes ……………………………
Health authorities and hospital societies ………
Other service delivery agencies …………………
Total service delivery agency expense …………
1
Reflects government's re-organization effective July 18, 2016.
2
Restated to reflect government's current accounting policies.
3
Reflects payments made under an agreement where an expense from a voted appropriation is recorded as revenue by a special account.
Budget and Fiscal Plan – 2017/18 to 2019/20
108
2016/17 Updated Financial Forecast (Third Quarterly Report)
Table 4.8 2016/17 Expense By Function
Year-to-Date to December 31
2016/17
($ millions)
Full Year
2016/17
Actual
Actual
Forecast
Variance
2015/16 1
4,476
1,216
13,194
752
19,638
4,462
1,214
13,287
759
19,722
(14)
(2)
93
7
84
4,345
1,335
12,811
712
19,203
4,462
3,804
267
8,533
6,350
5,665
461
12,476
6,409
5,760
468
12,637
59
95
7
161
6,303
5,502
407
12,212
41
(23)
(6)
(18)
(6)
1,220
964
184
674
3,042
1,689
1,372
250
957
4,268
1,689
1,372
250
948
4,259
1,144
1,224
34
(59)
1,081
1,197
1,468
1,846
1,602
1,848
134
2
1,572
1,670
1,393
978
961
1,893
1,563
1,087
1,015
1,927
170
109
54
34
1,694
907
972
1,890
2,018
1,343
450
1,310
2,635
2,246
2,340
450
1,447
2,531
228
997
137
(104)
2,562
1,264
1,501
2,786
34,278
34,689
411
33,442
47,452
49,082
Variance
2015/16 1
Budget
Actual
3,284
955
9,904
531
14,674
3,268
1,032
9,798
523
14,621
(16)
77
(106)
(8)
(53)
3,100
1,051
9,465
510
14,126
4,598
3,927
280
8,805
4,648
3,993
292
8,933
50
66
12
128
Social assistance 2,3……………………………
Child welfare 2…………………………………
Low income tax credit transfers ………………
Community living and other services ………
1,255
1,011
188
727
3,181
1,296
988
182
709
3,175
Protection of persons and property ……………
Transportation ……………………………………
Natural resources and economic
development ……………………………………
Other ..............................................................
Contingencies ……………………………………
1,110
1,283
Budget
Health:
Medical Services Plan …………………………
Pharmacare ……………………………………
Regional services ……………………………
Other healthcare expenses 2…………………
Education:
Elementary and secondary …………………
Post-secondary ………………………………
Other education expenses 3…………………
Social services:
General government ……………………………
Debt servicing ……………………………………
Total expense …………………………………
(9)
(9)
1,630
1,641
1,301
247
917
4,106
46,876
1
Restated to reflect government's current organization and accounting policies.
2
Payments for healthcare services by the Ministry of Social Development and Social Innovation and the Ministry of Children and Family Development made
on behalf of their clients are reported in the Health function.
3
Payments for training costs by the Ministry of Social Development and Social Innovation made on behalf of its clients are reported in the Education function.
Budget and Fiscal Plan – 2017/18 to 2019/20
109
2016/17 Updated Financial Forecast (Third Quarterly Report)
Table 4.9 2016/17 Capital Spending
Year-to-Date to December 31
2016/17
($ millions)
Budget
Actual
Full Year
2016/17
Actual
Variance
2015/16
Budget
Forecast
Actual
Variance
2015/16
Taxpayer-supported
Education
School districts ……………………………
Post-secondary institutions ………………
Health …………………………………………
BC Transportation Financing Authority ……
BC Transit ..................................................
Government operating (ministries) …………
Housing ………………………………………
Other 1…………………………………………
370
510
536
780
54
196
74
36
344
468
532
714
21
157
140
26
(26)
(42)
(4)
(66)
(33)
(39)
66
(10)
306
413
415
710
42
152
82
18
520
921
1,193
952
66
434
115
50
504
816
1,245
941
66
374
138
39
(16)
(105)
52
(11)
(60)
23
(11)
430
746
923
867
51
290
127
25
Total taxpayer-supported …………………
2,556
2,402
(154)
2,138
4,251
4,123
(128)
3,459
Other 3…………………………………………
2,162
6
11
3
60
69
49
-
1,751
2
18
3
44
52
15
-
(411)
(4)
7
(16)
(17)
(34)
-
1,567
13
21
3
72
50
11
-
2,832
9
16
4
92
90
65
-
2,613
5
46
9
63
90
29
-
(219)
(4)
30
5
(29)
(36)
-
2,306
15
25
23
90
68
23
23
Total self-supported ………………………
2,360
1,885
(475)
1,737
3,108
2,855
(253)
2,573
Total capital spending ……………………
4,916
4,287
(629)
3,875
7,359
6,978
(381)
6,032
Self-supported
BC Hydro ………………………………………
Columbia River power projects 2……………
Transportation Investment Corporation ……
BC Rail ………………………………………
ICBC …………………………………………
BC Lottery Corporation ………………………
Liquor Distribution Branch …………………
1
Includes BC Pavilion Corporation, BC Assessment Authority, Community Living BC and other service delivery agencies.
2
Joint ventures of the Columbia Power Corporation and Columbia Basin Trust.
3
Includes post-secondary institutions self-supported subsidiaries.
Budget and Fiscal Plan – 2017/18 to 2019/20
110
2016/17 Updated Financial Forecast (Third Quarterly Report)
Table 4.10 2016/17 Provincial Debt 1
Year-to-Date to December 31
2016/17
($ millions)
Budget
Taxpayer-supported debt
Provincial government operating ………
Other taxpayer-supported debt
(mainly capital)
Education 2
Actual
Variance
Full Year
2016/17
Actual
2015/16
Budget
Forecast
Actual
Variance
2015/16
6,399
6,271
(128)
7,325
6,215
5,167
(1,048)
8,034
4,935
8,291
13,226
Health 2,4……………………………………… 7,405
Highways and public transit
176
BC Transit …………………………………
BC Transportation Financing
9,902
Authority 5………………………………
Public transit ……………………………… 1,000
SkyTrain extension ……………………… 1,174
4,811
8,117
12,928
7,244
(124)
(174)
(298)
(161)
4,615
7,904
12,519
6,764
5,008
8,392
13,400
7,552
4,933
8,481
13,414
7,553
(75)
89
14
1
4,731
8,033
12,764
6,998
95
(81)
107
183
95
(88)
106
9,639
1,000
1,174
(263)
-
9,030
1,000
1,174
10,118
1,000
1,174
9,982
1,000
1,174
(136)
-
9,185
1,000
1,174
12,252
11,908
(344)
11,311
12,475
12,251
(224)
11,465
234
390
2,157
729
26
246
386
2,144
784
28
12
(4)
(13)
55
2
321
379
1,848
719
26
212
393
2,238
716
26
216
397
2,301
701
27
4
4
63
(15)
1
304
389
1,987
760
26
Post-secondary institutions 3 ……………
School districts ……………………………
Other
BC Immigrant Investment Fund …………
BC Pavilion Corporation …………………
Provincial government general capital …
Social housing 6……………………………
Other 7………………………………………
3,536
3,588
52
3,293
3,585
3,642
57
3,466
Total other taxpayer-supported ……… 36,419
Total taxpayer-supported debt …………… 42,818
35,668
(751)
33,887
37,012
36,860
(152)
34,693
41,939
(879)
41,212
43,227
42,027
(1,200)
42,727
19,472
125
291
447
266
(29)
8
(7)
17,713
220
296
447
19,560
156
291
443
19,585
158
291
448
25
2
5
17,928
150
296
459
307
3,440
32
84
43
1
225
3,412
34
222
3,409
32
310
3,465
32
88
56
-
310
3,389
33
Total self-supported debt ………………… 23,748
Forecast allowance …………………………
24,114
-
366
-
22,347
-
24,113
350
24,289
350
176
-
22,565
-
66,566
66,053
(513)
63,559
67,690
66,666
Self-supported debt
Commercial Crown corporations
BC Hydro ………………………………… 19,206
BC Lotteries ………………………………
154
Columbia Power Corporation ……………
283
454
Columbia River power projects 8…………
Post-secondary institutions'
subsidiaries ……………………………
223
Transportation Investment Corp………… 3,397
31
Other ……………………………….………
Total provincial debt ………………………
1
2
3
4
(1,024)
65,292
Provincial debt is prepared in accordance with Generally Accepted Accounting Principles and presented consistent with the Debt Summary Report included in
the Public Accounts . Debt is shown net of sinking funds and unamortized discounts, excludes accrued interest, and includes non-guaranteed debt directly
incurred by commercial Crown corporations and debt guaranteed by the Province. The reconciliation between provincial debt and the financial statement debt
is shown in Table A15.
Includes debt and guarantees incurred by the government on behalf of school districts, universities, colleges and health authorities/hospital societies (SUCH),
and debt directly incurred by these entities.
Post-secondary institutions' debt includes public-private partnership obligations of $15 million for the nine months ended December 31, 2015, $48 million for
the nine months ended December 31, 2016, $22 million for fiscal 2015/16 and $55 million for fiscal 2016/17.
Health facilities' debt includes public-private partnership obligations of $1,350 million for the nine months ended December 31, 2015, $1,552 million for the
nine months ended December 31, 2016, $1,442 million for fiscal 2015/16 and $1,590 million for fiscal 2016/17.
5
BC Transportation Financing Authority debt includes public-private partnership obligations of $1,166 million for the nine months ended December 31, 2015,
$835 million for the nine months ended December 31, 2016, $1,159 million for fiscal 2015/16 and $824 million for fiscal 2016/17.
6
Includes the BC Housing Management Commission and the Provincial Rental Housing Corporation. Social housing debt includes public-private partnership
obligations of $85 million for the nine months ended December 31, 2015, $81 million for the nine months ended December 31, 2016, $93 million for fiscal
2015/16 and $82 million for fiscal 2016/17.
7
Includes service delivery agencies, student loan guarantees, loan guarantees to agricultural producers, guarantees issued under economic development and
home mortgage assistance programs and loan guarantee provisions.
8
Joint ventures of the Columbia Power Corporation and Columbia Basin Trust.
Budget and Fiscal Plan – 2017/18 to 2019/20
111
2016/17 Updated Financial Forecast (Third Quarterly Report)
Table 4.11 2016/17 Statement of Financial Position
Actual
March 31,
2016
($ millions)
Financial assets
Cash and temporary investments ……………………………………………………
Other financial assets …………………………………………………………………
Sinking funds …………………………………………………………………………
Investments in commercial Crown corporations:
Retained earnings …………………………………………………………………
Recoverable capital loans …………………………………………………………
Liabilities
Accounts payable and accrued liabilities …………………………………………
Deferred revenue ……………………………………………………………………
Debt:
Taxpayer-supported debt …………………………………………………………
Self-supported debt …………………………………………………………………
Forecast allowance …………………………………………………………………
Total provincial debt …………………………………………………………………
Add: debt offset by sinking funds ………………………………………………
Less : guarantees and non-guaranteed debt ……………………………………
Financial statement debt ……………………………………………………………
Net liabilities ……………………………………………………………………………
Capital and other non-financial assets
Tangible capital assets ………………………………………………………………
Other non-financial assets ……………………………………………………………
Accumulated surplus ……………………………..…………………………………
Year-to-Date
December 31,
2016
Forecast
March 31,
2017
3,893
9,651
1,580
4,273
9,563
1,080
3,964
9,894
1,086
7,499
22,074
29,573
44,697
7,459
23,625
31,084
46,000
7,605
23,497
31,102
46,046
8,571
9,709
7,142
9,552
9,503
9,648
42,727
22,565
65,292
1,580
(820)
66,052
84,332
(39,635)
41,939
24,114
66,053
1,080
(803)
66,330
83,024
(37,024)
42,027
24,289
350
66,666
1,086
(805)
66,947
86,098
(40,052)
40,282
2,732
43,014
3,379
40,717
2,704
43,421
6,397
42,266
2,821
45,087
5,035
Changes in Financial Position
Year-to-Date
December 31,
2016
($ millions)
(Surplus) deficit for the period …………………………………………………………………………
Comprehensive income (increase) decrease …………………………………………………………
(Increase) decrease in accumulated surplus ………………………………………………………………
Capital and other non-financial asset changes:
Increase in taxpayer-supported capital investments …………………………………………………
Less: amortization and other accounting changes ………………………………………………
Change in net capital assets …………………………………………………………………………
Increase (decrease) in other non-financial assets ……………………………………………………
Increase (decrease) in net liabilities .........................................................................................
Investment and working capital changes:
Increase (decrease) in cash and temporary investments ……………………………………………
Increase in total investment in commercial Crown corporations:
Increase (decrease) in retained earnings …………………………………………………………
Self-supported capital investments …………………………………………………………………
Less: loan repayments and other accounting changes …………………………………………
Other working capital changes …………………………………………………………………………
Increase (decrease) in financial statement debt ……………………………………………………
(Increase) decrease in sinking fund debt ……………………………………………………………
Increase (decrease) in guarantees and non-guaranteed debt ……………………………………
Increase (decrease) in total provincial debt ………………………………………………………
Budget and Fiscal Plan – 2017/18 to 2019/20
Forecast
March 31,
2017
(2,975)
(43)
(3,018)
(1,458)
(198)
(1,656)
2,402
(1,967)
435
(28)
407
(2,611)
4,123
(2,139)
1,984
89
2,073
417
380
71
(40)
1,885
(334)
1,511
998
2,889
106
2,855
(1,432)
1,529
(1,122)
478
278
500
(17)
761
895
494
(15)
1,374
APPENDIX
A1
Tax Expenditures ........................................................................................................................ 114
A1.1 Personal Income Tax – Tax Expenditures .................................................................................... 116
A1.2 Corporate Income Tax – Tax Expenditures ................................................................................. 117
A1.3 Property Taxes – Tax Expenditures ............................................................................................. 117
A1.4 Consumption Taxes – Tax Expenditures ..................................................................................... 118
A2
Interprovincial Comparisons of Tax Rates – 2017 ...................................................................... 119
A3
Comparison of Provincial and Federal Taxes by Province – 2017 ................................................ 120
A4
Interprovincial Comparisons of Provincial Personal Income Taxes Payable – 2017 ..................... 122
A5
Material Assumptions – Revenue ................................................................................................ 123
A6
Natural Gas Price Forecasts – 2017/18 to 2019/20 ..................................................................... 128
A7
Material Assumptions – Expense ................................................................................................ 129
A8
Operating Statement – 2010/11 to 2019/20 .............................................................................. 131
A9
Revenue by Source – 2010/11 to 2019/20 ................................................................................. 132
A10 Revenue by Source Supplementary Information – 2010/11 to 2019/20 ..................................... 133
A11 Expense by Function – 2010/11 to 2019/20 .............................................................................. 134
A12 Expense by Function Supplementary Information – 2010/11 to 2019/20 .................................. 135
A13 Full-Time Equivalents (FTEs) 2010/11 to 2019/20 ................................................................... 136
A14 Capital Spending – 2010/11 to 2019/20 ..................................................................................... 137
A15 Statement of Financial Position – 2010/11 to 2019/20 .............................................................. 138
A16 Changes in Financial Position – 2010/11 to 2019/20 ................................................................. 139
A17 Provincial Debt – 2010/11 to 2019/20 ...................................................................................... 140
A18 Provincial Debt Supplementary Information – 2010/11 to 2019/20 .......................................... 141
A19 Key Provincial Debt Indicators – 2010/11 to 2019/20 ............................................................... 142
Budget and Fiscal Plan – 2017/18 to 2019/20
114
Appendix
A1: Tax Expenditures
Introduction
A tax expenditure is the reduction in revenues from delivering government programs or
benefits through the tax system. Tax expenditures are usually made by offering special tax
rates, exemptions, or tax credits. Governments introduce tax expenditures primarily to
achieve social policy objectives such as transfers to lower-income families or to promote
economic development and job creation.
Reporting tax expenditures improves government accountability by providing a more
complete picture of government activities. The tax expenditure appendix does not include
tax expenditures introduced or expanded in Budget 2017. These are described in Part 2:
Tax Measures. Beginning with Budget 2012, refundable tax transfers are accounted for in
a voted appropriation. This change does not affect the reporting of tax expenditure costs
in the following tables.
The Role of Tax Expenditure Programs
Using the tax system to deliver programs can reduce administration costs and compliance
costs for recipients. In certain situations, the tax system allows intended beneficiaries to
be readily identified from information that is already collected. In these cases, setting up
a separate expenditure program would result in costly overlap and duplication of effort.
An example is the BC low income climate action tax credit, which is delivered through
the income tax system. If this were a direct provincial expenditure program, a provincial
agency or office would have to be established to duplicate much of the work already done
by the Canada Revenue Agency. In addition, it would require individuals to undertake a
separate, time-consuming application process to qualify for the benefit.
There are, however, several potential drawbacks to tax expenditure programs. First, their
overall cost often receives less public scrutiny than is the case for spending programs
because annual budget appropriations by the legislature are not typically required.
Second, tax expenditure programs do not always effectively target those who are intended
to benefit from them. Some tax expenditure programs that are intended to provide tax
relief for lower-income earners may, in reality, confer the greatest benefit on higherincome earners who pay the most taxes. Finally, costs are often more difficult to control
under a tax expenditure program because the benefits tend to be more open-ended and
enforcement is often more difficult than for spending programs.
Tax Expenditure Reporting
Not all tax reductions, credits, exemptions and refunds are classed as tax expenditures.
The emphasis is on tax reductions, credits, exemptions and refunds that are close
equivalents to spending programs. By implication, the list does not include tax measures
designed to meet broad tax policy objectives such as improving fairness in the tax system,
or measures designed to simplify the administration of a tax. The list also does not include
anything that is not intended to be part of a tax base.
Tax expenditures that cost less than $2 million are generally not included. Where
practical, smaller items have been presented together as an aggregate figure.
Budget and Fiscal Plan – 2017/18 to 2019/20
Appendix
115
British Columbia Tax Expenditures
The following tables report tax expenditure estimates.
The cost of individual tax expenditures cannot be added together to reach a total tax
expenditure figure for two reasons:
• in some cases the programs interact with one another so that eliminating one program
could increase or decrease the cost of another; and
• eliminating certain tax expenditure programs could change the choices taxpayers
make, which in turn would affect the cost estimates.
The estimates for each tax expenditure are based on a static analysis of the costs and do
not take into account any behavioural changes, which could change the costs over time.
In addition, estimates are generally recalculated each year using current data sources and
using refinements to the methods of estimation that can result in significant changes to
the value of a given tax expenditure from prior years’ reports.
In Table A1.1, Personal Income Tax – Tax Expenditures, the list of tax expenditures
delivered through the income tax system has been separated into two sub-categories.
• Provincial Measures: This includes all major tax expenditures that are under provincial
policy control.
• Federal Measures: British Columbia shares the cost of some federal income tax
expenditure programs because, under the tax collection agreement between
British Columbia and the federal government, the Province has agreed to maintain
a consistent income tax base with the federal government in the interest of reducing
administration and compliance costs.
Budget and Fiscal Plan – 2017/18 to 2019/20
116
Appendix
Table A1.1 Personal Income Tax – Tax Expenditures
2016/17
Estimated Cost
($ millions)
Personal Income Tax
Provincial Measures
BC early childhood tax benefit ....................................................................................................................
Low income climate action tax credit ..........................................................................................................
Sales tax credit ...........................................................................................................................................
Training tax credit .......................................................................................................................................
Venture capital tax credit .............................................................................…………………………………
BC mining flow-through share tax credit .....................................................................................................
Political contributions tax credit ...................................................................................................................
Home renovation tax credit for seniors and persons with disabilities .........................................................
Provincial non-refundable credits: 1
• Charitable donations tax credit .............................................................................................................
• Tax credits for tuition and education .....................................................................................................
• Tax credits for persons with disability and medical expenses ..............................................................
• Pension income tax credit .....................................................................................................................
• Credit for persons age 65 and older .....................................................................................................
• Spousal and equivalent-to-spouse credits ............................................................................................
• Tax credit for Canada Pension Plan contributions ................................................................................
• Tax credit for Employment Insurance premiums paid ...........................................................................
• Children's fitness and arts tax credits ...................................................................................................
Federal Measures 2
• Pension income splitting .......................................................................................................................
• Child care expense deduction ..............................................................................................................
• Exemption from capital gains for small businesses and family farms ...................................................
• Deduction for residents of northern and isolated areas ........................................................................
• Non-taxation of business-paid health and dental benefits ....................................................................
• Registered Retirement Savings Plans: 3
• exemption for – contributions ............................................................................................. 378
– investment earnings .................................................................................. 603
• taxation of withdrawals .......................................................................................................... (274)
Total .........................................................................................................................
• Registered Pension Plans: 3
• exemption for – contributions ............................................................................................. 752
– investment earnings .................................................................................. 873
• taxation of withdrawals .......................................................................................................... (449)
Total .........................................................................................................................
• Tax-Free Savings Accounts ..................................................................................................................
139
195
49
4
27
10
3
2
208
52
91
28
66
74
161
56
9
71
49
88
10
125
707
1,176
39
1
Provincial non-refundable credits are generally based on estimates of credit claims by British Columbia residents.
2
These measures are federal measures but the estimates show only the foregone provincial revenue. Each measure is calculated from the 2016 federal
cost projections as reported in the Government of Canada's Tax Expenditures and Evaluations 2016 by applying British Columbia residents' share of the
measure and the relevant tax rates. Certain tax expenditure items have been excluded where no data were available or the amounts were immaterial.
3
Registered Retirement Savings Plans and Registered Pension Plans are treated in the same way as in the federal tax expenditure report. The tax
expenditure associated with these plans is presented as the amount of tax that would otherwise be paid in the year of deferral, were the deferral not
available. However, this type of estimate overstates the true costs of these preferences because taxes are eventually paid, including tax on investment
earnings. An estimate that does not overstate these costs would, however, be difficult to develop and would require some largely speculative
assumptions.
Budget and Fiscal Plan – 2017/18 to 2019/20
117
Appendix
Table A1.2 Corporate Income Tax – Tax Expenditures
2016/17
Estimated Cost
($ millions)
Corporate Income Tax 1
Charitable donations deduction 2 ....................................................................................................................
Training tax credit 3 .........................................................................................................................................
Film and television tax credits:
51
• Film Incentive BC tax credit 4 ....................................................................................................
• Production services tax credit 5 ................................................................................................. 340
Total ......................................................................................................................................................
International business activities tax refund 6 ...................................................................................................
Scientific research and experimental development tax credit 7 .......................................................................
Mining exploration tax credit 8 .........................................................................................................................
Book publishing tax credit ...............................................................................................................................
Interactive digital media tax credit 9 .................................................................................................................
32
8
391
20
148
40
3
65
1
Includes prior year adjustments for refundable tax credits.
2
The deduction offered for corporate charitable donations is a federal measure, but the estimate shows only the foregone provincial revenue. This is
calculated from the 2016 federal cost projection as reported in Government of Canada's Tax Expenditures and Evaluations 2016 by applying British
Columbia's share of corporate taxable income and the relevant tax rates to the federal estimate and increasing it by corporate income tax revenue
growth.
3
Includes prior year adjustment of -$2 million.
Includes prior year adjustment of -$39 million.
4
5
Includes prior year adjustment of -$61 million.
6
Includes employee income tax refunds.
7
Includes prior year adjustment of -$2 million.
8
Includes prior year adjustment of -$2 million.
9
Includes prior year adjustment of +$9 million.
Table A1.3 Property Taxes – Tax Expenditures
2016/17
Estimated Cost
($ millions)
School and Rural Area Property Tax
Assessment exemption of $10,000 for industrial and business properties 1 ...................................................
Overnight tourist accommodation assessment relief 1 ....................................................................................
Home owner grant 2 ........................................................................................................................................
8
3
809
Property Transfer Tax
Exemptions for the following:
• First-time home buyers .........................................................................................................................
• Newly built homes .................................................................................................................................
• Property transfers between related individuals .....................................................................................
• Property transfers to municipalities, regional districts, hospital districts,
library boards, school boards, water districts and educational institutions ............................................
• Property transfers to charities registered under the Income Tax Act (Canada) ...................................
1
Estimates are for the 2016 calendar year and include only school and rural area property taxes levied by the Province.
2
The home owner grant includes the northern and rural home owner benefit.
Budget and Fiscal Plan – 2017/18 to 2019/20
83
76
137
12
8
118
Appendix
Table A1.4 Consumption Taxes – Tax Expenditures
2016/17
Estimated Cost
($ millions)
Fuel Tax 1
Tax exemption for alternative fuels .............................................................................................................
Tax exemption for international flights (jet fuel) ..........................................................................................
Tax exemptions for farmers 2 ......................................................................................................................
15
20
8
Provincial Sales Tax 1
Exemptions for the following items:
• Food (basic groceries, snack foods, candies, non-alcoholic beverages and restaurant meals) ...........
• Residential energy (e.g. electricity, natural gas, fuel oil) ......................................................................
• Prescription and non-prescription drugs, vitamins and certain other health care products ..................
• Children's clothing and footwear ...........................................................................................................
• Clothing patterns, fabrics and notions ..................................................................................................
• Specified school supplies ......................................................................................................................
• Books, magazines and newspapers .....................................................................................................
• Basic land-line telephone and cable service .........................................................................................
• "1-800" and equivalent telephone services ...........................................................................................
• Specified safety equipment ...................................................................................................................
• Labour to repair major household appliances, clothing and footwear ..................................................
• Livestock for human consumption, and feed, seed and fertilizer ..........................................................
• Specified energy conservation equipment ............................................................................................
• Bicycles .................................................................................................................................................
1,184
224
235
47
4
28
41
59
3
26
9
56
16
23
1
Estimates are based on Statistics Canada data and/or administrative data.
2
Estimate is for both motor fuel tax and carbon tax.
Budget and Fiscal Plan – 2017/18 to 2019/20
119
Appendix
Table A2 Interprovincial Comparisons of Tax Rates – 2017
(Rates known and in effect as of February 7, 2017)
Tax
British
Columbia
Alberta
Saskatchewan
Manitoba
Ontario
Quebec
New
Brunswick
Nova
Scotia
Prince
Edward
Island
Newfoundland and
Labrador
Corporate income tax
(per cent of taxable income)
General rate .......................
Manufacturing rate 1 ............
Small business rate 2 ..........
Small business threshold
($000s) .............................
11
11
2.5
12
12
2
12
10
2
12
12
0
11.5
10
4.5
11.8
11.8
8
14
14
3.5
16
16
3
16
16
4.5
15
15
3
500
500
500
450
500
500
500
350
500
500
Corporation capital tax (per cent)
Financial 3 ...........................
Nil
Nil
0.7/3.25
6
Nil
Nil
4/5
4
5
6
75/150
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
2.15
1.95
4.26
Nil
Nil
Nil
2
(per cent) 6 ................................
2-4.4
3-4
3-4
2-3
2-3.5
3.48
2-3
3-4
3.75-4
5
Fuel tax (cents per litre) 7
Gasoline ..............................
Diesel ..................................
21.17
22.67
17.49
18.35
15.0
15.0
14.0
14.0
22.6
21.9
29.2
30.4
25.3
31.9
25.4
25.1
22.9
30.5
45.1
32.6
Sales tax (per cent) 8
General rate ........................
7
Nil
5
8
8
9.975
10
10
10
10
Tobacco tax (dollars per
carton of 200 cigarettes) 9 ........
47.80
50.00
55.20
68.04
37.75
29.80
54.38
65.95
60.40
59.30
Health care premiums/month ($)
Individual/family 4 ................
Payroll tax (per cent) 5 .............
Insurance premium tax
1
2
3
4
5
6
7
8
9
In British Columbia (and some other provinces), the general rate applies to income from manufacturing and processing. In Quebec, the rate for
manufacturing corporations eligible for the small business rate is 4 per cent; the rate for other manufacturing corporations is the general rate.
British Columbia intends to decrease its small business rate to 2 per cent effective April 1, 2017.
In Saskatchewan, small financial corporations pay the rate of 0.7 per cent on their first $1.5 billion of taxable capital and 3.25 per cent on any taxable capital
in excess of $1.5 billion. Large financial corporations are subject to the 3.25 per cent rate for all taxable capital. In New Brunswick, trust and loan
companies are subject to the rate of 4 per cent, while banks are subject to the rate of 5 per cent.
Effective January 1, 2018, British Columbia Medical Services Plan premiums will be reduced by 50 per cent for individuals and families with family net
income up to $120,000. Ontario levies a health premium, as part of its provincial personal income tax system, of up to $900 per year.
Provinces with payroll taxes provide payroll tax relief for small businesses. Quebec also levies a compensation tax of up to 4.48 per cent on salaries and
wages paid by financial institutions.
Lower rates apply to premiums for life, sickness and accident insurance; higher rates apply to premiums for property insurance including automobile
insurance. In Manitoba, Ontario, Quebec, and Newfoundland and Labrador, specific sales taxes also apply to certain insurance premiums except, generally,
those related to individual life and health.
Tax rates are for regular fuel used on highways and include all provincial taxes payable by consumers at the pump. The British Columbia rates include 6.75
cents per litre dedicated to the BC Transportation Financing Authority and the carbon tax rates of 6.67 cents per litre for gasoline and 7.67 cents per litre for
diesel. The British Columbia rates do not include regional taxes that increase the gasoline and diesel tax rates by 11 cents per litre in the South Coast
British Columbia transportation service region and by 3.5 cents per litre in the Capital Regional District. The Alberta rates include carbon levy rates of 4.49
cents per litre for gasoline and 5.35 cents per litre for diesel. The tax rates for Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, and
Newfoundland and Labrador include provincial sales tax based on average pump prices as of January 2017. Quebec's tax rates do not include increased or
reduced regional tax rates, such as an additional tax of 3 cents per litre on gasoline in the Montreal area.
Tax rates shown are statutory rates. Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador have
harmonized their sales taxes with the federal GST. Alberta imposes a 4 per cent tax on short-term rental accommodation.
Includes estimated provincial sales tax in all provinces except British Columbia, Alberta and Quebec. British Columbia intends to increase its tobacco tax
rate to $49.40 per carton effective October 1, 2017.
Budget and Fiscal Plan – 2017/18 to 2019/20
120
Appendix
Table A3 Comparison of Provincial and Federal Taxes by Province – 2017
Tax
British Columbia
Alberta
Saskatchewan
Manitoba
Ontario
Quebec
New
Brunswick
Nova
Scotia
Prince
Edward
Island
Newfoundland
and
Labrador
($)
Two Income Family of Four - $90,000
1. Provincial Income Tax……………………
Net Child Benefits…………………………
2. Property Tax - Gross…………………..
- Net……………………..
3. Sales Tax…………………………………
4. Fuel Tax……………………………………
5. Net Carbon Tax …………………………
6. Provincial Direct Taxes…………………
7. Health Care Premiums/Payroll Tax……
8. Total Provincial Tax………………………
9. Federal Income Tax………………………
10. Net Federal GST…………………………
11. Total Tax…………………………………
3,072
-660
4,136
3,566
1,564
218
236
7,996
1,800
9,796
7,770
1,474
19,041
3,994
0
3,578
3,578
0
195
-105
7,662
-7,662
7,770
1,568
17,000
3,650
0
4,955
4,955
1,248
225
-10,078
-10,078
7,770
1,519
19,367
5,670
-3,945
3,945
1,907
210
-11,732
1,935
13,667
7,770
1,379
22,816
3,455
0
5,471
5,471
2,224
339
-11,489
1,755
13,244
7,770
1,427
22,441
7,231
-2,257
5,525
5,525
2,829
438
-13,766
3,834
17,600
7,745
1,351
26,696
5,834
0
5,300
5,300
2,747
380
-14,261
-14,261
7,770
1,384
23,415
6,767
0
4,455
4,455
2,697
381
-14,301
-14,301
7,770
1,359
23,430
6,767
-3,721
3,721
2,409
344
-13,241
-13,241
7,770
1,398
22,410
5,815
0
3,316
3,316
2,653
677
-12,460
1,800
14,260
7,770
1,337
23,367
1,216
-660
3,011
2,441
1,303
218
208
4,725
1,800
6,525
4,001
1,228
11,754
1,555
-448
2,904
2,904
0
195
-106
4,099
-4,099
4,001
1,339
9,439
656
0
3,302
3,302
1,070
225
-5,253
-5,253
4,001
1,302
10,556
2,551
-3,190
3,190
1,637
210
-7,587
1,290
8,877
4,001
1,183
14,061
767
0
3,924
3,924
1,842
339
-6,873
1,170
8,043
4,001
1,225
13,269
3,110
-3,357
3,798
3,798
2,533
438
-6,522
2,556
9,078
3,984
1,217
14,279
3,047
0
2,947
2,947
2,321
380
-8,694
-8,694
4,001
1,169
13,864
3,544
0
2,795
2,795
2,293
381
-9,013
-9,013
4,001
1,155
14,169
3,746
-2,959
2,959
1,941
344
-8,990
-8,990
4,001
1,186
14,177
3,037
0
2,283
2,283
2,254
677
-8,250
1,200
9,450
4,001
1,136
14,587
0
-660
0
-1,393
-0
130
-106
-1,369
--1,369
256
233
-880
-689
0
-838
150
-299
-299
256
172
726
-460
--1,347
140
-1,027
645
1,672
256
125
2,053
-667
-2,087
-510
226
--2,017
585
-1,432
256
214
-962
-3,302
-3,613
-2,298
292
--4,325
1,278
-3,047
248
262
-2,538
0
-52
305
0
0
0
-1,886
253
-2,087
-2,087
256
103
2,446
-1,866
254
-2,425
-2,425
256
92
2,773
409
--1,505
229
-2,143
-2,143
256
121
2,520
-1,442
600
2,042
256
110
2,408
240
-186
-940
292
-1,045
1,065
2,110
1,398
35
3,543
1,372
-656
229
-2,257
-2,257
1,405
26
3,688
1,015
-429
451
-1,895
500
2,395
1,405
20
3,820
Two Income Family of Four - $60,000
1. Provincial Income Tax……………………
Net Child Benefits…………………………
2. Property Tax - Gross…………………..
- Net……………………..
3. Sales Tax…………………………………
4. Fuel Tax……………………………………
5. Net Carbon Tax …………………………
6. Provincial Direct Taxes…………………
7. Health Care Premiums/Payroll Tax……
8. Total Provincial Tax………………………
9. Federal Income Tax………………………
10. Net Federal GST…………………………
11. Total Tax…………………………………
Two Income Family of Four - $30,000
1. Provincial Income Tax……………………
Net Child Benefits…………………………
2. Property Tax ………………………………
3. Sales Tax…………………………………
4. Fuel Tax……………………………………
5. Net Carbon Tax …………………………
6. Provincial Direct Taxes…………………
7. Health Care Premiums/Payroll Tax……
8. Total Provincial Tax………………………
9. Federal Income Tax………………………
10. Net Federal GST…………………………
11. Total Tax…………………………………
-1,060
145
-126
420
0
420
256
151
827
-991
451
Unattached Individual - $25,000
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Provincial Income Tax……………………
Property Tax…………...…………………
Sales Tax…………………………………
Fuel Tax……………………………………
Net Carbon Tax …………………………
Provincial Direct Taxes…………………
Health Care Premiums/Payroll Tax……
Total Provincial Tax………………………
Federal Income Tax………………………
Net Federal GST…………………………
Total Tax…………………………………
301
--
349
--
477
145
-49
873
0
873
1,405
58
2,336
0
130
-59
420
-420
1,405
85
1,909
424
--
694
--
390
150
-965
-965
1,405
64
2,433
-600
140
-1,434
538
1,971
1,405
30
3,406
484
226
-950
488
1,437
1,405
46
2,888
Budget and Fiscal Plan – 2017/18 to 2019/20
649
--
949
--
903
253
886
254
-1,805
-1,805
1,405
33
3,242
-2,089
-2,089
1,405
24
3,517
121
Appendix
Table A3 Comparison of Provincial and Federal Taxes by Province – 2017
Tax
British Columbia
Alberta
Saskatchewan
Manitoba
Quebec
New
Brunswick
Nova
Scotia
Prince
Edward
Island
Newfoundland
and
Labrador
($)
Unattached Individual - $80,000
1. Provincial Income Tax……………………
2. Property Tax - Gross…………………..
- Net……………………..
3. Sales Tax…………………………………
4. Fuel Tax……………………………………
5. Net Carbon Tax …………………………
6. Provincial Direct Taxes…………………
7. Health Care Premiums/Payroll Tax……
8. Total Provincial Tax………………………
9. Federal Income Tax………………………
10. Net Federal GST…………………………
11. Total Tax…………………………………
Ontario
3,959
2,060
1,490
1,119
218
186
6,971
900
7,871
10,151
1,132
19,155
5,161
2,873
2,873
0
195
196
8,425
-8,425
10,151
1,188
19,765
6,535
3,582
3,582
884
225
-11,226
-11,226
10,151
1,105
22,483
6,979
4,711
4,711
1,350
210
-13,250
1,720
14,970
10,151
1,022
26,143
5,078
3,803
3,803
1,664
339
-10,884
1,560
12,444
10,151
1,065
23,661
8,976
5,041
5,041
1,959
438
-16,414
3,408
19,822
10,119
942
30,883
7,525
2,396
2,396
2,021
380
-12,322
-12,322
10,151
1,022
23,495
8,401
3,672
3,672
1,973
381
-14,427
-14,427
10,151
997
25,575
8,056
2,727
2,727
1,758
344
-12,885
-12,885
10,151
1,034
24,070
7,556
2,342
2,342
1,931
677
-12,506
1,600
14,106
10,151
976
25,234
0
2,904
2,904
0
130
-111
2,923
-2,923
0
348
3,271
-496
3,302
3,302
683
150
-3,638
-3,638
0
319
3,958
-1,109
3,190
3,190
1,151
140
-3,372
3,372
0
325
3,696
-1,604
3,924
3,924
864
226
-3,410
3,410
0
320
3,730
-1,236
3,798
3,798
1,693
292
-4,547
4,547
0
281
4,828
0
2,947
2,947
1,634
253
-4,834
-4,834
0
271
5,105
-237
2,795
2,795
1,657
254
-4,470
-4,470
0
282
4,752
0
2,959
2,959
1,271
229
-4,459
-4,459
0
296
4,756
-1,200
2,283
2,283
1,263
451
-2,796
2,796
0
341
3,137
Senior Couple with Equal Pension Incomes - $30,000
1. Provincial Income Tax……………………
2. Property Tax - Gross…………………..
- Net……………………..
3. Sales Tax…………………………………
4. Fuel Tax……………………………………
5. Net Carbon Tax …………………………
6. Provincial Direct Taxes…………………
7. Health Care Premiums/Payroll Tax……
8. Total Provincial Tax………………………
9. Federal Income Tax………………………
10. Net Federal GST…………………………
11. Total Tax…………………………………
0
3,011
2,166
867
145
-57
3,121
0
3,121
0
322
3,443
Personal Income Tax
•
Income tax is based on basic personal credits, applicable credits and typical major deductions at each income level. Quebec residents pay federal income tax less an abatement of
16.5 per cent of basic federal tax. This abatement has been used to reduce Quebec provincial tax rather than federal tax, for comparative purposes. The two income family of four
with $60,000 annual income is assumed to have one spouse earning $40,000 and the other $20,000, the family with $90,000 income is assumed to have one spouse earning
$50,000 and the other $40,000, the family with $30,000 is assumed to have each spouse earning $15,000 and each senior is assumed to receive $15,000. All representative
families are assumed to have employment income except the senior couple.
Net Child Benefits
•
Net child benefits are provincial measures affecting payments to families with children. Provincial child benefit measures are available in British Columbia (BC Early Childhood Tax
Benefit), Alberta (Alberta Child Benefit, Family Employment Credit), Ontario (Child Benefit), Quebec (Child Assistance Payments), New Brunswick (Child Tax Benefit), Nova Scotia
(Child Benefit) and Newfoundland and Labrador (Child Benefit).
Property Tax
•
It is assumed that the family at $30,000 and the individual at $25,000 rent accommodation, the family at $60,000 and the senior couple own bungalows, the family at $90,000 owns
a two-storey executive-style home, and the individual at $80,000 owns a luxury condominium in a major city for each province. Net local and provincial property taxes are estimated
as taxes owing, after credits provided through the property tax system are subtracted.
Sales, Fuel and Carbon Tax Estimates
•
•
•
Includes sales tax on meals, liquor and accommodation. Estimates are based on expenditure patterns from the Survey of Household Spending. In estimating individual and family
taxable consumption, disposable income is reduced by 20 per cent to reflect housing (mortgage and property taxes or rent) costs. The senior couple is assumed to own their home
and have no mortgage costs. For each province, disposable income is further reduced by estimated federal income taxes, estimated provincial income taxes and health care
premiums/payroll taxes if applicable. In addition, the single individual with $80,000 annual income and the family with $90,000 annual income are assumed to have savings equal to
5 per cent of their disposable income. For each family, disposable income is distributed among expenditures using the consumption pattern of a typical family with the relevant
characteristics as estimated using family expenditure data, and the relevant sales tax component is extracted. Sales tax includes: provincial retail sales taxes in British Columbia,
Saskatchewan, and Manitoba; Quebec's value added tax; the provincial component of the HST in Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland
and Labrador; and Alberta's Tourism Levy. Sales tax estimates have been reduced by sales tax credits where applicable.
Fuel tax is based on annual consumption: 1,000 litres of unleaded fuel for the individual at $25,000, the family at $30,000 and the senior couple; others are assumed to consume
1,500 litres.
Carbon tax applies in British Columbia to household consumption of gasoline, natural gas and home heating fuel. Estimated carbon tax liabilities are based on natural gas and
home heating fuel consumption amounts from the Survey of Household Spending and the assumed fuel consumption noted above. Net carbon tax is estimated as carbon tax
liabilities less the low income climate action tax credit where applicable. Alberta implemented a carbon levy in 2017. The price is currently set at $20 per tonne of carbon dioxide but
will increase to $30 per tonne in 2018. Assumptions regarding natural gas and fuel consumption in Alberta are taken from Alberta Treasury Board and Finance.
Health Care Premiums/Payroll Tax
•
A health care premium is levied in British Columbia only. Payroll taxes, in the four provinces that levy them, are paid by the employer. Employer-paid payroll taxes and employerpaid health care premiums are generally reflected in reduced wages.
Effective Tax Rates
•
British Columbia taxes have been calculated using rates in effect for 2017. Taxes for other provinces were calculated using rates that were announced prior to
February 1, 2017, and that come into effect during 2017.
Budget and Fiscal Plan – 2017/18 to 2019/20
122
Appendix
Table A4 Interprovincial Comparisons of Provincial Personal Income Taxes Payable 1 – 2017
(Rates known as of February 1, 2017)
Taxable income
British
Columbia
Saskatchewan
Alberta
Manitoba
Ontario
Quebec
2
New
Brunswick
Nova
Scotia
Prince
Edward
Island
Newfoundland
and
Labrador
Annual provincial taxes payable 3 ($)
0
$10,000………………
$20,000………………
3
$30,000………………
831
$40,000………………
1,412
$50,000………………
2,149
$60,000………………
2,904
$70,000………………
3,674
$80,000………………
4,506
$100,000……………… 6,797
$125,000……………… 10,268
$150,000……………… 13,943
0
17
951
1,885
2,819
3,791
4,791
5,791
7,791
10,291
13,258
0
307
1,335
2,362
3,486
4,754
6,054
7,354
9,954
13,204
16,870
0
1,007
2,044
3,220
4,424
5,668
7,036
8,776
12,256
16,606
20,956
0
408
1,210
1,832
2,774
3,674
4,589
5,724
8,734
13,087
17,439
0
268
1,637
3,159
4,857
6,525
8,187
9,849
13,636
18,913
24,240
0
331
1,536
2,676
4,040
5,495
6,977
8,459
11,727
15,857
20,204
0
862
1,758
3,196
4,633
6,117
7,784
9,451
12,843
17,218
21,593
0
864
1,980
3,216
4,531
5,883
7,438
9,108
12,448
17,036
21,628
0
142
1,672
2,726
4,118
5,544
6,994
8,552
11,712
15,662
19,941
0.0
4.3
6.6
8.0
9.1
9.8
10.6
11.4
12.4
13.6
14.4
0.0
0.7
5.6
6.8
8.2
9.2
10.0
10.7
11.7
12.5
13.3
Provincial personal income taxes as a per cent of taxable income (%)
$10,000………………
$20,000………………
$30,000………………
$40,000………………
$50,000………………
$60,000………………
$70,000………………
$80,000………………
$100,000………………
$125,000………………
$150,000………………
0.0
0.0
2.8
3.5
4.3
4.8
5.2
5.6
6.8
8.2
9.3
0.0
0.1
3.2
4.7
5.6
6.3
6.8
7.2
7.8
8.2
8.8
0.0
1.5
4.4
5.9
7.0
7.9
8.6
9.2
10.0
10.6
11.2
0.0
5.0
6.8
8.0
8.8
9.4
10.1
11.0
12.3
13.3
14.0
0.0
2.0
4.0
4.6
5.5
6.1
6.6
7.2
8.7
10.5
11.6
0.0
1.3
5.5
7.9
9.7
10.9
11.7
12.3
13.6
15.1
16.2
0.0
1.7
5.1
6.7
8.1
9.2
10.0
10.6
11.7
12.7
13.5
0.0
4.3
5.9
8.0
9.3
10.2
11.1
11.8
12.8
13.8
14.4
1
Calculated for a single individual with wage income and claiming credits for Canada Pension Plan and Quebec Pension Plan
contributions, Employment Insurance premiums, Quebec Parental Insurance Plan premiums, and the basic personal amount.
2
Quebec residents pay federal tax less an abatement of 16.5 per cent of federal tax. In the table, the Quebec abatement has been used
to reduce Quebec provincial personal income tax for comparative purposes.
3
Includes provincial low income reductions, surtaxes payable in Ontario and Prince Edward Island, and the Ontario Health Premium tax.
Excludes credits for sales and property tax credits.
Budget and Fiscal Plan – 2017/18 to 2019/20
123
Appendix
Table A5 Material Assumptions – Revenue
Revenue Source and Assumptions
($ millions unless otherwise specified)
Personal income tax *
Current calendar year assumptions
Household income growth ......................................
Compensation of employees growth ......................
Tax base growth .....................................................
Average tax yield ....................................................
Current-year tax .....................................................
Prior year's tax assessments ................................
Unapplied taxes .....................................................
BC Tax Reduction ..................................................
Non-refundable BC tax credits ...............................
Policy neutral elasticity ** .......................................
Fiscal year assumptions
Prior-year adjustment .............................................
2015 Tax-year
Household income growth ......................................
Tax base growth .....................................................
Average 2015 tax yield ...........................................
2015 tax .................................................................
2014 & prior year's tax assessments .....................
Unapplied taxes .....................................................
BC Tax Reduction ..................................................
Non-refundable BC tax credits ...............................
Policy neutral elasticity **........................................
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
$9,598
$9,170
$9,598
$10,031
3.7%
4.1%
2.9%
5.35%
$8,432
$420
$80
-$156
-$96
1.1
3.6%
4.1%
3.2%
5.40%
$8,802
$430
$80
-$159
-$97
1.2
3.8%
4.1%
3.8%
5.44%
$9,217
$440
$80
-$162
-$92
1.2
3.8%
4.0%
3.7%
5.49%
$9,638
$450
$80
-$165
-$92
1.2
$815
2015 Assumptions
5.3%
6.6%
2017/18 Sensitivities
+/- 1 percentage point change in
2017 BC household income growth
equals +/- $100 to $110 million
+/- 0.5 change in 2017 BC
policy neutral elasticity
equals +/- $150 to $170 million
+/- 1 percentage point change in 2016
BC household or taxable income
5.50%
$8,409
$463
$70
-$151
-$80
1.9
growth equals +/- $100 to $110
million one-time effect
(prior-year adjustment)
and could result in an
additional +/-$80 to $100 million
base change in 2017/18
* Reflects information as at January 27, 2017
** Ratio of annual per cent change in current-year revenue to annual per cent change in personal income (calendar year).
Corporate income tax *
$3,002
Components of revenue (fiscal year)
Instalments - subject to general rate ……………… $2,541
Instalments - subject to small business rate
$286
Non-refundable BC tax credits ...............................
-$100
Advance instalments .............................................. $2,727
International Business Activity Act refunds ............
-$20
Prior-year settlement payment ...............................
$295
Current calendar year assumptions
National tax base ($ billions) .................................. $288.5
BC instalment share of national tax base ............... 11.6%
Effective tax rates (general/small business) ........... 11.0 / 2.5
Share of the BC tax base subject to
small business rate……………………………….… 33.4%
BC tax base growth (post federal measures)........... 8.8%
BC net operating surplus growth ............................
8.5%
2015 Tax-year
BC tax base growth (post federal measures)...........
BC net operating surplus growth ............................
Gross 2015 tax .......................................................
Prior-year settlement payment ...............................
Prior years losses/gains (included in above) ..........
Non-refundable BC tax credits ...............................
$3,413
$3,468
$3,516
$2,807
$248
-$110
$2,945
-$25
$493
$3,011
$270
-$116
$3,165
-$25
$328
$3,182
$283
-$122
$3,343
-$25
$198
$297.7
12.5%
11.0 / 2.1
$301.3
13.3%
11.0 / 2.0
$308.6
13.8%
11.0 / 2.0
33.2%
4.6%
5.0%
33.1%
1.1%
2.4%
32.9%
3.0%
3.0%
2015 Assumptions
9.8%
-0.5%
$2,990
$295
-$44
-$88
+/- 1% change in the 2017
national tax base equals
+/- $20 to $40 million
+/- 1 percentage point change in the
2017 small business share equals
-/+ $30 to $40 million
+/- 1% change in the 2016
BC tax base equals +/- $30
to $50 million in 2017/18
* Reflects information as at January 27, 2017
Net cash received from the federal government and cash refunds under the International Business Activity Act are used as the basis for estimating
revenue. Due to lags in the federal collection and instalment systems, changes to the BC net operating surplus and tax base forecasts affect revenue in
the succeeding year. The 2017/18 instalments from the federal government reflects two-third of payments related to the 2017 tax year
(paid during Apr-July 2017 and adjusted in Sept and Dec) and one-third of 2018 payments. Instalments for the 2017 (2018) tax year are based on BC's
share of the national tax base for the 2015 (2016) tax year and a forecast of the 2017 (2018) national tax base. BC's share of the 2015 national
tax base was 12.53%, based on tax assessments as of December 31, 2016. Cash adjustments for any under/over payments from the
federal government in respect of 2016 will be received/paid on March 29, 2018.
Budget and Fiscal Plan – 2017/18 to 2019/20
124
Appendix
Table A5 Material Assumptions – Revenue (continued)
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
$6,544
$6,785
$7,061
$7,257
6.2%
4.3%
4.1%
4.1%
7.9%
5.8%
8.5%
5.5%
2.4%
4.6%
5.0%
4.4%
2.4%
4.6%
5.1%
3.5%
2.0%
4.5%
4.9%
4.1%
Components of Provincial sales tax revenue
Consolidated Revenue Fund................................... $6,537
BC Transportation Financing Authority ...................
$7
$6,776
$9
$7,052
$9
$7,248
$9
$2,177
$2,201
$2,226
$2,252
3.0%
0.0%
2.0%
3.0%
2.1%
0.0%
2.0%
2.1%
2.1%
0.0%
2.0%
2.1%
2.0%
0.0%
2.0%
2.0%
$30
148.98¢
6.67¢
7.67¢
$30
148.98¢
6.67¢
7.67¢
$30
148.98¢
6.67¢
7.67¢
$521
$12
$443
$976
$525
$12
$446
$983
$529
$12
$449
$990
$533
$12
$452
$997
$1,201
$1,218
$1,236
$1,255
$2,289
$2,395
$2,504
$2,618
2.0%
29,977
$821
2.0%
27,512
$834
2.0%
26,969
$846
$827
$1,252
$97
$33
$90
$96
$856
$1,319
$100
$33
$93
$103
$886
$1,389
$103
$34
$96
$110
$3,300
$2,840
$2,765
$2,755
1.2%
1.8%
33.1%
3.0%
4.7%
1.2%
2.0%
-28.4%
2.1%
4.1%
1.2%
2.0%
-8.2%
2.1%
4.0%
1.2%
2.0%
-2.0%
2.0%
3.9%
Components of revenue
Property transfer .................................................... $2,025
15% additional tax (included in above) * ................ $100
Tobacco ................................................................. $745
Insurance premium ................................................ $530
$1,542
$150
$758
$540
$1,445
$150
$770
$550
$1,425
$150
$770
$560
Revenue Source and Assumptions
($ millions unless otherwise specified)
Provincial sales tax
Provincial sales tax base growth (fiscal year) …………
Calendar Year nominal expenditure
Durable goods …………………………………………
Consumer goods and services................................
Business investment …………………………………
Other ……………………………………………………
Fuel and carbon taxes
Calendar Year
Real GDP ...............................................................
Gasoline volumes ..................................................
Diesel volumes .......................................................
Natural gas volumes ..............................................
Carbon tax rates (July 1)
Carbon dioxide equivalent emissions ($/tonne).......
$30
Natural gas (cents/gigajoule) ………………………… 148.98¢
Gasoline (cents/litre) …………………………………
6.67¢
Light fuel oil (cents/litre) ……………………………… 7.67¢
Components of revenue
Consolidated Revenue Fund ..............................
BC Transit ..........................................................
BC Transportation Financing Authority ...............
Carbon tax revenue ……………………………….
Property taxes
Calendar Year
Consumer Price Index ............................................ 1.8%
Housing starts (units).............................................. 41,843
Home owner grants (fiscal year) ...............................
$809
Components of revenue
Residential (net of home owner grants) .................. $801
Non-residential ....................................................... $1,198
Rural area ..............................................................
$94
Police .....................................................................
$33
BC Assessment Authority ......................................
$87
BC Transit ..............................................................
$76
Other taxes
Calendar Year
Population ..............................................................
Consumer Price Index ............................................
Housing starts ........................................................
Real GDP ...............................................................
Nominal GDP .........................................................
* The tax was effective August 2, 2016 and the estimate for 2016/17 is 67% of the full year forecast.
Budget and Fiscal Plan – 2017/18 to 2019/20
2017/18 Sensitivities
+/- 1 percentage point change in the
2017 consumer expenditure growth
equals up to +/- $30 million
+/- 1 percentage point change in the
2017 business investment growth
equals up to +/- $15 million
+/- 1 percentage point change in
2017 new construction & inflation
growth equals up to +/- $20 million in
residential property taxation revenue
+/- 1% change in 2017 total
business property assessment
value equals up to +/- $20 million
in non-residential property
taxation revenue
+/- 5% change to 2017 housing
starts equals +/- $40 to 60 million
in property transfer revenue,
depending on property values
125
Appendix
Table A5 Material Assumptions – Revenue (continued)
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
$1,213
$1,005
$877
$837
$1.22
$2.08
$1.61
$2.32
$1.53
$2.34
$1.73
$2.59
43.5
1,785
-2.2%
42.5
1,744
-2.3%
46.0
1,886
8.1%
49.7
2,040
8.2%
Oil price ($US/bbl at Cushing, Ok) …………………… $47.05
$54.69
$60.30
$65.74
Auctioned land base (000 hectares) …………………… 107
Average bid price/hectare ($) …………………………
$163
Cash sales of Crown land tenures ……………………
$17
Metallurgical coal price ($US/tonne, fob West Coast) …… $141
Copper price ($US/lb) ............................................... $2.26
50
$140
$7
$140
$2.38
40
$160
$6
$113
$2.48
40
$200
$8
$110
$2.61
4.1
4.0
4.0
4.0
$24
$27
$25
$27
75.4
73.7
75.3
78.4
$569
$2
$52
$623
$159
$61
$114
$50
$300
$1
$52
$353
$237
$73
$126
$49
$201
$1
$52
$254
$239
$76
$114
$49
$111
$1
$52
$164
$291
$80
$120
$50
$168
$5
$11
$8
$14
$206
$124
$10
$11
$8
$14
$167
$95
$15
$12
$8
$15
$145
$79
$10
$20
$8
$15
$132
Royalty programs and infrastructure credits
Deep drilling ……………………………………………
Road and pipeline infrastructure ……………………
Total ……………………………………………………
-$210
-$28
-$238
-$248
-$36
-$284
-$227
-$53
-$280
-$311
-$81
-$392
Implicit average natural gas royalty rate ………………
7.4%
8.5%
8.3%
8.3%
Revenue Source and Assumptions
($ millions unless otherwise specified)
Energy, sales of Crown land tenures,
metals, minerals and other *
Natural gas price
Plant inlet, $Cdn/gigajoule ……………………………
Sumas, $US/ MMBtu …………………………………
Natural gas production volumes
Billions of cubic metres ..........................................
Petajoules ..............................................................
Annual per cent change ………………………………
Annual electricity volumes set by treaty ………………
(million mega-watt hours)
Mid-Columbia electricity price …………………………
($US/mega-watt hour)
Exchange rate (US¢/ Cdn$, calendar year) …………
Components of revenue
Bonus bid auctions:
Deferred revenue…………………………………
Current-year cash (one-ninth)…..………………
Fees and rentals………..…….…..…………………
Total bonus bids, fees and rentals ……………………
Natural gas royalties……………………………………
Petroleum royalties ……………………………………
Columbia River Treaty electricity sales ………………
Oil and Gas Commission fees and levies ……………
Coal, metals and other minerals revenue:
Coal mineral tax…………….……...…………………
Net metals and other minerals tax…….…..………
Recoveries related to metal mines …………………
Coal tenures ..………..………………………………
Miscellaneous mining revenue ……………………
Total coal, metals and other minerals revenue
2017/18 Sensitivities
+/- $0.25 change in the natural gas
price equals +/- $60 to $70 million,
including impacts on production
volumes and royalty program
credits, but excluding any
changes from natural gas liquids
revenue (e.g. butane, pentanes )
Sensitivities can also vary
significantly at different price levels
+/- 1% change in natural gas
volumes equals +/- $2 million
on natural gas royalties
+/- 1 cent change in the
exchange rate equals +/- $4 million
on natural gas royalties
+/- US$20 change in the average
Metallurgical coal price
equals +/- $40 to $50 million
+/- 10% change in the average
Mid-Columbia electricity price
equals +/- $13 million
Based on a recommendation
from the Auditor General to be
consistent with generally
accepted accounting principles,
bonus bid revenue recognition
reflects nine-year deferral of
cash receipts from the sale of
Crown land tenures
Royalty program (marginal, low productivity and ultra marginal drilling) adjustments reflect reduced royalty rates.
Natural gas royalties incorporate royalty programs and Treasury Board approved infrastructure credits.
* Reflects information as at January 20, 2017.
Budget and Fiscal Plan – 2017/18 to 2019/20
126
Appendix
Table A5 Material Assumptions – Revenue (continued)
Revenue Source and Assumptions
($ millions unless otherwise specified)
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
$859
$852
$870
$872
$308
$326
$318
$300
$345
$803
$356
$806
$348
$800
$330
$800
$127
$118
$110
$110
45.1
13.4
58.5
11.3
45.5
13.5
59.0
11.8
46.5
13.5
60.0
11.4
46.3
13.7
60.0
11.2
$12.78
$12.94
$12.99
$496
$280
$38
$18
$20
$526
$272
$35
$18
$19
$534
$267
$35
$18
$18
$483
$478
$415
$43
$11
$14
$410
$43
$11
$14
Forests *
Prices (calendar year average)
SPF 2x4 ($US/thousand board feet) …………………
Random Lengths Composite
($US/thousand board feet) ...................................
Pulp ($US/tonne) ………………………………………
Coastal log ($Cdn/cubic metre);
Vancouver Log Market ………………………………
Crown harvest volumes (million cubic metres)
Interior …………………………………………………
Coast ……………………………………………………
Total ……………………………………………………
BC Timber Sales (included in above) ………………
Stumpage rates ($Cdn/cubic metre)
Total stumpage rates ………………………………… $12.88
Components of revenue
Tenures ………………………………………………… $471
BC Timber Sales ……………………………………… $304
Logging tax ……………………………………………
$38
Other CRF revenue …………………………………… $23
Recoveries……………………………………………… $23
* Reflects information as at January 20, 2017.
Other natural resources
$490
$463
Components of revenue
Water rental and licences* …………………………… $418
$390
Recoveries ……………………………………………… $50
$48
Angling and hunting permits and licences …………
$11
$11
Recoveries ……………………………………………… $11
$14
* Water rentals for power purposes are indexed to Consumer Price Index.
Other revenue
Medical Services Plan (MSP) premiums
Take-up rate of 50 per cent reduction ………………
$10,674
$10,482
$9,862
$9,818
na
na
90%
90%
$2,322
$2,258
$64
$536
$430
-$15
$107
$116
$1,900
$383
$238
$1,719
$1,655
$64
$543
$402
-$15
$106
$120
$1,980
$386
$247
$1,749
$1,685
$64
$552
$401
-$15
$106
$85
$2,050
$386
$255
$126
$1,010
-$99
$25
$177
$1,001
$2,225
$137
$1,010
-$98
$24
$182
$1,018
$2,101
$142
$1,029
-$102
$25
$185
$1,031
$1,939
Components of revenue
Fees and licences
MSP premiums ……………………………………… $2,529
Consolidated Revenue Fund ........................... $2,459
MSP recoveries ..............................................
$70
Motor vehicle licences and permits ……………… $529
Other Consolidated Revenue Fund .................... $403
Summary consolidation eliminations...................
-$14
$107
Other recoveries ................................................
$117
Crown corporations and agencies ......................
Post-secondary education fees …………………… $1,815
Other healthcare-related fees ……………………… $399
$247
School Districts ..................................................
Investment earnings
Consolidated Revenue Fund ..............................
$68
Fiscal agency loans & sinking funds earnings.....
$952
Summary consolidation eliminations...................
-$61
Crown corporations and agencies.......................
$40
SUCH sector agencies .......................................
$190
Sales of goods and services ………………………… $1,008
Miscellaneous ........................................................ $2,345
Budget and Fiscal Plan – 2017/18 to 2019/20
2017/18 Sensitivities
+/- US$50 change in SPF
price equals +/- $75 to $100 million
+/- US$50 change in pulp price
equals +/-$5 to $10 million
+/- Cdn$10 change in average
log price equals +/-$15 to
$25 million
+/- 10% change in Interior
harvest volumes equals
+/- $50 to $70 million
+/- 10% change in Coastal
harvest volumes equals
+/- $15 to $20 million
+/- 1 cent change in
exchange rate equals
+/- $10 to $15 million on
stumpage revenue
The above sensitivities relate
to stumpage revenue only.
+/- 1 percentage point change in the
take-up of 50 per cent reduction
equals +/- $15 to $20 million
+/- 1 percentage point change in BC's
population growth equals
+/- $20 to $30 million in MSP
premium revenue
127
Appendix
Table A5 Material Assumptions – Revenue (continued)
Revenue Source and Assumptions
($ millions unless otherwise specified)
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
$6,495
$6,670
$6,894
$7,164
$37,150
3.0%
$13,748
13.10%
$38,360
3.3%
$14,161
13.13%
$39,894
4.0%
$14,586
13.15%
$4,723
$1,748
$21
$4,868
$1,802
$5,035
$1,859
$5,246
$1,918
$3
—
—
—
Health and social transfers
National Cash Transfers
Canada Health Transfer (CHT) ........................... $36,068
Annual growth .................................................
6.0%
Canada Social Transfer (CST) ............................ $13,348
BC share of national population (June 1) …………… 13.09%
BC health and social transfers revenue
CHT ....................................................................
CST ....................................................................
Prior-year adjustments
Health deferral:
Medical Equipment Trust ..................................
Other federal contributions
$1,585
$1,647
$1,513
$1,486
$18
$137
$300
$68
$49
$18
$2
—
$92
$319
$492
$90
$15
$138
$299
$65
$49
$18
$11
$71
$91
$297
$501
$92
$23
$138
$298
$65
$49
$18
$11
$1
$92
$220
$508
$90
$19
$139
$298
$65
$49
$18
$11
$1
$91
$193
$513
$89
$6,868
$6,658
$6,711
$6,711
$640
$3,503
$895
$523
$1,307
$629
$3,596
$865
$554
$1,014
$644
$3,712
$869
$560
$926
$631
$3,809
$870
$567
$834
$2,664
$2,915
$3,075
$2,961
$698
100%
$712
100%
$712
100%
2017/18 Sensitivities
+/- 0.1 percentage point change in
BC's population share equals
+/- $50 million
Components of revenue
Disaster Financial Assistance ................................
Other Consolidated Revenue Fund ........................
Labour Market Development Agreement ................
Labour Market and Skills Training Program ...........
Family Support and Children in Care ......................
Youth Justice Services ...........................................
Emergency Management .......................................
Local government services and transfers ...............
Other recoveries.....................................................
Crown corporations and agencies ..........................
Post-secondary institutions ....................................
Other SUCH sector agencies..................................
Service delivery agency direct
revenue
School districts ……………………………………………
Post-secondary institutions ……………………………
Health authorities and hospital societies ………………
BC Transportation Financing Authority ………………
Other service delivery agencies ................................
Commercial Crown corporation
net income
BC Hydro ………………………………………………… $684
reservoir water inflows ………………………………… 99%
mean gas price ………………………………………… 2.29
2.59
2.45
(Sumas, $US/MMbtu – BC Hydro forecast based on NYMEX forward selling prices)
electricity prices ........………………………….......... 21.54
25.00
26.49
(Mid-C, $US/MWh)
ICBC …………………………………………………...…
vehicle growth ........................................................
current claims cost percentage change ..................
unpaid claims balance ($ billions) ..........................
investment return ………………………………………
loss ratio ................................................................
($396)
+2.5%
+18.1%
$10.6
3.0%
101.4%
($144)
+1.8%
+2.8%
$11.2
2.5%
94.1%
($25)
+1.8%
+5.0%
$11.8
2.7%
92.5%
2.52
28.52
($143)
+1.8%
+6.3%
$13.0
2.8%
92.4%
Budget and Fiscal Plan – 2017/18 to 2019/20
+/-1% in hydro generation
= +/-$10 million
+/-10% = -/+$1 million
+/-10% change in electricity trade
margins = +/-$20 million
+/-1% = +/-$53 million
+/-1% = -/+$46 million
+/-1% = -/+$106 to $112 million
+/-1% return = +/-$156 to $163 million
128
Appendix
Table A6 Natural Gas Price Forecasts – 2017/18 to 2019/20
Adjusted to fiscal years and
$C/gigajoule at plant inlet
Private sector forecasts (calendar year)
2017
2018
2019
2017/18
2018/19
2019/20
3.60
3.00
3.05
3.00
3.46
2.85
3.00
2.90
3.14
2.95
2.76
2.45
2.50
2.55
3.65
3.75
3.12
3.20
3.30
2.60
2.95
3.10
3.20
3.00
3.15
3.10
3.10
2.70
3.15
3.05
2.80
2.86
2.52
2.36
2.75
2.65
3.25
3.56
3.40
3.50
3.40
3.25
3.27
3.19
3.45
3.15
3.00
3.42
2.80
2.92
3.05
2.80
3.45
4.02
2.96
2.33
2.43
2.23
2.14
1.62
1.85
1.65
2.54
1.39
1.66
1.31
1.55
1.47
2.74
2.46
2.51
2.36
2.46
2.23
1.95
1.65
2.03
1.78
2.16
1.48
1.58
1.40
1.80
1.57
2.29
2.46
2.62
2.84
2.62
2.27
2.12
2.12
2.27
1.87
2.32
2.02
1.82
1.94
2.04
1.72
2.40
2.93
NYMEX Forward Market converted to Plant Inlet CDN$/GJ (December 5, 2016) ………………………………………
2.21
2.51
2.94
2.67
2.16
3.06
1.95
Average all minus high/low …….……………...………………………………………………………………
2.12
2.02
2.28
Average one forecast per consultant minus high/low ……………………………………………………
2.00
1.65
1.93
Natural gas royalty price forecast ……………………………………………………………………………
1.61
1.53
1.73
GLJ Henry Hub US$/MMBtu (January 1, 2017) …………………………………………
Sproule Henry Hub US$/MMBtu (November 30, 2016) …………………………………
McDaniel Henry Hub US$/MMBtu (October 1, 2016) ……………………………………
Deloitte Henry Hub US$/Mcf (September 30, 2016) ………………………………………
GLJ Alberta AECO-C Spot CDN$/MMBtu (January 1, 2017) ……………………………
Sproule Alberta AECO-C Spot CDN$/MMBtu (November 30, 2016) ……………………
McDaniel AECO-C Spot C$/MMBtu (October 1, 2016) …………………………………
Deloitte AECO-C Spot C$/Mcf (September 30, 2016) ……………………………………
GLJ Sumas Spot US$/MMBtu (January 1, 2017) …………………………………………
Sproule Sumas Spot CDN$/MMBtu (November 30, 2016) ………………………………
GLJ BC Spot Plant Gate CDN$/MMBtu (January 1, 2017) ………………………………
Sproule BC Station 2 CDN$/MMBtu (November 30, 2016) ………………………………
McDaniel BC Avg Plant Gate C$MMBtu (October 1, 2016) ………………………………
Deloitte BC Station 2 C$MMBtu (September 30, 2016) …………………………………
GLJ Midwest Chicago US$/MMBtu (January 1, 2017) ……………………………………
Sproule Alliance Plant Gate CDN$/MMBtu (November 30, 2016) ………………………
EIA Henry Hub US$/MMBtu (November 2016) ……………………………………………
TD Economics Henry Hub FuturesUS$/MMBtu (Nov 17, 2016) …………………………
Scotiabank Group Henry Hub US$/MMBtu (December 2, 2016) ………………………
BMO Alberta Empress US$/MMBtu (November, 2016) …………………………………
CIBC World Markets Inc. Henry Hub US$/MMBtu (August 9, 2016) ...........................
InSite Petroleum Consultants Ltd Henry Hub US$/MMBtu (September 30, 2016) .....
GLJ: Gilbert Laustsen Jung Petroleum Consultants Ltd
US EIA: US Energy Information Administration
Deloitte/AJM: Deloitte L.L.P acquired Ashton Jenkins Mann Petroleum Consultants
3.30
3.50
2.62
2.79
2.80
3.25
3.75
AECO: Alberta Energy Company
McDaniel: McDaniel & Associates Consultants Ltd
Natural gas prices
-0.51
Natural Gas Prices
10
-0.49
Cdn$/gigajoule, plant inlet
June/08: $9.34
9
8
7
6
Budget 2017
5
4
3
$1.61
2
$1.53
$1.73
1
0
May/16: $0.33
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Budget and Fiscal Plan – 2017/18 to 2019/20
2018
2019
2020
7
-0.55
-0.52
129
Appendix
Table A7 Material Assumptions – Expense
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
2,066
2,062
2,080
200,974
201,244
1,451
1,596
1,592
1,592
Average children-in-care ……………………… 7,250
caseload (#)
Average annual residential …………………… 44,800
cost per child in care ($)
7,250
7,200
7,100
44,800
46,600
48,500
5,923
5,969
5,970
553,435
531,251
12,004
6,865
3,315
556,901
534,717
12,004
6,865
3,315
560,957
538,772
12,004
6,865
3,315
Updated
Forecast
2016/17
Ministry Programs and Assumptions
($ millions unless otherwise specified)
Advanced Education …………………………… 1,981
Student spaces in public institutions ………… 200,341
Children and Family Development …………
Education ………………………………………… 5,617
Public School Enrolment (# of FTEs) ………… 549,203
School age (K–12) ...................................... 527,019
Distributed Learning (online) ......................
12,004
Summer ......................................................
6,865
3,315
Adults .........................................................
Forests, Lands and Natural Resource
Operations …………………...…..................
Sensitivities 2017/18
202,509 Student enrolments may fluctuate due to a
number of factors including economic changes
and labour market needs.
A 1% increase in the cost per case or a 1%
increase in the average funded caseload will
affect expenditures by approximately $2 million
(excluding Delegated Aboriginal Agencies).
Enrolment figures are based on BC Stats and
school district enrolment trends, to which the
ministry has added forecasts for distributed
learning, adult education and summer learning.
887
703
696
698
BC Timber Sales …………………………….…
182
183
181
183
Targets can be impacted by changes to actual
inventory costs incurred. There is a lag of
approximately 1.5 years between when inventory
costs are incurred and when they are expensed.
Volume harvested can also impact targets. For
example, if volume harvested is less than
projected in any year, then capitalized expenses
will also be reduced in that year.
Fire Management ………………………………
279
63
64
64
For authorized expenditures under the Wildfire
Act . Over the past several years, wildfire fighting
costs have ranged from a low of $47 million in
2006 to a high of $382 million in 2010.
Health .............................................................
17,965
18,840
19,341
19,913
Pharmacare ……………………………………
1,173
1,226
1,261
1,300
A 1% change in utilization or prices affects costs
by approximately $10 million.
Medical Services Plan (MSP) ………………… 4,286
4,570
4,774
4,869
A 1% increase in volume of services provided by
fee-for-service physicians affects costs by
approximately $25 million.
Regional Services ……………………………… 12,234
12,770
13,030
13,466
515
521
521
240,000
240,000
Justice ......................................................……
527
New cases filed/processed …………………… 240,000
(# for all courts)
240,000 The number of criminal cases proceeded on by
the provincial and federal Crown (including
appeals to higher courts in BC), the number of
civil and family litigation cases, the number of
violation tickets disputed, and the number of
municipal bylaw tickets disputes which would go
to court for resolution.
Crown Proceeding Act (CPA) ………………
51
25
25
25
Public Safety and Solicitor General .............
684
742
741
741
Policing, Victim Services and Corrections ....
629
680
679
679
The number of new cases, and the difference
between estimated settlements and actual
settlements.
The volume and severity of criminal activity, the
number of inmate beds occupied and the
number of offenders under community
supervision.
Budget and Fiscal Plan – 2017/18 to 2019/20
130
Appendix
Table A7 Material Assumptions – Expense (continued)
Updated
Forecast
2016/17
Ministry Programs and Assumptions
($ millions unless otherwise specified)
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
Sensitivities 2017/18
Social Development and Social
Innovation ……………………………………
2,738
2,981
3,039
3,056
Temporary Assistance ………………………… 44,955
annual average caseload (#)
42,100
41,300
40,100
Disability Assistance …………………………… 98,205
annual average caseload (#)
103,000
104,600
105,500 The caseload for persons with disabilities is
sensitive to the aging of the population and
longer life expectancy for individuals with
disabilities. Cost per case fluctuations are driven
by primarily by earning exemption policy
exemptions which are dependent on the level of
income earned by clients.
Average caseload (#) ………………………… 18,150
19,040
19,900
20,730
44,900
45,200
44,900
43,500
Average caseload (#) ………………………… 1,300
1,560
1,830
2,100
17,400
17,300
16,700
16,000
Transportation and Infrastructure ...............
Emergency Program Act (EPA) ………………
988
110
868
15
874
15
874
15
Tax Transfers ……………………………………
1,031
1,166
1,187
1,208
Individuals .....................................................
464.0
489.0
489.0
489.0
Low Income Climate Action ........................
Early Childhood Tax Benefit .......................
Sales Tax ..................................................
Small Business Venture Capital .................
BC Senior's Home Renovation ...................
Other tax transfers to individuals ...............
Family Bonus Program................................
194.9
138.5
48.8
27.3
2.2
52.1
0.2
195.0
145.0
55.0
31.0
2.0
60.8
0.2
195.0
145.0
55.0
31.0
2.0
60.8
0.2
195.0
145.0
55.0
31.0
2.0
60.8
0.2
Corporations .................................................
567.0
677.0
698.0
719.0
in 2017/18. Production services tax credit is
90.0
437.3
the most volatile of all tax transfers and is
influenced by several factors including delay
in filing returns and assessment of claims,
length of projects and changes in the
exchange rates.
The expected to work caseload is sensitive to
fluctuations in economic and employment trends.
Costs are driven by changes to cost per case
and caseload. Cost per case fluctuations result
from changes in the needed supports required by
clients, as well as caseload composition.
Adult Community Living:
Developmental Disabilities Programs
Average cost per client ($) …………………
Personal Supports Initiative
Average cost per client ($) …………………
Film and Television ....................................
50.9
90.0
90.0
Production Services ...................................
339.5
404.0
420.3
Scientific Research & Experimental
Development ............................................
61.7
68.0
72.0
Interactive Digital Media .............................
64.6
59.3
60.0
Mining Exploration ......................................
40.3
42.0
42.0
Other tax transfers to corporations .............
10.0
13.7
13.7
2016/17 tax transfer forecast incorporates adjustments relating to prior years.
Management of Public Funds and Debt ……
Interest rates for new provincial borrowing:
Short-term ……………………………………
Long-term ………………………………………
CDN/US exchange rate (cents) ………………
76.0
60.0
42.0
13.7
1,148
1,181
1,169
1,162
0.61%
2.26%
131.8
0.61%
2.78%
135.7
0.93%
3.20%
131.1
1.54%
3.56%
126.8
Service delivery agency net spending ……… 6,489
6,279
6,266
6,614
School districts …………………………………
393
Post-secondary institutions …………………… 3,325
787
Health authorities and hospital societies ……
BC Transportation Financing Authority ……… 1,139
Other service delivery agencies ……………… 845
241
3,180
674
1,254
930
220
3,460
515
1,369
702
295
3,581
575
1,496
667
The adult community living caseload is sensitive
to an aging population and to the level of service
required. Cost per case fluctuations are driven by
the proportion of clients receiving certain types of
services at differing costs. For example,
residential care is significantly more costly than
day programs.
For authorized expenditures under the
Emergency Program Act , including those for
further disasters, and the difference between
initial estimates for disaster response and
recovery costs and final project costs.
These tax transfers are now expensed as
required under generally accepted accounting
principles.
Changes in 2016 tax transfers will result in
one-time effect (prior-year adjustment) and
could result in an additional base change
Full year impact on MoPD on interest costs of a
1% change in interest rates equals $57.0 million;
$100 million increase in debt level equals $1.4
million.
Budget and Fiscal Plan – 2017/18 to 2019/20
Table A8 Operating Statement – 2010/11 to 2019/20
($ millions)
Actual
2010/11
Actual
2011/12
Actual
2012/13
Actual
2013/14
Actual
2014/15
Actual
2015/16
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
Average
annual
change
(per cent)
40,680
(40,926)
41,805
(42,047)
42,041
(43,204)
Surplus (deficit) before unusual items …………
Forecast allowance ………………………………
Liability for HST transition funding repayment
(246)
-
(242)
(1,599)
(1,163)
-
347
-
1,692
-
Surplus (deficit) ……………………………………
(246)
(1,841)
(1,163)
347
-0.1
-0.8
-0.5
-0.6
-4.4
-2.8
(409)
(256)
Revenue …………………………………………
Expense …………….....…....………………..…
43,748
(43,401)
46,131
(44,439)
47,606
(46,876)
50,838
(50,193)
51,196
(50,702)
52,045
(51,572)
730
-
1,808
(350)
-
645
(350)
-
494
(250)
-
473
(250)
-
1,692
730
1,458
295
244
223
0.2
0.7
0.3
0.6
0.1
0.1
0.1
0.8
3.7
1.5
2.9
0.6
0.5
0.4
76
364
156
307
61
50
45
2.8
2.6
Per cent of GDP: 1
Surplus (deficit) .......................…………………
Per cent of revenue:
Surplus (deficit) .......................…………………
Per capita ($): 2
Surplus (deficit) .......................…………………
1
2
(55)
Surplus (deficit) as a per cent of GDP is calculated using GDP for the calendar year ending in the fiscal year (e.g. 2017/18 amounts divided by GDP for the 2017 calendar year).
Per capita revenue and expense is calculated using July 1 population (e.g. 2017/18 amounts divided by population on July 1, 2017).
Appendix
Budget and Fiscal Plan – 2017/18 to 2019/20
50,890
(49,082)
131
132
Table A9 Revenue by Source – 2010/11 to 2019/20
($ millions)
Natural resource revenue:
Natural gas royalties ……………………………
Bonus bids, rents on drilling rights and leases
Columbia River Treaty …………………………
Other energy and minerals ………………………
Forests ……………………………………………
Other resources …………………………………
Other revenue:
Medical Services Plan premiums ………………
Post-secondary education fees …………………
Other health-care related fees …………………
Motor vehicle licences and permits ……………
Other fees and licences …………………………
Investment earnings ……………………………
Sales of goods and services ……………………
Miscellaneous ……………………………………
Contributions from the federal government:
Canada Health Transfer …………………………
Canada Social Transfer …………………………
Harmonized sales tax transition payments ……
Other cost shared agreements …………………
Commercial Crown corporation net income:
BC Hydro …………………………………………
Liquor Distribution Branch ………………………
BC Lotteries (net of payments to federal gov't)
ICBC ………………………..……………………
BC Railway Company ……………………………
Transportation Investment Corporation ………
Other ………………………………………………
Total revenue ………………………………
Actual
2011/12
Actual
2012/13
Actual
2013/14
Actual
2014/15
Actual
2015/16
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
Average
annual
change
(per cent)
6.3
6.3
2.9
0.7
6.0
0.5
3.5
5.8
n/a
3.8
4.6
5,805
2,026
5,614
940
741
735
1,920
855
(3)
399
19,032
6,427
2,002
5,930
928
959
636
1,913
944
(5)
411
20,145
6,977
2,204
6,068
890
1,120
614
1,985
758
1
433
21,050
6,862
2,427
5,303
917
1,222
724
2,080
937
458
20,930
8,076
2,635
5,762
932
1,198
752
2,154
1,065
(1)
483
23,056
8,380
2,787
5,990
973
1,190
734
2,219
1,533
520
24,326
9,598
3,002
6,544
976
1,201
745
2,289
2,025
530
26,910
9,170
3,413
6,785
983
1,218
758
2,395
1,542
540
26,804
9,598
3,468
7,061
990
1,236
770
2,504
1,445
550
27,622
10,031
3,516
7,257
997
1,255
770
2,618
1,425
560
28,429
313
923
136
514
436
406
2,728
339
928
110
529
482
424
2,812
169
868
89
306
562
479
2,473
445
859
170
269
719
493
2,955
493
834
130
267
754
459
2,937
139
765
116
226
865
460
2,571
159
623
114
317
859
490
2,562
237
353
126
289
852
463
2,320
239
254
114
270
870
483
2,230
291
164
120
262
872
478
2,187
-0.8
-17.5
-1.4
-7.2
8.0
1.8
-2.4
1,787
1,235
308
467
643
843
759
1,929
7,971
1,919
1,291
324
479
722
1,022
930
1,746
8,433
2,047
1,345
327
489
699
1,173
942
1,673
8,695
2,158
1,445
333
504
770
1,236
946
2,256
9,648
2,254
1,544
358
499
770
1,203
967
1,893
9,488
2,434
1,666
374
521
841
1,226
1,011
2,287
10,360
2,529
1,815
399
529
860
1,189
1,008
2,345
10,674
2,322
1,900
383
536
876
1,239
1,001
2,225
10,482
1,719
1,980
386
543
860
1,255
1,018
2,101
9,862
1,749
2,050
386
552
832
1,279
1,031
1,939
9,818
-0.2
5.8
2.5
1.9
2.9
4.7
3.5
0.1
2.3
3,689
1,487
769
2,064
8,009
3,858
1,526
580
1,760
7,724
3,887
1,555
1,605
7,047
4,280
1,589
1,645
7,514
4,186
1,641
1,452
7,279
4,454
1,695
1,498
7,647
4,744
1,751
1,585
8,080
4,868
1,802
1,647
8,317
5,035
1,859
1,513
8,407
5,246
1,918
1,486
8,650
4.0
591
891
1,097
315
15
(7)
38
2,940
558
909
1,102
84
14
(17)
41
2,691
509
930
1,116
231
6
(60)
44
2,776
549
877
1,165
136
13
(88)
49
2,701
581
935
1,245
657
5
(89)
37
3,371
655
1,031
1,304
(293)
6
(82)
81
2,702
684
1,050
1,305
(396)
6
(88)
103
2,664
698
1,054
1,284
(144)
5
(90)
108
2,915
712
1,060
1,301
(25)
6
(86)
107
3,075
712
1,050
1,314
(143)
7
(86)
107
2,961
40,680
41,805
42,041
43,748
46,131
47,606
50,890
50,838
51,196
52,045
n/a
-3.6
0.9
2.1
1.8
2.0
-191.6
-8.1
32.1
12.2
0.1
2.8
Appendix
Budget and Fiscal Plan – 2017/18 to 2019/20
Taxation revenue:
Personal income …………………………………
Corporate income ………………………………
Sales …………………………………………….
Fuel ………………………………………………
Carbon ……………………………………………
Tobacco ……………………………………………
Property ……………………………………………
Property transfer …………………………………
Corporation capital ………………………………
Insurance premium ………………………………
Actual
2010/11
Table A10 Revenue by Source Supplementary Information – 2010/11 to 2019/20
Actual
2010/11
Per cent of nominal GDP:
Actual
2011/12
Actual
2012/13
Actual
2013/14
Actual
2014/15
Actual
2015/16
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
1
Taxation ……………………………………………
Natural resources …………………………………
Other ………………………………………………
Contributions from the federal government ……
Commercial Crown corporation net income …
Total revenue ………………………………
Average
annual
change
(per cent)
9.3
1.3
3.9
3.9
1.4
19.8
9.3
1.3
3.9
3.6
1.2
19.3
9.5
1.1
3.9
3.2
1.3
19.0
9.1
1.3
4.2
3.3
1.2
19.1
9.6
1.2
3.9
3.0
1.4
19.1
9.7
1.0
4.1
3.1
1.1
19.0
10.3
1.0
4.1
3.1
1.0
19.4
9.8
0.9
3.8
3.1
1.1
18.7
9.7
0.8
3.5
3.0
1.1
18.1
9.7
0.7
3.3
2.9
1.0
17.7
0.4
-6.3
-1.7
-3.1
-3.9
-1.3
7.5
3.1
4.0
15.6
-3.1
7.1
5.8
3.1
5.8
-3.6
-8.5
2.8
4.5
-12.1
3.1
-8.8
3.2
0.6
-0.6
19.5
11.0
6.6
-2.7
4.1
10.2
-0.6
-1.7
-3.1
24.8
5.4
5.5
-12.5
9.2
5.1
-19.8
3.2
10.6
-0.4
3.0
5.7
-1.4
6.9
-0.4
-9.4
-1.8
2.9
9.4
-0.1
3.1
-3.9
-5.9
1.1
5.5
0.7
2.9
-1.9
-0.4
2.9
-3.7
1.7
n/a
n/a
n/a
n/a
n/a
n/a
Taxation ……………………………………………
Natural resources …………………………………
Other ………………………………………………
Contributions from the federal government ……
Commercial Crown corporation net income …
Total revenue ………………………………
4,262
611
1,785
1,793
658
9,109
4,478
625
1,874
1,717
598
9,292
4,630
544
1,913
1,550
611
9,247
4,561
644
2,102
1,637
589
9,533
4,963
632
2,043
1,567
726
9,931
5,184
548
2,208
1,629
576
10,144
5,663
539
2,246
1,700
561
10,710
5,577
483
2,181
1,730
606
10,577
5,678
458
2,027
1,728
632
10,524
5,775
444
1,994
1,757
601
10,572
3.4
-3.5
1.2
-0.2
-1.0
1.7
Real Per Capita Revenue (2016 $) 3 ………………
9,797
9,762
9,608
9,914
10,223
10,330
10,710
10,365
10,111
9,954
0.2
Growth rate (per cent) ……………………………
4.4
-0.4
-1.6
3.2
3.1
1.0
3.7
-3.2
-2.5
-1.6
0.6
Growth rates (per cent):
Per capita ($): 2
1
2
3
Appendix
Budget and Fiscal Plan – 2017/18 to 2019/20
Taxation ……………………………………………
Natural resources …………………………………
Other ………………………………………………
Contributions from the federal government ……
Commercial Crown corporation net income …
Total revenue ………………………………
Revenue as a per cent of GDP is calculated using nominal GDP for the calendar year ending in the fiscal year (e.g. 2017/18 revenue divided by nominal GDP for the 2017 calendar year).
Per capita revenue is calculated using July 1 population (e.g. 2017/18 revenue divided by population on July 1, 2017).
Revenue is converted to real (inflation-adjusted) terms using the consumer price index (CPI) for the corresponding calendar year (e.g. 2017 CPI for 2017/18 revenue).
133
134
Table A11 Expense by Function – 2010/11 to 2019/20 1
($ millions)
Actual
2010/11
Actual
2011/12
Actual
2012/13
Actual
2013/14
Actual
2014/15
Updated
Forecast
2016/17
Actual
2015/16
Budget
Estimate
2017/18
Plan
2018/19
Average
annual
change
Plan
2019/20
(per cent)
Function:
Health:
Medical Services Plan ………………………
Pharmacare …………………………………
Regional services ……………………………
Other healthcare expenses …………………
Social services:
Social assistance ……………………………
Child welfare …………………………………
Low income tax credit transfers ……………
Community living and other services ………
Protection of persons and property …………
Transportation …………………………………
Natural resources & economic development
Other ……………………………………………
Contingencies …………………………………
General government ……………………………
Debt servicing …………………………………
Operating expense …………………………
Unusual items:
HST transition funding repayment ……………
3,873
1,147
11,255
642
16,917
3,906
1,122
11,784
690
17,502
4,114
1,130
11,960
658
17,862
4,136
1,120
12,410
704
18,370
4,345
1,335
12,811
712
19,203
4,462
1,214
13,284
759
19,719
4,763
1,347
13,725
794
20,629
4,919
1,382
14,013
800
21,114
5,016
1,421
14,459
801
21,697
3.6
2.6
3.5
2.8
3.4
5,802
4,859
504
11,165
5,885
4,907
436
11,228
6,002
5,103
423
11,528
6,133
5,284
410
11,827
6,064
5,349
414
11,827
6,303
5,502
407
12,212
6,409
5,760
468
12,637
6,694
5,977
453
13,124
6,756
6,114
454
13,324
6,767
6,224
450
13,441
1.7
2.8
-1.3
2.1
1,506
1,118
408
754
3,786
1,448
1,580
2,349
1,208
1,146
2,252
1,550
1,112
509
769
3,940
1,512
1,545
1,873
1,414
1,235
2,383
1,552
1,098
534
806
3,990
1,539
1,555
2,092
1,346
1,262
2,390
1,572
1,097
279
857
3,805
1,520
1,580
1,755
1,184
1,386
2,482
1,589
1,129
248
881
3,847
1,451
1,608
2,191
1,288
1,359
2,498
1,641
1,301
247
917
4,106
1,572
1,670
2,562
1,264
1,501
2,786
1,689
1,372
250
948
4,259
1,605
1,848
2,246
2,340
450
1,447
2,531
1,862
1,485
250
1,022
4,619
1,572
1,851
2,236
1,632
400
1,464
2,666
1,882
1,478
250
1,058
4,668
1,585
1,920
2,188
1,471
300
1,380
2,752
1,887
1,478
250
1,071
4,686
1,532
1,954
2,216
1,495
300
1,381
2,870
2.5
3.2
-5.3
4.0
2.4
0.6
2.4
-0.6
2.4
n/a
2.1
2.7
40,926
42,047
43,204
43,401
44,439
46,876
49,082
50,193
50,702
51,572
2.6
-
1,599
-
-
-
-
-
-
-
-
Total expense ………………………………
40,926
43,646
43,204
43,401
44,439
46,876
49,082
50,193
50,702
51,572
Per cent of operating expense:
Health ……………………………………………
Education ………………………………………
Social services and housing …………………
Protection of persons and property …………
Transportation …………………………………
Natural resources & economic development
Other ……………………………………………
Contingencies …………………………………
General government ……………………………
Debt servicing …………………………………
39.1
27.3
9.3
3.5
3.9
5.7
3.0
2.8
5.5
40.2
26.7
9.4
3.6
3.7
4.5
3.4
2.9
5.7
40.5
26.7
9.2
3.6
3.6
4.8
3.1
2.9
5.5
41.2
27.3
8.8
3.5
3.6
4.0
2.7
3.2
5.7
41.3
26.6
8.7
3.3
3.6
4.9
2.9
3.1
5.6
41.0
26.1
8.8
3.4
3.6
5.5
2.7
3.2
5.9
40.2
25.7
8.7
3.3
3.8
4.6
4.8
0.9
2.9
5.2
41.1
26.1
9.2
3.1
3.7
4.5
3.3
0.8
2.9
5.3
41.6
26.3
9.2
3.1
3.8
4.3
2.9
0.6
2.7
5.4
42.1
26.1
9.1
3.0
3.8
4.3
2.9
0.6
2.7
5.6
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
1
Figures reflect government accounting policies used in the most recent Public Accounts audited financial statements.
0.8
-0.5
-0.2
-1.9
-0.2
-3.2
-0.2
n/a
-0.5
0.1
Appendix
Budget and Fiscal Plan – 2017/18 to 2019/20
Education:
Elementary and secondary …………………
Post-secondary ………………………………
Other education expenses …………………
3,641
1,129
10,597
625
15,992
Table A12 Expense by Function Supplementary Information – 2010/11 to 2019/20
Actual
2010/11
Per cent of nominal GDP:
Actual
2011/12
Actual
2012/13
Actual
2013/14
Actual
2014/15
Actual
2015/16
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
1
Average
annual
change
(per cent)
7.8
5.4
1.8
0.7
0.8
1.1
0.6
0.6
1.1
20.0
7.8
5.2
1.8
0.7
0.7
0.9
0.7
0.6
1.1
19.4
7.9
5.2
1.8
0.7
0.7
0.9
0.6
0.6
1.1
19.5
7.8
5.2
1.7
0.7
0.7
0.8
0.5
0.6
1.1
19.0
7.6
4.9
1.6
0.6
0.7
0.9
0.5
0.6
1.0
18.4
7.7
4.9
1.6
0.6
0.7
1.0
0.5
0.6
1.1
18.8
7.5
4.8
1.6
0.6
0.7
0.9
0.9
0.2
0.6
1.0
18.7
7.6
4.8
1.7
0.6
0.7
0.8
0.6
0.1
0.5
1.0
18.4
7.5
4.7
1.6
0.6
0.7
0.8
0.5
0.1
0.5
1.0
17.9
7.4
4.6
1.6
0.5
0.7
0.8
0.5
0.1
0.5
1.0
17.5
-0.6
-1.9
-1.6
-3.3
-1.6
-4.6
-1.7
n/a
-1.9
-1.3
4.3
1.2
8.9
4.9
8.7
8.8
-12.6
-16.7
2.5
2.9
5.8
0.6
4.1
4.4
-2.2
-20.3
17.1
7.8
5.8
2.7
3.5
2.7
1.3
1.8
0.6
11.7
-4.8
2.2
0.3
2.8
2.1
2.6
-4.6
-1.2
1.6
-16.1
-12.0
9.8
3.8
0.5
2.8
0.0
1.1
-4.5
1.8
24.8
8.8
-1.9
0.6
2.4
4.5
3.3
6.7
8.3
3.9
16.9
-1.9
10.4
11.5
5.5
2.7
3.5
3.7
2.1
10.7
-12.3
85.1
-3.6
-9.2
4.7
4.6
3.9
8.5
-2.1
0.2
-0.4
-30.3
1.2
5.3
2.3
2.4
1.5
1.1
0.8
3.7
-2.1
-9.9
-5.7
3.2
1.0
2.8
0.9
0.4
-3.3
1.8
1.3
1.6
0.1
4.3
1.7
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Health ……………………………………………
Education ………………………………………
Social services …………………………………
Protection of persons and property …………
Transportation …………………………………
Natural resources & economic development
Other ……………………………………………
Contingencies …………………………………
General government ……………………………
Debt servicing …………………………………
3,581
2,500
848
324
354
526
270
257
504
3,760
2,496
876
336
343
416
314
274
530
3,850
2,536
878
339
342
460
296
278
526
3,892
2,577
829
331
344
382
258
302
541
3,955
2,546
828
312
346
472
277
293
538
4,092
2,602
875
335
356
546
269
320
594
4,150
2,660
896
338
389
473
492
95
305
533
4,292
2,730
961
327
385
465
340
83
305
555
4,340
2,739
960
326
395
450
302
62
284
566
4,407
2,730
952
311
397
450
304
61
281
583
2.3
1.0
1.3
-0.5
1.3
-1.7
1.3
n/a
1.0
1.6
Operating expense …………………………
9,164
9,345
9,505
9,456
9,567
9,989
10,331
10,443
10,424
10,476
1.5
9,857
0.2
9,819
-0.4
9,874
0.6
9,835
-0.4
9,848
0.1
10,171
3.3
10,330
1.6
10,234
-0.9
10,013
-2.2
9,864
-1.5
0.0
Operating expense …………………………
-1.4
Growth rates (per cent):
Health ……………………………………………
Education ………………………………………
Social services …………………………………
Protection of persons and property …………
Transportation …………………………………
Natural resources & economic development
Other ……………………………………………
General government ……………………………
Debt servicing …………………………………
Operating expense …………………………
Appendix
Budget and Fiscal Plan – 2017/18 to 2019/20
Health ……………………………………………
Education ………………………………………
Social services …………………………………
Protection of persons and property …………
Transportation …………………………………
Natural resources & economic development
Other ……………………………………………
Contingencies …………………………………
General government ……………………………
Debt servicing …………………………………
Per capita ($): 2
Real Per Capita Operating Expense (2016 $)
3
Growth rate (per cent) …………………………
1
2
3
0.0
Expense as a per cent of GDP is calculated using nominal GDP for the calendar year ending in the fiscal year (e.g. 2017/18 expense divided by nominal GDP for the 2017 calendar year).
Per capita expense is calculated using July 1 population (e.g. 2017/18 expense divided by population on July 1, 2017).
Expense is converted to real (inflation-adjusted) terms using the consumer price index (CPI) for the corresponding calendar year (e.g. 2017 CPI for 2017/18 expense).
135
136
Table A13 Full-Time Equivalents (FTEs) – 2010/11 to 2019/20 1
Actual
2010/11
Actual
2011/12
Actual
2012/13
Actual
2013/14
Actual
2014/15
Actual
2015/16
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
(per cent)
Taxpayer-supported programs and agencies:
Ministries and special offices (CRF) 2 ………
Service delivery agencies 3 …………….....…
Total FTEs …………………………………
Average
annual
change
30,221
4,295
27,228
4,346
27,326
4,508
26,526
4,640
26,679
4,798
27,192
4,803
27,455
4,813
28,000
4,865
28,100
4,866
28,100
4,632
-0.8
34,516
31,574
31,834
31,166
31,477
31,995
32,268
32,865
32,966
32,732
-0.6
-3.6
-4.7
-9.9
1.2
0.4
3.7
-2.9
2.9
0.6
3.4
1.9
0.1
1.0
0.2
2.0
1.1
0.4
0.0
0.0
-4.8
-1.0
0.3
129.4
142.5
142.8
147.2
147.6
146.7
147.3
146.3
147.6
150.4
1.7
0.8
Growth rates:
Ministries and special offices (CRF) …………
Service delivery agencies …………….....….
4
Total FTEs ……………………………………
1
2
3
4
Full-time equivalents (FTEs) are a measure of staff employment. FTEs are calculated by dividing the total hours of employment paid for in a given period by the number of
hours an individual, full-time person would normally work in that period. This does not equate to the physical number of employees. For example, two half-time employees
would equal one FTE, or alternatively, three FTEs may represent two full-time employees who have worked sufficient overtime hours to equal an additional FTE.
The ministry 2011/12 FTE total includes a reduction of about 3,200 FTEs reflecting the shift of BC Ambulance Service oversight from the Ministry of Health to the Provincial
Health Services Authority.
Service delivery agency FTE amounts do not include SUCH sector staff employment.
Population per FTE is calculated using July 1 population (e.g. population on July 1, 2017 divided by 2017/18 FTEs).
Appendix
Budget and Fiscal Plan – 2017/18 to 2019/20
Population per FTE:
Table A14 Capital Spending – 2010/11 to 2019/20
($ millions)
Actual
2011/12
Actual
2012/13
Actual
2013/14
Actual
2014/15
Actual
2015/16
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
Average
annual
change
(per cent)
433
924
916
1,080
39
10
197
261
230
20
4,110
560
655
732
921
37
1
194
245
196
24
3,565
509
591
742
1,005
48
6
267
92
19
3,279
466
507
690
1,017
80
298
65
28
3,151
420
718
900
822
83
326
107
31
3,407
430
746
923
867
51
290
127
25
3,459
504
816
1,245
941
66
374
138
39
4,123
687
987
917
1,344
161
519
134
55
4,804
678
880
962
1,226
113
442
139
51
4,491
597
757
782
1,546
115
442
114
45
4,398
3.6
-2.2
-1.7
4.1
12.8
n/a
n/a
6.0
-7.5
9.4
1,519
67
730
6
48
81
18
1
2,470
1,703
108
734
9
92
74
19
5
2,744
1,929
94
540
10
73
97
10
12
2,765
2,036
52
202
8
82
100
13
26
2,519
2,169
28
76
5
88
69
25
28
2,488
2,306
15
26
23
90
68
23
23
2,574
2,613
5
46
9
63
90
29
2,855
2,421
12
592
22
60
90
82
3,279
2,434
7
959
13
40
90
29
3,572
2,961
18
837
12
40
90
27
3,985
7.7
-13.6
1.5
8.0
-2.0
1.2
4.6
n/a
5.5
6,580
6,309
6,044
5,670
5,895
6,033
6,978
8,083
8,063
8,383
2.7
2.0
1.2
3.2
1.6
1.3
2.9
1.5
1.2
2.7
1.4
1.1
2.5
1.4
1.0
2.4
1.4
1.0
2.4
1.6
1.1
2.7
1.8
1.2
3.0
1.6
1.3
2.8
1.5
1.4
2.8
-3.2
1.3
-1.3
10.5
-26.5
-7.1
-13.3
11.1
-4.1
-8.0
0.8
-4.2
-3.9
-8.9
-6.2
8.1
-1.2
4.0
1.5
3.5
2.3
19.2
10.9
15.7
16.5
14.9
15.8
-6.5
8.9
-0.2
-2.1
11.6
4.0
2.2
2.5
2.0
920
553
1,473
792
610
1,402
721
608
1,329
687
549
1,236
733
536
1,269
737
548
1,286
868
601
1,469
999
682
1,682
923
734
1,657
893
809
1,703
-0.3
4.3
1.6
Real Per Capita Capital Spending (2016 $) 4 …
1,585
1,473
1,381
1,285
1,306
1,309
1,469
1,648
1,592
1,603
0.1
Growth rate (per cent) …………………………
-9.4
-7.0
-6.2
-7.0
1.7
0.2
12.2
12.2
-3.4
0.7
-0.6
Self-supported:
BC Hydro …………………………………………
Columbia River power projects …………………
Transportation Investment Corporation.………
BC Railway Company …………………………
ICBC ………………………………………………
BC Lottery Corporation …………………………
Liquor Distribution Branch ………………………
Other 1 ............................................................
Total capital spending ……………………
Per cent of nominal GDP: 2
Taxpayer-supported ……………………………
Self-supported ……………………………………
Total …………………………………………
Growth rates:
Taxpayer-supported ……………………………
Self-supported ……………………………………
Total …………………………………………
Per capita: 3
Taxpayer-supported ……………………………
Self-supported ……………………………………
Total …………………………………………
1
2
3
4
0.8
Appendix
Budget and Fiscal Plan – 2017/18 to 2019/20
Taxpayer-supported:
Education
Schools districts ……………………………
Post-secondary institutions …………………
Health ……………………………………………
BC Transportation Financing Authority ………
BC Transit ………………………………………
Vancouver Convention Centre expansion ……
BC Place redevelopment ………………………
Government direct (ministries) …………………
Housing …………………………………………
Other ………………………………………………
Actual
2010/11
Includes post-secondary institutions' self-supported subsidiaries.
Capital spending as a per cent of GDP is calculated using nominal GDP for the calendar year ending in the fiscal year (e.g. 2017/18 amounts divided by nominal GDP for the 2017 calendar year).
Per capita capital spending is calculated using July 1 population (e.g. 2017/18 amounts divided by population on July 1, 2017).
Capital spending is converted to real (inflation-adjusted) terms using the consumer price index (CPI) for the corresponding calendar year (e.g. 2017 CPI for 2017/18 capital spending).
137
138
Table A15 Statement of Financial Position – 2010/11 to 2019/20
Actual
2010/11
($ millions)
Actual
2011/12
Actual
2012/13
Actual
2013/14
Actual
2014/15
Actual
2015/16
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
Average
annual
change
(per cent)
3,235
7,938
1,491
3,174
8,186
1,778
2,802
9,336
835
3,676
9,121
977
3,893
9,651
1,580
3,964
9,894
1,086
3,271
10,268
1,120
3,244
10,301
559
3,145
10,815
489
0.3
3.4
-11.1
6,998
15,167
22,165
7,541
17,208
24,749
7,839
19,255
27,094
8,271
20,624
28,895
7,499
22,074
29,573
7,605
23,497
31,102
8,094
25,151
33,245
8,703
26,520
35,223
9,217
28,736
37,953
3.0
9.1
7.2
32,694
34,829
37,887
40,067
42,669
44,697
46,046
47,904
49,327
52,402
5.4
7,919
10,749
9,119
10,449
9,149
9,881
8,298
9,683
8,312
9,765
8,571
9,709
9,503
9,648
9,855
10,397
10,320
10,759
10,677
11,196
3.4
0.5
31,821
13,333
-
34,659
15,534
-
38,182
17,634
-
41,068
19,625
-
41,880
21,040
-
42,727
22,565
-
42,027
24,289
350
43,302
26,135
350
45,184
28,023
250
47,201
30,237
250
45,154
1,410
50,193
1,491
55,816
1,778
60,693
835
62,920
977
65,292
1,580
66,666
1,086
69,787
1,120
73,457
559
77,688
489
4.5
9.5
n/a
6.2
-11.1
(455)
46,109
(730)
50,954
(755)
56,839
(726)
60,802
(739)
63,158
(820)
66,052
(805)
66,947
(998)
69,909
(1,516)
72,500
(1,515)
76,662
64,777
70,522
75,869
78,783
81,235
84,332
86,098
90,161
93,579
98,535
4.8
Net liabilities ………………………………………
(32,083)
(35,693)
(37,982)
(38,716)
(38,566)
(39,635)
(40,052)
(42,257)
(44,252)
(46,133)
4.1
Capital and other assets:
Tangible capital assets …………………………
Restricted assets ………………………………
Other assets ……………………………………
34,278
1,312
891
35,692
1,377
894
36,762
1,442
966
37,778
1,493
1,307
39,028
1,553
1,281
40,282
1,668
1,064
42,266
1,668
1,153
44,831
1,712
1,156
47,074
1,757
1,159
49,161
1,802
1,157
4.1
3.6
2.9
36,481
37,963
39,170
40,578
41,862
43,014
45,087
47,699
49,990
52,120
4.0
4,398
2,270
1,188
1,862
3,296
3,379
5,035
5,442
5,738
5,987
3.5
Per cent of Nominal GDP:
Net liabilities ……………………………………
Capital and other assets ………………………
15.6
17.8
16.5
17.5
17.2
17.7
16.9
17.7
16.0
17.4
15.9
17.2
15.3
17.2
15.5
17.5
15.6
17.6
15.7
17.7
0.0
-0.1
Growth rates:
Net liabilities ……………………………………
Capital and other assets ………………………
8.8
6.6
11.3
4.1
6.4
3.2
1.9
3.6
-0.4
3.2
2.8
2.8
1.1
4.8
5.5
5.8
4.7
4.8
4.3
4.3
4.6
4.3
Per capita: 2
Net liabilities ……………………………………
Capital and other assets ………………………
7,184
8,169
7,933
8,438
8,355
8,616
8,437
8,842
8,302
9,012
8,446
9,166
8,429
9,489
8,792
9,924
9,096
10,276
9,371
10,587
3.0
2.9
Liabilities:
Accounts payable & accrued liabilities ………
Deferred revenue ………………………………
Debt:
Taxpayer-supported debt …………
Self-supported debt ………………
Forecast allowance ………………
Total provincial debt ………………………
Add: debt offset by sinking funds ………
Less: guarantees and
non-guaranteed debt ………………
Financial statement debt ...............................
Accumulated surplus (deficit) …………………
14.3
5.8
1
1
2
Net liabilities as a per cent of GDP is calculated using GDP for the calendar year ending in the fiscal year (e.g. 2017/18 amount divided by GDP for the 2017 calendar year).
Per capita net liabilities is calculated using July 1 population (e.g. 2017/18 amount divided by population on July 1, 2017).
Appendix
Budget and Fiscal Plan – 2017/18 to 2019/20
Financial assets:
3,060
Cash and temporary investments ……………
7,990
Other financial assets …………………………
Sinking funds ................................................
1,410
Investments in commercial Crown corporations:
Retained earnings …………………………
7,092
13,142
Recoverable capital loans …………………
20,234
Table A16 Changes in Financial Position – 2010/11 to 2019/20
($ millions)
(Surplus) deficit for the year ……………………
Comprehensive income (increase) decrease
Change in accumulated (surplus) deficit ……
Actual
2010/11
Actual
2011/12
Actual
2012/13
Actual
2013/14
Actual
2014/15
(347)
(327)
(674)
Updated
Forecast
2016/17
Actual
2015/16
(1,692)
258
(1,434)
(730)
647
(83)
Budget
Estimate
2017/18
(1,458)
(198)
(1,656)
Plan
2018/19
(295)
(112)
(407)
Plan
2019/20
(244)
(52)
(296)
10-Year
Total
246
96
342
1,841
287
2,128
1,163
(81)
1,082
(223)
(26)
(249)
(1,739)
492
(1,247)
4,110
3,565
3,279
3,151
3,407
3,459
4,123
4,804
4,491
4,398
38,787
(2,051)
2,059
71
120
2,250
(2,151)
1,414
65
3
1,482
(2,209)
1,070
65
72
1,207
(2,135)
1,016
51
341
1,408
(2,157)
1,250
60
(26)
1,284
(2,205)
1,254
115
(217)
1,152
(2,139)
1,984
89
2,073
(2,239)
2,565
44
3
2,612
(2,248)
2,243
45
3
2,291
(2,311)
2,087
45
(2)
2,130
(21,845)
16,942
561
386
17,889
2,592
3,610
2,289
2,205
1,995
1,881
16,642
149
175
-
-
Capital and other asset changes:
Increase (decrease) in net liabilities ..............
734
(150)
1,069
417
(372)
874
217
71
-
-
-
-
-
-
Investment and working capital changes:
Increase (decrease) in cash and
temporary investments ……………………
Increase (decrease) in warehouse
borrowing investments ……………………
Investment in commercial Crown corporations:
Increase (decrease) in retained earnings
Self-supported capital investments ………
Less: loan repayments and
other accounting changes …………
(61)
-
-
-
(693)
(27)
(99)
234
(366)
2,470
(94)
2,744
543
2,765
298
2,519
432
2,488
(772)
2,573
106
2,855
489
3,278
609
3,572
514
3,985
1,759
29,249
(924)
1,180
(480)
(719)
1,931
(871)
(724)
2,584
1,073
(472)
2,345
1,256
(1,119)
1,801
(169)
(1,123)
678
930
(1,432)
1,529
(1,122)
(1,624)
2,143
(693)
(2,203)
1,978
(1,355)
(1,769)
2,730
(350)
(12,109)
18,899
(1,781)
849
1,235
3,596
3,229
2,506
1,825
478
757
596
2,281
17,352
3,441
(81)
39
(130)
4,845
(81)
99
176
5,885
(287)
(34)
59
3,963
943
27
(56)
2,356
(142)
(33)
46
2,894
(603)
6
75
895
494
(316)
301
2,962
(34)
1
192
2,591
561
(1)
519
4,162
70
1
(2)
33,994
840
(211)
1,180
3,269
5,039
5,623
4,877
2,227
2,372
1,374
3,121
3,670
4,231
35,803
Forecast allowance ………………
1,853
1,416
-
2,838
2,201
-
3,523
2,100
-
2,886
1,991
-
812
1,415
-
847
1,525
-
(700)
1,724
350
1,275
1,846
-
1,882
1,888
(100)
2,017
2,214
-
17,233
18,320
250
Total provincial debt ……………
3,269
5,039
5,623
4,877
2,227
2,372
1,374
3,121
3,670
4,231
35,803
Other working capital changes ………………
Appendix
Budget and Fiscal Plan – 2017/18 to 2019/20
Taxpayer-supported capital investments ……
Less: amortization and other
accounting changes ………………
Increase in net capital assets ..................
Increase (decrease) in restricted assets .......
Increase (decrease) in other assets .............
Increase (decrease) in financial statement
debt ………………………………………………
(Increase) decrease in sinking fund debt ……
Increase (decrease) in guarantees
Increase (decrease) in non-guaranteed debt
Increase (decrease) in total provincial debt …
Represented by increase (decrease) in:
Taxpayer-supported debt ………
Self-supported debt ………………
139
140
Table A17 Provincial Debt – 2010/11 to 2019/20
($ millions)
Actual
2010/11
Actual
2011/12
Actual
2012/13
Actual
2013/14
Actual
2014/15
Actual
2015/16
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
(per cent)
Taxpayer-supported debt:
Provincial government direct operating …
Average
annual
change
6,964
9,408
10,223
9,280
8,034
5,167
3,609
2,350
1,066
-18.8
4,185
6,407
10,592
5,293
4,315
6,830
11,145
5,691
4,386
7,245
11,631
6,038
4,518
7,600
12,118
6,522
4,731
8,033
12,764
6,998
4,933
8,481
13,414
7,553
5,352
8,977
14,329
8,012
5,653
9,596
15,249
8,658
5,941
10,151
16,092
9,214
4.2
6.0
5.3
7.3
183
6,287
1,000
1,174
8,644
163
7,084
1,000
1,174
9,421
143
7,912
1,000
1,174
10,229
123
8,428
1,000
1,174
10,725
106
9,185
1,000
1,174
11,465
95
9,982
1,000
1,174
12,251
83
11,023
1,000
1,174
13,280
109
12,199
1,000
1,174
14,482
151
13,652
1,000
1,174
15,977
-0.5
10.0
0.0
0.2
7.8
398
383
808
674
54
2,317
26,846
34,659
363
383
1,073
658
40
2,517
28,774
38,182
440
382
1,372
719
34
2,947
30,845
41,068
414
381
1,698
715
27
3,235
32,600
41,880
304
389
1,987
760
26
3,466
34,693
42,727
216
397
2,301
701
27
3,642
36,860
42,027
156
410
2,746
733
27
4,072
39,693
43,302
101
418
3,120
779
27
4,445
42,834
45,184
58
425
3,502
841
26
4,852
46,135
47,201
-18.0
6.1
22.4
5.7
-11.9
11.9
7.1
4.5
Self-supported debt:
Commercial Crown corporations and agencies
BC Hydro ……………………………………
BC Lotteries …………………………………
Columbia Power Corporation ……………
Columbia River power projects …………
Post-secondary institution subsidiaries …
Transportation Investment Corporation. …
Other…………………………………………
Total self-supported debt ………………………
Forecast allowance ………………………………
11,710
85
183
173
1,148
34
13,333
-
12,978
90
481
173
1,779
33
15,534
-
14,167
132
475
215
2,610
35
17,634
-
15,559
155
470
198
3,209
34
19,625
-
16,544
140
300
464
222
3,335
35
21,040
-
17,928
150
296
459
310
3,389
33
22,565
-
19,585
158
291
448
310
3,465
32
24,289
350
20,798
171
286
434
310
4,089
47
26,135
350
21,705
176
281
417
310
5,078
56
28,023
250
23,058
182
276
400
310
5,947
64
30,237
250
7.8
8.8
n/a
9.1
6.7
20.1
7.3
9.5
n/a
Total provincial debt ……………………………
45,154
50,193
55,816
60,693
62,920
65,292
66,666
69,787
73,457
77,688
6.2
Appendix
Budget and Fiscal Plan – 2017/18 to 2019/20
Other taxpayer-supported debt (mainly capital):
Education facilities
4,092
Post-secondary institutions ………………
6,016
School districts ……………………………
10,108
4,895
Health facilities …………………………………
Highways, ferries and public transit
BC Transit ……………………..................
158
BC Transportation Financing Authority …
5,785
Public transit ………………………………
997
1,155
SkyTrain extension ………………………
8,095
Other
BC Immigrant Investment Fund …………
347
BC Pavilion Corporation …………………
250
Provincial government general capital …
570
Social Housing ……………………………
511
81
Other …………………………………………
1,759
24,857
Total other taxpayer-supported debt ………
31,821
Total taxpayer-supported debt …………………
7,813
Table A18 Provincial Debt Supplementary Information – 2010/11 to 2019/20 1
($ millions)
1
2
3
4
Actual
2011/12
Actual
2012/13
Actual
2013/14
Actual
2014/15
Actual
2015/16
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
Average
annual
change
(per cent)
3.4
4.9
2.4
3.9
0.9
15.5
3.6
4.9
2.4
4.0
1.1
16.0
4.2
5.0
2.6
4.3
1.1
17.2
4.5
5.1
2.6
4.5
1.3
17.9
3.9
5.0
2.7
4.5
1.3
17.4
3.2
5.1
2.8
4.6
1.4
17.1
2.0
5.1
2.9
4.7
1.4
16.1
1.3
5.3
2.9
4.9
1.5
15.9
0.8
5.4
3.1
5.1
1.6
15.9
0.4
5.5
3.1
5.4
1.6
16.0
-22.0
1.1
3.1
3.6
7.5
0.4
6.5
6.5
22.0
7.2
7.2
23.2
8.0
8.0
25.2
8.6
8.6
26.5
8.7
8.7
26.1
9.0
9.0
26.1
9.3
9.3
25.5
9.6
9.6
25.6
9.9
9.9
25.9
10.3
10.3
26.4
5.2
n/a
5.2
2.0
-5.4
5.3
11.5
7.9
57.5
6.2
12.2
4.8
8.1
6.8
31.7
8.9
20.4
5.2
7.5
9.0
8.6
10.2
8.7
4.4
6.1
8.6
17.1
7.6
-9.2
4.2
8.0
4.8
9.8
2.0
-13.4
5.3
7.3
6.9
7.1
2.0
-35.7
5.1
7.9
6.9
5.1
-1.6
-30.2
6.8
6.1
8.4
11.8
3.0
-34.9
6.4
8.1
9.1
9.2
4.3
-54.6
5.5
6.4
10.3
9.2
4.5
-14.2
5.3
7.7
7.9
16.7
4.7
11.9
11.9
7.8
16.5
16.5
11.2
13.5
13.5
11.2
11.3
11.3
8.7
7.2
7.2
3.7
7.2
7.2
3.8
7.6
7.6
2.1
7.6
7.6
4.7
7.2
7.2
5.3
7.9
7.9
5.8
9.8
n/a
9.8
6.4
1,559
2,263
1,096
1,813
394
7,125
1,737
2,354
1,176
1,921
515
7,703
2,069
2,451
1,252
2,072
554
8,398
2,228
2,535
1,316
2,229
642
8,949
1,998
2,609
1,404
2,309
696
9,016
1,712
2,720
1,491
2,443
739
9,105
1,087
2,823
1,590
2,578
766
8,845
751
2,981
1,667
2,763
847
9,009
483
3,135
1,780
2,977
914
9,288
217
3,269
1,872
3,245
986
9,588
-19.7
4.2
6.1
6.7
10.7
3.4
2,985
2,985
10,111
10,875
5.1
3,453
3,453
11,156
11,721
7.8
3,879
3,879
12,277
12,757
8.8
4,276
4,276
13,226
13,754
7.8
4,529
4,529
13,545
13,944
1.4
4,808
4,808
13,913
14,167
1.6
5,112
5,112
14,030
14,030
-1.0
5,437
5,437
14,519
14,229
1.4
5,760
5,760
15,100
14,507
2.0
6,142
6,142
15,781
14,858
2.4
8.3
8.3
5.1
3.5
3.7
Appendix
Budget and Fiscal Plan – 2017/18 to 2019/20
Per cent of nominal GDP: 2
Taxpayer-supported debt:
Provincial government direct operating ………
Education facilities ……………………………
Health facilities …………………………………
Highways, ferries and public transit …………
Other ……………………………………………
Total taxpayer-supported debt ……………
Self-supported debt:
Commercial Crown corporations & agencies
Warehouse borrowing program ………………
Total self-supported debt …………………
Total provincial debt ……………………
Growth rates:
Taxpayer-supported debt:
Provincial government direct operating ………
Education facilities ……………………………
Health facilities …………………………………
Highways, ferries and public transit …………
Other ……………………………………………
Total taxpayer-supported debt ……………
Self-supported debt:
Commercial Crown corporations & agencies
Warehouse borrowing program ………………
Total self-supported debt …………………
Total provincial debt ……………………
Per capita: 3
Taxpayer-supported debt:
Provincial government direct operating ………
Education facilities ……………………………
Health facilities …………………………………
Highways, ferries and public transit …………
Other ……………………………………………
Total taxpayer-supported debt ……………
Self-supported debt:
Commercial Crown corporations & agencies
Total self-supported debt …………………
Total provincial debt ……………………
Real Per Capita Provincial Debt (2016 $) 4 ……
Growth rate (per cent) …………………………
Actual
2010/11
Numbers may not add due to rounding.
Debt as a per cent of GDP is calculated using nominal GDP for the calendar year ending in the fiscal year (e.g. 2017/18 debt divided by nominal GDP for the 2017 calendar year).
Per capita debt is calculated using July 1 population (e.g. 2017/18 debt divided by population on July 1, 2017).
Debt is converted to real (inflation-adjusted) terms using the consumer price index (CPI) for the corresponding calendar year (e.g. 2017 CPI for 2017/18 debt).
141
142
Table A19 Key Provincial Debt Indicators – 2010/11 to 2019/20
Actual
2010/11
Actual
2012/13
Actual
2013/14
Actual
2014/15
Actual
2015/16
Updated
Forecast
2016/17
Budget
Estimate
2017/18
Plan
2018/19
Plan
2019/20
Average
annual
change
(per cent)
2.9
1.9
88.5
78.8
94.7
85.1
104.1
93.7
107.6
96.1
106.4
94.1
105.8
91.0
101.6
84.0
106.1
87.6
110.2
91.1
113.9
93.5
10,111
7,125
11,156
7,703
12,277
8,398
13,226
8,949
13,545
9,016
13,913
9,105
14,030
8,845
14,519
9,009
15,100
9,288
15,781
9,588
5.1
3.4
22.0
15.5
23.2
16.0
25.2
17.2
26.5
17.9
26.1
17.4
26.1
17.1
25.5
16.1
25.6
15.9
25.9
15.9
26.4
16.0
2.0
0.4
4.2
4.0
4.3
4.0
4.4
3.9
4.5
3.9
4.2
3.6
4.8
4.2
3.8
3.2
4.1
3.4
4.3
3.6
4.3
3.7
0.2
-0.7
2,155
1,596
2,300
1,625
2,336
1,590
2,547
1,686
2,465
1,591
2,946
1,960
2,508
1,624
2,678
1,686
2,836
1,767
2,918
1,880
3.4
1.8
5.2
4.9
4.4
4.3
3.8
4.6
3.8
4.0
4.0
4.1
-2.6
Background Information:
Revenue ($ millions)
Total provincial 5 ............………………………
51,041
53,001
53,618
56,422
59,145
61,726
65,591
65,805
66,675
68,181
3.3
40,391
40,742
40,749
42,745
44,492
46,927
50,005
49,417
49,590
50,492
2.5
Total provincial ..............………………………
45,154
50,193
55,816
60,693
62,920
65,292
66,666
69,787
73,457
77,688
6.2
Taxpayer-supported 7 ..………………………
31,821
34,659
38,182
41,068
41,880
42,727
42,027
43,302
45,184
47,201
4.5
205,117
216,786
221,414
228,973
240,900
249,981
261,808
272,540
283,412
294,600
4.1
4,466
4,499
4,546
4,589
4,645
4,693
4,752
4,807
4,865
4,923
1.1
Taxpayer-supported 6 ..………………………
Debt ($ millions)
Provincial nominal GDP ($ millions) 8 ..............…
Population (thousands at July 1) 9 .......…………
1
The ratio of debt to population (e.g. 2017/18 debt divided by population at July 1, 2017).
2
The ratio of debt outstanding at fiscal year end to provincial nominal gross domestic product (GDP) for the calendar year ending in the fiscal year (e.g. 2017/18 debt divided by 2017 nominal GDP).
3
The ratio of interest costs (less sinking fund interest) to revenue. Figures include capitalized interest expense in order to provide a more comparable measure to outstanding debt.
4
Weighted average of all outstanding debt issues.
5
Includes revenue of the consolidated revenue fund (excluding dividends from enterprises) plus revenue of all government organizations and enterprises.
6
Excludes revenue of government enterprises, but includes dividends from enterprises paid to the consolidated revenue fund.
7
Excludes debt of commercial Crown corporations and agencies and funds held under the province's warehouse borrowing program.
8
Nominal GDP for the calendar year ending in the fiscal year (e.g. Nominal GDP for 2017 is used for the fiscal year ended March 31, 2018).
9
Population at July 1st within the fiscal year (e.g. population at July 1, 2017 is used for the fiscal year ended March 31, 2018).
Appendix
Budget and Fiscal Plan – 2017/18 to 2019/20
Debt to revenue (per cent)
Total provincial ..........…………………………
Taxpayer-supported .....………………………
Debt per capita ($) 1
Total provincial ..........…………………………
Taxpayer-supported .....………………………
Debt to nominal GDP (per cent) 2
Total provincial ..........…………………………
Taxpayer-supported .....………………………
Interest bite (cents per dollar of revenue) 3
Total provincial ..........…………………………
Taxpayer-supported .....………………………
Interest costs ($ millions)
Total provincial ..........…………………………
Taxpayer-supported .....………………………
Interest rate (per cent) 4
Taxpayer-supported .....………………………
Actual
2011/12
Phil Adams