July 18, 2019
VICTORIA – The B.C. government is reporting higher income and stronger economic growth in 2018-19 that is helping make life more affordable, improving the services people count on and supporting a strong economy in British Columbia.
“For years, the old government chose to work for the few at the top,” said Carole James, Minister of Finance. “We’re making different choices that are making life better for people and putting B.C. on strong fiscal footing. Our plan to put people first and build a brighter future is working. We’re an economic leader this year, with the strongest employment growth and among the top in wage growth in the country, boosting families’ incomes and paying dividends to the people of B.C.”
Budget 2018 put B.C. on a different path. It made a record $1-billion investment in a made-in-B.C. child care plan that is making quality, affordable child care available to tens of thousands of families. To tackle the housing crisis, Budget 2018 invested $7 billion in affordable housing — the biggest housing investment in B.C.’s history — and introduced a 30-point plan to build affordable homes and help moderate the real estate market.
The release of Public Accounts 2018-19 shows that government’s plan is yielding positive fiscal results. Improved economic growth, wage growth and 2017 income tax returns led to a $2.9-billion increase in revenue, allowing government to re-invest in people and the services they need, like health care and education. The year ended with an operating surplus of $1.5 billion, placing B.C. in a stable position amidst signs of global economic uncertainty.
“Unlike the previous government, which ran large surpluses while people struggled to make ends meet, we put these additional resources to work by investing in our province’s greatest resource — our people,” said James. “We’ve put money back into people’s pockets by eliminating unfair MSP premiums, removing interest on student loans and introducing the new B.C. Child Opportunity Benefit, to name a few initiatives. Together, these measures amount to the biggest middle-class tax cut in a generation.”
Government has chosen to confront tough challenges head on, rather than ignore issues like fiscal deterioration at ICBC and misuse of rate-regulated accounting at BC Hydro. Because of government’s actions, BC Hydro is on a more sustainable path and ICBC’s finances are beginning to benefit from product reform. Tackling the problems left behind at ICBC remains a government priority.
After years of skyrocketing real estate prices, where the benchmark price for single family homes spiked 75% in Metro Vancouver in five years, B.C.’s 30-point housing plan is helping moderate the market, contributing to a decline in property transfer tax revenues.
“A housing market and economy driven by speculative investment and money laundering isn’t good for people,” added James. “The previous government put maximizing property transfer tax revenue first, while owning and renting a home became further out of reach for too many people. We’re working to build a sustainable economy that works for people in the long run. We don’t believe in short-term gains at the expense of future generations. I’ll be watching housing trends closely and I’m pleased by the moderation we’re seeing in the market so far.”
At 14.5%, British Columbia now has the lowest taxpayer-supported debt-to-gross domestic product ratios in a decade, which continues to contribute to B.C. being the only province with an “AAA” credit rating from the major international credit rating agencies.
Public Accounts 2018-19: https://www2.gov.bc.ca/gov/content/governments/finances/public-accounts
Public Accounts PowerPoint Presentation: https://news.gov.bc.ca/files/2019_PPT_MCJ_PA19_FINAL.pdf
Two backgrounders follow.
Executive compensation remains fair and affordable
Government is committed to ensuring that executive compensation is fair and transparent for the public, and that public sector boards are held accountable for their compensation decisions.
That is why each year, the Ministry of Finance discloses executive compensation to provide the public with a clear, concise description of the link between pay and performance for senior management and executive employees in key decision-making positions across the provincial public sector.
British Columbia is considered a national leader in reporting standards of executive compensation, which includes base salary, pensions, holdbacks, bonuses, severances and an explanation of the compensation paid.
The Public Sector Employers Act requires disclosure of an organization’s CEO/president and the next four highest ranking or highest paid executives with decision-making authority, earning an annualized base salary of $125,000 or more during a fiscal year. These disclosure requirements apply to over 120 of B.C.’s public sector employers, including the public service, Crown corporations, post-secondary institutions, research universities and health authorities. The 60 K-12 school districts disclose by the end of year.
Disclosure statements can be found on the websites of the employers, as well as the Public Sector Employers’ Council Secretariat: https://www2.gov.bc.ca/gov/content/governments/services-for-government/public-sector-management/compensation/executive-compensation-disclosures
The highest paid executives in B.C.’s public sector in 2018-19:
1. Thomas Bechard, president and CEO, Powerex
All other compensation: $2,839
Total compensation 2018-19: $938,499
Total compensation 2017-18: $898,258
2. Santa J. Ono, president and vice-chancellor, University of British Columbia
All other compensation: $73,791
Total compensation 2018-19: $601,772
Total compensation 2017-18: $595,848
3. Chris O’Riley, president and COO, BC Hydro
All other compensation: $47,698
Total compensation 2018-19: $554,900
Total compensation 2017-18: $529,184
4. Brenda Leong, chair, BC Securities Commission
All other compensation: $7,013
Total compensation 2018-19: $502,848
Total compensation 2017-18: $639,702
5. Ken Cretney, president and CEO, BC Pavilion Corporation
All other compensation: $13,620
Total compensation 2018-19: $472,951
Total compensation 2017-18: $372,453
6. Nicolas Jimenez, president and CEO, ICBC
All other compensation: $2,482
Total compensation 2018-19: $468,783
Total compensation 2017-18: $382,132
7. Andrew Szeri, vice-president academic and provost, University of British Columbia
All other compensation: $1,785
Total compensation 2018-19: $444,415
Total compensation 2017-18: $326,124
8. Andrew Petter, president, Simon Fraser University
All other compensation: $35,586
Total compensation 2018-19: $439,910
Total compensation 2017-18: $439,460
9. James Cassels, president and vice chancellor, University of Victoria
All other compensation: $135
Total compensation 2018-19: $432,979
Total compensation 2017-18: $423,215
10. Mark Poweska, executive vice-president, operations, BC Hydro
All other compensation: $874
Total compensation 2018-19: $422,746
Total compensation 2017-18: $405,720
Note: Total compensation includes base salary, holdback or bonus, statutory and health benefits and pension contributions, as well as other allowances and/or payments, which may include vacation payout, sick leave payout, vehicle allowance, paid parking, severance/salary continuance, retirement allowance, professional fees and administrative leave.
Public Accounts 2018-19
British Columbia’s economy grew by an estimated 2.4% in the 2018 calendar year, which was the third highest rate in the country. Economic growth was led by goods-producing industries with notable gains in mining, quarrying and oil and gas extraction, construction and manufacturing.
B.C. has the strongest employment growth in Canada this year, as well as the lowest unemployment rate at 4.7% in 2018 — a decrease from 5.1% in 2017 and the lowest in Canada for 23 consecutive months to June 2019. Wage and salary growth also led the country at 5.9% in 2018, and B.C. continues to rank among the top provinces for wage growth this year.
Balanced budget, year-end surplus
Public Accounts 2018-19 confirms a balanced budget with an operating surplus of just over $1.5 billion, which is $1.3 billion higher than the surplus forecast in Budget 2018.
The larger surplus is primarily due to $2.9 billion in increased revenue, reflecting improved economic growth, higher household incomes and strong 2017 income tax returns.
Approximately $2 billion in increased spending went toward health care, education, economic development and significant wildfire, emergency response and preparedness activities in the natural resources sector.
Improved revenues allowed government to eliminate the operating debt earlier in the year, enabling government to authorize one-time funding for priority areas through Supplementary Estimates, such as infrastructure improvement and internet connectivity for rural and Indigenous communities and health research grants.
Confronting fiscal challenges head on
Addressing ongoing fiscal challenges at ICBC continues to be a focus for government. Public Accounts show ICBC’s fiscal challenges stabilized as forecast in the third quarter with a net loss of $1.2 billion, which was $174 million lower than its prior year’s net loss of $1.3 billion.
With government oversight, ICBC continues to implement major product reforms as it works to operate in a fiscally sustainable way while continuing to offer fair and affordable vehicle insurance rates.
A recent credit rating report from Fitch acknowledges the Province’s new cost-control efforts for ICBC and notes that these measures should help improve ICBC’s ongoing fiscal performance.
For the past two years, the auditor general of British Columbia issued a qualification on the use of rate-regulated accounting in the audit opinion for Public Accounts. In response to the first qualification, government made a $950-million adjustment to the balance of rate-regulated deferral accounts in the 2017-18 Public Accounts. In 2018-19, government made changes to its regulatory framework and BC Hydro formally adopted International Financial Reporting Standards. As a result, the auditor general has removed her qualification on the use of rate-regulated accounting for the 2018-19 fiscal year.
Taxpayer-supported debt down
British Columbia’s operating debt was eliminated for the first time in 40 years, contributing to a $926-million decrease in taxpayer-supported debt. This means B.C. is in one of the strongest fiscal positions in the country.
The taxpayer-supported debt-to-gross domestic product (GDP) ratio for the 2018-19 fiscal year-end is 14.5%, which is the lowest it has been in a decade. B.C. continues to have one of the country’s lowest taxpayer-supported debt-to-GDP ratios after Alberta and Saskatchewan.
Ministry of Finance