Canada Kicks Ass
AG says deficit will be double what Wynne claimed.


PluggyRug @ Thu Apr 26, 2018 12:07 pm

This year’s provincial deficit will be almost double what the Kathleen Wynne government says it will be, Ontario’s fiscal watchdog has concluded.

The government has dramatically understated the amount of debt it plans to take on, making the government finances look better than they really are, Ontario auditor general Bonnie Lysyk finds in her pre-election review of the province’s books.

“We concluded that the Pre-election Report is not a reasonable presentation of Ontario’s finances … resulting in understated deficits,” Lysyk’s report says.

In the spring budget, the Ontario Liberal government projected a deficit of $6.7 billion in 2018-19, but the true deficit is 75% higher — $11.7 billion, the Lysyk review says.

The government told Ontarians the deficit for 2019-20 would be $6.6 billion, but again Lysyk finds that number out of whack.

The auditor projects that deficit to be 85% higher at $12.2 billion, and 92% higher in 2020-21 — $12.5 billion rather than $6.5 billion as announced in the budget.

“When expenses are understated, the perception is created that government has more money available than it actually does,” the report says. “Government decision-makers might therefore budget more money to be spent on initiatives and programs when that money is actually needed to pay for expenses the government has failed to record properly.”

The auditor said the government has failed to reflect the true financial impact of borrowing to pay for its Fair Hydro Plan, which shaves an average of 25% off electricity customer bills.

The government has also recorded public sector pension plan assets in its books as if the money is available to spend as it wishes, which it is not, the Lysyk review stated. (bold mine)....

The effect of those two accounting measures is to create a false impression about the province’s level of indebtedness, Lysyk said.

The Wynne government has been in a protracted dispute with the auditor general over this issue.

“We made a decision that we need to reduce electricity bills by 25%,” Wynne said Wednesday. “We worked closely with professional accountants who helped us to design the plan. We have kept that debt in the electricity system and that is the responsible step that we have taken.” ... or-general


martin14 @ Thu Apr 26, 2018 12:10 pm

Only double ?

There must be a mistake somewhere !



PluggyRug @ Thu Apr 26, 2018 12:24 pm

Liberals used calculus for the budget. They know how to differentiate but not how to integrate. Their pie charts are steak & kidney spiced with common graft.
All the fiscal numbers are contained in a bottomless bucket with no sides.


BeaverFever @ Thu Apr 26, 2018 12:36 pm

Auditor general’s report could spell trouble for all three of Ontario’s political parties

Bonnie Lysyk’s latest report again takes issue with major public sector pension plans being counted as government assets. But if the opposition parties support the analysis, they too will have to explain how they will handle massive deficits, Martin Regg Cohn writes.

History, like politics, has a way of repeating itself. Especially at election time.

In opposition 15 years ago, Ontario’s Liberal Party smelled a rat. They accused the Tory government of the day of cooking the books.

Playing the reformist card in the 2003 campaign, Dalton McGuinty’s Liberals proposed that all future pre-election budgets be reviewed by the auditor. Upon winning power, McGuinty ordered a special audit that uncovered a deficit of more than $5 billion “hidden” by the previous Progressive Conservative government.

Fast forward to 2018, with a new cast of characters and the roles reversed. Now, the PC opposition is accusing the governing Liberals of playing with numbers — and this time, the auditor general of the day, Bonnie Lysyk, is on their side.

....There is nothing new in the auditor’s latest report, which is merely a summation and compendium of her previous complaints about Liberal bookkeeping. But in auditing as in politicking, timing is everything.

Which makes the Liberals electorally unlucky.

Few paid the auditor much heed two years ago when Lysyk suddenly declared she was reversing the accounting rules established by previous auditors: Accumulated surpluses in major public sector pension plans could no longer be counted on the government’s books as budgetary assets, as they had been since Tory times.

The effect of her ruling was to produce a gaping multi-billion-dollar hole in the government’s accounting framework at the very moment they were striving to meet a 2017-18 target for deficit elimination. The government convened an outside panel of accounting and pension experts, who declared that Lysyk couldn’t have it both ways: Just as pension shortfalls count as a liability on the balance sheet, a pension surplus should count for something — not nothing, as the auditor insisted.

Lysyk still wouldn’t budge. But Bay Street didn’t bite, ignoring the auditor’s alarm bells. Credit rating agencies also looked at the books but didn’t buy into her alarmist assessments.

But if the pension fight was a professional disagreement that eroded Lysyk’s credibility, the next battle — over an ambitious borrowing scheme to reduce hydro rates — was more complicated. Under opposition pressure, Wynne’s Liberals dreamed up a refinancing plan that would put off today’s bills for tomorrow, supposedly smoothing out the cost curve.

Politically, the plan had some success because it dialled down the pressure on a red hot issue. But fiscally, the plan looked like aggressive accounting, by offloading the debt onto a new financing arm of Ontario Power Generation. Their proposed “rate-regulated” accounting — where utilities bank on regulated rates that guarantee reliable cash flows — is widely used in the U.S., but Lysyk cried foul because it is more novel in Canada (though hardly unprecedented).

The auditor general’s proof point that she’s right and everyone else is wrong. Her opponents are in the pay of the Liberal government — from the public servants contesting her arguments, to the private auditing firms and outside experts who disagree with her: “They paid their advisers well,” she said dismissively at a news conference Wednesday.

Which suggests that any auditor or accountant who charges a fee has been bought — lock, stock and budget. Except for Lysyk, who boasts of her independence as an officer of the legislature.

The opposition PCs and New Democrats have embraced the auditor’s critique, but not her numbers. They should be careful what they wish for.

The NDP’s campaign platform uses the government’s fiscal framework as its starting point, and so did the PC “People’s Guarantee” released last November (suspended after the party’s leadership race). If the opposition parties abide by the auditor’s latest analysis, that means they too will have to explain how they will handle deficits that are billions of dollars higher than they were banking on, for years to come.

Does that mean more program cuts? Reduced campaign promises? Pretending that pension surpluses don’t exist, until they do?

An arcane accounting dispute is now a pressing political issue on the eve of the campaign, and may well be in the aftermath: The new PC leader, Doug Ford, is taking a page from the McGuinty Liberals of 2003 by promising to bring in an outside auditor to settle the budget question that Lysyk has thrown into such confusion.

The Tories know well their political history. As they should, given the budgetary events of 15 years ago, when they were last in power. ... rties.html


martin14 @ Thu Apr 26, 2018 12:53 pm

Double the deficit hiding, double the corruption

Truly the Lieberal way. :lol: