Carol Bellringer, sa国际传媒鈥檚 auditor general, says the 2018-19 budget surplus claimed by province鈥檚 finance minister is inaccurate. In a recent statement, Carole James put the surplus at $1.5 billion. Bellringer says the correct number is $7.2 billion.
This is utter rubbish.
A word of explanation. It takes several months before government staffers can finalize totals for the preceding year. Since the fiscal year ends March 31, James is only now able to give the 2018 bottom line.
So what about this allegation that the real surplus was $7.2 billion? First off, this would be the coup of the century if it were true.
I can recall no provincial government in recent times recording a surplus that high. Blue ink on this scale, at the provincial level, is rarer than hens鈥� teeth.
So what is Bellringer saying? That a fiscal miracle has occurred? No. She鈥檚 saying the books have been misstated.
In one respect, she鈥檚 right. The books have been misstated, but she鈥檚 the one doing it.
Bellringer鈥檚 complaint is that the province spreads revenues for multi-year projects across the span they apply to, instead of booking them in the year they鈥檙e received. She says this fails to comply with 鈥渋ndependent accounting standards.鈥�
In fact, what she means is 鈥渃orporate accounting standards,鈥� and they are not the same thing.
Here鈥檚 how it works. The province routinely receives revenues from the federal government for projects that will take several years to complete.
Suppose the sum is $100 million, and the project in question will last five years. Then the finance ministry books $20 million annually for each of those years.
However, Bellringer says the ministry should log the entire $100 million in year one.
Now this is visible nonsense. First off, the money was intended to be spent over five years. If the ministry booked all of the money at the outset, it would paint a misleading picture.
Then again, if all the funds were in fact logged in year one, there would be a dramatic drop in government revenues the following year. This kind of roller-coastering would imply that revenues are massively volatile, when they are no such thing.
So why is Bellringer adopting such a counterintuitive stance? Because this is how private sector auditors do it. And there鈥檚 a reason for that.
Say a company鈥檚 income rises sharply in a given year. If reported in that year, the influx will almost certainly cause the share price to jump. And stockholders are entitled to that reward.
If the new income were spread out over several years, stock prices would lag, depriving investors of the return they鈥檝e earned.
However, governments are not corporations. They have different interests to serve.
One of those interests is fiscal transparency. By allocating revenues over the period they鈥檙e intended for, the government鈥檚 books give an honest picture of what鈥檚 actually in prospect.
Another interest is stability. If government revenues surge and plummet from year to year, a perception of chaos is created, where none in fact exists.
But most important, the government鈥檚 accounts should be intelligible to members of the public. As things stand, they are not, and Bellringer isn鈥檛 helping.
For several decades, each holder of that office has tried to impose his or her own ideas about how the books should be set up. This results in round after round of changes on which the final bell never rings.
It works like this. The 2018 books aren鈥檛 consistent with the 2017 accounts because the auditor has forced a rule change. So attempts are then made to restate the 2017 bottom line to make it compatible with the 2018 tally.
But that makes the 2017 books incompatible with the 2016 version, which in turn can鈥檛 be reconciled with the 2015 result, and so on into the mists of time. Our public accounts have been restated more often than Donald Trump changes cabinet members.
It鈥檚 heartening to see finance staffers standing up to the auditor on this occasion. Now if only they could get rid of all the other aberrations that have rendered our books unintelligible, we would have accounts that meant something.
