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Slide 1

BC Real GDP%change

Source: BC Ministry of Finance and average private sector forecast (BMO, CIBC, Global Insight, RBC,Scotiabank and TD as of August 19, 2011)

2.8 2.8

2.0

2.3

0

1

2

3

4

Private Sector Private SectorMinistry of Finance Ministry of Finance

2011 2012

Ministry forecast remains prudentrelative to private sector

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Slide 2

2,050

2,100

2,150

2,200

2,250

2,300

2,350

Source: Statistics Canada

BC employment (000s, sa)

Mar 2009: 2,203

2008 2009 201020072006

Jul 2008: 2,276

2011

Jul 2011: 2,274

BC employment recovering slowly

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Slide 3Source: Statistics Canada

BC retail sales ($ millions, sa)

3,750

4,000

4,250

4,500

4,750

5,000

2008 2009

Dec 2007: 4,946

201020072006

Dec 2008: 4,385

2011

May 2011: 4,921

BC retail activity mixed

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120,000

220,000

320,000

420,000

520,000

620,000

720,000

10,000

20,000

30,000

40,000

50,000

60,000

2006 2007 2008 2009 2010 2011

Housing Starts

ResidentialPrices

BC housing starts trending flat whileprices are elevated

BC housing starts (units SAAR) BC residential average price (dollars, SA)

Source: Canada Mortgage and Housing Corporation Slide 4

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BC total merchandise exports ($ billions, sa)

1.5

1.9

2.3

2.7

3.1

3.5

2009 2010200820072006

Jun 2011: $2.8B

2011

Oct 2008: $3.1B

May 2009: $1.9B

Exports recovery on track

Slide 5

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Slide 6

US Real GDP (Second Estimate,annualized q/q %change)

Source: US Bureau of Economic Analysis* Advance estimate, subject to revision

0.5

3.63.0

1.7

-1.8

1.3

-3.7

-8.9

-6.7

-0.7

1.7

3.8 3.9 3.8

2.5 2.3

0.4

1.3

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

2007 2008 2009 2010 2011

*

Slowing pace of US real GDP growth

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3.2 3.23.1

2.92.7

2.5 2.5

1.8

0.0

1.0

2.0

3.0

4.0

Jan Feb Mar Apr May Jun Jul Aug

Forecast annual per centchange in US real GDP, 2011

Source: Consensus Economics

US consensus outlook deteriorates in2011

Slide 7

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Fiscal plan gap greater with PST/GST

(309)

(2,778)

(805)

(458)

(1,145)

(734)

152

2010/11 2011/12 2012/13 2013/14

Fiscal plan deficit before measures required tobalance the budget ($ millions)

First QuarterlyReportupdate

Projection prior to

reverting to PST/GST

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Three-year cumulative changes prior toreverting to PST/GST

244

(379)

334

(82)

(624)

(30)

TaxationRevenue

NaturalResources

OtherRevenue

FederalContributions

CommercialCrowns

Expense

Total cumulative change: ($537) million

($ millions)

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Three-year cumulative impact ofreturning to PST/GST

(580)

(836)

456

(119)

(1,019)

(216)

HST2011

TransitionPayment

PSTversus

HST

PITRelief

Related toHST

OtherRevenueImpacts

HSTPrior YearTransition

Reimbursement

OtherExpenseImpacts

Total cumulative change: ($2,314) million

($ millions)

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Taxpayer-supported debt to GDP ratio beforemeasures required to balance the budget

Taxpayer debt burden higher withPST/GST

15.8%

17.5%

18.1%

18.4%

16.7%

17.3%

17.4%

2010/11 2011/12 2012/13 2013/14

First QuarterlyReportupdate

Projection prior toHST referendum

18.2% aftermeasures

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Managing the change

Government will consult with British Columbians onmeasures to close the $458M deficit gap in 2013/14

Measures must consider:

Slower revenue growth of 2.8% compared to 3.3% at Budget

2011

The need to direct resources towards increasing demand for

services

Negotiating wage mandate

Infrastructure requirements to rehabilitate and modernize

existing facilities

Slide 12

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Other challenges

Economic risks

Return to recession in the US economy

European debt crisis: threat to financial stability

Slower Asian demand for BC products

Further appreciation of the Canadian dollar

Further weakening of the US dollar

Fiscal risks

Volatile commodity and energy prices

Treaty Negotiations and the New Relationship

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Next Steps

Budget Consultation Paper Sept 8

Budget 2012Development Process Fall

Report on Budget Consultation by Nov 15

Second Quarterly Report by Nov 30

Economic Forecast Council Dec 9

Budget 2012 Feb 21, 2012

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