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ACCOUNTABILITY
STATEMENT
This Business Plan for
the three years commencing April 1, 2004 was prepared under my direction
in accordance with the Government Accountability Act and the government’s
accounting policies. All of the government’s policy decisions as at February
27, 2004 with material economic or fiscal implications of which I am aware
have been considered in preparing the Business Plan.
The Ministry’s priorities outlined
in the Business Plan were developed in the context of the government’s
business and fiscal plans. I am committed to achieving the planned results
laid out in this Business Plan.
[original
signed]
Patricia L. Nelson, Minister
of Finance
March 4, 2004
The
ministry
The Ministry of Finance
includes the Department of Finance, Alberta Capital Finance Authority,
Alberta Pensions Administration Corporation, ATB Financial, Alberta Insurance
Council, Credit Union Deposit Guarantee Corporation and their subsidiaries.
The Ministry of Finance also includes the activities of a number of companies
in wind-up.
The Department of Finance has four main areas: Office of Budget and Management;
Pensions, Insurance and Financial Institutions; Treasury Management; and
Corporate Support.
The Finance Business Plan incorporates all the entities reporting to
the Minister into an integrated strategic plan that focuses on the key
priorities for the Ministry. The following plan does not include the day-to-day
activities of the Ministry.
link
to the government strategic business plan
This
plan supports the 3-Year Government of Alberta (GOA) Business Plan to
have a prosperous economy (Goal 7), which is aligned with the 20-Year
Government of Alberta Strategic Business Plan of competing in a global
marketplace (Opportunity 3). The Finance plan provides support by keeping
taxes competitive and the regulatory system effective.
The plan also supports
the 3-Year GOA Business Plan of having a financially stable, open and
accountable government (Goal 8). This is aligned with the 20-Year Strategic
Plan of making Alberta the best place to live, work and visit (Opportunity
4). Support is provided through the ministry's efforts to smooth out fluctuations
in resource revenue, eliminate debt on schedule, keep spending affordable,
ensure future sustainability of revenue to meet needs, monitor performance
and assist with capital planning and financing for infrastructure.
Finally, the Ministry
Plan supports the 3-Year GOA Business Plan to have an effective, responsive
and well-managed local government (Goal 6), which is aligned with the
20-Year Strategic Plan to make Alberta the best place to live, work and
visit (Opportunity 4). The ministry provides support through the Alberta
Capital Finance Authority.
vision
A province that is innovative
and globally competitive with a fiscally sustainable and accountable government.
MISSION
Develop and implement
the government's fiscal framework and financial policies.
CORE
BUSINESSES
Core Business
1: Fiscal Planning and Financial Management
Goal 1 - A financially
strong, sustainable and accountable government
Goal 2 - A fair and competitive provincial tax system
Goal 3 - Effective management of financial assets, liabilities and risk
Core Business
2: Regulation of Provincial Financial Institutions
Goal 4 - Reliable
and competitive financial and insurance products and services
Core Business
3: Pensions Policy, Regulation and Administration
Goal 5 - Pensions
that deliver on promises
Core Business
4: Financial Services
Goal 6 - Quality
and competitive financial services accessible to Albertans and local
authorities
SIGNIFICANT
OPPORTUNITIES AND CHALLENGES
Maintaining a strong
and sustainable financial position poses challenges. Changing world economic
conditions, exchange rates and energy prices impact Alberta's economy
and fiscal plan. The decline of high royalty rate conventional energy
revenues is an issue that is being addressed. Disasters and emergencies,
such as BSE and severe weather conditions, are unpredictable events that
can have budget consequences. Volatile capital markets can affect pension
plans and endowment funds like the Alberta Heritage Savings Trust Fund,
especially if markets are weak for extended periods. The Sustainability
Fund will help manage risks from energy and other revenues, as well as
disasters and emergencies. An aging population and early retirements will
also impact pension plans. Recognizing pressures on pension plans will
enable stakeholders to work together to review pension plan governance
and establish stabilizing strategies.
STRATEGIC
PRIORITIES 2004-07
Through
the Ministry’s review of external and internal challenges, the strategic
priorities described below have been identified. These are in addition
to the important ongoing core activities of the Ministry.
| 1.
Maintaining Alberta's Fiscal Framework Linkage:
Goal 1 |
The
government's new fiscal framework is designed to provide predictability,
sustainability and continued discipline to prepare Alberta for the
challenges that lie ahead, while maintaining a competitive tax environment.
Finance will work with other ministries to maintain a balanced approach
in fiscal planning. In addition, Finance will implement the accepted
Financial Management Commission (FMC) recommendations, including the
risk analysis, three-year capital plans, alternative mechanisms for
capital project financing, capitalization and amortization of assets,
and continued refinements to the government reporting entity. |
| 2.
Public-Private Partnerships (P3s)
Linkage: Goals 1 and 3 |
Public-private
partnerships (P3s) have been identified as one option to deliver capital
projects, where appropriate. Finance provides financial expertise
to other ministries on financing government and government-funded
capital projects, ranging from construction to information technology.
Finance also determines the appropriate accounting treatment and the
impact on the Province's financial position and fiscal plan. Finance
will assess the costs and risks of alternate financing vehicles, including
P3s, and make recommendations to mitigate provincial financial risk
and achieve optimal value for money. |
| 3.
Enterprise-Wide Risk Management
Linkage: Goal 3 |
The
Alberta government faces risks from a variety of sources. The concept
of enterprise risk management is to identify the sources of risk to
all major components of the Province's revenues and expenses and to
use the collective strength of the enterprise to manage those risks
with a comprehensive cost-effective strategy. In cooperation with
other departments, Finance will develop an enterprise risk management
framework and provide recommendations for government consideration. |
| 4.
Automobile Insurance
Linkage: Goal 4 |
The
Government is committed to ensuring Albertans have access to affordable
automobile insurance. Finance will work to implement recommendations
from the government's review of automobile insurance, including issues
respecting automobile injury claims and related premium increases.
|
| 5.
Public Pension Plans Governance
Linkage: Goal 5 |
Finance,
in consultation with public sector boards and stakeholders, will review
current governance arrangements for public pension plans (in the context
of recent proposals for independence) with the objective of making
recommendations to improve accountability to plan members and taxpayers.
|
GOALS,
STRATEGIES AND PERFORMANCE MEASURES
CORE
BUSINESS ONE: Fiscal Planning and Financial Management
GOAL
1: A Financially Strong, Sustainable and Accountable Government
What it means
Maintaining Alberta's strong financial position
means keeping the budget balanced and sustainable. Strategic fiscal planning
and prudent economic forecasting are required to meet today's priorities
and sustain essential programs and services over the longer term. The
Alberta Sustainability Fund has been established to cushion ongoing operating
spending plans from volatile energy revenues and the costs of emergencies
and disasters. The new Fiscal Framework includes a three-year capital
plan, with some funding of capital from the capital account and alternative
financing arrangements. The government will continue to balance the budget
every year in accordance with the fiscal framework and to reduce the province's
existing debt as scheduled. The government will also continue to fulfill
its legislated commitment to be accountable to Albertans by publishing
three-year consolidated fiscal plans, quarterly fiscal updates and annual
performance reports, including audited financial statements, as required
by the Government Accountability Act.
In executing its leadership
role for these initiatives, Finance will continue to assess the economic
impact associated with issues of concern to Albertans, including the implementation
of the Climate Change Strategy. The department will also take an active
role in strategic corporate approaches to information technology investment,
governance and accountability.
Strategies
- Assess the financial costs and risks
to the government of proposed P3s and make recommendations to reduce
provincial financial risk and optimize value for money.
- Continue overseeing cross-government
implementation of the accepted Financial Management Commission (FMC)
recommendations. Finance will concentrate on supporting further development
of the capital plan. In response to the Public Sector Accounting Board's
recommendations, Finance will also work with other ministries to determine
what entities should be consolidated in the government's reporting
entity, with planned implementation for fiscal years beginning with
Budget 2006 at the earliest.
- Continue to repay accumulated debt
in accordance with the legislated plan.
Performance Measures
GOAL
2: A fair and competitive provincial tax system
What it means
Government policy is a low rate, broad base
policy approach to promote efficiency of the tax system. Taxes are necessary
to provide the revenue that government needs to fund programs and services.
The tax system must be fair and promote self-reliance. Our taxes must
also be competitive with those in other provinces and countries with which
Alberta competes, in order to attract the investment, jobs and skilled
workers necessary to keep our economy performing well. Alberta has a low
single rate income tax, the lowest tax on gasoline in the country and
no general payroll tax. Alberta is the only province without a capital
tax or a general retail sales tax.
Finance continues to work with the federal government, other provinces
and territories to promote effective tax systems and collection arrangements.
Strategies
- As affordable, complete implementation
of the Business Tax Plan to reduce the general corporate income tax
rate from 11.5% to 8%.
Performance Measures
Goal
3:
Effective management of financial assets, liabilities and risk
What it means
Finance through the Treasury Management Division
has responsibility for the province's ongoing cash management including
short-term borrowing and investing, management of banking arrangements
and cash forecasting as well as arranging short and long-term financing
for the government and provincial corporations. Through prudent management
of liabilities and assets, the Ministry endeavors to minimize financing
costs and maximize investment returns.
The Ministry has assumed a leadership role in developing an enterprise
risk management framework so that the Alberta Government can effectively
manage the day-to-day financial challenges.
Strategies
- Effective investment policies are in
place to ensure optimal return.
- Develop an enterprise-wide risk management
framework for government decisions.
- Invest the Sustainability Fund in high
quality fixed income assets.
Performance Measures
CORE
BUSINESS TWO: Regulation of Provincial Financial Institutions
Goal
4:
Reliable and competitive financial and insurance products and services
What it means
Financial service providers are responsible
for ensuring that Albertans receive the services they have purchased.
Finance regulates the credit union, insurance, loan and trust industries
in Alberta, in the interests of depositors, insurance policy holders,
insurance intermediaries, trust beneficiaries and the companies themselves.
Finance is working with the automobile insurance industry to implement
recommendations from the government's review of automobile insurance,
including issues respecting automobile injury claims and related premium
increases. In addition, Finance will monitor issues that face the insurance
industry and consumers with respect to general property and liability
insurance in Alberta.
Strategies
- Implement recommendations from the government's
review of issues respecting automobile insurance, including compensation
for automobile injury claims and premium increases.
- Work with industry and consumer stakeholders
to review the statutory provisions of the Insurance Act respecting
insurance contracts.
- Ensure a supervisory framework is in
place to govern Alberta Treasury Branches (ATB Financial) and that
it is appropriate and comparable to that for private sector financial
institutions.
Performance Measures
CORE
BUSINESS THREE: Pensions Policy, Regulations and Administration
Goal
5:
Pensions that deliver on promises
What it means
Pension plan members need to be assured that
their benefits are secure. Employers and other plan sponsors need to know
that pension regulation is fair and even-handed. Finance assesses private
sector pension plan compliance with legislative standards and ensures
that action is taken and 'at risk ' plans comply with regulations. Finance
will also continue to monitor funding of private sector pension plans.
The Department provides advice to the Minister of Finance on the financial
soundness and governance of the public pension plans. Alberta Pensions
Administration Corporation (APA) provides administrative services.
Finance works with the federal government and the other provinces to
maintain the sustainability of the Canada Pension Plan and explores alternatives
to allow Albertans to secure their retirement income. The Department provides
support and information for government initiatives on public pension issues.
In addition, Finance works with stakeholders and other jurisdictions across
Canada to harmonize and streamline private pension legislation and regulatory
processes.
Strategies
- In consultation with public pension
boards and stakeholders, facilitate the improvement of pension governance
frameworks.
- Review funding requirements for public
pension plans.
- Review investment rules and returns
for private pension plan assets.
Performance Measures
CORE
BUSINESS FOUR: Financial Services
Goal
6:
Quality
and competitive financial services accessible to Albertans and local authorities
What it means
Alberta's dynamic
economy and entrepreneurial spirit requires readily accessible and technologically
advanced financial services and products. Alberta Treasury Branches (ATB
Financial) and the Alberta Capital Finance Authority (ACFA) are public
sector components of the financial services sector.
ATB Financial is a
full-service financial institution, with the largest branch network in
the province. It provides services to individuals, small businesses and
the agri-industry in 240 communities across Alberta.
ACFA provides financing
to a variety of local authorities including municipalities, towns, counties,
hospitals, schools and post-secondary institutions throughout the province
for capital projects.
Strategies
- ATB Financial continues to operate on
sound financial institution and business principles with the objective
of earning a fair return.
- ACFA will continue to provide local
authorities within the province with flexible funding for capital
projects at the lowest possible cost, consistent with the viability
of ACFA.
Performance Measures
expense
by core business
ministry
statement of operations
CONSOLIDATED
NET OPERATING RESULT
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