Despite challenges to the fiscal plan from wildfires and flood-related costs, B.C. is currently on target to balance the 2014-15 budget, Finance Minister Michael de Jong announced today.
The year-end surplus for 2014-15 is now projected to be $266 million, up by $82 million from Budget 2014. Revenues have improved by $515 million, partly offset by higher expenses of $433 million primarily for statutory spending on fighting fires and flood-related emergency programs. Firefighting costs alone are expected to reach $350 million this year.
As a result of the successful implementation of government’s debt-management strategy, the taxpayer-supported debt for 2014-15 is projected to be $785 million lower than Budget 2014. Consequently, the taxpayer-supported debt-to-GDP ratio for this fiscal year is forecast at 18.1%, three-tenths of a percentage point lower than at Budget. Maintaining an affordable debt-to-GDP ratio is key to maintaining B.C.’s triple-A credit rating, which saves B.C. taxpayers millions of dollars a year on government’s cost of borrowing.
B.C.’s real GDP is forecast to grow by 1.9% in 2014, down slightly by one-tenth of a percentage point from Budget 2014. While most indicators of B.C.’s economic performance in 2014 show improved domestic activity compared to last year, domestic labour market activity and exports are slightly weaker than forecast earlier in the year. Growth forecasts of 2.3% in 2015 and 2.5% in 2016 are unchanged from Budget.
Government will be releasing the 2015 Budget Consultation Paper, which asks British Columbians to rank their preferences for the choices that need to be made in maintaining a balanced budget. Ongoing uncertainty in the global and domestic economies means government must continue the discipline that balanced the budget while keeping costs affordable for families, investing in programs and services, and managing the provincial debt.
The paper will be available online, or by contacting the Select Standing Committee on Finance and Government Services, which is holding public consultations throughout the province in September and October. For more information about the 2015 Budget Consultation Paper and how to participate in the consultation process, please visit: www.fin.gov.bc.ca/budgetconsultation
Michael de Jong, Minister of Finance –
“Budget 2014 made prudent growth forecasts and again emphasized spending discipline. Events have shown the importance of that caution. Our fiscal plan has proven capable so far of absorbing unpredictable expenses for flooding and the summer wildfires, while maintaining a modest surplus.”
“The current budget forecast is built around assumptions – that includes the assumption that all labour agreements will be reached within the current affordability mandate. Under the Economic Stability Mandate, public-sector employees have the opportunity to share some of the benefits if economic growth surpasses the Economic Forecast Council’s forecast for real GDP growth.”
- Revenues are forecast to improve by $515 million. This reflects additional revenue from taxation sources, including one-time gains associated with prior-year personal income taxes, natural resources and commercial Crown corporations.
- Employment growth is projected to improve next year with an expected increase of 1.1%, or about 25,000 jobs. In the medium term, employment is forecast to rise by 1.4% each year from 2016 to 2018.
- Retail sales in B.C. advanced 5.6% year-to-date to June 2014, primarily due to gains at motor vehicle and parts dealers, food and beverage stores and gas stations.
- Year-to-date to July, B.C. housing starts increased by 4.0% compared to the same period in 2013. This is due to an increase in both multiple-family and single-family home construction.
- The value of B.C.’s merchandise exports was up 9.9% year-to-date to June 2014 compared to the same period last year, fuelled mainly by substantial gains in exports of energy products, metal ores and non-metallic minerals as well as pulp and paper stock.