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