| The Government of
Alberta Annual Report also includes: Consolidated
Financial Statements and Measuring
Up. If you would prefer to download any or all of these documents
as pdf files, click here.
Accountability
Statement
The government’s
Annual Report for the year ended March 31, 2004 was prepared under
my direction on behalf of the government in accordance with the
Government Accountability Act and the government’s
accounting policies. All of the government’s policy decisions
as at June 21, 2004 with material economic or fiscal implications
have been considered in the preparation of the Annual Report.
[original
signed]
Patricia
L. Nelson
Minister of Finance
Budget
2003 - Making Alberta Even Better
- A Message from the Minister of Finance
The Government
of Alberta's fiscal plan for 2002-03 delivered on its commitment
to Albertans to target dollars to priority areas and preserve
Alberta's advantage as the lowest taxed province in Canada. We
began fiscal year 2002-03 in an environment of uncertainty and
delivered a budget, titled The Right Decisions for Challenging
Times, to take on these challenges and look for new opportunities
to build on the Alberta Advantage.
Alberta has
a well-earned reputation as a fiscal leader in Canada. In 2003-04
our budget was balanced for the tenth consecutive year, debt was
repaid, and the province maintained its triple A credit rating.
Building on our fiscal strengths, the government began laying
the groundwork for an even better Alberta by establishing a new
fiscal framework to add greater predictability and sustainability
to the province's budget planning process.
Along with
a strong economy comes new challenges created by a growing population,
and in the 2003-04 fiscal year we placed increased priority on
addressing the pressures that growth creates on core programs
such as health, education and infrastructure.
As part of
our commitment to be open and accountable, the government provides
an annual report at the end of each fiscal year to share our financial
and performance results with all Albertans. The actual results
are compared to the estimates and targets established in the previous
year's budget. This allows Albertans to see how we accomplished
what we set out to do.
FISCAL FRAMEWORK
As demonstrated
in recent years, swings in energy prices can cause large swings
in government revenue. Albertans felt that changes were required
to the way the government managed these ups and downs. 2003-04
saw the implementation of the new fiscal framework, which included
a new Alberta Sustainability Fund to protect ongoing operating
spending from volatile revenue and the costs of emergencies and
disasters. In its first year, the Sustainability Fund met its
$2.5 billion target.
The new framework
also incorporated a three-year Capital Plan worth $5.5 billion
to provide sustainable and predictable funding for roads, schools,
health facilities and other infrastructure priorities.
Accumulated
debt, less cash set aside for future debt reduction, sits at $3.7
billion. Lower debt means lower servicing costs, permanently freeing
up money to spend on other program priorities. With continuing
strong energy prices, Alberta is now within striking distance
of eliminating the accumulated debt.
ADDRESSING PRIORITIES
Priority programs
such as health and education continued to be at the forefront
of government spending. In 2003-04, over 65% of the province's
total expense was allocated to Health and Wellness, Learning,
Infrastructure and Transportation.
Health reform
initiatives were introduced to reduce the number of regional health
authorities, implement an Alberta Electronic Health record, establish
a provincial on-line Waitlist Registry and set up Health Link
Alberta, a 24 hour province-wide telephone line and website. $283
million in capital funding for health facilities and equipment
helped to fund new projects, including a new children's hospital
in Calgary and the redevelopment of hospitals in Edmonton and
Red Deer.
Alberta's
Commission on Learning released its final report, with the government
supporting 86 of the 95 recommendations including class-size guidelines
and an increased focus on supporting Aboriginal students and students
with special needs. 658 additional new post-secondary student
spaces and 5,700 additional apprenticeship training seats were
provided through the Access Fund. Over 27,000 students received
a total of $37 million in scholarships.
ECONOMY
Despite facing
disasters such as Bovine Spongiform Encephalopathy (BSE) and forest
fires, the 2003-04 fiscal year was positive. Transfers to the
Sustainability Fund from higher oil and natural gas royalties
enabled the government to provide over one billion dollars in
emergency funding to help pay for the costs of forest fires, compensation
programs for cattle producers affected by the BSE crisis, and
natural gas rebates.
A strong economy
brings opportunity, and Albertans benefited from the creation
of 47,000 new jobs and one of the lowest unemployment rates in
the country. We also continued to enjoy the highest personal disposable
incomes and the lowest overall taxes in Canada.
Due to the
indexation of our tax system, taxpayers were protected from inflation.
School property tax rates were reduced in 2003-04, marking the
tenth straight year that rates were either reduced or frozen.
Businesses also saved as government reduced corporate taxes from
13% to 12.5% and the small business rate fell from 4.5% to 4%.
Alberta is
in a great position to keep building on the solid foundation set
over the past few years. With the innovative and fundamental changes
made to the government's fiscal framework in 2003-04, our province
continues to be a better place to live, now and into the future.
[original
signed]
Patricia
L. Nelson
Minister of Finance
Preface
The Public
Accounts of Alberta are prepared in accordance with the Financial
Administration Act and the Government Accountability
Act. The Public Accounts consist of the annual report of
the Government of Alberta and the annual reports of each of the
24 ministries.
This
annual report of the Government of Alberta contains the Minister
of Finance’s accountability statement, the consolidated
financial statements of the Province and a comparison of the actual
performance results to desired results set out in the government’s
business plan, including the Measuring Up report.
The annual
reports of ministries, released in the fall of each year, contain
Ministers’ accountability statements, the audited consolidated
financial statements of the ministries and a comparison of actual
performance results to desired results set out in the ministries’
business plans. Each ministry annual report also includes:
- financial
statements of entities making up the ministry including departments
(all departments combined form the General Revenue Fund), regulated
funds, provincial agencies and Crown-controlled corporations,
- other
financial information as required by the Financial Administration
Act and Government Accountability Act, either
as separate reports or as a part of financial statements, to
the extent that the ministry has anything to report, and
- financial
information relating to accountable organizations and trust
funds.
The
Government of Alberta Annual Report is comprised of two parts:
-
Consolidated
Financial Statements, which provide an overall accounting
of the Government’s revenue and spending, and assets and liabilities.
-
Measuring
Up, which reports on the progress that has been made towards
achieving the government’s goals.
Annual
reports for each ministry are published in September and provide
additional detailed information on performance and financial results.
Executive
Summary: Making Alberta Even Better
Budget
2003 focused
on making Alberta a better place to live and work. It built on
past successes and placed increased priority on responding to
the pressures created by a growing economy and population. The
Budget laid out a plan to:
- focus
program spending on Albertans’ health and education priorities
and support for the agriculture industry,
- provide
more sustainable and predictable funding for roads, schools,
health facilities and other infrastructure through a new three-year
Capital Plan, and
- help manage
revenue volatility and costs of disasters and emergencies through
the new Alberta Sustainability Fund.
These commitments
were met:
- The budget
was balanced for the tenth consecutive year and debt was repaid.
- The Alberta
Sustainability Fund was established and provided over $1 billion
for emergencies, disasters and natural gas rebates.
- A new
Capital Framework was put into place and funding for capital
projects increased by 66%. Previously deferred capital projects
were rescheduled.
- Health
reform continued with new initiatives to improve the health
system. Health spending accounted for 35% of total expense.
- The Report
of Alberta's Commission on Learning was released, with the government
supporting 86 of the 95 recommendations. Education spending
accounted for 27% of total expense.
- Alberta's
tax advantage was strengthened. Indexation of the personal income
tax system to inflation continued. Business tax rates were cut.
NEW FISCAL FRAMEWORK
- Based on
the recommendations of the Financial Management Commission,
changes were made to the province's fiscal framework, including:
- Establishment
of the Alberta Sustainability Fund to protect
the fiscal plan from revenue volatility and emergencies
and disasters. Non-renewable resource revenue above $3.5
billion was deposited into the Fund and was not available
for budgeted spending. The Fund was used to pay for emergencies,
disasters and assistance under the Natural Gas Price
Protection Act. Fund assets over the $2.5 billion target
level were reallocated to other balance sheet improvements.
- Reducing
the minimum economic cushion to 1% of budgeted
revenue (Contingency Allowance) plus any net positive amount
required for capital cash requirements and the retained
income of funds and agencies. The balanced budget requirement
was modified to reflect Sustainability Fund and Capital
Account transfers. In-year initiatives, other than those
funded from the Sustainability Fund or Capital Account,
were limited to the budgeted Contingency Allowance.
- Establishment
of a Capital Framework to provide more
predictability to capital funding. This included the requirement
for a three-year Capital Plan; establishment of a Capital
Account; and allowing the use of alternative financing for
capital projects.
- Implementing
accounting changes, as recommended by the
Public Sector Accounting Board, with respect to treatment
of capital spending. This included recording annual amortization
costs of capital on the income statement and bringing unamortized
capital assets onto the balance sheet.
Economic
and Tax Highlights
ECONOMIC HIGHLIGHTS
- In 2003,
the Alberta economy grew by an estimated 3.1%.
- In 2004,
Alberta's economic growth is expected to accelerate to 3.6%,
as high energy prices, near-record housing starts, and exceptionally
strong employment growth continue.
- Employment
grew by 2.9%, as 47,900 jobs were created in Alberta during
2003, the highest rate of job growth in Canada. Alberta registered
the second lowest unemployment rate among the provinces in 2003,
at 5.1%.
- Alberta
had the highest personal disposable income per capita among
the provinces at $26,170. This was nearly $3,500, or 15%, higher
than the national average.
- Alberta's
strong economy continued to attract large numbers of migrants
from other provinces. For the seventh consecutive year, Alberta
had the highest level of net inter-provincial migration in Canada,
with a net increase of 12,081 persons in 2003.
- With a
population estimated to be 3,153,723 as of July 1, 2003, Alberta
led the country in overall population growth, at 1.3%.
- Higher
energy prices spurred a sharp increase in conventional energy
sector investment. The average number of rigs drilling increased
by 36% in 2003. This more than offset a reduction in oil sands
investment, which moderated to $5 billion after reaching a record
high of $6.7 billion in 2002.
- New housing
construction continued at near-record levels. Alberta's housing
starts moderated to 36,171 in 2003, slightly below the 20-year
high recorded in 2002, but 23% above the average number of starts
over the preceding five years.
- About
$650 million in BSE disaster assistance mitigated, to a degree,
the significant difficulties faced by many producers. As a result
of record program payments, farm cash receipts were up 2% from
the 1997-2001 five-year average.
- Alberta's
inflation rate returned to low levels in the latter part of
2003, following two years of relatively high inflation (which
was due in large part to inflation measurement anomalies associated
with natural gas rebates). While Alberta’s inflation averaged
4.4% for 2003 as a whole, the inflation rate declined steadily
in the second half of the year, falling to a year-over-year
rate of 1.2% in December.
TAX HIGHLIGHTS
- Albertans
continued to pay the lowest personal taxes in Canada in 2003
and indexation of the personal income tax system protected taxpayers
from inflation.
- On April
1, 2003, the general corporate income tax rate was reduced to
12.5% from 13%. The small business rate fell to 4.0% from 4.5%,
and the small business income threshold rose to $400,000 from
$350,000.
- School
property tax rates were frozen in 2003-04, marking the tenth
straight year that rates were either reduced or frozen. More
revenue was collected from the tax because new homes and businesses
were built and the value of properties rose. The revenue collected
in 2003-04 was still lower than when the province assumed responsibility
for collecting school property taxes in 1994-95.
- Two tax
changes were made in-year. The tax on cigars was reduced and
international passenger and cargo flights that either land in
or take off from Alberta were exempted from the 1.5 cent per
litre aviation fuel tax. The cost in 2003-04 of these in-year
tax changes was approximately $5 million.
Performance Measures
- Albertans
had the highest personal disposable income.
- Alberta
has the lowest total provincial and municipal tax load among
Canadian provinces.
Program
and Capital Highlights
- Total expense was $21.9 billion in 2003-04, 5.8%, or $1.2
billion, higher than in 2002-03. The increase was primarily
due to higher spending on health, education and social services,
increased capital grants to local authorities, and natural gas
rebates.
- Total expense was $962 million higher than budgeted primarily
due to BSE agriculture assistance, increased forest fire-fighting
costs and the provision of natural gas rebates.
- Health and education accounted for 62% of total expense.
Health spending increased by 10.4% and education spending by
7.1%.
- 2003-04 was the first year of the government’s new capital
framework. Capital Plan spending reached $1.66 billion in 2003-04,
an increase of $662 million, or 66%, from 2002-03.
Expense
Highlights (by Function)
Health
- Health
spending was $7.6 billion in 2003-04. This was an increase of
10.4%, or $717 million, from 2002-03 and essentially unchanged
from the budget. The increase reflects higher funding for regional
and province-wide health services, physician services, drug
costs, and capital grants to health authorities.
- Major
initiatives included:
- Reducing
the number of regional health authorities (RHAs) from 17
to 9, and transferring community and facility-based mental
health services to RHAs.
- Implementation
of the Alberta Electronic Health Record. This will allow
health care providers to gain immediate access to a patient's
records, which will result in faster, more accurate diagnosis
and treatment, and safer patient care. As at March 31, 2004,
a total of 5,500 users had access to the Electronic Health
Record.
- Eight-year
agreement with the Alberta Medical Association and Alberta's
health regions, changing how physicians, health regions
and government work together to improve patient care. It
includes $100 million over 3 years to support 24-hour per
day access to local primary care services and $66 million
to link physicians to the Alberta Electronic Health Record.
- Expansion
of alternative payment programs that will give physicians
more flexibility in how health services are provided, including
primary care, specialized care for chronic diseases and
mental health services and will allow academic physicians
more time for research and teaching. Currently, over 400
physicians are in alternate payment programs.
- Implementation
of the Health Link Alberta, which provides a 24-hour per
day, province-wide telephone and website access to health
information in order to help Albertans determine the appropriate
level of health service that they may need.
- Establishment
of a provincial on-line Waitlist Registry for selected surgeries,
MRIs, CT scans, radiation and chemotherapy.
- Capital
Plan spending included $268 million in capital grants
to health authorities for facilities and equipment, an increase
of $242 million from 2002-03. In addition, $15 million was provided
for government-owned health capital. Capital funding included
support for:
- Alberta
Children's Hospital in Calgary and the Alberta Heart Institute
in Edmonton, redevelopment of the Royal Alexandra Hospital
in Edmonton and the Red Deer Regional Hospital, and increased
support for medical equipment.
- The
Health Sustainability Initiative, which allows for the redevelopment
of existing health facilities, primarily in the rural areas.
The focus is on facility conversions (e.g. from acute to
long-term care), consolidating services, integrating mental
health clinics and new service delivery models.
- Performance
Measures
- 86%
of Albertans surveyed rated the quality of health care they
received as excellent or good.
- 85%
of Albertans surveyed rated their access to physician services
as easy or very easy.
- 73%
of Albertans surveyed rated their access to hospital services
as easy or very easy.
- 95%
of health facilities were rated as being in acceptable condition.
Education
- Education
spending was $5.9 billion in 2003-04. This was an increase of
7.1%, or $389 million, from 2002-03 and $84 million higher than
budgeted. The increase from 2002-03 reflects higher basic and
post-secondary operating grants, increased teacher pension costs
and a doubling of funding for education capital projects.
- Major
initiatives included:
- Release
of the Report of Alberta's Commission on Learning. The government
supported 86 of the 95 recommendations. Three recommendations
remain under review. In-year funding was provided to cover
what the Commission identified as an immediate funding shortfall.
- Development
of a new funding framework for school jurisdictions. Under
the new framework, increases to school boards vary based
on their individual profiles including student population,
differential operating costs and provincial priorities.
Boards have increased flexibility to address local priorities,
including student needs and class size.
- Enactment
of the Post-secondary Learning Act, which established
the Campus Alberta Quality Council. The Council will facilitate
the development and expansion of degree-granting opportunities
for students.
- Increased
support, through the Access Fund, allowed for the creation
of 658 additional new entry spaces with the major focus
on health programs such as Licensed Practical Nursing, paramedicine,
psychiatric nursing, pharmacy and health sciences. As well,
5,700 additional apprenticeship training spaces were created.
- Fifteen
publicly funded colleges and technical institutes launched
eCampus Alberta and began collaborating to increase access
to online learning opportunities. This will enhance efficiency
and increase access for students across the system by sharing
courses over the Internet.
- $37
million in scholarships were provided to about 27,700 students
in 2003-04. The amount of scholarship money available for
Alexander Rutherford Heritage Scholarships was increased
to address an increase in eligible applicants.
- $88
million in student loans were disbursed in 2003-04. The
Alberta Student Loan Relief Benefit and the Loan Relief
Completion Payment continued to reduce debt automatically
for students in their first and final years of study, respectively.
These programs provided $54 million in debt reduction in
2003-04.
- Capital
Plan spending included $255 million in capital grants
to school and post-secondary institution capital projects, double
the 2002-03 level. This included support for:
- Schools
– 44 new/replacement projects, 20 expansion projects
and numerous smaller school facilities projects.
- Post-secondary
institutions – Health Research Innovation centres,
Natural Resources Engineering Facility and power plant expansion
at the University of Alberta, and numerous smaller post-secondary
projects.
- Performance
Measures
- 89%
of Albertans aged 25-34 have completed high school.
- 57%
of Albertans aged 25-34 have completed post-secondary education.
- 78%
of Alberta's Grade 9 students met acceptable standards on
provincial achievement tests in language arts.
- 63%
of Alberta's Grade 9 students met acceptable standards on
provincial achievement tests in mathematics.
- 94%
of schools and 84% of post-secondary institutions were estimated
to be in acceptable condition.
Social
Services
- Social
Services spending was $2.3 billion in 2003-04. This was an increase
of 7.4%, or $157 million, from 2002-03 and a $35 million increase
from the budget. The increase from 2002-03 reflects higher spending
on children's services, persons with developmental disabilities,
Assured Income for the Severely Handicapped, Supports for Independence
and seniors' programs.
- Major
initiatives included:
- Emphasis
on early intervention programs for children at risk and
implementation of the Alberta Response Model to help ensure
children, youth, and families live in stable, nurturing
environments.
- Introducing
the Supplementary Accommodation Benefit to assist low-income
seniors with increased long-term care accommodation costs.
- Providing
seniors with one-time assistance to offset high energy utility
costs.
- Increasing
Supports for Independence payments to families with children
and to people who are not expected to work by $20 per month.
In addition, family benefits under Supports for Independence
increased by $14 per month, per child, as a result of flowing
through the corresponding increase in the National Child
Benefit.
- Enabling
access to health coverage through the Alberta Adult Health
Benefit for qualified adults who leave income support under
both the Assured Income for the Severely Handicapped and
Supports for Independence programs as a result of increased
income.
- Performance
Measures
- 85%
of Alberta's children were living at or above the Market
Basket Measure low-income threshold (2000).
- 88%
of Albertans were living at or above the Market Basket Measure
low-income threshold (2000).
Agriculture,
Resource Management and Economic Development
- Agriculture,
Resource Management and Economic Development spending was $2.1
billion in 2003-04. This was a decrease of 10.8%, or $250 million,
from 2002-03 but $648 million higher than budgeted. The increase
from budget was primarily due to agriculture disaster assistance.
The decrease from previous year reflected the large drought
assistance payments made in 2002-03.
- Major
initiatives included:
- Providing
about $650 million in disaster assistance to the agriculture
sector following the border closure to beef exports due
to the discovery of BSE. This disaster assistance was partly
offset by over $230 million in federal transfers related
to BSE assistance.
- Signing
of the federal-provincial implementation agreement for the
five-year Agriculture Policy Framework, resulting in the
creation of the Canadian Agricultural Income Stabilization
program.
- Performance
Measures
- Alberta's
labour productivity is the highest among the provinces.
- 30%
of Alberta's real Gross Domestic Product (GDP) contributed
by manufacturing and knowledge-intensive service industries
(preliminary).
- Alberta
has the second highest business use of the Internet among
provinces.
Transportation,
Communications and Utilities
- Transportation,
Communications and Utilities spending was $1 billion in 2003-04.
This was an increase of 56.4%, or $368 million, from 2002-03
and $163 million increase from budget. The increase from 2002-03
primarily reflects natural gas energy rebates and increased
rural and municipal capital transportation grants. This spending
does not include capital investment on provincial government-owned
transportation and communication networks.
- Major
initiatives included:
- Implementation
of the new capital framework to provide more predictable
capital funding on transportation and other infrastructure
projects.
- Payment
of $214 million in rebates to Albertans under the Natural
Gas Rebate Program to help offset the increase in natural
gas costs.
- Enactment
of the Traffic Safety Act, replacing the Highway
Traffic Act, Motor Vehicle Administration Act,
Motor Transportation Act and Off-Highway Act.
The new Act included a Graduated Driver Licensing program,
new standard and safety policies for commercial vehicle
equipment and updated fines.
- Performance
Measures
- 89%
of provincial highways were in acceptable physical condition.
- 96%
of water management infrastructure were in acceptable physical
condition (1999).
Protection
of Persons and Property
- Protection
of Persons and Property spending was $842 million in 2003-04.
This was a decrease of 6.5%, or $59 million, from 2002-03 but
$138 million higher than budgeted. The decrease from 2002-03
reflects lower forest fire-fighting costs partly offset by increases
in other areas including drivers licences, public security,
legal services and court services. Spending was higher than
budgeted due to forest fire-fighting costs.
- Major
initiatives included:
- Establishing
an Integrated Response to Organized Crime and Gangs initiative,
comprised of members of the RCMP and the Edmonton and Calgary
police services.
- Introducing
a new Alberta driver’s licence with added security
to help protect Albertans from identity fraud.
- Pilot
project using video conferencing in Alberta’s courts.
- Performance
Measures
- Alberta
had the lowest violent and property crime rates among the
four western provinces.
- 79%
of Albertans surveyed feel somewhat to very comfortable
walking alone in their neighborhoods at night.
Other
Program Expense
- Other
program expense was $1.8 billion in 2003-04. This was an increase
of 6.1%, or $105 million, from 2002-03 and $94 million higher
than budgeted. The increase from 2002-03 was related to a range
of initiatives including the Canada/Alberta Affordable Housing
Agreement and the Community Initiatives Program.
- Major
initiatives included:
- Increasing
funding under the Canada/Alberta Affordable Housing Agreement
to facilitate the development of an additional 872 affordable
housing units in Edmonton, Calgary, Lethbridge, Leduc, Brooks,
Cochrane, Fort McMurray, Grande Prairie, Red Deer and Rocky
Mountain House.
- $25
million was awarded for 35 community-based projects under
the Centennial Legacies Grant Program for recreational and
cultural facilities, heritage sites and museums.
- Introducing
ME first!, the Municipal Energy Efficiency Assistance Program,
which will allow Alberta municipalities to access interest-free
loans for energy efficiency projects.
- Releasing
the Water for Life: Alberta’s Strategy for Sustainability.
The plan outlines a series of actions aimed at ensuring
Albertans have safe, secure drinking water, healthy aquatic
ecosystems, and a reliable water supply to promote provincial
economic development.
- Performance
Measures
- Surface
water and air quality remained high.
- 80%
of adult Albertans surveyed participated in sport and recreational
activities.
- 98%
of visitors were satisfied with provincial historic sites,
museums and interpretative centres.
Debt
Servicing Costs
- Debt Servicing
Costs were $271 million in 2003-04. This was $205 million lower
than in 2002-03 and $194 million lower than estimated in the
budget. Lower debt servicing costs reflected lower debt levels
and the appreciation of the Canadian dollar relative to the
U.S. dollar. This reduced the cost of debt held in U.S. dollars.
Pension
Provisions
- Pension
Provisions were $132 million in 2003-04. This was $24 million
lower than in 2002-03 but $11 million higher than estimated
in the budget. The decrease from 2002-03 reflected stronger
returns of pension funds.
Capital
Plan Priorities
- Capital
spending was $1.66 billion in 2003-04, an increase of $662 million,
or 66% from 2002-03. Capital spending includes capital investment
in government-owned assets, grants to local authorities for
capital purposes and other infrastructure support.
- The
increase from 2002-03 reflected significantly higher spending
on transportation infrastructure, and health and education facilities
and equipment.
- The slightly
lower than budgeted capital spending in 2003-04 primarily reflects
revised project schedules.
- Alberta
continues to lead the country in capital spending as a percentage
of total spending.
- In
2003-04, $920 million in capital grants were provided to local
authorities, including schools, post-secondary institutions,
health facilities and municipal governments. This was more than
double the level of capital grants in 2002-03.
- Spending
on provincial government-owned capital was $739 million, a 18%
increase from 2002-03.
-
Total
revenue was $25.9 billion. This was $3.2 billion, or 14.2%,
higher than in 2002-03, and $4 billion higher than budgeted.
Higher investment income, federal transfers and non-renewable
resource revenue were the main reasons for the increase
from 2002-03. The increase from budget was largely due
to higher non-renewable resource revenue.
Non-Renewable
Resource Revenue
-
Non-renewable
resource revenue was $7.7 billion. This was $546 million higher
than in 2002-03 and $2.9 billion higher than budgeted.
-
Energy
prices remained strong in 2003-04, reflecting continuing high
world oil demand, delays in the return of Iraqi production,
strong economic growth in the United States and continuing
concerns over North American natural gas supply. Partly offsetting
the impact of higher energy prices was the strengthening Canadian
dollar relative to the United States dollar.
-
Natural gas prices averaged Cdn$5.75 per thousand cubic feet.
This was 77 cents higher than in 2002-03 and $1.70 higher
than budgeted. Over the last six years, the average annual
natural gas price has ranged from as low as $2 per mcf and
to as high as $6 per mcf.
-
Oil
prices averaged US$31.35 per barrel (WTI). This was $2.22
higher than in 2002-03 and $8.05 higher than the budget estimate.
Over the last six years, the average annual oil price has
ranged from as low as US$13 and to as high as US$31.
- Tax revenue
was $9.3 billion. This was a decrease of $274 million from 2002-03
and $537 million lower than budgeted. The decreases were due
to lower personal and corporate income tax revenue partly offset
by higher revenue from other tax sources.
- Personal
income tax revenue was $4.6 billion. This was $221 million,
or 5%, lower than recorded in 2002-03. The decrease reflected
updated federal tax assessment information for the 2002 tax
year. Based on this updated information, 2002-03 actual personal
income tax revenue was approximately $200 million lower than
reported in the 2002-03 year-end statements. This also reduces
the 2003 tax year assessment estimates. Excluding prior year
adjustments, personal income tax revenue grew by about 3%.
- Corporate
income tax revenue was $1.7 billion. This was about $320 million
lower than in 2002-03 and the budget estimate. The decline was
due primarily to higher than expected tax refunds for 2002 and
previous tax years, which were paid in the 2003-04 fiscal year,
and 2003-04 reductions in corporate income tax rates.
- Other tax revenues were $3 billion. This was $270 million
higher than in 2002-03 and $205 million higher than the budget
estimate. The increases were attributable to revenues from freehold
mineral rights tax, tobacco tax, school property tax, fuel taxes
and insurance taxes. Only the hotel tax revenue was lower than
the previous year and the budget estimate.
Transfers from
Government of Canada
- Transfers
from Government of Canada were $2.9 billion. This was $852 million
higher than in 2002-03 and $540 million higher than the budget
estimate. The increases were primarily due to higher Canada
Health and Social Transfers (CHST) and increased federal agriculture
transfers, primarily related to BSE.
Investment Income
- Investment
income was $1.8 billion. This was a $2.3 billion difference
from 2002-03 when a net loss of $462 million was recorded. The
loss in 2002-03 reflected net realized losses and the write-down
in values of financial assets due to weak equity markets. In
2003-04, investment income returned to historically more normal
levels as equity markets recovered. This recovery was quicker
and stronger than had been expected, resulting in investment
income being $819 million higher than estimated in the budget.
Other Revenue
- Revenue from all other sources was $4.1 billion. This was
$199 million lower than 2002-03 but $237 million higher than
estimated in the budget. The decline was due to significant
one-time or non-recurring revenue in 2002-03 including forest
fire insurance, agriculture re-insurance recoveries, Alberta
Dairy Control Board and the Alberta Capital Finance Authority
transfer to government revenue. The increase from budget reflected
higher net income from commercial operations and higher timber
royalties and fees.
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The Sustainability Fund was established to
protect spending from volatile revenue and the costs of emergencies
and disasters. At March 31, 2004, it had $2.5 billion of financial
assets.
-
The Sustainability Fund received non-renewable
resource revenue above $3.5 billion and paid for the costs
of emergencies and disasters and natural gas rebates. It also
received additional revenue from the higher than budgeted
surplus. (Note: the amount of non-renewable resource revenue
that can be used for budget purposes was increased to $4 billion
in 2004-05).
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The target level for the Fund was $2.5 billion.
After reaching this amount the government can reallocate assets
to other balance sheet improvements.
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The Third Quarter Fiscal Update,
released in February 2004, forecast the Sustainability Fund
would reach $4.3 billion, prior to any reallocations. Of this
amount, $893 million was reallocated to each of the Capital
Account and Debt Retirement Account. This left the Sustainability
Fund at a forecast $2.5 billion.
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Net Revenue was $809 million higher than
forecast in the Third Quarter Fiscal Update. Of this
amount $141 million was retained by funds and agencies (including
endowment funds, Alberta Treasury Branches, Agriculture Financial
Services Corporation) or was required for capital cash requirements.
Other cash adjustments, primarily related to natural gas royalties,
further reduced the additional cash available for transfer
to the Sustainability Fund to $510 million.
-
Because of timing, this additional $510 million
was not transferred until after March 31, 2004. This brings
the value of Sustainability Fund to $3 billion. A decision
regarding the potential reallocation of Sustainability Fund
assets above the $2.5 billion target level will be made in
2004-05.
- Net Assets – As of March 31, 2004,
the Government of Alberta had net assets of $21.1 billion. This
included capital assets of $10.5 billion.
- Accumulated Debt – Accumulated debt,
net of cash set aside in the Debt Retirement Account, was $3.7
billion. This was a $1 billion reduction from March 31, 2003.
- Capital Account – The Capital Account
had financial assets of $1.18 billion. These funds have been
set aside to pay for capital projects over the next three years.
In 2003-04, the Capital Account started with $910 million in
financial assets. During the year, a further $893 million was
added to the Capital Account and $623 million was withdrawn
for funding capital projects.
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