balanced budget 2014 march 7 mike de jong
DESCRIPTION
TRANSCRIPT
JuneUpdate
2013
Q1 Forecast
Q2Forecast
Taxationrevenue
Otherrevenuechanges
Lowerministryspending
Lower taxtransfers
Prior yearliability
adjustments
Otherexpensechanges
Q3Forecast
153 136
165
(255)
(88) 100
110
84
59
175
$ millions Surplus increased by $10 million since Second Quarterly Report
2013/14 updated forecast
2
Balanced Budgets in 2013/14
3
1.4
2.02.3
2.5 2.5 2.5
1.4
2.32.7 2.7 2.7 2.7
0.0
1.0
2.0
3.0
4.0
2013 2014 2015 2016 2017 2018
Ministry of Finance
Economic Forecast Council
BC real GDPper cent change
BC’s economic outlook
4
2,180
2,220
2,260
2,300
2,340
BC employment (000s, sa)
Source: Statistics Canada
201020092008 2011 2012
Jul 2008: 2,276
Mar 2009: 2,204
Jan 2014: 2,317
2013
BC Employment
20145
Source: Statistics Canada
BC retail sales ($ millions, sa)
2010 2011
Jun 2008 4,968
201220092008
Mar 2009: 4,406
Nov 2013: 5,373
2013
BC retail sales
6
Source: Canada Mortgage and Housing Corporation *Historical average is from January 1990 to December 2013
Mar 2009: 11,600
Sep 2008: 40,000
BC housing starts (annualized units, sa)
2008 2009 2010 2011 2012
Dec 2013: 32,300
2013
BC housing starts
Hist avg* = 28,900
7
Source: BC Stats
BC merchandise exports ($ millions, sa)
Sep 2009: 1,923
2010 2011 201220092008
Oct 2008: 3,068Dec 2013: 2,908
2013
BC exports
8
US46.8%
Japan12.1%
China19.6%
Other Asia9.1%
Other12.4%
US88.4%
Asia6.0%
Other5.6%
US78.4%
Asia5.3%
Other16.3%
Source: BC Stats
Average annual share of international goods exports by province, 2013(per cent)
BC Alberta Ontario
BC’s trade diversity
9
US69.8%
Japan12.8%
China2.3%
Other Asia4.3% Other
10.8%
20132001
US46.8%
China19.6%
Japan12.1% Other
Asia9.1%
Other12.4%
Source: BC Stats
Annual share of BC’s international goods exports
Over 40% of BC’s exports now go to Asia
10
• For the next two years, as was the case this year, a very thin margin for forecast error
• Ongoing global economic uncertainty
Risks to the fiscal plan
11
3 year fiscal plan
Revenue ……………………………………………………………………………………..43,950 44,800 46,032 47,464
Expense …………….....…....………………..…………………………………………..(43,675) (44,116) (45,201) (46,113)
Contingencies ….....…....……………..…………………………………………..- (300) (400) (575)
Surplus (deficit) before forecast allowance ………………………………………………275 384 431 776
Forecast allowance …………………………………………………………..(100) (200) (225) (325)
Surplus (deficit) ........................………………………………………………………………………….175 184 206 451
Plan 2015/16
Plan 2016/17($ millions)
Budget Estimate 2014/15
Updated Forecast 2013/14
12
AAA AA+ AA AA- A+ A A- BBB BB B- CCC
BC
Canada
Germany
United States*
France*
Japan*
Italy*
Greece**
Credit rating comparisons
*Credit rating downgrades between 2009 and 2013.** Greece upgraded in December 2012 from Selective Default.Source: Standard and Poor’s 13
Province AAA AA+ AA AA- A+ A
British Columbia
Alberta
Saskatchewan
Manitoba
Ontario
Quebec
New Brunswick
Nova Scotia
Prince Edward Island
Newfoundland and Labrador
Canada
Credit rating comparisons
Source: Standard and Poor’s14
Debt-to-GDP comparisons
Source: 2013/14 forecast from most recent Budget document for each jurisdiction.
15
• Comprehensive borrowing strategy– Diversification into global markets– First-mover into emerging Chinese market
• Balance sheet management– Cash surpluses in government organizations– Investment management– Capital expenditure constraints
Strategic debt management
16
• Estimated $1.6 billion in excess cash on Government’s balance sheet
• Encouraging excess cash held by government organizations to be deposited with Provincial Treasury until needed– Cash remains property of government organizations– Provincial Treasury uses it for debt management purposes
• Core Review initiative to induce further voluntary participation in Provincial Treasury deposit program– $18 million in savings achieved for 2014/15
Cash management
17
Taxpayer-supported debt to GDP ratio (per cent)Budget 2014 fiscal plan
Return to balanced budgets
Declining debt ratio
18
$ billions
Revenue – 2.6% average annual growth
Expense – 2.2% average annual growth
Fiscal plan period
Maintaining a balanced budget
19
BC public sector compensation base
Health168924
44%
Education K-128234821%
Public Service 32,942
8%
Universities32524.4
8%
Crowns21473
6%
Post Sec-
ondary 29,380
8%
Community Social
Services18390
5%
Employees 385, 981
Data as per PSEC’s Quarterly Report published February 18, 2014 representing unionized and non-unionized employee totals in each of the seven sectors. 20
Keeping taxes low for BC families
BC AB SK ON NL NB MB PE NS QC
$9,947 $9,987
$12,805 $12,849 $12,983
$15,392$15,987 $16,339 $16,523
$18,048
Lowest Provincial Personal Income Taxes for Individuals Earning up to $121,000 - 2014 Tax Year
21
• BC Training and Education Savings Grant– $1,200 per child born on or after January 1, 2007
• BC Early Childhood Tax Benefit – $55/month per child under six, starting April 2015
• Property Transfer Tax Relief
Investment in families
22
• $350 million increase in funding over 3 years for:– Income Assistance– Community Living BC– Children and youth with special needs– Legal Aid
Support for the vulnerable
23
Three-year health funding
$385
2013/14 2014/15 2015/16 2016/17
3-year total increase: $2.5 billion
$16,551
$16,936
$17,856
$17,402 Restated June Update 2013
base
($ millions)
$851
$1,305
24
• Capital investment in support of skills training continues– Camosun College Trades Renewal– Okanagan College Trades Expansion– NorKam Secondary Trades and Technology
Centre of Excellence
Skills infrastructure investment
25
• Distant Location Tax Credit Extended to Capital Regional District
• Scientific Research and Experimental Development Tax Credit Extended Three Years
• Transitional Tax Relief for Credit Unions
Targeted tax measures
26
Tobacco Tax Increase
27
40 cents
LNG taxation
28
LNG taxation
29
LNG taxation
30
LNG tax competitiveness
31