 We just had the opportunity to return visiting some of the financial markets in New York, Toronto, Montreal and Chicago. And we had a very good reception and it was a very, very valuable tour. And so I'm sharing with you the same presentation that we provided on that tour. But the one thing that I know for sure as a proud British Columbian is that I think the world changed immeasurably for governments in 2008 with the collapse of Lehman Brothers, the subprime mortgage meltdown and all the other concurrent problems around the world. I think we're in a very different world and governments have better adjust to that reality very, very quick. And the governments that do that I think are going to prosper into the future. The governments that retain the confidence of the investment community of their own taxpayers and of the financial markets are going to be in a very positive cycle, kind of a virtuous cycle that will play on itself, feed on itself and create a very, very bright future. For governments that don't do that and try to ignore the fact that they've built up too much debt and that their deficits are too large and they're not taking that seriously and they're not generating confidence by demonstrating that they can manage that are going to be in a whole world of trouble. And we've seen evidence of that around the world. You people know better than anyone else but I can tell you as a British Columbian and a Canadian I have never been so proud to travel around the world and to be able to talk about our province and our country knowing how strong we are in relation to so many other jurisdictions. And I think that that strength is going to be something that will continue to grow and serve us well. So you can see here of course one of the reasons we have this slide starting off the show is because we like to talk about a strategy we've had in place for British Columbia now for about seven years called the Asia Pacific Gateway Strategy and it's a federal provincial private sector initiative to say let's work together identify the joint investments we can make to open up British Columbia to the fastest growing part of the world which is the Asia Pacific. And the opening of the or the containerization of the Port of Prince Rupert has been an enormous success. This is one of the rare times in government where we took a chance we often don't make because typically my experience has been that if the private sector is unwilling to make an investment it's probably not a good idea for government to move in and make that investment but in this case we both the province and the federal government really believed that there was a big opportunity in containerizing the Port of Prince Rupert a deep water port it was two and a half days sailing time close at Asia and we went ahead and did that in partnership with the private sector port and that has been an enormous success that has opened up and expanded the supply chain options for a lot of the buyers in the U.S. Midwest that are bringing in goods from Asia and vice versa it's opened up export opportunities for British Columbia I'll talk about that a bit more in the future but we start out on this slide so that the people in the United States understand that our geographic location is the only Pacific province in the country gives us a real advantage and it is really being strengthened by the Prime Minister today who is trying to open up new free trade agreements and make sure that Canada is part of new free trade agreements with many of the fastest growing Asian countries in the world so that's something we're very encouraged by but the reason why I would argue British Columbia enjoys a AAA credit rating is because of this chart this chart shows how we have performed over the last 11 years both in our budget targets and where we ended up so the dark blue band that you see there is the budget target that was set out at the budget beginning of the year and the light blue is where we ended up at the end of the year at what's called public accounts in July when we report out all the finalized numbers and you can see in 2001 when we first got elected we inherited a deficit a structural deficit in fact by the the prior NDP government that had been in power for 10 years and the following year you see it actually got deeper the reason it got deeper is you may recall in our first day in office we cut personal income taxes 25 across the board because we were trying to send a signal to you folks and to the public in British Columbia that we were going to be dramatically moving in a different direction we wanted to leave more money in the pockets of British Columbians and we felt that by doing so we would encourage investment and encourage confidence and every single year there you can see we outperformed in the good years where we ran those significant surpluses we used those surpluses to pay down debt and to continue to lower taxes both business and personal income taxes and then you can see in 0809 where the the beginnings of the market challenges started to hit North America and around the world and in 2009 was the one year we got it wrong and 2009 the deficit target was 495 million but the speed and the scale and the scope of the downturn was such that it it went well past that and we were off by about 1.2 billion now no government especially ours especially under our former Premier who was very felt very very strongly about fiscal discipline as does our current Premier as do as do we still but you know going and having that kind of situation was not a great thing but the rating agencies essentially said to us look you get a pass for that year because virtually everyone missed their targets in 2009 so the the key to us is how you're going to be performing and getting back to balance budget well you can see the following year we outperformed in the other direction by 1.4 billion we almost balanced the budget and we've got a very credible path to get back to balance but budget in 2013 the same as true with our debt to GDP ratio we have always typically outperformed our budget targets so when you look into our budget you see what are projected or the actual debt to GDPs are we typically will come in below that and that will continue in the future and I'll talk about debt to GDP a little bit more in a future slide we believe the triple A credit rating is important there is going to be a further wave of credit downgrades around the world over the next 12 months I believe and that is going to mean that Canada and British Columbia as a sub sovereign and and is going to join the ranks of a rapidly diminishing club but we think it's very important club because we think that having that triple A credit rating and demonstrating that you can operate in a low tax low debt environment that encourages investment growth and opportunity is possible in the world that we're in today and so that's something that British Columbia intends to hang on to and I'll talk about that in a moment too so just to give you an idea on our budget so we have always when we're building our budget tried to be very conservative in our growth projections and I think this is very important because what we don't want to see in a budget is optimistic outlooks that try to make the budget look better than it may actually be given the uncertain world economy so in 2012 you can see the light green is what we call the independent forecast council so it's made up of 14 economists from many of your institutions but also some other independent forecast economists that come together every year meet with the finance minister and sit down and provide us with a very detailed outlook of what they see for real GDP growth in British Columbia we then take the consensus average out of those 14 and we discount further from that and that's the number that goes into our budget and the reason we do that is because if there's going to be any surprises we want those surprises to be in the upside not the downside and it's important for you to know that because you can see that in 2012 2013 2014 that the independent forecast council your experts your economists believe that we're going to do better than what British Columbia believes now if they are correct then there's the potential for up to half a billion dollars in additional revenues to the province if the light green bars happen to be the ones that are right but we we do believe it's important for us to be conservative and and I just want to talk about 2011 for just a moment because at the beginning of the year that light green bar was at 2.8 percent so the at the beginning of the year the forecast council average was more optimistic we set ours at 2 percent because we were worried about at that time the US debt negotiations were still underway there was rumblings in Europe and we just felt that it was not the time to be even remotely optimistic to be honest with you so we we set ours at 2 percent GDP growth and I got criticized last July the NDP and some of the even some of the media were saying oh you guys are low balling it and I gave the reason why we came in it too we were we were being cautious admittedly but we felt it was important to be cautious given the climate we're in well of course you can see what happened the private sector forecaster numbers came down to 2.2 and frankly 2 percent was the right right number for us to pick so that that's important for all your investors to know because British Columbia budgets conservatively and we'll continue to do so I'm going to blaze through some of these slides just to know the retail sales have bounced back factor above the the peak that we saw in 2007 and we expect them to remain steady going forward they're not going to like the world on fire but we think we'll have a slow but steady retail sales activity our employment our our employed in British Columbia is at the highest level it's ever been at and right now our unemployment rate is about 7 percent it's below the national average which is about 7.2 and we have some cautious optimism in terms of employment growth going forward we think that there's a lot of very good things happening in British Columbia we've seen some very significant investments Rio Tinto Alcan of course over a three billion dollar investment in the Kitimat smelter the Kamano project in the northwest of the province of British Columbia those kind of investments the shipbuilding contract the private sector investments we're seeing in the mining sector and of course even digital media technology etc so we're seeing some broad-based activity that gives us encouragement on the employment side housing starts are going to be steady we don't think that they're going to be what they were back in 07 or 08 but we think that the housing starts are going to be pretty steady we're liking some of the recent numbers that we're seeing because we think they're healthy and but not overly healthy if you will so I see good stability in the housing side we can talk about that during Q&A if you wish but at the beginning when I talked about the Asia-Pacific look what it's done to British Columbia's trade profile I mean we didn't look much different than Alberta and Ontario back when I first got elected in 2001 but you can see now that British Columbia exports less than 43% of our exports to the United States about 40% Asia and the rest to the rest of the world we are a very diversified economy and I think that that's important because that diversification acts as a bit of a shock absorber and we are also seeing real growth to the fastest growing part of the world which is Asia and that I think is a good thing for British Columbia and for Canada so that we believe will continue going forward you can see the US consensus outlook for real GDP growth has been varying this is the monthly forecast consensus outlook in the United States it started to drop pretty dramatically starting in June I can tell you as we started putting together the budget I was very very nervous about the United States and in fact I said in November that I was not going to be committing to a balanced budget in 2013 until I saw the year-end numbers coming out of the United States in December and and I wasn't going to make a decision until late January and I'm glad I did that because we started to see a flattening in October and then we start in November December and then we started to see the numbers edge up a little bit and that was the first time I had a sense that the floor wasn't going to keep falling underneath us and and so going forward the latest consensus average now is 2.3% you should know that for the purposes of our budget our budget model we have used 1.4% real GDP growth in the United States in 2012 so again British Columbia is very very cautious and obviously it looks like it's not going to end up at 1.4 thankfully the eurozone we all know what's happening there so I won't say much except that the consensus average is for negative growth and we watched the eurozone fairly closely not because we have much of a trade relationship we're not very trade exposed there but we are seeing pretty significant growth and export activities China and the eurozone is China's number one export market so that's why we we keep an eye on what's happening in the eurozone and hopefully we'll see some better things there so what's our fiscal outlook while we're balancing the budget in 13-14 I feel very confident that I can say to all of you we will balance the budget and I in fact I am hopeful that we will do what we always do and outperform we've got very strict expenditure control and discipline on the spending side I'll talk about that in a future slide we're protecting essential services and this is important because in many states in the United States they're having unfortunately to cut back on investments that are important like in healthcare or education or post-secondary in British Columbia we have not only been able to provide record levels of investment both operating and capital in our health sector or post-secondary sector or K-12 sector but even going forward although the amount of increases are going to be moderated dramatically they're coming off some pretty significant growth levels and that is important that we are able to as an economy make those important investments and we're going to continue to have a robust capital program and we will have be able to do that in a very sustainable manner so how are we managing expenditures this graph actually gives you a a pretty good idea of what's happening up until 0809 we were averaging annual spending growth of almost six percent once we got hit with the downturn we realized that we're in a whole different world and and at least this government was going to get used to the fact that we're probably in a low growth environment in North America for at least a decade and given that we better get our spending profile to more properly reflect what the growth rates are going to be and so we cut our spending growth in half to about three percent over the last three years we didn't just say we were going to do it we actually did it and that's important to understand because a lot of governments will make the promise but then I don't actually get there and going forward you can see that we're going to keep our spending overall growth to about two percent a year and virtually all of those dollars are going into health care k-12 education and post-secondary every other ministry is is pretty much frozen or is going to be reduced in spending so you can see how we do that in the big three ministries health care i'm a former health minister so I actually had the the luck of getting becoming a health minister right when the economy started to plummet across the around the world but you can see we took our health care spending growth from seven percent to four point eight percent over the next three years that'll be three point two percent but here's the thing what we didn't do is do what Canadians always do our Canadian governments always do in health care they just basically restrict the spending and create huge waiting lists and starve the system and create problems what we did is we said no we're going to fundamentally change how we deliver health care in British Columbia and it's not easy to do by the way but it's important to do because again in health care expenditures we have to recognize with an aging demographic and the fact that there is not going to be unlimited dollars that you're going to be able to put into health care we're going to have to find better ways as Canadians to deliver our health care system in a sustainable way so we can talk about that in the Q&A if you want but we just as a couple of examples we did we set up we collapsed all the different supply chains and the different health authorities into a single purchasing organization that alone is generated savings that will hit about a quarter of a billion dollars over the next couple of years we've delivered services differently we're having patients what we call patient focus funding where dollars follow the patients to try and drive productivity and efficiency in health care delivery we've had remarkable results in that in British Columbia and there's a whole bunch of other things that we're doing to try and bend down the cost curve in health care but do it at the same time is driving better outcomes in the system and it is possible debt to GDP you can see we got as low as 13.3 percent before we got hit with the downturn we will peak at 18.3 percent and then our debt to GDP will start trending down again but remember we typically outperform those numbers so for example you can see in 1112 we've got 16.4 percent in the budget it was 17.5 percent so we we feel pretty confident that that we'll continue to be very disciplined on the debt to GDP of course this is in a world of course where you've got Canada at about 36 Quebec is about 50 Ontario's on its way to 50 and who knows where and of course you've you know what's going on the United States is about I think about 73 percent if you don't include you know Fannie Mae Freddie Mac France is over 80 and you know Greece forget it it's way way out there I won't depress anybody we're competitive with the corporate tax rate side just to quickly point out BC share of the general corporate tax rate so this is for the larger businesses doing over half a million in revenues we've reduced from 16.5 to 10 percent so combined with the federal 15 percent rate we're 25 so that's a good story we believe I think we're very tax competitive on the small business side we've raised the threshold for what we define as a small business from 200 to 500 thousand dollars a year and we've dropped the rate from four and a half to two and a half percent for small business and we we think we're we've got a good story to tell that we're you can see what's happened on personal income tax side again 37 reduction across the board since 2001 British Columbians pay the lowest personal income tax rates in the country if you are enough to 119 thousand a year over 119 thousand we're second lowest behind Alberta so we think we've got a good story to tell there too and for all the people that like the left wingers that tell you that by cutting taxes you starve yourself of revenue we're collecting more personal income tax revenue today than we were in 2001 and and back in the 90s when the NDP had us at 54.3 top marginal tax rate the highest in North America so it is a myth to believe that you can't reduce rates and grow the economy and generate additional revenues we all know that but I just like to say it anyway um our competitiveness we got a jobs plan so we're going to focus on creating a high paying jobs expanded small business venture capital when we say we're promoting our competitive advantage what we mean by that is we put aside dollars in the budget 15 million dollars to go into key markets to get in front of key decision makers find out what they read what they look at and get the bc story in front of them basically some of the key elements that I'm explaining to you today we want to get into some key capital markets because we think that there's a lot of scared money in the world today and we want to make sure we bring it home to British Columbia Canada because there's a lot of investment looking for a safe harbor and we're going to make sure they know about British Columbia when they're thinking about what to do we eliminated the provincial jet fuel tax on international flights because we want to encourage more tourism and we also had an agreement with yvr that they had signed agreements from a number of airlines making a commitment to add additional flights if bc took that step so that's something we're we think is a a good business case and on our port tax municipal port tax rates we've capped in British Columbia in perpetuity and that's because we wanted to make sure that we were encouraging additional investments in port infrastructure it has been a huge success since we put that in place in 2007 and there's been well over a billion and a half dollars of new private sector investments in the ports which is again helping to open up the gateway opportunity and it's something we want to see continue and so we're we've made that permanent and we make up the difference to the municipality so they're held whole finally or not finally but we've got a robust capital program it's not as big as it was during the downturn but it's still very significant at almost record levels and over the next three years there's 19.2 billion dollars of capital investment in British Columbia 10.7 billion of that is what we call taxpayer supported debt the other eight and a half billion dollars is what's called self-supported so that would be like the the Portman Bridge project which is supported by toll revenues or the BC hydro which is probably 85 percent of the self-supported debt so a very significant capital program that will be investing in strategic investments in transportation and healthcare facilities new hospitals in new investments in post-secondary and new schools literally dozens of new schools throughout the province in the K to 12 sector we're still a leader in the country in private public partnerships we've done 35 plus partnership projects representing over 12 billion dollars of capital five billion of that is private sector investment and what's important I used to really emphasize this on our tour that we did particularly in the US there's a lot of people that believe that we do private public partnerships to keep debt off book you should know that it's all on book in British Columbia and I say all of it we have a very conservative auditor general who insists that the entire amount including the private sector equity is all shown on book so we do it because we have found through every single p3 project we've engaged in that all of them have been delivered on or ahead of schedule or on or under budget and this is something that is very very good for the province and we will continue we've got new projects coming through the pipeline on a regular basis there will be new hospitals being announced there will be new major transportation projects and something that I think will be certainly welcomed in the investment world our budget also has several levels of prudence between our contingencies and our forecast allowances we've got 1.6 billion dollars of cushion to ensure that we meet our budget targets so again that's something that we want to make sure we do and of course our conservative economic assumptions provide the potential for up to half a billion dollars in additional revenue so between all three of those well over two billion dollars of cushion to ensure that we meet or beat our targets so we're looking ahead we're diversified we're competitive tax wise we got a sound fiscal management record we got huge activity happening in the mining sector a lot of natural resources in British Columbia the gateway and making sure we have a sustainable health system we added this slide because last time I was in New York we had a lot of questions about pension funds and in the United States this is a very ugly story as you know they've got lots of unfunded pension liabilities that are literally bankrupting cities municipalities states are at risk etc so we like to talk about our pension story we have fully funded public sector pensions in British Columbia they're operated and designed and on what we call a joint trusty ship basis where there's an employer representative employee representative that have judiciary obligations to ensure that every three years when there is an actuarial undertaking that's that's done if there's any shortfalls identified they have to either add additional contributions by employer employees or scale back the level of benefits that are being offered and I can tell you that is a very positive story when we were telling that in Illinois for example they have an 83 billion dollar unfunded pension liability and a pretty optimistic discount rate of eight and a half percent returns that they're expecting and not too many people believe that that's likely so you can just imagine some of these jurisdictions and I can't talk about the other provinces I think some of the other provinces I believe have unfunded liabilities too that they're going to have to manage but I think this is a very very positive story for British Columbia