The B.C. government is receiving plenty of applause for its latest budget, which promises to return the province to surplus conditions.

“While many other provinces are suddenly grappling with the challenge of reining in budget deficits, British Columbia has put the finishing touches on its four-year program to return to surplus,” BMO Nesbitt Burns says. “The province unveiled a balanced budget for FY2004/05 today, and looks for modest surpluses to continue over the next two fiscal years.” Finance Minister Gary Collins called for a surplus of $100 million in the coming fiscal year.

Nesbitt says that lower-than-expected borrowing costs, stronger returns from Crown Corporations, and stringent spending controls have kept B.C.’s budget plans on track.

There weren’t any bold strokes in the budget, Nesbitt says, although the province’s better-than-expected fiscal position has allowed it to spend a little. “The government will ramp up outlays on health, education, and a few other selected priority areas,” it notes.

Nesbitt points out that there were few measures to further raise revenues, as B.C. had already modestly bumped cigarette taxes in December. “Given that
the province is due for an election next year, look for more meaty tax relief in next year’s budget, if finances stay on track in the year ahead,” it forecasts.

The Investment Dealers Association of Canada is applauding the B.C. government for sticking to its three-year fiscal plan. It notes that the budget’s projected surpluses and a declining public debt burden over the next three years are grounded in conservative economic and financial assumptions. The budget projections are based on GDP growth increasing from 1.5% last year to 2.8% in 2004 and 3.1% in 2005.

The IDA says that the commitment to strengthened public finances and a lower the tax burden have buoyed investor confidence in British Columbia. It also notes that estimated business investment spending rose 4% last year, a marked turnaround from the previous year. “We anticipate further gains in business spending this year, led by investment in the energy sector and the tourism sector. Plans to accelerate funding for the 2010 Olympic Games will be a catalyst to stimulate spending and growth in the province.”

The IDA says it is pleased the government has proceeded with recommended changes to the International Financial Business Program Act. “In particular, amendments that extend eligibility to non-financial companies, and permit both related party and non-related party activities to qualify, will improve the effectiveness of the IFB Program. This amended legislation will spark investment in the province, revitalizing and expanding the financial infrastructure in Vancouver. These international investments will strengthen the city as a centre for venture capital and small business capital markets,” it says.