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Ministry of Finance

Goals, Objectives, Strategies and Performance Measures

Goal 1: A sustainable fiscal environment built on a balanced budget

Confidence in British Columbia’s economy is enhanced by a sustainable fiscal environment that provides a stable foundation on which to maintain and enhance the delivery of public services. Supporting a strong and vibrant economy provides the means to develop excellence in education, promote healthy living, support people at risk, protect our environment and create jobs for British Columbians. Fiscal responsibility applied today ensures that the cost of current public services will not be passed on to future generations.

Objective 1.1: Effective management of government’s fiscal plan

The government’s ability to achieve a sustainable fiscal environment relies upon the development and maintenance of a prudent and resilient fiscal plan. The Ministry plays a critical role in overseeing the fiscal plan and works closely with the federal government, ministries and other public sector partners to ensure that government’s annual and three-year revenue and expenditure targets are met.

Strategies

  • Continuous monitoring and corrective action as required.
  • Implement effective and differentiated public sector labour relations and human resource strategies.

Performance Measure 1: Taxpayer-supported debt to GDP ratio

Performance Measure 2007/08 Forecast 2008/09 Target 2009/10 Target 2010/11 Target
Taxpayer-supported debt to GDP ratio. 14.1% Declining trend Declining trend Declining trend
Data Source:  The Public Accounts is the source for actual performance of taxpayer-supported debt (Debt Statistics Report basis). Statistics Canada is the source of annual GDP results.

Discussion

This measure is the three-year moving average of the ratio of taxpayer-supported debt to gross domestic product (GDP). Maintaining a relatively low taxpayer-supported debt to GDP ratio is a key measure of fiscal sustainability, signifying a healthy balance sheet and ensuring that debt remains affordable. Rating agencies rely on this measure as a key credit rating consideration. Government is committed to maintaining a declining taxpayer-supported debt to GDP ratio on a three-year moving average.

Performance Measure 2: Provincial credit rating

Performance Measure 2007/08 Forecast 2008/09 Target 2009/10 Target 2010/11 Target
Provincial credit rating. Aaa Aaa Aaa Aaa
Data Source:  Moody’s Investor Service (Credit Rating Agency)- Aaa is Equivalent to AAA plus rating from Standards and Poor’s.

Discussion

This measure is the rating of provincial debt by Moody’s Investor Services, an independent rating agency. Bonds are rated in descending alphabetical order from A to C — highest to lowest. Triple A is the highest possible rating, provided to those public and private sector organizations that offer excellent financial security and are generally considered high-grade entities. The interest rate paid by the Province when it borrows in the domestic and international capital markets is influenced by the credit ratings supplied by third party agencies. In determining the Province’s credit rating, rating agencies evaluate debt as a percentage of GDP and interest owing as a percentage of gross receipts. Agencies also consider the government’s track record in meeting its fiscal targets, its transparency in budgeting and reporting, the economic outlook, and business and consumer confidence in the economy.

The strength of the economy can affect the factors used by rating agencies in determining the province’s credit rating and ultimately influence the rating itself. A stronger economy means higher revenues for government, reducing the proportion of government revenue spent on interest costs; and a stronger economy results in higher GDP, improving the debt to GDP ratio.

Goal 2: A strong, competitive and vibrant economy

The Ministry of Finance plays an essential role in supporting a strong, competitive and vibrant economy. The ministry reviews provincial tax policies on an ongoing basis to help ensure that British Columbia has a competitive tax regime. Since 2001, the ministry has delivered a series of tax reductions to individuals and businesses. These initiatives include three significant personal income tax cuts; a 25 per cent cut in 2001, the B.C. Tax reduction in 2005 and a 10 per cent cut in Budget 2007; a 27 per cent cut in the corporate income tax rate; elimination of the general corporation capital tax and the introduction of a provincial sales tax exemption for production machinery and equipment.

Objective 2.1: A fair and competitive tax environment

The Province’s ability to develop a strong and vibrant economy depends on a tax and regulatory environment that is both nationally and internationally competitive. Jurisdictions with competitive tax regimes and regulatory frameworks are successful in attracting and retaining personal and business investment. Taking advantage of these opportunities enhances economic development and creates stable revenues to support critical government services such as health care and education. In addition, a tax system that is perceived to be fair increases the confidence of British Columbians in their government.

Strategies

  • Continue to improve the fairness, competitiveness, and sustainability of the provincial tax system.
  • Ensure financial and corporate regulatory frameworks and registry services are efficient and effective while protecting the public interest.

Performance Measure 3: Provincial corporate and personal income tax rates

Performance Measures 2007/083 Forecast 2008/09 Target 2009/10 Target 2010/11 Target
Provincial ranking of corporate income tax rates.1 Fourth lowest Remain in the lowest four Remain in the lowest four Remain in the lowest four
Provincial ranking of personal income tax rates for the bottom two tax brackets.2 Lowest Lowest Lowest Lowest
Data Source:  
1   Source: Comparison of provincial statutes for rates in effect on March 31 each year.
2   Source: Comparison of provincial statutes for each tax year. B.C.’s 2008 personal income tax rates for the first two tax brackets are 5.35 per cent for the first tax bracket up to $35,016 and 8.15 per cent for the second tax bracket up to $70,033.
3   The value for 2007/08 was determined based on provincial statutes for rates in effect as of January 2008.

Discussion

Provincial ranking of corporate income tax rates: This measure compares corporate income tax rates in B.C. against the other provinces in Canada by comparing provincial statutes in effect as of March 31st each year. A competitive tax environment fosters economic growth by encouraging business investment and promoting a business friendly environment. Although measuring the overall competitiveness of the tax system is complex, a comparison of general corporate income tax rates represents a reasonable basis for assessing competitiveness.

Provincial ranking of personal income tax rates for the bottom two tax brackets: This measure compares personal income tax rates in effect as of March 31st each year for the bottom two tax brackets against the other provinces in Canada. British Columbia has the lowest personal income tax rates of any province in Canada for the bottom two tax brackets. Keeping these tax rates low is consistent with the objective of maintaining a fair and competitive tax system.

Goal 3: Provide governance frameworks that support government in effectively achieving its objectives and providing the public with value for money

The Ministry of Finance is responsible for government’s overall financial, management governance, accountability and performance frameworks for ministries and the broader public sector. This involves the establishment of appropriate legislation, policies and procedures and reporting at the corporate level to ensure the Province’s resources and obligations are appropriately managed in support of effective service delivery.

Objective 3.1: Effective financial, governance, accountability and performance frameworks

To be effective, financial, governance, accountability and performance frameworks need to set accountability and public disclosure standards for financial and performance information, as well as reinforce individual and corporate accountabilities for outcomes, and maintain standards for stewardship of resources, management of liabilities and risk, and the collection and disbursement of public funds. Timeliness, accuracy and completeness of government planning and financial reporting is critical to the use of the information and maintaining public confidence in government’s management of resources.

Financial and management capacity, systems and guidance are needed to support decision makers in meeting their objectives by working with communities of professionals throughout government to balance legislative, policy and procedural requirements with business requirements; develop financial systems strategy to provide appropriate management information; and develop and maintain training programs to ensure sufficient financial, governance, procurement and management capacity across government.

Risk-based approaches used in compliance and controls monitoring and internal audit project planning optimize the use of limited resources while ensuring that they examine, assess, adjust and mitigate government’s most significant risk exposures. Advisory services assist ministries in ensuring efficient and effective operations.

Strategies

  • Use risk-based approaches to effectively manage government’s resources.
  • Provide timely and transparent information to clients and citizens.
  • Meet statutory reporting requirements and comply with Generally Accepted Accounting Principles.
  • Ensure appropriate financial and management capacity, systems and guidance are in place.
  • Maximize investment returns on surplus cash to minimize borrowing costs and requirements.
  • Ensure Crown Agencies are publicly accountable for their programs, services and fiscal management.

Performance Measure 4: Annual savings from Ministry programs applying risk-based approaches

Performance Measures 2007/08 Forecast 2008/09 Target 2009/10 Target 2010/11 Target
Self-insurance (five-year rolling average).1 $70.02 million $76.8 million $79.7 million $79.7 million
Compliance and controls monitoring, and potential Internal Audit and Advisory Services savings.2 $15 million $15 million $15 million $15 million
Data Source:  
1   Source: Ministry of Finance Risk Management Branch.
2   Source: Internal Audit and Advisory Services recommendations and Corporate Compliance and Controls Monitoring.

Discussion

Annual savings from self insurance (five-year rolling average): This measure demonstrates the savings achieved by government with public sector self-insurance programs, rather than insuring through third parties. Self-insurance involves government assuming the role of a traditional insurer by investigating, defending and paying claims. The Ministry of Finance’s co-ordination of public sector self-insurance programs allows the provincial government to cost-effectively retain selected risks rather than transfer them at a premium to third parties.

Compliance and controls monitoring, and potential Internal Audit and advisory services savings: This measure demonstrates savings from utilizing a risk-based approach for compliance and controls monitoring and potential annual benefits (five-year average) from implementing Internal Audit and Advisory Services and Activity Based Management recommendations. Activity Based Management branch provides consulting services that combine costing and process analysis to assist programs in improving performance and reducing costs.

The Ministry’s delivery of cross government risk-based financial processing and independent management review services provide a basis for evaluating the adoption of best practices and savings. Savings are achieved through the adoption of audit recommendations and more effective payment review procedures.

Performance Measure 5: The timely release of the Public Accounts with an unqualified audit opinion from the Office of the Auditor General

Performance Measure 2007/08 Actual 2008/09 Target 2009/10 Target 2010/11 Target
Release of Public Accounts with an unqualified audit opinion from the Auditor General by June 30. July 11, 2007 On or before June 30, 2008 On or before June 30, 2009 On or before June 30, 2010
Data Source:  Release of the Public Accounts.

Discussion

This measure captures both timeliness and completeness of government’s financial reporting. Timely release of financial reporting is critical for effective use of the information and helps instill public confidence in government’s ability to manage its resources. The Budget Transparency and Accountability Act requires release of the Province’s financial statements (Public Accounts) by August 31st, following each March 31st fiscal year end. An unqualified opinion from the Auditor General that the public accounts comply with Generally Accepted Accounting Principles provides an objective and independent assessment that government has met the Generally Accepted Accounting Principles’ standard for disclosure of its financial information, further increasing confidence in the reliability of that information.

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