Goals, Objectives, Strategies and Results

Overview

Ministry Goals

The ministry will focus its energy on supporting government’s realization of the Five Great Goals. This will be accomplished through the ministry achieving its goals of:

1. A sustainable fiscal environment built on a balanced budget: A sustainable fiscal environment is a cornerstone in maintaining confidence in British Columbia’s economy as well as providing a stable foundation on which to sustain and enhance the delivery of public services. It supports a strong and vibrant economy and provides the means to develop excellence in education, promote healthy living, support people at risk, protect our environment, and create jobs for British Columbians.
2. A strong, competitive and vibrant economy: The Ministry of Finance plays an essential role in the creation and maintenance of a tax and regulatory climate that supports economic development and employment opportunities. Since 2001, the ministry has delivered a series of tax reductions targeted to individuals and businesses. In addition, several key regulatory frameworks, such as the Business Corporations Act, have been streamlined and modernized. As a result of these steps, the province’s businesses can now rely on a tax and regulatory environment that allows them to compete and succeed on the international stage while creating jobs at home.
3. Effective financial, governance, accountability and performance framework: The Ministry of Finance is responsible for government’s overall financial, management, governance, accountability and performance frameworks. This involves the establishment of appropriate legislation, policies and procedures and reporting at both the corporate and government organization levels to ensure the province’s resources and obligations are appropriately managed in support of effective service delivery.

Linkage to the Five Great Goals

Ministry of Finance contributes to the Five Great Goals by creating a sustainable fiscal environment and supporting a strong and vibrant economy that attracts investment, creates jobs, and provides government with the means to address its education, health, support system and environmental sustainability priorities as set out in the following Five Great Goals:

1. Make British Columbia the best-educated, most literate jurisdiction on the continent.
2. Lead the way in North America in healthy living and physical fitness.
3. Build the best system of support in Canada for persons with disabilities, those with special needs, children at risk, and seniors.
4. Lead the world in sustainable environmental management, with the best air and water quality, and the best fisheries management, bar none.
5. Create more jobs per capita than anywhere else in Canada.

Cross Ministry Initiatives

The ministry plays an integral role in multiple cross ministry initiatives through its overarching fiscal, economic and governance responsibilities. Major cross ministry initiatives include:

1. First Nations New Relationship

• In consultation with Ministry of Aboriginal Relations and Reconciliation, develop a fiscal framework to support new relationship with First Nations and continue to monitor fiscal framework for treaties.
• Provide accounting policy and structure advice for the $100 million New Relationship Fund for consideration by Treasury Board and Cabinet.

2. Public sector negotiating framework

• Establish appropriate and sustainable compensation levels.

3. 2010 Olympic and Paralympic Winter Games

Provide support to Ministry of Economic Development by:

• Providing guidance and support to the Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games and the Secretariat to assist with implementation and ongoing management of appropriate risk management systems.
• Acting as the primary contact with the Auditor General, assist with issue identification, and management and resolution of accounting and audit items.
• Assisting the Olympic Secretariat through review of its internal processes and controls and provide advice on improvements; and
• Assisting ministries and Crown agencies to ensure they have appropriate business continuity plans to support their involvement in the Games.

Performance Plan

The 2006/07–2008/09 Service Plan reflects changes from the 2005/06–2007/08 Service Plan Update September 2005 to better align ministry’s priorities with government’s Five Great Goals and improve complementary performance reporting.

Consistent with government’s direction, the ministry is shifting focus to a few critical aspects of performance. As a result, the ministry has eliminated internally and operationally focused performance measures. The ministry’s goals have also been refined. A summary of changes is provided in Appendix 1. For information about the performance measure methodologies, please visit the following website:
http://www.fin.gov.bc.ca/serviceplan/2006-07/methodologies.htm.

The ministry collects and utilizes data from reliable independent and government sources in its development of targets for the performance measures in the service plan. These sources include major credit rating agencies, Public Accounts, and provincial statutes. The ministry’s Corporate Planning Secretariat provides quality assurance in the development of all aspects of the Service Plan. The ministry monitors the performance of the measures in the Service Plan and introduces corrective actions as necessary to ensure that the ministry achieves its goals set out in the Service Plan.

To provide a comparative basis for the performance measures, 2004/05 actuals are included along with the 2005/06 forecast and three year targets.

A sustainable fiscal environment is a cornerstone in maintaining confidence in British Columbia’s economy as well as providing a stable foundation on which to sustain and enhance the delivery of public services. It supports a strong and vibrant economy and provides the means to develop excellence in education, promote healthy living, support people at risk, protect our environment, and create jobs for British Columbians. Fiscal responsibility today means that the cost of current public services will not be passed on to future generations.

Government is committed to achieving a declining taxpayer-supported debt to GDP ratio. Development and maintenance of a prudent and resilient fiscal plan is critical to government’s ability to achieve a sustainable fiscal environment. The ministry plays a critical role in overseeing the fiscal plan and works closely with the federal government, ministries and other public sector partners to ensure that government’s annual and three year revenue and expenditure targets are met.

Performance Measures:

Achieve Annual Targets for Provincial Budget: This measure is a comparison of budgeted revenue and spending with the actual results as set out in government’s audited financial statements (the Public Accounts). Achieving annual targets demonstrates that government is effectively managing the fiscal plan.

Taxpayer-Supported Debt to GDP ratio: This measure is the ratio of taxpayer-supported debt reported in government’s annual audited financial statements to gross domestic product. Maintaining a relatively low taxpayer-supported Debt-to-GDP ratio signifies a healthy balance sheet and ensures that debt remains affordable. Rating agencies rely on this measure as a key credit rating consideration. Government plans to maintain a declining trend for the taxpayer-supported debt to GDP ratio. Government will monitor this trend using a 3-year moving average.

Provincial credit rating: This measure is the rating of provincial debt by Moody’s Investor Services, an independent rating agency.

The interest rate paid by the Province when it borrows in the domestic and international capital markets is influenced by the credit ratings supplied by third party agencies. In determining a credit rating, agencies consider the borrower’s ability to promptly pay the interest and principal due based upon the borrower’s balance sheet and income statement. In the case of the province, rating agencies evaluate debt as a percentage of GDP, and the significance of interest owing as a percentage of gross receipts. Agencies also consider the government’s track record as a prudent fiscal manager, its reporting accuracy and transparency, the economic outlook, and business and consumer confidence in the economy.

Moody’s Investor Service, an internationally recognized credit rating agency, rates bonds in descending alphabetical order from A to C — highest to lowest. The Aa rating is provided to those public and private sector organizations that offer excellent financial security and are generally considered high-grade entities.

1	2004/05 Public Accounts.
2	Final result to be confirmed upon release of the Public Accounts.
3	Moody’s Investor Service (Credit Rating Agency).
4	Equivalent to an AA plus. Moody’s upgraded the province to Aa1 from Aa2 in March 2005.

The Ministry of Finance plays an essential role in the creation and maintenance of a strong, competitive and vibrant economy. The ministry reviews provincial tax policies on an ongoing basis to help ensure that British Columbia has a competitive tax regime. Since 2001, the ministry has delivered a series of tax reductions to individuals and businesses. These initiatives include a 25 per cent reduction in personal income taxes ensuring individuals in the bottom two-tax brackets have the lowest personal income tax rates in the country.

In addition, the BC Tax Reduction introduced in 2005 has reduced or eliminated provincial income tax for 730,000 British Columbians earning less than $26,000. The province has also introduced an 18 per cent reduction in the general corporate income tax rate, eliminated the capital tax for general corporations and provided an exemption from provincial sales tax for production machinery and equipment. Other more targeted initiatives include property tax relief for small hydroelectric projects and the province’s major port operators, new incentives for digital animation and visual effects and an increase in the threshold for the small business tax rate.

Further, the government was able to return to a seven per cent provincial sales tax rate reversing an earlier 0.5 per cent increase that was necessary to pay for an increase in health care professionals’ compensation. As a result of these and other steps which the government continues to pursue, the province’s businesses can now, and continue to, rely on a tax and regulatory environment that allows them to compete and succeed on the international stage while creating jobs at home.

The ministry will continue to streamline and improve the effectiveness of regulatory frameworks and strengthen consumer confidence. The ministry is undertaking a broad review of the Insurance Act, which sets out statutory requirements applying to contracts of life insurance and of property and casualty insurance (such as for fire and liability), other than automobile insurance. Other initiatives include an expansion of e-government that will improve, expand and maintain one-stop service, expand accessibility and reduce cost.

The province’s ability to develop a strong and vibrant economy depends on a tax and regulatory environment that is both nationally and internationally competitive. Jurisdictions with competitive tax regimes and regulatory frameworks are successful in attracting and retaining personal and business investment. Taking advantage of these opportunities enhances economic development and creates stable revenues to support critical government services such as health care and education. In addition, a tax system that is perceived to be fair increases the confidence of British Columbians in their government.

Performance Measures:

Provincial ranking of corporate income tax rates: This is a new measure which compares corporate income tax rates in BC against the other provinces in Canada by comparing provincial statutes in effect as of March 31 each year. A competitive tax environment fosters economic growth by encouraging business investment and promoting a business friendly environment. Although measuring the overall competitiveness of the tax system is complex, a comparison of general corporate income tax rates represents a reasonable basis for assessing competitiveness.

Provincial ranking of personal income tax rates for the bottom two tax brackets: This measure compares personal income tax rates for the bottom two tax brackets against the other provinces in Canada. Government has the lowest personal income tax rates of any province in Canada for the bottom two tax brackets. Keeping these tax rates low is consistent with the objective of maintaining a fair and competitive tax system.

1	New performance measure.
2	Source: Comparison of provincial statutes for rates in effect on March 31 each year.
3	Source: Comparison of provincial statutes for each tax year.

Streamlined legislative and policy frameworks for regulation of the financial and corporate sector, fair regulation of financial institutions and the electronic delivery of registry services are important for supporting business confidence, development and investment, and continuing to foster consumer confidence.

Performance:

Evidence of the government’s success in creating a tax and regulatory climate that stimulates economic growth is the increase in the number of businesses operating in the province. In 2005/06, the ministry expects to record a five per cent increase in new business registrations (55,969) which is an improvement on the four per cent growth achieved in 2004/05.

Over the past several years the ministry has replaced paper-based corporate and personal registries with online services which has improved customer service at reduced cost. The most recent addition to the suite of electronic registries was a Corporate Registry in March 2004. In 2005/06, the percentage of company incorporations and registrations filed electronically was 95 per cent.

The ministry also sponsors the One Stop Business Registry which provides business with single electronic access to multiple levels of the federal and provincial pubic sector for purposes of registration and address changes, as well as the federal business number to facilitate interaction with the public sector. In 2005/06, this award-winning registry closed agreements to add new public sector partners to its platform including several municipalities, the Liquor Distribution Branch, the Liquor Licensing and Control Branch and the government’s Corporate Authentication Program and corporate registry.

The Ministry of Finance is responsible for government’s overall financial and management governance, accountability and performance framework for ministries and the broader public sector. This involves the establishment of appropriate legislation, policies and procedures and reporting at the corporate level to ensure the province’s resources and obligations are appropriately managed in support of effective service delivery. The framework sets accountability and public disclosure standards for financial and performance information through release of three-year budgets and service plans, Public Accounts and annual reports to track progress. This framework also reinforces individual and corporate accountabilities for outcomes, maintains standards for stewardship of resources, management of liabilities and risk, and the collection and disbursement of public funds.

Key activities include: financial, governance, procurement and accounting policy development; internal audit and advisory services; activity based management services, treasury and risk management; compliance monitoring; and financial and economic reporting.

In 2005/06, government managed cash flows of approximately $100 billion. During the same year, debt service cost for the total provincial debt is expected to be $2.2 billion. Of this amount, approximately $657 million relates to the Management of Public Funds and Debt vote (central government operating debt). Ongoing improvement in the management of these cash and debt activities offers significant opportunities to reduce costs and redirect government resources to priority services.

Performance Measures:

Debt service costs: Debt service costs relates to the overall cost of borrowing. This measure is the ratio of taxpayer-supported cost of borrowing (debt interest expense) to taxpayer supported revenues as compared to other provinces in Canada. A relatively low ratio, or “interest bite”, demonstrates fiscal prudence and an affordable debt burden. Rating agencies also rely on this measure as one among a number of important credit rating considerations.

1	Moody’s Investor Service (Credit Rating Agency).

Creation of risk-based frameworks that reinforce individual and corporate accountabilities provides opportunities to reduce unnecessary constraints, realize efficiencies and improve outcomes. Risk-based practices are adopted only if they can demonstrate consistency with government priorities and add value using an optimal mix of resources and funding.

Performance Measures:

Annual savings from self insurance: This measure demonstrates the savings achieved by government by selecting public sector self insurance programs, rather than insuring through third parties. Self-insurance involves government assuming the role of a traditional insurer by investigating, defending and paying claims.

The Ministry of Finance’s coordination of public sector self-insurance programs allows the provincial government to cost-effectively retain selected risks rather than transfer them at a premium to third parties.

Post-payment monitoring, Activity Based Management and Internal Audit savings: This measure demonstrates savings from utilizing a risk-based approach for post-payment monitoring and potential annual benefits (five-year average) from implementing Internal Audit and Advisory Services and Activity Based Management recommendations. Activity Based Management provides consulting service that combine costing and process analysis to assist programs in improving performance and reducing costs.

The ministry’s delivery of cross-government risk-based financial processing and independent management review services, through Internal Audit and Advisory Services, provide a basis for evaluating its adoption of best practices and savings. Savings are achieved through the adoption of audit recommendations and more effective payment review procedures.

1	Base and targets have increased from the September 2005/06 updated Service Plan as a result of an increase in insurance costs in the private sector insurance markets.
2	Source: Ministry of Finance Risk Management Branch.
3	Base and targets have increased from the September 2005/06 updated Service Plan. The increase of $700,000 in the base and targets reflect additional potential average annual cost savings from the implementation of Internal Audit and Advisory Services and Activity Based Management recommendations.
4	Source: Internal Audit and Advisory services recommendations and post payment monitoring.
5	The $16.4 million is a five-year rolling average of potential savings identified from utilizing a risk-based approach for post-payment monitoring and potential savings identified as a result of implementing Internal Audit and Advisory Services recommendations. The 2004/05 actuals are restated from the 2005/06–2007/08 Service Plan Update for purpose of reporting five-year rolling average rather than reporting 2004/05 in isolation. The actual savings vary from year to year. In 2005/06 and following years, the targeted potential savings (five-year average) from implementation of Internal Audit and Advisory Services and Activity Based Management recommendations is $5.2 million plus the savings of $1.2 million from post payment reviews.
6	Self insurance savings decline in 2008/09 as a result of an anticipated decrease in private sector insurance costs over the next two to three years. Based on a five-year rolling average, it is not until 2008/09 that more competitive private insurance starts to reduce savings from self-insurance.

Government is undergoing transition to a model that provides program managers with enhanced financial and procurement decision-making abilities within a defined accountability framework. This shift provides managers with additional tools and accountabilities to succeed, and is supported by an updated public sector management frameworks. The ministry plays an important role in the development of these governance frameworks and works closely with other ministries to ensure appropriate clarification of roles, responsibilities and accountabilities.

Performance Measure:

Percentage of responses to ministerial correspondence within two weeks: This measure captures the percentage of correspondence addressed to the Minister which is responded to within two weeks. Achieving the ministry standard of responding to minister’s correspondence within a two-week period ensures correspondents receive timely and relevant information.

1	Source: Ministry of Finance CLIFF Correspondence Tracking System.
2	The ministry will be working to achieve its target through streamlining processes and by providing every correspondent with an immediate response acknowledging receipt of their letter.

The Budget Transparency and Accountability Act (BTAA) requires that all accounting policies and practices applicable to public documents required to be made public under this act (e.g., Budget and Public Accounts), comply with Generally Accepted Accounting Principles (GAAP). Adherence to GAAP requires monitoring of evolving accounting standards, consistent financial practices across government and full transparency for the use of public funds. This transparency is critical for ensuring that British Columbians and the investment community have the information they need to make informed decisions and confidence in government’s finances.

Performance Measures:

Release of public accounts by June 30 with an unqualified audit opinion from the Office of the Auditor General: This activity measure captures both timeliness and completeness of government financial reporting. Timely release of financial reporting is critical for effective use of the information and helps instill public confidence in government’s ability to manage its resources. Recent performance and future targets provide more timely reporting than required in the Budget Transparency and Accountability Act, which requires release of the province’s financial statements (Public Accounts) by August 31st, following each March 31st, fiscal year end. An unqualified opinion from the Auditor General that the public accounts comply with GAAP provides an objective and independent assessment that government has met the GAAP standard for disclosure of its financial information, further increasing confidence in the reliability of that information.

1	Performance measure is a combination of two separate performance measures reported in the September 2005 Update: 1) Full implementation of GAAP and 2) Delivery date for annual Public Accounts.
2	Source: Release of the Public Accounts.

A Crown corporation is an organization that is established by the provincial government that is outside of a ministry. Crown corporations are accountable to the government through a Responsible Minister; and have assigned/delegated authority and responsibility from government, or otherwise have statutory authority and responsibility to perform specified functions or services. The Crown Agencies Secretariat (CAS) is a central agency within the Ministry of Finance with responsibility for developing and implementing a framework for strategically and systematically overseeing Crown agencies. CAS also provides analysis, advice, and coordination on governance, accountability, strategic priorities, performance planning, reporting and measurement, mandate reviews and “Whole of Crown Agency Sector” issues and policies. An effective governance system will aid both government and Crown corporations by ensuring Crown corporations focus on the activities necessary to fulfill their mandates while at the same time ensure they are being managed in the public interest.

Performance Measures:

Shareholder’s Letter of Expectations in place: This measure is the ratio of number of completed and publicly available Shareholder Letters to the number of Crown corporations for which the requirement to have a Shareholder’s Letter applies.

The Shareholder’s Letter of Expectations is a key component of the Accountability Framework. The Shareholder’s Letter is signed by the Minster Responsible, as the representative of government (the shareholder), and the Chair of the Board of the Crown corporation, as the representative of the Crown corporation. This letter is designed to ensure a shared understanding between the shareholder and Crown corporation on key governance issues, corporate mandate and core services, public policy issues, strategic priorities and performance expectations, and serves as the foundation for the development of annual Crown corporation service plans. Crown Agencies Secretariat coordinates the drafting of the Shareholder’s Letter by developing guidelines and coordinating the overall process for preparing Shareholder’s Letters of expectations between Ministers and Crown Agencies. The Minister Responsible will work with the Chair of the Board of the Crown corporation to ensure that all expectations outlined in the Shareholder’s Letter of Expectations are achieved.

1	This measure has been changed to reflect that not all Crown corporations, such as those in the process of winding up their operations, are required to have a Shareholder’s Letter.
2	Source: All completed Shareholder’s Letter of Expectations are signed by the Minister and Chair of Board of the Crown corporation and posted on the Crown Agencies Secretariat Website, http://www.gov.bc.ca/cas/.

Public sector compensation costs comprise a significant portion of the provincial budget. Accordingly, effective management of the province’s fiscal plan requires the establishment of appropriate and sustainable compensation levels. Labour market analysis and frameworks are also critical for attracting and retaining highly skilled workers critical to the delivery of many public services.

Performance Measures:

Public sector cost changes: This measure captures the public sector compensation changes over the 2005/06 compensation base. A four year envelope of $4.7 billion above the 2005/06 compensation base is provided through 2009/10.

This performance measure excludes any growth in the compensation base attributable to the growth in the number of public sector employees.

Compensation related costs in the public sector are a significant component of the provincial budget. As a result, marginal changes in compensation costs have significant fiscal impacts requiring accurate and timely monitoring.

1	Performance measure has been revised to reference cost changes over 2005/06 compensation base. The 2005/06 updated Service Plan referenced cost changes over the 2002/03 compensation base.
2	Source: Public Sector Employers’ Council Secretariat (PSEC).
3	Increase over the 2004/05 compensation base is attributable to growth in the number of employees in Crown agencies and in the health and post secondary sectors.

Ministry Performance Plan Summary