Report C: FINANCIAL MANAGEMENT PLAN REVIEW AND OUTLOOK
Borrowing for capital projects finances the building of schools, hospitals, roads, and other forms of provincial infrastructure. These investments provide essential services for today and will also benefit future generations of British Columbians.
The need for capital infrastructure in British Columbia is substantial. Maintaining the existing asset base, replacing aging infrastructure, and meeting the needs of a growing and changing population all require capital spending. The Financial Management Plan provides discipline to ensure that only the highest-priority capital projects proceed, and that government pursues innovative and cost-effective mechanisms to provide capital infrastructure.
In 1997/98, approximately $975 million was spent to finance capital projects including the building of schools, hospitals, roads and other forms of provincial infrastructure. Specific examples of projects undertaken in 1997/98 include:
For 1998/99, government will be increasing the level of capital spending to approximately $1.25 billion, an increase of about $275 million from 1997/98. The increase in capital spending, including the carry-over of delayed projects from 1997/98, will provide some economic stimulus during 1998/99. The major portions of capital spending will be on education, and on highway construction and upgrades. Examples of projects for 1998/99 include:
As well as meeting the capital needs of the province, capital spending also assists in stimulating the economy. Capital spending in 1997/98 created an estimated 12,400 person-years of employment in the design and construction industry. In 1998/99, the additional $275 million in capital spending will create an estimated 3,700 more jobs than in 1997/98.
In June 1996, the government announced a review of capital expenditures to determine the appropriate levels of investment and to improve the planning, construction, and maintenance of infrastructure. The review concluded in January 1997 and identified over 100 potential cost containment strategies, falling into four categories:
For 1997/98, the projected value of the cost containment strategies totalled $200 million. The value of the cost containment strategies is projected to approach $275 million in savings in 1998/99.
Examples of cost containment strategies and their savings value in 1997/98 include:
In 1997/98, the government also began pursuing several alternative procurement methods including:
The government is reorganizing the way social capital projects are delivered in 1998/99. While needs assessment and planning remain the responsibility of individual ministries, project management, financing, and project delivery are consolidated in the Ministry of Finance and Corporate Relations. The objective of this new model is to achieve greater savings by increasing joint and multi-use facilities, public-private partnership opportunities and utilization of existing facilities, and undertaking more cost-effective and efficient procurement methods.
|Return to Report C: Financial Management Plan Review and Outlook|