Treasury Board Ministry 1 Government Controllership Challenges in Alberta’s Hot Economy September 13, 2007.
Post on 14-Dec-2015
216 Views
Preview:
Transcript
1 Treasury Board Ministry
Government Controllership Challenges in Alberta’s Hot Economy
September 13, 2007
2 Treasury Board Ministry
Overview
Today’s Alberta Fiscal Framework Being Accountable – Government
Accountability Act Internal Audit Fiscal Pressures Revenue Volatility and Developments in Public
Sector Accounting
3 Treasury Board Ministry
Today’s Alberta
An exceptionally strong economy High productivity levels Record corporate profits Lowest unemployment in 30 years Highest personal disposable income No accumulated debt (debt offset by Debt
Retirement Account) Lowest taxes
4 Treasury Board Ministry
Almost $160 Billion in Major Projects
5 Treasury Board Ministry
Personal Disposable Income2001-2005 Annual Average (dollars per capita)
6 Treasury Board Ministry
Total Provincial Tax Load 2006-07 (per cent of the Canadian average)
7 Treasury Board Ministry
Natural Gas and Crude Oil Royalties(millions of dollars)
0
2,000
4,000
6,000
8,000
10,000
1999
-00
2000
-01
2001
-02
2002
-03
2003
-04
2004
-05
2005
-06
2006
-07
Natural Gas Crude Oil Synthetic
8 Treasury Board Ministry
Fiscal Framework – Key Elements:
Deficits and Operating Debt Outlawed 2003-04 FMC recommendationDebt for capital (e.g. P3’s)
Revenue Sustainability Fund Expense basis Contingency Allowance Capital Framework (government capital and
capital grants)
9 Treasury Board Ministry
Source: Alberta Finance
Fiscal Framework - Alberta Surpluses (Deficits)
($ millions-nominal)
-5,000
-3,000
-1,000
1,000
3,000
5,000
7,000
9,000
11,00019
80-8
119
82-8
319
84-8
519
86-8
719
88-8
919
90-9
119
92-9
319
94-9
519
96-9
719
98-9
920
00-0
120
02-0
320
04-0
520
06-0
7
10 Treasury Board Ministry
Fiscal Framework - 2007-08 Revenue: $35.3 billion
11%
10%
9%
7%
7%5%
2%
29%
21%
Investment Income
Fees & Licenses
Commercial
Corporate Taxes $3.1 billion
Other Taxes $3.6 billion
Federal Transfer Payments $3.7 billion
Personal Income Tax $7.3 billion
Resource Revenues $10.3 billion
Other Sources (fines and penalties; refunds of expense; miscellaneous)
11 Treasury Board Ministry
Fiscal Framework:2007-08 Expense by Function: $33.1 billion
37%
1%
13%
8%
6%
10%
26%
Transportation, Communication and Utilities $2.5 billion
Agriculture, Resource Management and Economic
Development $2.1 billion
Social Services $3.1 billion
Education $8.7 billion
Health $12.2 billion
Debt Servicing $.2 billionOther $4.5 billion
12 Treasury Board Ministry
Fiscal Framework: Sustainability Fund
The Fund had $7.7 billion in assets at the end of the 2006-07 fiscal year
Offset the costs of emergencies, disasters, natural gas rebates, settlements with First Nations and unexpected declines in revenue
If the Fund has assets greater than $2.5 billion, funds can be allocated to the Capital Account, Heritage Fund, endowments and other balance sheet improvements
13 Treasury Board Ministry
Fiscal Framework: Contingency Allowance
A minimum of 1% of “revenue for fiscal policy purposes” must be set aside as a contingency (budgeted at $314 million in 2007-08)
This is the limit on in-year operating spending increases or revenue policy reductions
This limit excludes increases for: emergencies/disasters and natural gas rebates
funded from the Sustainability Fund; andCapital spending funded from Capital Account
and dedicated revenue/expense increases
14 Treasury Board Ministry
Fiscal Framework - Capital
Addressing Capital RequirementsCapital projects can be financed from three
sources: current year revenue, Capital Account, and alternative financing (including P3s)
Capital AccountAllows the surplus from one year to be used
in another for government-owned capital projects and capital grants to local authorities
15 Treasury Board Ministry
Fiscal Framework – Capital (continued)
Alternative FinancingAlternative financing of capital projects is
allowed for both government-owned capital and local authorities’ capital
Infrastructure Deficit IssuePortion of unanticipated surpluses will go to
address this issue
16 Treasury Board Ministry
Capital Plan Summary by Function
17 Treasury Board Ministry
Province’s Support for Capital Infrastructure
18 Treasury Board Ministry
Being Accountable – Government Accountability Act
Government 3-year and Consolidated business and fiscal plans
Quarterly financial reports Annual performance reports (Measuring Up,
ministry annual reports)CCAF project to improve performance
reporting
19 Treasury Board Ministry
Being Accountable: Environmental Scan
Looks at trends and issues facing Alberta government
Undertaken by a committee of Assistant Deputy Ministers
Used in the planning process to guide discussion and decisions
20 Treasury Board Ministry
Being Accountable: Trends/Risks - Alberta
Growth pressures Energy sector – technical and environmental
challenges Land claims Issues around skilled workforce Urban/rural demographics Security of information Changing governmental relationships Increasing public demand for services
21 Treasury Board Ministry
Being Accountable: Five Government Priorities Focus of government action:
Govern with Integrity and Transparency Manage Growth Pressures Improve Albertan’s Quality of Life Build A Stronger Alberta Provide Safe and Secure Communities
Strategies supporting the five government priorities are set out in mandate letters for each Minister
Progress on the strategies are reported quarterly on the government website http://www.premier.alberta.ca/
22 Treasury Board Ministry
Being Accountable: Measuring Performance
“Measuring performance is the key to improving results and delivering services that meet the needs of Albertans. The government is setting performance benchmarks and targets so that programs can be accurately evaluated. Funding of programs will be increasingly tied to results achieved. To provide full accountability, these results will be shared with Albertans”
Budget ’95, Building a Strong Foundation
23 Treasury Board Ministry
Internal Audit:An Effective Oversight Resource
Reporting relationship to Senior Officials Projects focus on adding value
Annual risk assessment and deputy ministry requests
Assurance and advisory projectsCross-government projects and ministry
specific projects Emphasis on working with ministries to
improve operations OAG relies on internal audit work
24 Treasury Board Ministry
Fiscal Pressures
Volatile Resource Revenues Public expectation that spending should
increase with revenue (health, education) Demands on infrastructure (roads, hospitals,
schools) Surplus management
Two-thirds of surplus allocated to capital maintenance and renewal
25 Treasury Board Ministry
Resource Revenue Volatility
26 Treasury Board Ministry
Income Tax Volatility
Personal income tax revenue – subject to measurement uncertainty due primarily to the use of economic estimates of personal income growth
Corporate income tax revenue – subject to measurement uncertainty due primarily to the use of five year moving average of historical corporate income tax refund ratios to determine corporate income tax revenue balance
27 Treasury Board Ministry
Sensitivities to Fiscal Year Assumptions2007-08a
28 Treasury Board Ministry
Revenue Volatility and Developments in Public Sector Accounting
Intense revenue volatility Accounting developments - PSAB Federal and government transfers Solutions/Questions Experience of other jurisdictions
29 Treasury Board Ministry
Revenue Volatility and Developments in Public Sector Accounting
Justification for public-private partnerships (P3s)CostsBasis of recognition and measurement of
resulting obligations and assets Expansion of the reporting entity
SUCH sector (2008-09 line-by-line) Disclosure of and assessment of capital
assets and infrastructure deficit Market value assessment of investments
30 Treasury Board Ministry
Questions ??
top related