MONITOR PROVINCIAL AN UPDATE ON PROVINCIAL ECONOMIC …mymortgage.ca/uploads/NEWS/33. 06-23-10 The West Will... · 2012-10-18 · AN UPDATE ON PROVINCIAL ECONOMIC & FISCAL MATTERS

AN UPDATE ON PROVINC IAL ECONOMIC & F ISCAL MATTERSAN UPDATE ON PROVINC IAL ECONOMIC & F ISCAL MATTERSMONITORP R O V I N C I A LP R O V I N C I A L

The Canadian econ-

omy is gathering

steam, and all provinces are

participating in the recovery

this year. Real GDP will likely

expand across the country in

2010, with the strongest growth

rates seen in Western Canada

as commodity-sector activity

recovers from a depressed year

in 2009. Indeed, the theme of

the “West Outperforming the

Rest” should persist into 2011 as global commodity demand remains fi rm, while a strong

Canadian dollar tempers growth in Central Canada and capital investment activity begins

to wane in Atlantic Canada.

Western Canada is poised to benefi t from a rebound in commodity prices, fi rming global demand

for raw materials and a lower overall cost environment in the energy sector. Oil prices have

more than doubled from their recession low, and investment activity in Western Canada has

started to pick up as a result. At the same time, reduced royalty rates in Alberta and various

incentives in B.C. and Saskatchewan have helped improve the energy economics in the region,

and have removed some of the political uncertainty surrounding the Alberta royalty regime.

Meantime, Western Canada’s post-recession fi scal hole is much shallower than in Central

Canada, and as a result, the impact on growth of budget-balancing measures will be milder

in the coming years, allowing real GDP growth of about 4% per year through 2011.

The recovery is also well underway in Central Canada, as auto production has rebounded

from the depths of recession, and Ontario’s housing market just recently slipped from re-

cord sales and price levels. While housing is expected to cool through the rest 2010, and

June 2010

Michael Gregory, CFASenior Economist

Robert KavcicEconomist

1•800•613•0205www.bmocm.com/economics

Population: 33,930,800

Area: 9,984,670 km²

GDP/Capita: $46,960

National Capital:Ottawa

Party in Power:Conservatives

Prime Minister:Rt. Hon. Stephen Harper

Finance Minister:Hon. Jim Flaherty

Legislative Seats:Conservatives 144Liberals 77Bloc Quebecois 48New Democrats 36Independent 2Vacant 1

Minority Government Since:October 2008

Source: BMO Capital Markets

Provincial GDPReal GDP Growth Rates—Forecast (percent)

NB200920102011

-0.82.52.6

NS200920102011

-0.52.42.7

PEI200920102011

0.62.62.3

Que200920102011

-1.02.92.8

Ont200920102011

-3.13.42.9

Alta200920102011

-5.13.63.9

Sask200920102011

-6.34.23.8

BC200920102011

-2.33.93.9

Man200920102011

-0.23.03.1

NL200920102011

-10.24.03.0

Canada200920102011

-2.53.43.1

The West Will Rise Again

MONITORP R O V I N C I A LP R O V I N C I A L

2 Provincial Monitor June 2010

the manufacturing sectors in Ontario and Quebec will continue to bear the weight of a

strong Canadian dollar, domestic demand will pick up the slack. Indeed, retail sales have

rebounded to record levels in both provinces, as have the number of service-sector jobs.

However, longer-term growth in the region will be challenged by fi scal restraint—Ontario

faces the largest budget defi cit in the country and Quebec has already begun to implement

tax increases and spending restraint. Taken together, these factors all point to below-aver-

age economic growth of slightly less than 3% per year through 2011.

Atlantic Canada’s outlook remains stable. Aside from Newfoundland & Labrador (which was

hit by some one-time factors), the region saw very modest real GDP declines in 2009. One

supporter of growth during the recession was capital investment in both the public and

private sectors. While government stimulus remains strong in the region, some major pri-

vate-sector projects will wind down in the next few years. This, combined with an ongoing

challenge in the manufacturing sector, will lead to below-average growth of about 2.5% per

year through 2011 in Atlantic Canada.

Budget Roundup

The 10-province combined budget defi cit is estimated at $34.2 billion for the fi scal year ended

March 2010, or 2.2% of Canadian GDP1. This contrasts sharply with a $2.6 billion shortfall in

FY2008/09 (-0.2% of GDP) and a surplus of $11.8 billion in 2007/08 (+0.8%). The deterioration

mostly refl ects the impact of recession-ravaged revenues and fi scal stimulus efforts. With the

latter continuing into FY2010/11, the combined budget defi cit is forecast to only fall to $32.6

billion this fi scal year (2.0%). However, as the stimulus efforts end next year (following Ottawa’s

lead) and decent economic growth pumps revenues, the combined defi cit falls to $23.9 billion,

or 1.4% of GDP. On aggregate, defi cit reduction efforts continue in subsequent years.

The fi scal year ended March 2010 also marks the projected defi cit highs for most individual

provinces. Alberta, Saskatchewan (pre-GFSF) and Quebec are projecting larger shortfalls

this fi scal year than last year (New Brunswick is just marginally higher). However, nearly

all jurisdictions are showing smaller defi cits in 2011/12 (except Nova Scotia). Also, most of

the eight provinces with balanced budget legislation are showing a zero or positive total

within the required time (New Brunswick and Nova Scotia are the exceptions). In some

cases, these laws were modifi ed to permit larger defi cits for longer, owing to the severity

of the economic downturn.

Alberta and Saskatchewan (pre-GFSF) are scheduled to return to surplus by FY2012/13

(their unaltered legislations require a balanced budget each year unless it can be covered by

banked, prior surpluses). British Columbia is projected to record a surplus the following year,

but this could easily happen a year ahead of schedule given that embedded contingencies

and allowances overwhelm the small shortfall in 2012/13. Thus, as the three western prov-

1 Excludes funds shifted from Saskatchewan’s Growth and Financial Security Fund.



inces lead economic growth in

the coming years, they will also

lead the fi scal turnaround. This

refl ects the region’s exposure to

commodities, which is also a key

risk to these three province’s

fi scal outlooks.

Quebec and Nova Scotia are

projecting zero balances by

FY2013/14. Interestingly, both

provinces resorted to raising

their Harmonized Sales Tax (HST)

to pare their fi scal shortfalls (we

suspect that other HST provinces might eventually follow suit). Embedded in Quebec’s fi gures

are $1.1 billion in unidentifi ed defi cit reduction measures. As a rule, we are sceptical of un-

identifi ed measures, but Quebec has already shown a commitment to “fi lling in the details”.

A year ago, the province had a $5.1 billion pool of unidentifi ed measures by FY2013/14. PEI

is also projecting a zero balance by FY2013/14, but has yet to provide revenue and expense

details beyond FY2011/12.

Manitoba and New Brunswick are scheduled to return to surplus by FY2014/15, and we have

to wait another three years (FY2017/18) before Ontario hits it projected zero balance. As a rule,

we are also sceptical of long fi scal adjustment periods, given the overlay of multiple election

cycles and the rising demographic pressure on public fi nances. However, Ontario was saddled

with the largest defi cit as a share of GDP, requiring the largest fi scal adjustment. Ontario is

also the province most levered to U.S. economic growth, and with U.S. prospects still quite

uncertain, the government opted for only a very gradual defi cit-reduction path. We anticipate

90/91 92/93 94/95 96/97 98/99 00/01 02/03 04/05 06/07 08/09 10/11-4

-3

-2

-1

0

1

2

Combined Provincial Budget Balance (% of GDP)

Sea of Red

estimate

forecast

Red Tide SubsidesBudget Balance ($ mlns)

07/08 08/09 09/10 e 10/11 f 11/12 f 12/13 f 13/14 f 14/15 f 15/16 f 16/17 f 17/18 fBC 2,837 78 (2,775) (1,715) (945) (145) * 410Alberta (ex. SF) 4,581 (852) (3,624) (4,748) (1,135) 505Saskatchewan 641 2,389 425 20 50 75 ex. GFSF 1,282 1,970 (86) (174) (121) 102Manitoba 558 470 (555) (545) (448) (345) (146) 185

Ontario 600 (6,409) (21,330) (19,690) (17,300) (15,900) (13,300) (10,700) (7,800) (4,200) 0Quebec 0 0 (4,257) (4,506) (2,900) (1,200) 0 **New Brunswick 97 (192) (743) (749) (681) (553) (262) 42Nova Scotia 419 20 (488) (222) (370) (187) 0

PEI (4) (33) (84) (55) (36) (30) 0Nfld & Labrador 1,421 2,350 (295) (194) (157) (192)

( ) = deficit e = estimate f = forecast SF = Sustainability Fund ($2,808 mln in 12/13) GFSF = Growth and Financial Security Fund ($340 mln in 11/12)* By 12/13, $850 mln of contingencies and allowances ** By 13/14, $1,054 mln of measures to be named later



that as U.S. economic prospects improve (and become less uncertain), Ontario will eventually

embark on a more aggressive defi cit-reduction path.

PEI and Newfoundland & Labrador do not have balanced budget legislation. After narrowing

in FY2011/12, Newfoundland & Labrador’s defi cit is projected to widen a tad in 2012/13,

despite rebounding offshore oil revenues. Although a culprit is an aggressive, possible GDP-

growth-enhancing infrastructure program, we view any budget plan that fails to display

sustained defi cit reduction over the medium term with some skepticism.

Fortunately, nearly all provinces are likely to get some extra fi scal lift from better-than-ex-

pected growth. Among this year’s provincial budgets, the various forecasts for real GDP

Focus on HSTs

In the coming year, consumption tax changes will take effect in four provinces. B.C. and Ontario will harmonize their provincial sales tax with the Federal Goods and Services Tax on July 1st. The new Harmonized Sales Tax rates of 12% in B.C. and 13 % in Ontario, will leave the overall tax rate unchanged, but apply to a wider range of goods and services. In Nova Scotia, the already-harmonized sales tax will rise 2 ppts on July 1st to 15%. In Quebec, the QST will rise by 1 ppt on January 1st, 2011 and again on January 1st, 2012, ultimately lifting the combined QST/GST to 14.5%.

These changes will have an impact on provincial infl ation rates. The Province of Ontario estimates that 17% of consumer expenditures will now become subject to the 8% provincial portion of the HST, which would imply a 1.4% jump in consumer prices (the annual infl ation rate will be lifted by half that amount in 2010 given that it takes place mid year). Assuming that the B.C. HST impacts a broadly similar share of spending, the annual infl ation rate would jump 1.2% (or about 0.6% in 2010). However, sales tax harmonization also lowers business input costs, which would apply longer-term downward pressure to some prices. This will offset some of the impact of the tax increase, but the amount is uncertain and will occur over a longer time period. In Nova Scotia and Quebec, where the tax rates are already harmonized, the increases will be fully refl ected in consumer prices.

Overall, harmonization in B.C. and Ontario could have a small negative impact on consumer spending. The impact will be moderated by offsetting income tax cuts, tax rebates and pre-sumed cost savings pass-through (at least partially) by businesses. In Nova Scotia and Quebec, the impact on consumer spending will be more severe given that there are no cost savings to pass through, and no substantial offsetting tax cuts or rebates.

British Columbia Ontario Quebec Nova ScotiaCurrent Tax 7% PST + 5% GST 8% PST + 5% GST 12.5% HST * 13% HSTFuture Tax 12% HST 13% HST 14.5% HST 15% HST

Change Date July 1, 2010 July 1, 2010Jan. 1, 2011 (1 ppt)Jan. 1, 2012 (1 ppt)

July 1, 2010

Est. CPI Impact

2010 +0.6% +0.7% none +0.6%2011 +0.6% +0.7% +0.6% +0.6%2012 slightly negative slightly negative +0.6% none

yes yes no no

Consumer Impact slightly negative slightly negative negative negative

* Quebec administers its own HST (7.5% QST + 5% GST)Note: QC and NS assumes 60% passthrough

Cost SavingsPass-Through?



growth in 2010 are nearly all

below our own projections (9

out of 10), ranging from more

than 1.5 percentage points for

B.C. and Saskatchewan to 0.5

points for Manitoba and Nova

Scotia. Among the provinces

that publish their 2011 GDP

growth forecasts, six of eight are

again below our projections.

Although there was signifi cant

deterioration in provincial fi-

nances during the past couple years, aggregate and individual defi cits remain manageable;

the consolidation required to return to balanced budgets should not be too onerous and, in

consequence, is more likely to be sustained.

British Columbia was hit hard during the recession, but the province is now fi rmly in recov-

ery mode. After contracting 2.3% in 2009, real GDP should rebound a solid 3.9% this year,

placing it among the strongest in Canada.

While the temporary boost from the 2010 Olympic Games has faded, strong domestic demand

is driving a sustainable recovery. The province’s housing market has seen a furious rebound,

with average prices rising 30% from the recession low, to a record level. However, this bounce

refl ects a signifi cant amount of pulled-forward demand, as buyers moved to beat stricter

mortgage rules, higher mortgage rates and the July 1st HST. As a result, softer demand and

more supply have already begun to hint at a cooler housing market in the second half of the

year. Still, the spill-over effect to construction activity has been signifi cant, with housing starts

more than doubling from their recession low.

Higher commodity prices will keep investment activity in the mining, and oil and gas sectors

humming. The current 2% incentive royalty rate for natural gas wells is in place through

June-2010, while the Province has increased its Infrastructure Royalty Credit Program, which

provides rebates for exploration-related construction costs, by $50 mln. Exports should also

fi rm as global demand recovers. While a strong C$ will limit growth, the forestry sector will

benefi t from a modest recovery in U.S. housing starts, and sales to Asia (now more than a


Percent of Canada: 13.3

Rank by Population: 3rd

Area: 944,735 km²

GDP/Capita: $45,550

Provincial Capital:Victoria

Party in Power:Liberals

Premier:Hon. Gordon Campbell

Finance Minister:Hon. Colin Hansen

Legislative Seats:Liberals 49New Democrats 35Independent 1

Next Election:May 2013

BritishColumbia

Housing market has stoked economic recovery

Balanced budget by FY2013/14; upside potential

Fiscal Ships Likely Lifted FurtherReal GDP (% chng)

2009

-2.3-5.1-6.3-0.2-3.1-1.0-0.8-0.50.6

-10.2

BCAlbertaSaskatchewanManitobaOntarioQuebecNew BrunswickNova ScotiaPEINfld & Labrador

BMO3.93.64.23.03.42.92.52.42.64.0

2010Gov’t2.22.62.62.52.72.31.71.92.04.0

Gap1.71.01.60.50.70.60.80.50.60.0

BMO3.93.93.83.12.92.82.62.72.33.0

2011Gov’t2.32.93.33.03.22.6n/a1.2n/a3.1

Gap1.61.00.50.1-0.30.2n/a1.5n/a-0.1



quarter of international goods

exports) will benefi t from strong

growth in that region.

Employment has rebounded

2.2% from the recession low

and the jobless rate has fallen

almost a percentage point to

7.5%. Job growth of about 2%

through 2011 should help pull

the unemployment rate down

to 6.6% next year, still above the

very lean days of 2007.

The Province of British Columbia

is forecasting a $1.7 bln defi cit for FY2010/11, a $1.1 bln improvement over the $2.8 bln shortfall

estimated for FY2009/10. Total revenue will grow 5.8% to $39.2 bln in FY2010/11, fuelled by

natural resources and contributions by the federal government (mostly transition payments for

the HST). Total expenses are projected to grow 2.3% to $40.6 bln, with heath care garnering

more than 80% of the modest gain. The commitment to eliminate the defi cit by FY2013/14

remains in place, and with contingencies of $450 mln embedded in each year and forecast

allowances that move up from $300 mln to $400 mln, the defi cit could easily be eliminated a

year or two earlier. The return to balance hinges on a sturdy rebound in revenue—4.6% annu-

ally in the four years through FY2013/14—combined with a moderate slowdown in spending

growth to 2.3% annually. On a real per-capita basis, total spending will contract 1.2% annually

over the next four years, similar to the restraint seen in the mid-1990s and mid-2000s.

The Province’s borrowing requirements are pegged at $8.9 bln in FY2010/11, with 30%

completed by mid-June.

The Alberta economy is starting to bounce back from a deep commodity price-induced re-

cession. After contracting 5.1% in 2009, the sharpest decline since at least 1982, real GDP

is expected to grow 3.6% this year and a further 3.9% in 2011, led by the energy sector.

The combination of falling energy prices and a more taxing royalty regime cut investment

activity in the sector by about half in 2009, and in the wake of the downturn, the province



Rank by Population: 4th

Area: 661,848 km²

GDP/Capita: $78,450

Provincial Capital:Edmonton

Party in Power:Progressive Conservatives

Premier:Hon. Ed Stelmach

Finance Minister:Hon. Ted Morton

Legislative Seats:PC 68Liberals 8Wild Rose 3New Democrats 2Independent 1

Majority Government Since:March 2008

Alberta

Energy sector to fuel recovery; lower royalties help

Balanced budget by FY2012/13

Average Home Price (y/y % chng)

00 01 02 03 04 05 06 07 08 09 10-15

-10

-5

0

5

10

15

20

25

British Columbia:Hot Housing Market Set to Cool



has seen net out-migration for

the fi rst time in 15 years. One

positive impact of the recession

has been cooling cost pressures

in the province (i.e., labour and

raw materials), which ran out of

control late in the boom. Now,

lower costs, a rebound in oil

prices and a reversal of past roy-

alty increases by the Province

have improved the economics in

the energy sector. Indeed, activ-

ity is already beginning to pick up, with recent investment announcements including $2.5

bln for the BP/Husky Sunrise Project, a $1.5 bln expansion of Surmont and an expansion

of Canadian Natural Resources’ Horzion Mine. The Province is expecting oil sands output

to reach 2.1 mln barrels/day by FY2012/13, or 40% more than last year’s level. Strength in

unconventional oil will help to offset a sluggish natural gas sector, in which the Province is

expecting an 8.5% decline in production in FY2010/11.

Larger excesses built up late in the commodity boom should keep growth in Alberta slightly

below its Western neighbours in the coming year. For example, Calgary’s offi ce vacancy rate

hit 14.9% in 2010Q1, according to CB Richard Ellis, up from 7.9% a year ago, and ample new

supply like Eighth Avenue Place and the Bow will be coming on the market in the next 18

months. Employment also remains 2.4% below peak levels, while the unemployment rate

has yet to make a decisive move lower. As the recovery matures, Alberta’s job market should

pick up steam, and a renewal of inward migration trends is likely by 2011. Longer term, this

should help to support housing, which is still working off the excesses of 2007—average

prices are unchanged from those prevailing three years ago, while sales are running at just

60% of the peak levels seen during the height of the boom.

The Province of Alberta is projecting a $4.7 bln defi cit for FY2010/11, after an estimated $3.6 bln

shortfall in FY2009/10. The budget is expected to return to a $505 mln surplus in FY2012/13. Note

that royalty reductions, announced after the budget, are expected to cost $700 mln per year by

FY2012/13, which would more than negate the small surplus. The Province will draw from its

Sustainability Fund to cover its defi cits, which will shrink from $15 bln to $2.8 bln by FY2012/13.

Total revenue will inch up 1.3% to $34.0 bln in FY2010/11, led by higher non-renewable resource

revenues, while total expenses will grow 4.2% to $38.7 bln. The Province’s return to surplus

hinges on a combination of solid revenue growth of 6.3% annually through FY2012/13, with oil

and natural gas prices projected to average US$89.50 and C$5.50, respectively, by FY2012/13.

Program spending is projected to slow signifi cantly, rising 2.1% per year through FY2012/13.

Oil Sands Investment ($ blns)

03 04 05 06 07 08 09 10 11 12 130

5

10

15

20

25

Alberta: Break Time is Over

Source: Province of Alberta

forecast

estimate



Alberta plans to borrow $4.1 bln in FY2010/11, mostly on behalf of ACFA and ATB Financial.

About 35% has been completed through mid-June.

Saskatchewan’s economy contracted sharply in 2009 amid a steep decline in potash production.

However, a rebound in that sector, combined with strength in energy and still-strong population

trends, are poised to fuel 4.2% real GDP growth this year, the strongest in Canada.

Potash production wilted in 2009 as sales to China, the European Union and the U.S. fell

sharply. As a result, Canadian potash output fell 58%, the vast majority of which is in Sas-

katchewan. However, sales have bounced back and output was up 75% y/y in 2010Q1, while

Canpotex said it was exporting at maximum capacity in the quarter. Meantime, the oil and

gas sector, particularly the Bakken play, continues to attract investment dollars. The Province

banked $190 mln in land sales in April, well above the $11.7 mln fetched in the prior year,

when commodity prices were much lower. The Province has also moved to lower royalties,

including a three-year break on horizontal natural gas drilling. However, Saskatchewan was

a benefi ciary of royalty uncertainty in Alberta, but with that uncertainty now mostly gone,

any spill-over activity could moderate in the coming year.

Saskatchewan continues to see positive interprovincial migration fl ows, including almost 3,000

people in the latest four quarters. This trend is likely to continue thanks to relatively low living

costs and bright economic prospects. With population growth still near a multi-decade high,

retail sales (up 4.8% y/y in 2010Q1) and construction activity will continue to be primary ben-

efi ciaries. At the same time, the job market is absorbing the new migrants with the unemploy-

ment rate rising only modestly

during the recession and, at 5%,

is the lowest in Canada. Private

sector job growth of 1.3% y/y in

May has offset a 2.9% decline in

public-sector employment.

As we go to print, record spring

rainfall has much of the prov-

ince’s farmland too wet for

planting. Crop insurance seed-

ing deadlines were extended

to June 20th, but about 25% of

cropland has yet to be seeded.




Area: 651,036 km²

GDP/Capita: $61,442

Provincial Capital:Regina

Party in Power:Saskatchewan Party

Premier:Hon. Brad Wall

Finance Minister:Hon. Rod Gantefoer

Legislative Seats: Saskatchewan Party 37New Democrats 20Independent 1

Next Election:November 2012

Saskatchewan

Diverse commodity mix to drive economic growth

Spending restraint to steer balance to surplus

GDP – Canada – Potash (blns of chained 2002 dollars)

05 06 07 08 09 100.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

Saskatchewan: Fertilized Recovery



At this point, it looks like the agriculture sector will be a drag on growth in 2010. Propor-

tionally, Saskatchewan’s agriculture sector is by far the largest in Canada, with crop and

animal production making up more than 12% of real GDP in 2009 compared to less than

2% nationally.

The Province of Saskatchewan is projecting a $174 mln defi cit in FY2010/11 (a modest

0.3% of GDP) before transfers from the Growth and Financial Security Fund totalling $194

mln. The Province is projecting a return to pre-GFSF surpluses by FY2012/13. Revenue is

expected to fall 0.8% to $10.0 bln in FY2010/11, owing largely to lower dividend payments

from Crown Entities. Non-renewable resource revenues will rise 19.5% with potash prices

expected to average a conservative US$308, but production is assumed to bounce back.

Resource revenues will make up 21% of total in FY2010/11, below the 26% average of the

last fi ve years, but still the primary risk to the fi scal outlook. Total spending will rise 0.1% to

$10.1 bln in FY2010/11, and growth will be held to 1.3% annually through FY2013/14, or a

2.7%-per year contraction on a real per-capita basis.

Total borrowing requirements are expected to be $1.1 bln in FY2010/11, with 16% completed

by mid-June.

Manitoba’s diverse economy experienced a softer-than-average recession, with real GDP

contracting just 0.2% in 2009. The province’s broad industry base is also well-positioned for

the emerging recovery, with real GDP expected to advance 3.0% this year and 3.1% in 2011.

Nonresidential construction activity has been a pillar of strength in Manitoba in recent years,

but is expected to fade slightly in

2010. After growing at a double-

digit pace for the past four years,

non-housing capital spending is

expected to dip 1.5% in 2010 as

a number of infrastructure proj-

ects wind down. Still, large-scale

investments by Manitoba Hydro,

including the $1.3 bln Wuskwatim

generating station, will continue

to provide economic support over

the medium term.




Area: 647,797 km²

GDP/Capita: $43,500

Provincial Capital:Winnipeg

Party in Power:New Democrats

Premier:Hon. Greg Selinger

Finance Minister:Hon. Rosann Wowchuk

Legislative Seats:New Democrats 36PC 19Liberals 2

Next Election:May 2011

ManitobaDiverse economy and strong population growth

Return to surplus by FY2014/15

Population (y/y % chng)

83 85 87 89 91 93 95 97 99 01 03 05 07 090.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Manitoba: The People Are Coming

Manitoba

Canada



While manufacturing and trade have stabilized, they should feel the pinch of a strong C$,

but mining and agriculture provide good growth prospects—HudBay’s Lalor Lake mine holds

about three million ounces of gold, and the company plans to spend $500 mln on the project

in the next few years. Meantime, population growth has picked up and is running ahead

of the national rate for the fi rst time since the early-1980s, which will continue to support

retail sales and housing demand.

The Province of Manitoba is projecting a $545 mln summary defi cit in FY2010/11, and the Prov-

ince is anticipating four years of defi cits before returning to a $185 mln surplus in FY2014/15.

Starting at 1% of GDP, Manitoba’s defi cit will remain relatively small, and a moderation in

spending growth and the economic recovery should let the province to grow its way back

into the black. Total revenues are projected to rise 1.7% to $12.7 bln in FY2010/11. Some very

modest tax changes will add $8.6 mln to revenue, the largest being an increase in the tobacco

tax. Meantime, total spending is projected to rise 1.6% to $13.3 bln in FY2010/11. This refl ects

a marked slowdown from the 6% annualized growth seen over the prior four years. While the

Province will continue to spend on education and health, cuts elsewhere (e.g. a public-sector

wage freeze) will slow overall spending growth to 1.8% per year over the forecast horizon.

This represents a contraction of about 0.7% per year on a real per-capita basis.

Total borrowing requirements are expected to be $3.4 bln in FY2010/11, with 39% completed

by mid-June.

The Ontario economy has pulled out of recession as the auto sector is rebounding and

domestic demand, led by housing, is gaining strength. Still, the recession left a deep dent

in Ontario’s economy, and a

number of factors will likely

temper growth in the coming

years—a strong loonie, sluggish

U.S. consumer demand and fi s-

cal restraint. Real GDP will likely

advance 3.4% this year before

slowing to a below-average

2.9% in 2011.

The auto sector did the most

damage to the Ontario economy

in 2009, with production falling



Rank by Population: 1st

Area: 1,076,395 km²

GDP/Capita: $46,135

Provincial Capital:Toronto


Premier:Hon. Dalton McGuinty

Finance Minister:Hon. Dwight Duncan

Legislative Seats:Liberals 72 PC 25New Democrats 10

Next Election:October 2011

Ontario

Auto sector on the mend; domestic demand strong

A long, tough road back to balance in FY2017/18

Real Net Exports (% of GDP)

85 87 89 91 93 95 97 99 01 03 05 07 09-2

0

2

4

6

8

10

12

Ontario: Stiff Trade Winds



as much as 60% below prior-year levels. However, production has since bounced back, and

recent announcements—a $245 mln investment by GM in St. Catharines, a third shift at

GM in Oshawa and a second shift at Honda in Alliston—are encouraging. Still, the recovery

in the broad manufacturing and export sectors will remain tepid as the loonie hovers at

high levels—real net exports were negative in the last two quarters of 2009. The trouble in

manufacturing lifted Ontario’s unemployment rate to 8.9% in May, above the national rate

and also above those in Quebec, New Brunswick and Nova Scotia. Still, while the goods

sector remains depressed, service-sector employment has recovered to record levels and

will remain a key support, particularly in the professional, scientifi c and technical sector.

Overall services now make up nearly 80% of Ontario jobs, up from 72% just 10 years ago.

The private sector, which has added 120,000 jobs in the past year, will have to make up for

a coming slowdown in public-sector hiring as the Province embarks on a defi cit reduction

campaign (starting in FY2011/12).

Domestic demand in Ontario has fi rmed and will drive growth in 2010. Retail sales have

bounced more than 10% from their recession low, while the housing market caught fi re amid

record low mortgage rates and pre-HST buying, pushing average prices to a record level. The

surge, however, refl ects a signifi cant amount of pulled-forward demand, and slower activity

is likely in the second half of 2010 and into 2011—the most recent data already show softer

sales and more ample supply.

The Province of Ontario is projecting a $19.7 bln defi cit in FY2010/11 versus a $21.3 bln

shortfall in the prior fi scal year, and has begun to plant the seeds of future spending restraint.

The defi cit clocks in at 3.3% of GDP, and will be followed by another six years of red ink

before returning to balance in FY2017/18, by far the longest and deepest stretch of defi cits

among the Canadian provinces. Revenue is expected to rise 10.8% to $106.9 bln in FY2010/11

as the economic recovery drives personal and corporate income tax receipts and Federal

transfers receive a temporary boost. There were no major new tax measures in this year’s

budget, but the HST (July 1st) and other measures outlined last year will go ahead as planned,

including modest personal and corporate tax relief and HST rebate cheques, which have

already begun to be paid out. Meantime, program spending will rise 6.5% to $115.9 bln in

FY2010/11. The real work to rein in spending will begin next year, and starting in FY2012/13,

program spending growth will slow to 1.9% annually through FY2017/18—this includes a

challenging target of 3% annual growth in health spending. On a real per-capita basis, pro-

gram spending will shrink 1.3% per year through FY2017/18, a level of restraint not seen

in the province since the mid-1990s. If the discipline to hit these targets is maintained, and

the economic recovery proceeds as forecast, Ontario could be nursed back to fi scal health

without any major tax increases.

Borrowing requirements in FY2010/11 are pegged at $39.7 bln, of which a third has been

completed by mid-June.



The Quebec economy is in recovery mode after faring relatively well during the recession.

Real GDP fell a much smaller-than-average 1.0% in 2009, and should post 2.9% and 2.8%

growth in 2010 and 2011, respectively—below the national rate.

Manufacturing activity in the province held up relatively well during the recession thanks

to the province’s lack of exposure to autos and a stable performance in aerospace, though

challenges remain. As a result of the relatively mild recession, Quebec’s unemployment

rate, with the exception of one month, stayed below 9% and is now consistently below the

national rate for the fi rst time on record back to 1976. Granted, public-sector hiring rose

signifi cantly in 2009, but the private sector has recently started to participate in the recov-

ery. Private-sector employment is just shy of pre-recession levels, with trade, fi nance and

professional services seeing ramped-up hiring.

The goods sector, however, continues to languish, particularly in manufacturing which saw

the lowest level of employment on record in April. With little help from the loonie or U.S.

demand, the manufacturing sector will continue to carve out a sluggish recovery, and com-

bined with softer-than-average, though improving, population growth, points to a relatively

weak trend growth rate in Quebec. Capital investment has been a major support in recent

years, particularly public spending on infrastructure including investments by Hydro-Quebec.

While non-housing capex is expected to grow about 5% this year, public-sector investment

will likely peak in 2010, leading to slower growth in 2011 and beyond. A strong recovery in

the housing market has also lifted residential construction activity.

The Province of Quebec is pro-

jecting a $4.5 bln deficit in

FY2010/11 and has taken big

steps toward returning to bal-

ance in fi ve years. At 1.4% of

GDP, the defi cit remains mod-

est compared to those of the

mid-1990s. Substantial progress

has been made in “measures

to be identifi ed”, or $5.1 bln of

previously unidentifi ed savings

or revenue increases from last

year’s budget. This unidentifi ed

Capital spending to peak in 2010

Budget-balancing challenge slowly being met



Rank by Population: 2nd

Area: 1,543,056 km²

GDP/Capita: $40,040

Provincial Capital:Quebec City


Premier:Hon. Jean Charest

Finance Minister:Hon. Raymond Bachand

Legislative Seats:Liberals 66Parti Quebecois 50Action Democratique 4Independent 3Quebec Solidaire 1

Majority Government Since:December 2008

Quebec

Unemployment Rate (percent : s.a.)

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 104

6

8

10

12

14

16

Quebec: Closing the Gap

Quebec

Canada



source of funds now totals just $1.1 bln by FY2013/14. Total revenue will rise 4.5% to $65.5

bln in FY2010/11. Chief among revenue-raising measures is an additional 1 ppt increase in

the QST in January-2012, to 9.5% (on top of the 1 ppt increase in January-2011). The combined

2 ppt increase will ultimately add $2.7 bln to revenues, with a $400 mln boost this fi scal

year. The Province is also introducing a health contribution fund on July 1, 2010, an annual

tax that will that will cost $25 per adult in 2010, rising to $200 by 2012. Total spending will

rise 3.9% to $69.5 bln in FY2010/11, and the Province is targeting 2.7% annualized program

spending growth through FY2014/15, or fl at in real per-capita terms. All told, Quebec’s efforts

to re-balance the budget should begin to weigh on growth in 2011 as tax increases kick in

and spending begins to get restrained.

Borrowing requirements are $12.9 bln in FY2010/11 (including the fi nancing fund and Fi-

nancement-Quebec), with 63% completed by mid-June.

After a relatively mild recession, the New Brunswick economy is poised to grow 2.5% in

2010 and 2.6% in 2011. Government infrastructure spending will be tempered by slowing

private-sector construction and sluggish U.S. exports, leading to below-average growth.

Major capital projects like the Point Lepreau nuclear plant upgrade and Canaport LNG ter-

minal were key supports during the recession, but those projects have wound down. This

will partly offset the boost provided by the two-year, $1.6 bln capital investment program

currently being undertaken by the provincial government, of which about half will be de-

ployed in FY2010/11.

Meantime, despite a recent bounce back, the strong loonie and sluggish U.S. demand will

weigh on exports and manufacturing activity. However, a sturdy job market, which effec-

tively saw no net job losses during the recession, and the positive impact of income tax

reductions should help support consumer activity—retail sales were up a solid 8.9% y/y in

the fi rst quarter.

The Province of New Brunswick is projecting a $749 mln budget defi cit in FY2010/11 (2.8% of

GDP) as it increases spending and capital investment, and continues to implement its tax-re-

duction program. The Province plans to return to a small surplus by FY2014/15. Total revenues

will rise 1.8% to $7.2 bln in FY2010/11, with higher corporate and sales tax revenues offsetting

lower personal income tax receipts. An overhaul of the Province’s tax system continues to

go forward as planned. All personal tax rates will fall again in 2010, ultimately bottoming out

in 2012. By then, two tax brackets will have rates of 9% and 12%, down from a range of tax

Fiscal stimulus to offset softer private-sector activity

Tax-system overhaul continues as planned

Population: 750,660



Area: 72,908 km²

GDP/Capita: $37,980

Provincial Capital:Fredericton


Premier:Hon. Shawn Graham

Finance Minister:Hon. Greg Byrne

Legislative Seats: Liberals 39PC 25Vacant 2

Next Election:September 2010

New Brunswick



rates between 10.1% and 18% in 2008. In total, the tax cuts will cost $258 mln in FY2010/11,

rising to $380 mln by FY2012/13. Corporate income taxes will also continue to be trimmed

with a relatively small revenue impact—the general corporate rate (11% as of July 1st) will fall

1 point to 8% by 2012 (that would be the lowest in Canada at current rates).

New Brunswick plans to borrow $3.0 bln in FY2010/11, with 54% completed by mid-June.

The Nova Scotia economy will return to growth this year after a modest contraction in 2009.

Real GDP will likely expand 2.4% in 2010 and 2.7% in 2011, below the national rate as the

trade sector acts as a drag.

Manufacturing remains sluggish, with sales well below the peak levels seen in 2008 and

exports, particularly of natural gas, still depressed. The recovery in demand south of the

border, however modest, will help these sectors return to growth, even though the pace

will be moderated by a strong Canadian dollar. The labour market has begun to improve in

recent months, with total employment now just shy of 2008’s peak level—a 3.7% jump in

private-sector jobs has offset a 5.6% decline in the public sector over the past year. While

this will help consumer spending, the 2 ppt increase in the HST on July 1st will act as a drag.

Indeed, strong retail sales activity in recent months likely refl ects some pulled-forward

purchases, setting the stage for softer sales in the second half of the year.

Non-residential construction has been a key economic support, but some large-scale projects

like Deep Panuke will start to fade this year. The fi rst natural gas output from that project is

expected in 2011, which should provide a small boost to growth. Government infrastructure

spending will pick up some of the slack from softer private investment in 2010, before a

longer period of restraint kicks in.

The Province of Nova Scotia is projecting a $222 mln budget defi cit in FY2010/11, taking a

balanced approach to eliminating the defi cit in four years that includes spending restraint

and tax increases. At about 0.6% of GDP, the defi cit is at the low end of the provincial pack,

but it will rise to $370 mln (1% of GDP) next year. Revenue is expected to rise 3.7% to $8.4

bln in FY2010/11, as income tax receipts rise. The biggest revenue-raising measure in this

year’s budget was a 2 ppt increase in the HST, to 15%, taking effect on July 1st. This will

generate $215 mln in revenue this fi scal year. Other measures include a new tax bracket

on incomes above $150,000 until the budget is balanced. Meantime, petroleum royalties

are projected to rise 57% from very depressed levels, adding $174 mln to the Province’s

Manufacturing and trade still sluggish

HST hike and fi scal restraint in the pipeline

Population: 940,740



Area: 55,284 km²

GDP/Capita: $37,950

Provincial Capital:Halifax

Party in Power:New Democrats

Premier:Hon. Darrell Dexter

Finance Minister:Hon. Graham Steele

Legislative Seats:New Democrats 31Liberals 10PC 8Vacant 2Independent 1

Majority Government Since:June 2009

Nova Scotia



coffers, though still a modest 3% of total revenue. Total spending will rise 0.4% to $9.0 bln

in FY2010/11, and the Province is beginning a four-year period of restraint that will include

a 10% reduction in the civil service by 2013. The overall expenditure management program

will target 0.4% annualized spending growth through FY2013/14, a stark change from growth

of more than 6% seen during the past fi ve years.

Borrowing requirements are expected to be $2.5 bln in FY2010/11, with 36% completed

by mid-June.

As with most of Atlantic Canada, economic growth in PEI will be relatively soft in 2010, largely

because of the trade sector. While PEI was the only province to see positive real GDP growth

in 2009, the economy will likely expand a relatively modest 2.6% this year.

Employment hit a record level in April, and was 4.6% above year-ago levels through May.

This has pulled the unemployment rate down to just over 10% so far in 2010. While this will

support retail sales, tourism and exports will continue to be strained by a strong Canadian

dollar—manufacturing sales were down almost 12% y/y in the fi rst quarter on weakness in

both durables and non-durables.

However, a fi ve-year, $500 mln capital investment plan should keep non-residential construc-

tion activity fi rm in the coming years, with public and private investment intentions pointing

to a 6.3% increase in 2010.

The Province of Prince Edward Island is projecting a fourth consecutive budget defi cit in

FY2010/11, at $54.9 mln (1.1% of GDP), compared to the prior period’s $84.2 mln shortfall. The

Province is anticipating a return to balance in four years, though it has not laid out a detailed

plan to get there. Total revenue is projected to grow 2.9% to $1.5 bln in FY2010/11, lifted by

4.6% growth in own source revenues, to $800 mln, while Federal transfers will dip slightly.

Total spending is projected to grow a very modest 0.8% in FY2010/11, to $1.5 bln, as interest

charges will jump more than 8% to $110 mln, or 7.5% of revenue. This year’s budget contained

no signifi cant new tax or spending measures, and the province will likely lean on a combination

of economic recovery and modest spending growth to return to balance in four years.

Borrowing requirements are expected to be $242 mln in FY2010/11, with 63% completed

by mid-June.

Population: 141,270



Area: 5,660 km²

GDP/Capita: $34,435

Provincial Capital:Charlottetown


Premier:Hon. Robert Ghiz

Finance Minister:Hon. Wes Sheridan

Legislative Seats:Liberals 24Conservatives 3


Prince EdwardIsland

Only province with real GDP growth in 2009

Balanced budget in four years



Newfoundland & Labrador saw a sharp 10.2% real GDP contraction in 2009, the worst per-

formance in Canada. However, improvement in the mining sector and a reversal of some

temporary factors will drive 4% growth in 2010 and solid 2.8% growth in 2011.

Offshore oil output is in secular decline, and production fell 12.3% y/y in the fi rst quarter with

a like-sized decline expected for all of 2010. Despite the uncertainty surrounding the Gulf

oil spill, there’s no sign that the Province will back down on its stance to maintain offshore

drilling activity. This includes Chevron’s now somewhat controversial deep water exploration

well in the Orphan Basin, which is actually deeper than the Horizon well in the Gulf.

Mineral output (ie: iron ore and nickel) is expected to bounce this year, partly because last

year’s production was hampered by a strike at the Voisey’s Bay mine. However, the biggest

economic driver in the province in the next two years will be construction activity. Gov-

ernment infrastructure spending will total about $1 bln in FY2010/11, helping boost total

capital spending an expected 23% in 2010. Provincial government infrastructure spending

will amount to more than $5 bln over the next several years, keeping the economic fuel

burning into 2011. At more than 3% of GDP, the Province’s infrastructure program is among

the largest in Canada relative to the size of the economy.

Other underlying economic trends remain solid in the province. Employment reached a

record level in May on strength in both private- and public-sector hiring, while retail sales

and housing activity—both sales and construction—are well above year-ago levels, helped

by the fastest rate of population growth since the early-1990s.

The Province of Newfoundland

and Labrador is forecasting an

improved $194.3 mln deficit

(0.8% of GDP) for FY2010/11, as

rebounding offshore oil reve-

nues offset still-strong spending

growth. The Province expects

deficits averaging $175 mln

in each of the next two fi scal

years, as revenues and program

spending both post strong in-

creases. Revenue is expected 00 01 02 03 04 05 06 07 08 09 10 11 12

0

1

2

3

4

5

6

7

8

Capital Investment ($ blns)

Newfoundland and Labrador: Stimulating

forecast

Population: 510,890



Area: 405,720 km²

GDP/Capita: $58,620

Provincial Capital:St. John’s

Party in Power:Progressive Conservatives

Premier:Hon. Danny Williams

Finance Minister:Hon. Tom Marshall

Legislative Seats:PC 43 Liberals 4New Democrats 1


Newfoundland& Labrador

Capital investment program drives economic growth

Still-strong spending growth keeps budget in the red



to rise 3.0% to $6.6 bln in FY2010/11, refl ecting a $277 mln (14.7%) increase in oil royalties

resulting from higher prices. The Province is assuming that oil will average US$83.5/bbl

this fi scal year, up from last fi scal year’s average of just over $70. Offshore oil royalties will

make up almost 33% of total revenue, and the volatility of oil prices is the biggest risk to

the fi scal outlook. Program spending will grow 3.5% to $6.2 bln in FY2010/11, down from

the aggressive 8% pace seen during the past fi ve fi scal years. The Province is forecasting

1.9% annual program spending growth through FY2012/13, which will mark a 0.9%-per year

contraction on a real per-capita basis (though all of the restraint takes place in the last year

of the forecast horizon).

The Province expects no new borrowing in FY2010/11.



Provincial Fiscal Summary

BudgetBalance($ mlns) % of GDP

Gross Financing Requirements*

($ blns) S&P Moody’s DBRSBritish Columbia (1,715) (0.8) 8.9 AAA Aaa AA (high)Alberta (4,748) (1.6) 4.1 AAA Aaa AAASaskatchewan 20 0.0 1.1 AA+ Aa1 AAManitoba (545) (1.0) 3.4 AA Aa1 A (high)Ontario (19,690) (3.3) 39.7 AA- Aa1 AA (low)Quebec (4,506) (1.4) 15.2 A+ Aa2 A (high)New Brunswick (749) (2.6) 3.0 AA- Aa2 A (high)Nova Scotia (222) (0.6) 2.5 A+ Aa2 A*PEI (55) (1.1) 0.2 A* Aa2 A (low)Nfld & Labrador (194) (0.6) 0.0 A* Aa2 A

Total Provincial (32,404) (2.0) 78.1 *positive outlook **negative outlook

Source: Provinces and BMO Capital Markets ( ) = deficit* includes provincial crown corporations

FY10/11 (as of June 21, 2010)

Provincial Economic SummaryBC Alberta Sask. Man. Ontario Quebec NB NS PEI NL Canada

Real GDP Growth (chain-weighted : y/y % chng)2009 -2.3 -5.1 -6.3 -0.2 -3.1 -1.0 -0.8 -0.5 0.6 -10.2 -2.52010 f 3.9 3.6 4.2 3.0 3.4 2.9 2.5 2.4 2.6 4.0 3.42011 f 3.9 3.9 3.8 3.1 2.9 2.8 2.6 2.7 2.3 3.0 3.1

Employment Growth (y/y % chng)2009 -2.3 -1.2 1.5 0.0 -2.4 -0.9 0.1 0.0 -1.1 -2.4 -1.62010 f 1.9 1.0 1.4 1.3 1.6 1.3 0.6 0.5 2.6 2.7 1.52011 f 2.0 2.2 2.0 1.4 1.5 1.3 1.2 1.1 0.3 1.2 1.6

Unemployment Rate (%)2009 7.6 6.6 4.8 5.2 9.0 8.5 8.8 9.2 12.0 15.5 8.32010 f 7.2 6.9 4.9 5.3 8.9 8.1 8.7 8.6 10.9 14.4 8.12011 f 6.6 6.5 4.8 5.2 8.3 7.7 8.6 8.5 10.6 13.5 7.6

Housing Starts (000s)2009 16.0 20.0 3.8 4.1 50.1 44.0 3.5 3.4 0.9 3.2 148.92010 f 26.0 27.0 4.5 4.2 59.0 47.0 3.7 3.8 0.6 4.2 180.12011 f 24.5 25.0 4.0 4.6 66.0 44.5 3.8 3.8 0.6 3.2 180.0

Consumer Prices (y/y % chng)2009 0.0 -0.1 1.1 0.6 0.4 0.6 0.3 -0.1 -0.1 0.3 0.32010 f 1.9 1.8 1.8 1.7 2.5 1.7 2.1 2.6 2.0 2.2 2.12011 f 2.3 2.1 2.3 1.6 2.1 2.2 1.8 2.1 1.5 1.9 1.9

Provincial Economic Indicators(3-mnth m.a. : y/y % chng)

Retail SalesJan 10 7.2 0.2 3.5 5.8 5.4 6.3 7.2 8.0 5.5 6.1 3.6Feb 10 9.2 4.0 5.2 7.5 5.7 8.1 8.6 8.8 8.0 8.1 5.0Mar 10 9.4 6.8 4.8 8.6 6.0 9.5 8.9 9.5 9.1 9.6 6.0

Manufacturing ShipmentsFeb 10 -0.5 0.2 1.9 -10.6 8.7 0.5 31.5 1.6 -10.3 -12.6 4.4Mar 10 6.7 5.1 4.7 -9.0 13.5 3.8 27.6 1.8 -15.3 -25.5 8.4Apr 10 8.7 9.5 8.6 -7.9 13.0 3.9 29.6 4.5 -11.9 2.1 9.4

ExportsFeb 10 -6.2 2.3 8.0 -17.0 0.0 -8.5 46.0 -19.6 -26.2 -4.0 1.1Mar 10 -0.7 12.7 10.4 -11.2 7.6 -5.9 43.8 -18.3 -22.7 -7.1 4.0Apr 10 3.6 20.2 8.7 -11.2 8.8 -4.7 34.4 -6.6 -20.7 -7.2 4.7

Employment GrowthMar 10 1.4 -1.1 0.6 1.1 0.3 0.9 -0.1 -0.8 5.0 1.8 0.4Apr 10 1.9 -0.7 1.2 1.6 0.8 1.3 0.4 0.0 5.1 2.1 0.9May 10 2.0 -0.3 1.4 2.1 1.5 1.4 0.4 0.5 4.3 3.4 1.3



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History of Canadian Fiscal Balances($ mlns)

99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10e 10/11fBC 148 1,503 (1,184) (2,737) (1,191) 2,696 3,090 4,079 2,837 78 (2,775) (1,715)Alberta 2,791 6,571 1,081 2,133 4,136 5,175 8,551 8,510 4,581 (852) (3,624) (4,748)Sask. * 83 58 1 1 1 383 400 293 641 2,389 425 20Manitoba 11 40 63 4 (577) 562 394 430 558 470 (555) (545)

Ontario 668 1,902 375 117 (5,483) (1,555) 298 2,269 600 (6,409) (21,330) (19,690)Quebec 7 427 22 (728) (358) (664) 37 109 0 0 (4,257) (4,506)NB (30) 43 79 1 (182) 236 235 236 97 (192) (743) (749)NS (797) 147 113 28 38 170 239 182 419 20 (488) (222)

PEI 13 (35) (37) (55) (125) (34) 1 24 (4) (33) (84) (55)NL (269) (350) (468) (644) (914) (489) 77 154 1,421 2,350 (295) (194)

Provinces 2,625 10,306 45 (1,881) (4,654) 6,480 13,322 16,286 11,150 (2,180) (33,726) (32,404)

Federal 14,258 19,891 8,048 6,621 9,145 1,463 13,218 13,752 9,600 (2,200) (47,000) (49,200)

Total 16,883 30,197 8,093 4,740 4,491 7,943 26,540 30,038 20,750 (4,380) (80,726) (81,604)

* includes GSFS

History of Canadian Fiscal Balances(% of GDP)

99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10e 10/11fBC 0.1 1.1 (0.9) (2.0) (0.8) 1.7 1.8 2.2 1.5 0.0 (1.4) (0.8)Alberta 2.4 4.5 0.7 1.4 2.4 2.7 3.9 3.6 1.8 (0.3) (1.3) (1.6)Sask. * 0.3 0.2 0.0 0.0 0.0 0.9 0.9 0.6 1.3 3.8 0.7 0.0Manitoba 0.0 0.1 0.2 0.0 (1.5) 1.4 0.9 1.0 1.1 0.9 (1.1) (1.0)

Ontario 0.2 0.4 0.1 0.0 (1.1) (0.3) 0.1 0.4 0.1 (1.1) (3.7) (3.2)Quebec 0.0 0.2 0.0 (0.3) (0.1) (0.3) 0.0 0.0 0.0 0.0 (1.4) (1.4)NB (0.2) 0.2 0.4 0.0 (0.8) 1.0 1.0 0.9 0.4 (0.7) (2.7) (2.6)NS (3.5) 0.6 0.4 0.1 0.1 0.6 0.8 0.6 1.3 0.1 (1.4) (0.6)

PEI 0.4 (1.0) (1.1) (1.5) (3.3) (0.9) 0.0 0.6 (0.1) (0.7) (1.8) (1.1)NL (2.2) (2.5) (3.3) (3.9) (5.0) (2.5) 0.3 0.6 4.9 7.5 (1.0) (0.6)

Provinces 0.3 1.0 0.0 (0.2) (0.4) 0.5 1.0 1.1 0.7 (0.1) (2.2) (2.0)

Federal 1.5 1.8 0.7 0.6 0.8 0.1 1.0 0.9 0.6 (0.1) (3.1) (3.1)

Total 1.7 2.8 0.7 0.4 0.4 0.6 1.9 2.1 1.4 (0.3) (5.3) (5.1)

* includes GSFS

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