Last week, Ontario Finance Minister Vic Fedeli announced that the previous Liberal government had saddled his province with a whopping $15 billion dollar deficit. He claimed that his predecessors had deliberately tried to "cover up" a "crippling hidden deficit." Martin Regg Cohn writes that we've seen this movie before. Each incoming government accuses its immediate predecessor of cooking the books. But Fedeli's claims are simply not true:
To be clear, no one “hid” any numbers from anyone, least of all financial analysts. To be sure, Auditor General Bonnie Lysyk disagreed strongly with the last government’s interpretations, and issued a “qualified” opinion of their recent budgets. But everyone was working from the same set of numbers and cash flows at the time. That’s why Fedeli’s fulminations about outright deception — not just different interpretations — don’t add up. In fact, his Tories quietly adopted the Liberal numbers as their fiscal framework for their own wild promises before and during the last campaign.
In any case, a partisan political cover-up isn’t as simple as it sounds. As Fedeli now knows, finance ministers and political staff don’t have sole signing authority for budget numbers, because they flow through the public servants who put their names to financial statements.
What is really at the heart of the matter is how the government accounts for public service pensions. The Auditor General, Bonnie Lysyk, reported that "a massive surplus, in excess of roughly $11 billion in jointly-controlled public service pensions, was improperly counted as an asset (which auditors had approved ever since the Tories were last in power)."
Whether one puts $11 billion dollars in the credit or debit column makes a huge difference. And the panel Ford hired to review the books -- headed by Gordon Campbell -- has recommended that "provisionally" Lysyk's contention that those dollars should be counted as a debit is the proper interpretation of where things stand.
It all comes down how you count. And, the way Fedeli counts will enable him to slash and burn.
Image: The Toronto Star