2016-17 fiscal update reflects B.C.’s strong economic growth

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Victoria: The British Columbia government invested an additional $1.9 billion in priority programs and services in 2016-17 compared to the previous year, making record investments in areas including housing, health and education, Finance Minister Michael de Jong announced today.

Government’s commitment to fiscal discipline and economic growth that supports jobs throughout B.C. helped reduce taxpayer-supported debt for the first time in almost 10 years, while allowing the Province to make priority investments, including:

  • $758 million to fund housing initiatives.
  • $486 million increase in health care spending.
  • $256 million increase in education spending.
  • $137 million increase in social service spending of for child, youth and community living.
  • $193 million for the Lion’s Gate Waste Water Treatment Plant Project.
  • $255 million increase in other sectors, partly offset by a $199 million decrease in debt service costs.

British Columbia finished 2016-17 with a $2.8 billion surplus, which contributed to substantially decreasing taxpayer-supported debt. Overall government direct operating debt decreased $3.4 billion, while taxpayer-supported debt, offset by new capital investments, decreased by $1.2 billion.

Stronger than forecast economic growth-including strong employment, retail sales and housing starts-increased government revenues by $3.9 billion over 2015-16. Taxation revenues overall were up $2.8 billion compared to last year, with personal income tax revenue up $1.3 billion (15.8%), sales tax revenue up $556 million (9.2%), property transfer tax revenue up $493 million (32.2%) and corporate income tax revenue up $216 million (7.8%).

Preliminary real GDP growth numbers for 2016 show that British Columbia’s economy grew by an estimated 3.7%, the strongest growth among provinces and an improvement on the Economic Forecast Council prediction of 2.7% in Budget 2016. Employment activity in B.C. was strong in 2016, growing at its fastest annual pace since 1994. Housing starts for 2016 totalled 41,843 units, an improvement of 33% over 2015.

British Columbia’s taxpayer-supported debt-to-GDP ratio-a key measure of affordability-ended the year at 15.9%, compared to the 17% forecast at Budget 2016. Taxpayer-supported debt-to-revenue for 2016-17 was 81.7%, compared to the 92.4% forecast at Budget 2016.

British Columbia is the only Canadian province rated triple-A credit by Moody’s (AAA) and Standard and Poor’s (AAA). B.C.’s strong fiscal performance also received the best rating among the provinces from Dominion Bond Rating Service (AA High). In April, Standard and Poor’s described British Columbia’s financial management practices as “the best among the Canadian provinces”.

Finance Minister Michael de Jong said: “We took the benefits of a strong, growing and job-creating economy and directed them to increased funding for services, helping families with the cost of living and taking new steps to help promote home ownership. Almost $500 million of the new investments in Budget 2016 were funded through savings realized by paying down the legacy of deficit budgets in years gone by.

“British Columbia saw the strongest economic growth among the provinces last year and some of the fastest job growth in more than 20 years. This level of economic activity helped provide the means to make key investments in services that matter most to people and ensures we have the resources to continue and enhance those investments.”