Province committed to managing fiscal challenges

Prudent fiscal management for the province in spite of HST decision

  • Sep. 13, 2011 2:00 p.m.

British Columbia will need continued prudent fiscal management  to weather global economic uncertainty and respond to challenging budget  pressures to meet its commitment to eliminate the deficit in 2013-14,  Finance Minister Kevin Falcon said last week with the release of the first  quarterly report.

While B.C. has seen moderate improvement in some economic indicators  through the first half of 2011, the Province is maintaining its prudent  forecast of two per cent real GDP growth in 2011 and moderating its 2012  forecast to 2.3 per cent due to the worldwide deteriorating economic  climate.

Revenues are forecast to increase by an average of just 2.8 per cent  annually over the next two years, compared to the Budget 2011 projection  of 3.3 per cent. Lower natural resource revenue and commercial Crown corporation income, partly offset by improvements in taxation and other  revenue sources, mean cumulative losses projected at $537 million over the  three years of the fiscal plan before the impacts of returning to the PST  are factored in.

The decision to extinguish the HST and revert back to the PST is forecast  to increase the cumulative losses to more than $2.3 billion by 2013-14,  with further losses anticipated in the following year not covered by the  current fiscal plan. This includes $1.6 billion in 2011-12 associated with  reimbursing the federal HST transition funding and a more than $700  million loss from lower tax revenue and increased spending over the three  years ending 2013-14.

The added costs and lower revenues mean the deficit is now forecast at  nearly $2.8 billion in 2011-12 and $805 million in 2012-13. Government  must reduce the deficit by $458 million in 2013-14 to balance the budget  as required by law.

Government will continue to protect health care and education, while  taking steps to control spending. All ministries, agencies and Crown  corporations are looking at ways to reduce costs and manage their spending  pressures.

The province will consult with British Columbians on their priorities for  Budget 2012. As part of this process, the all-party Select Standing  Committee on Finance and Government Services will hold public meetings and seek input through the annual budget consultations beginning in September.

For more details on the pre-budget consultations please visit:

http://www.leg.bc.ca/budgetconsultations/

 

 

Ministry of Finance

 

 

 

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