Go to Part 2:  Overview

Financial Highlights

• Internal government transfers from the Lottery Fund to the Department of Finance declined by $142 million compared to the previous year. This was due to an offsetting increase in Lottery Fund grants to ministries.
• Investment income increased by $13 million. The newly created Sustainability Fund and Capital Account earned $42 million and $29 million, respectively. An additional $7 million was earned by the General Revenue Fund due to larger than anticipated cash surpluses. These increases were partially offset by a $49 million reduction in earnings on income set aside for debt retirements and a $16 million reduction in the income of the Alberta Capital Finance Authority as a result of reduced borrowing over the previous year by its shareholders.
• Net income from commercial operations decreased by $25 million. This was primarily due to a recovery of a credit loss provision by ATB Financial in 2002-03.
• Other income and fees decreased by $103 million due primarily to a one-time transfer of $100 million in 2002-03 from the retained earnings of the Alberta Capital Finance Authority to the Department of Finance.

• Total debt servicing costs declined by $216 million from 2002-03 primarily due to debt retirement of $1.7 billion in 2003-04 and a decrease in the foreign exchange provision on unhedged US$ debt as a result of a stronger Canadian dollar.
• Valuation adjustments decreased by $80 million. An actuarial valuation of the Public Service Management (Closed Membership) Pension Plan that was conducted in 2002-03 resulted in an increase to the pension provision in that year.
• Alberta Pensions Administration Corporation operating costs increased by $2.8 million as a result of additional staffing requirements and amortization of newly developed systems.
• Department of Finance voted operating expenses increased by $2.7 million, which included a $1.5 million supplementary estimate for the automobile insurance review.

Goals, Performance Measures, Targets and Results

Core Business: Fiscal Planning and Financial Management

Re-engineering Alberta's fiscal framework is a strategic priority for Alberta Finance. In 2003-04, Alberta Finance concentrated on developing a new fiscal framework, establishing the sustainability fund and capital account, assisting in the development of the capital plan and beginning to assess expansion of the government's reporting entity to include other entities.

Alberta Finance worked with other ministries on assessing the economic impact and challenges with global climate change as a result of the introduction to the Kyoto Protocol.

Debt servicing costs were $194.4 million below budget primarily due to an increase in the foreign exchange loss provision on unhedged US$ debt, higher than anticipated debt retirement and lower short-term interest rates. This linked to better performance on accumulated debt. The remaining $1.9 million reduction from budget is attributed to staff vacancies and lower contract costs.

Having a financially strong, sustainable and accountable government is important to Albertans. This means that the Government should be fiscally prudent in its economic forecasting. It must plan strategically to meet the needs of the Province today and into the future.

As a result of this strategic approach, the Alberta Government balanced its budget for the tenth consecutive year in 2003-04. As reported in the 2003-04 Government of Alberta Annual Report, the Province's revenue exceeded expense by $4 billion. This was $3 billion higher than budgeted.

A credit rating is an independent credit rating agency's assessment of the future ability of an organization to repay its long-term debt, and a method of comparing the quality of different bond issues. A blended rate is an average (rounded) of the domestic debt credit ratings issued by the following credit rating agencies: Standard and Poor's Rating Services, Moody's Investors Service Limited and Dominion Bond Rating Service. The highest possible rating is AAA.

The Fiscal Responsibility Act (FRA) legislated and implemented Alberta’s Sustainability Fund (SF) in 2003-04. The Sustainability Fund is an account within the General Revenue Fund and is the mechanism that protects the fiscal plan from revenue volatility and costs of emergencies, disasters and natural gas rebates. The balance in the Sustainability Fund achieved the target of $2.5 billion in 2003-04.

The FRA stipulates that non-renewable resource revenue above $3.5 billion (changed to $4 billion for 2004-05) is transferred into the SF. In addition, Treasury Board can allocate additional amounts to the SF. By way of policy, the SF is the first priority for year-end surpluses until the Fund reaches $2.5 billion.

The balance in the SF cannot be less than zero, and if the SF balance exceeds $2.5 billion, Treasury Board may re-allocate the excess to other balance sheet accounts, reducing liabilities, such as accumulated debt, or increasing assets, such as the Capital Account or the Heritage Fund.

In 2003-04, approximately $1 billion was allocated to Bovine Spongiform Encephalopathy (BSE) agriculture assistance, increased forest fire fighting costs and the provision of natural gas rebates.

The Fiscal Responsibility Act sets out the government's schedule to repay the $12.5 billion of accumulated debt that was remaining as of March 31, 2000 over a maximum of 25 years. The legislation includes five-year milestones for repayment of the accumulated debt.

Alberta's accumulated debt is the sum of the outstanding consolidated debt of the General Revenue Fund, the debt of the Alberta Social Housing Corporation and the government's liability for school construction.

As of March 31, 2004, accumulated debt less cash set aside for future debt repayment was $3.7 billion, significantly better than the original Budget 2003 target of $4.7 billion. This favorable position is a result of strong non-renewable resource revenues in 2003-04.
On July 12, 2004, the Government announced a debt-free Alberta. The Province will be setting aside an additional $3 billion to pay off the province's accumulated debt. The additional $3 billion will be set aside in the Debt Retirement Account by March 31st, 2005 to make all remaining debt payments as they become due. Once it is topped up, funds in the Debt Retirement Account will be locked in by legislation that will be introduced in the next session, to ensure the account can only be used to pay down the debt.

Alberta is dedicated to being financially open and accountable and has become a leader among Canadian governments in financial reporting. The provincial government reports quarterly to Albertans on progress made in achieving the current year's fiscal plan. The Government Accountability Act sets out the reporting requirements that provide government accountability. The government has to publish three-year consolidated fiscal plans, quarterly fiscal updates and annual reports including audited financial statements within a relatively short time frame. By providing timely, comprehensive information, Albertans have the opportunity to objectively evaluate the performance of government.

In the spring of 2004, 606 adult Albertans were surveyed to see how satisfied they are with the information they receive on the government's financial performance. They were asked the following question: "How satisfied are you with the information you receive from the Alberta government on the government's financial performance?" The results were reliable to within plus or minus 4.0%, 19 times out of 20. Out of the Albertans surveyed, 57% said they were satisfied with the amount of information they received, 10% less than 2002-03. The results may have been affected by the timing of the survey and in the future this survey will be conducted at the same time every year. The baseline was established at 70%.

In July 2002, the Financial Management Commission (FMC) submitted a report containing 25 recommendations to the Minister of Finance. A formal government response was published in September 2002 accepting 22 of the 25 recommendations. Finance is coordinating the implementation of the 22 accepted recommendations. The key recommendations implemented included a new fiscal framework, sustainability fund, capital plan, and changes to the accounting treatment of capital.

At the end of this fiscal year, 11 of the 22 (50%) FMC recommendations accepted by Government have been implemented. This is ahead of the target of 7 of 22 (32%). The FMC recommendations implemented include numbers 1-3, 5, 7-9, 15, 20, 22 and 24. The FMC recommendations are available on the Alberta Finance website or the FMC website at www.albertafmc.com.

Goal 2: A Fair and Competitive Provincial Tax System

Alberta's tax system is fair and competitive. A fair tax system is one that incorporates a low-rate, broad-based tax regime, rather than introducing special tax incentives that favour one group over another. Further, our high personal tax exemptions protect low-income people by allowing them to earn more money before paying any tax at all. Alberta's low personal and corporate taxes translate into a competitive tax system that helps attract workers and investment, creating a strong provincial economy.

Low personal income taxes and fuel taxes, in combination with no retail sales taxes, mean that Albertans pay the lowest personal taxes in Canada. A typical two-income family earning $60,000 will pay over $600 less in taxes in Alberta than they will in Ontario, the next lowest province. Low personal taxes give people more money to spend or invest as they wish, and help attract people to Alberta.

Alberta's personal tax system is also fair. With the highest income exemptions in Canada, at $14,337 in 2004, Albertans are able to earn more money before they start to pay any tax. A family of four can earn up to $35,700 in 2004 without paying provincial income tax, as the Alberta Family Employment Tax Credit offsets any tax paid to that level. Alberta's decision to index the tax system also protects taxpayers by preventing inflation from eating away at past tax cuts.

The taxes in the comparison include provincial personal income tax, sales tax, payroll taxes, fuel taxes, tobacco taxes and healthcare premiums.

Calculations are based on the following assumptions:

• Business is assumed to bear between 25% and 60% of the provincial sales tax, depending upon the provincial tax regime.
• In provinces that impose payroll taxes, 75% is assumed to be borne by employees and 25% by employers. The same 75/25 split is assumed for health care insurance premiums.
• Fuel tax is based on estimated consumption of 3,000 litres per year for one-income families and 4,500 litres for two income families.
• Tobacco tax is based on estimated consumption of 100 packs per adult per year.
• RRSP/RPP contributions of $1,000, $7,800 and $13,500 are included in the calculation of personal income tax for the $30,000, $60,000 and $100,000 families, respectively.
• For two income families, income and RRSP/RPP contributions are split 60/40 between two spouses.
• The children in each family are assumed to be 6 and 12 years old.

Alberta's corporate taxes are competitive. In 2003-04, the target of being the lowest in Canada was not met. Alberta's provincial tax load on businesses was the third lowest in Canada, following New Brunswick and British Columbia. Alberta's general corporate tax rate and small business tax rate were the second lowest in Canada. Further, Alberta does not have a capital tax or a payroll tax, making Alberta businesses more competitive. Low overall taxes encourage entrepreneurs to start new businesses here, or expand existing operations.

The government continued its plan of corporate income tax reductions in 2003-04. Effective April 1, 2003, the general rate was reduced to 12.5%, the small business rate was reduced to 4.0%, and the small business threshold was increased to $400,000. The tax cuts continued in 2004. Effective April 1, 2004, the general rate was reduced to 11.5%, the small business rate was reduced to 3%, and the small business threshold continued to be $400,000. The government will continue to take steps towards its goal of an 8.0% general rate, as affordable.

Business taxes examined include business income taxes, capital taxes and insurance corporation taxes. Each year, the provinces report their tax revenues by these categories to the federal government as part of the reporting requirements for the Equalization program. The steps to calculate provincial tax loads are:

1. National-average tax rates are calculated by dividing total national tax revenues by the national tax base. The tax base for business income taxes, for example, is corporate profits.
2. The revenue that the province would generate if it taxed at national rates is equal to the national-average tax rate multiplied by the provincial tax base for each of the tax categories.
3. Provincial tax load is equal to the ratio of actual provincial revenues divided by the results of the previous calculation multiplied by 100.

In a global economy, it is important to be competitive not only within Canada, but also with other countries. A competitive tax system helps attract investment from around the world. The following graph compares Alberta's total tax load as a percentage of GDP to the tax loads of the G-7 countries. The tax load in each jurisdiction includes all applicable municipal, provincial/state, federal and supranational taxes, and social security levies. At 26% of GDP, Alberta's tax load is lower than all the G-7 nations, and 10 percentage points lower than the G-7 average.

The measure is calculated using OECD and Statistics Canada data and as such is limited to the most recent year published by these sources, consequently 2001 data is used as the base year for this comparison. Provisional estimates by the OECD are not used in the comparison. Information on Russia is not available on a consistent basis; as a result, it is not included in the comparison.

The Government of Alberta's annual cash flow must be managed to optimize returns and to ensure cash is available to meet Alberta's obligations. The Minister of Finance is also responsible for managing several billion dollars in liabilities as well as certain assets. Through prudent management of liabilities and assets, the Ministry works at minimizing financing costs and maximizing investment returns.

The Ministry established the benchmark for the Fund in the 2003-04 Statement of Investment Policy for the Sustainability Fund (“the Fund”). For the portion of the Fund invested in CCITF, the benchmark is the 91 day Scotia Capital Treasury Bill index. For the remaining funds, invested in short and long-term fixed income securities, the benchmark is the 365 day Scotia Capital Treasury Bill index.

Performance is presented in terms of nine-month returns because the Fund was established July 2003. The index returns for the nine-month period, from July 2003 to March 2004, for the 91 and 365 day Scotia Capital Treasury Bill indices were 2.16% and 2.91% respectively. Comparable returns for the Fund were 2.66% and 3.68% respectively, which exceeded both benchmarks.

During the year, the ministry arranged the borrowing of $1.05 billion for provincial crown corporations through public bond issues and private placements. The ministry was able to negotiate lower commission costs and saved the Province and its corporations an estimated $1.2 million compared to selling the same bonds in the public markets.

The Debt Retirement Account represents funds that have been set aside from annual surpluses to meet the Province's obligations on future debt maturities. The objective is to have cash available as debt matures and to invest the money in securities with a higher rate of return than the cost of Province of Alberta debt that would have been issued on the day the investment is purchased. If the investment return exceeds the market cost on the Province of Alberta debt, then the Province is able to save that differential. The funds invested in the current year (2003-04) with a maturity date of 60 days or greater, exceeded the market return on the debt by 5.7 basis points.

The Consolidated Cash Investment Trust Fund (CCITF) is a money market fund used to manage the cash balances of the Province and other depositors in the fund. A benchmark for the return on the fund has been established as the Scotia Capital (formerly ScotiaMcLeod) 91 day Treasury Bill index plus 10 basis points. The benchmark return for 2003-04 was 3.10%. The one-year return on the CCITF was 3.25%.

An enterprise risk management framework is one of Finance's strategic priorities. Identification and management of these risks has become a priority for the government as a whole. Finance was originally given the task of developing a risk management program for the government. The target was not met for 2003-04. The leadership for this initiative became the responsibility of a sub-committee of the Deputy Minister's Council, chaired by Finance. The sub-committee is currently looking at developing a risk management framework for the Government of Alberta. Alberta Finance also participated in the sponsorship and funding of a comprehensive study by the Conference Board of Canada and Deloitte & Touche, looking at government organizations across Canada and abroad with a goal of providing senior government leaders with risk management strategies.

Core Business: Regulation of Provincial Financial Institutions

Alberta Finance sets the legislative and regulatory framework and with its delegated regulatory organizations regulates the credit union, loan and trust, and insurance industries in Alberta. By balancing the interests of stakeholders including depositors, policyholders, investors and the companies themselves, the department helps to promote an efficient, fair and competitive financial sector in Alberta.

The Department also monitors the Credit Union Central Alberta Ltd. (CUCA) and, through the Credit Union Deposit Guarantee Corporation (CUDGC), guarantees the repayment of all deposits held with credit unions. Alberta Finance's role with respect to deposit insurance is to ensure that CUDGC is capable of fulfilling its guarantee of credit union deposits.

Automobile insurance is compulsory in Alberta to help ensure that Albertans are protected from loss when they are involved in an automobile collision. Alberta Finance regulates this industry and monitors availability, affordability and fairness of insurance to Albertans. In the past couple of years, premiums increased at a high rate and more vehicle owners found it difficult to obtain insurance in the regular marketplace. A strategic priority for Alberta Finance in 2003-04 was to assess the issues facing the automobile insurance industry and review the compensation for automobile injury claims and related premium increases.

Expenses were $1.1 million above budget due to the Auto Insurance Reform. The Ministry received a supplemental estimate of $1.5 million to develop and communicate reforms to Alberta's automobile insurance systems.

Goal 4: Confidence in Provincially Regulated Financial Institutions and Insurance Companies

In 2003-04, there were 67 credit unions operating in Alberta through 199 branches with assets exceeding $9 billion, 57 loan and trust corporations registered to conduct business in Alberta and 301 insurance companies licensed to conduct business in Alberta.

All provincially incorporated credit unions, trust and loan companies, insurance companies and the CUCA met solvency requirements. No financial failures were recorded in 2003-04.

A review of Alberta's automobile insurance system was initiated in 2002-03 and will be completed in 2004. Bill 53, the Insurance Amendment Act (No.2), was introduced in the Fall 2003 session of the Legislative Assembly. Bill 53 was passed on December 3, 2003 and put in place the enabling framework for a new premium rate structure that will reward safe drivers, and ensure fair compensation for Albertans injured in automobile accidents. The framework also provided for a new process to diagnose and treat minor injuries, a new Automobile Insurance Rate Board and a new dispute resolution process for consumers with complaints regarding the calculation of their premium. A new automobile insurance system is set for October 2004. The target was partially met for 2003-04.

Over the past few years on an international and national level, the financial services sector has undergone changes that have seen a broader range of services offered to customers through the amalgamation of financial institutions. To keep pace with these changes and to ensure that our provincial institutions remain on an even playing field within the market place, the province's regulatory framework has required amendments. Notable changes during the past fiscal year included harmonizing and expanding the powers of credit unions and ATB Financial to enable them to (i) serve the need for financial services in local communities, (ii) streamline their operations, and (iii) encourage an efficient and fair regulatory environment for financial institutions.

An integral component in ensuring that Alberta financial sector policy and regulation remains harmonized with changes that occur nationally and internationally is gauging our stakeholders' satisfaction with these efforts.

A baseline survey, scheduled for 2003-04, to gauge stakeholder satisfaction in the future did not occur. However, throughout the past year, the department has been engaged in ongoing consultation and communication with our provincially incorporated financial institutions. Collectively, our stakeholders have indicated that they are generally satisfied with the department's progress. This measure has been removed from the Ministry 2004-07 business plan but, ongoing consultations will continue with stakeholders.

Pension Plan Governance and Regulation is one of the strategic priorities for Alberta Finance. The Minister of Finance is responsible for Alberta's public sector pension plans (except for the Teachers' Pension Plans which fall under the Ministry of Learning). These four major plans are: the Local Authorities Pension Plan, the Special Forces Pension Plan, the Public Service Pension Plan, and the Management Employees Pension Plan. The plans have approximately 146,000 active members and 77,000 inactive members, which include members who have contributed to the plans but have left the public service and are not yet drawing a pension. The four plans have over $16 billion in assets. Annually, they collect in excess of $720 million in contributions and pay out approximately $690 million in benefits and refunds.

Alberta Finance also provides policy support to the Minister regarding the Canada Pension Plan. Over the past year, we have worked with the federal government and the other provinces to monitor the stability and sustainability of the plan.

The variance is due to increased spending in the Department of $0.8 million as a result of higher staffing levels offset by decreased spending in Alberta Pension Administration Corporation of $1.7 million due to delays in commencement of business cases, staff vacancies and staff development.

After suffering three consecutive years of decline in world capital markets, equity markets rebounded in 2003 and pension fund assets began to once again post positive returns. However, the funding of the public sector pension plans is still a concern. The Pension Boards and the Government will continue to monitor this situation closely. Alberta Finance also continues to work toward the retirement of the pre-1992 unfunded liabilities of the Special Forces and Universities Academic Pension Plans in accordance with the legislative framework currently in place.

Some of the pension boards have made recommendations to improve governance of the public sector plans. Alberta Finance is currently reviewing these recommendations as part of Finance’s general governance review. An advisory committee was established to help oversee the Supplementary Retirement Plan for Public Service Managers. As at March 31, 2004, a new Memorandum of Understanding was being drafted which outlined the roles and responsibilities of Alberta Pensions Administration Corporation and the Minister of Finance.

Over the past year, Alberta Finance continued to work with stakeholders of the Local Authorities Pension Plan (LAPP) to determine if, subject to meeting established principles and guidelines, the plan should become independent of government. Several stakeholders made presentations to the Standing Policy Committee on Economic Development and Finance and made recommendations on issues that the government needed to consider. Alberta Finance will carry this work forward with LAPP stakeholders to determine the future direction of the plan. In the interim, LAPP Corporation's mandate was extended for another year.

Alberta Pensions Administration (APA) Corporation collects pension contributions, maintains member accounts, pays pension benefits, and provides information to pension boards, employers, members and pensioners of seven different pension plans and two supplementary retirement plans.

In 2003, following the successful implementation of a new pension administration system for two client pension plans, APA Corporation transitioned its largest client plan to the new system in July and its final pension plan in September. Additionally, online services for employers were implemented for the four main plans during 2003.

In 2004, APA Corporation surveyed 3,000 members and 54 employers who used APA Corporation services in 2003. This 79% result is an average of the two surveys. The target was not met due to dissatisfaction with the employers on the APA telephone service. Further information on these and other surveys is available at site www.apaco.ab.ca. The response rate and results were as follows:

Alberta Finance administers the Employment Pension Plans Act (EPPA). The purpose of the Act is to safeguard the benefits promised to members of registered pension plans by setting minimum standards for funding, investment and qualifications for benefits. There are currently 1,280 private pension plans being monitored by the Superintendent's Office. Of these, 1,103 are active, 45 are in the process of being registered, and 132 are in the process of winding up. These plans have 175,843 active members. Total contributions were approximately $965 million for the year ended March 31, 2004, with the market value of total Assets and going concern Liabilities as at March 31, 2004 of $14.7 billion and $11.9 billion respectively.

During the past fiscal year, a risk assessment system was implemented to support the department's shift in regulatory focus from routine compliance monitoring to risk management. The new system enables the department to use data filed for compliance purposes to help identify plans "at risk" of failing to meet the minimum standards of the legislation. At-risk plans will be subject to more detailed scrutiny and the level of intervention will depend on the results of the risk assessment. Intervention will include desk reviews (both randomly selected plans and those identified by the risk assessment system) and on-site examinations of the plan's administration. A report will be issued to the plan administrator after each review identifying deficiencies and requiring that they be corrected within a specified time.

Plans must demonstrate they have adequate funding to pay out all promised benefits by filing annual information returns and, for defined benefit plans, triennial actuarial valuations. Over the last few years, investments, including those in registered private sector pension plans, have experienced a significant drop in returns that have reduced the market value of assets and increased the funding requirements of plan sponsors.

The EPPA requires that the sponsors of the plans meet minimum funding requirements by making current service contributions, eliminating any unfunded liability by making special payments over a fifteen-year period, and eliminating any solvency deficiency by making special payments over a five-year period. The department's performance benchmark is that at least 98% of pension plans registered in Alberta will meet these minimum funding requirements.

This measure is an amendment of the previous measure, which was based only on the solvency ratios of the plans. Because the risk management system is designed to ensure that plans meet all minimum funding requirements, this new measure is designed to assess that outcome directly.

Stakeholders in the pension industry advocate greater harmony in pension regulation for all jurisdictions in Canada. Alberta is participating in the development of a Model Pension Law through its membership in Canadian Association of Pension Supervisory Authorities (CAPSA). CAPSA released Proposed Regulatory Principles for a Model Pension Law in January 2004 with public consultations ending June 30, 2004.

Alberta also performs regular reviews of its legislation to ensure its relevance, effectiveness, and consistency with other jurisdictions. In the past year, Alberta Finance released consultation papers and received feedback from stakeholders on four issues: Risk Assessment, Access to Locked-in Accounts, Strengthening Risk Management, Disclosure and Accountability and Pension Division on Marriage Breakdown. Informal stakeholder feedback for Alberta proposals that would increase harmonization was positive.

This measure has been removed from the Ministry 2004-07 business plan because it is an ongoing process that involves not just Alberta but also several jurisdictions in Canada.

Alberta Finance’s goal is to ensure Albertans and local authorities receive reliable and competitive financial products and services. ATB Financial and the Alberta Capital Finance Authority are key components of the financial servicing sector.

Alberta Capital Finance Authority expenses were $4.4 million over the budget amount due to increased borrowing activity by shareholders. ATB had no major variances.

ATB Financial is a $14.3 billion, full service financial institution operating in Alberta through 147 branches and 129 agencies. ATB Financial serves over 600,000 Albertans. ATB Financial is the largest lender to primary producers and independent business in Alberta with about $3.5 billion in loans outstanding at March 31, 2004. 

ATB Financial has a conservative risk profile, with approximately half of its assets in residential mortgages and consumer loans. The remaining loans are about equally divided between commercial, agricultural, and independent business loans. Like other financial institutions that seek to remain relevant to their customers, ATB has launched a wealth management platform both to meet the needs of its customer base and to reduce its dependence on spread income. Under the banner of ATB Investor Services, ATB Financial continued to build strong momentum during the year, adding $355 million in assets under administration. At March 31, 2004 assets under administration stood at $544 million.

Although ATB's mandate is to provide services to Albertans, it also wants to earn a fair return for the Government of Alberta. ATB Financial compares its financial results with the major Canadian banks. During fiscal 2003-04, ATB performed exceptionally well in spite of difficulties in the agricultural community due to the occurrence of one case of BSE. ATB was able to exceed most of its targets with the exception of loan growth. While loan authorizations grew in its Commercial and Energy Banking portfolio during the year, due to very high energy prices, loan advances fell by about 18% since energy companies could finance their investments through cash flow.

Financial Results

(For further information, refer to ATB Financial Annual Report dated March 31, 2004.)

Highlights

• Total assets of $14.3 billion is an increase of 8.51% over last year.
• Total loans at $12.1 billion is an increase of 3.76% over last year.
• Total deposits of $13.0 billion is an increase of 7.76% over last year.
• Net income of $172.0 million is a decrease of 13.51% from last year.

The Alberta Capital Finance Authority's (ACFA) mission is to provide local authorities within the Province with flexible funding for capital projects at the lowest possible cost, consistent with the viability of ACFA.

The Alberta Capital Finance Authority (ACFA) aims to offer the lowest cost of borrowing to local authorities in Canada. The ACFA compares Alberta local authorities' cost of borrowing to the Municipal Finance Authority of British Columbia (BCMFA) and the City of Toronto. The BCMFA and the City of Toronto were selected for comparison because they reflected the size and credit rating of ACFA. Data was not collected prior to 2002; therefore, the 2002 average is calculated using data from August 2002 to December 2002. However, the 2003 average is calculated using the entire calendar year. The target was consistently met for short-term rates (3-5 years), but mid- (10-15 years) and long-term rates (20-25 years), were comparable to, or slightly higher than, the lowest rates in Canada.

A biennial survey is conducted to measure shareholder satisfaction with ACFA's lending policies and efficiency levels. Due to changes in lending policies the biennial survey, last conducted in 2001, has been rescheduled for September 2004 to measure the impact of these significant changes on stakeholder satisfaction.

¹ The Crop Reinsurance Fund of Alberta was merged into the Agriculture Financial Services Corporation, Effective April 1, 2003.

² Dissolved August 1, 2003.

³ Ministry includes only the department so separate financial statements are not necessary.

• Go to Part 1:  Preface
• Go to Part 2:  Overview