REEVELY A $1.5-billion pre-election present for Liberals

The Ontario Liberals have an extra $1.5 billion to spend between now and the next election and can still keep their promise to balance the provincial budget by 2018 thanks to a helpful ruling on how to handle surpluses in a couple of big provincial pension funds.

What does $1.5 billion buy? It’s more than the money the province gave up by taking sales tax off electricity bills starting this month. For $1.5 billion, the Liberals could cut bills by that much again and probably buy labour peace with Ontario’s restive doctors and have some left over. They could stop pressuring boards of education to close halfempty schools — more than twice over. They could replace half a dozen small hospitals. They could even cut taxes.

The point is, we’re talking serious money — the stakes in what’s otherwise the most arcane public-accounting battle ever to spill out of a comptrollers’ seminar and into the streets.

The Liberals like to promise big before elections. Premier Kathleen Wynne is especially keen on governing from “the activist centre,” which in 2014 meant picking her moments with some care, but roaring in with cash for infrastructure, early childhood educators and personal-support workers, industrial subsidies and northern development.

But she and Finance Minister Charles Sousa have also sworn up and down that Ontario will finish 2018 with a balanced provincial budget.

So they got a shock last fall when Bonnie Lysyk, the province’s auditor general, told them she thought it was wrong to count money held by the pension plans for the Ontario Public Service Employees Union and Ontario’s teachers’ unions as provincial assets. Specifically, about $11 billion in surpluses in those funds, the government’s share of which had been treated as government assets for as long as they’d been there. That stripped billions of dollars off the government’s balance sheet.

More importantly, it meant $1.5 billion in excess income that the government had treated as a form of revenue could no longer be handled that way. That produced a nasty spat between the auditor general and Liz Sandals, the minister who as president of the Treasury Board is in charge of how the province keeps its books.

Sandals presented the legislature with an unaudited financial report because Lysyk wouldn’t sign off on it, an unprecedentedly brazen way of handling an ordinarily dull part of running the government.

The money’s there either way — the only question is which ledger it should be inscribed in. But if it’s in this ledger, it makes the Liberals’ budget-balancing promise $1.5 billion easier to keep; if it’s in that ledger, the promise is $1.5 billion harder to accomplish.

(That says something about how arbitrary the goal of a balanced budget by a certain date is, you’ll note. But a balanced budget by 2018 is what Wynne and Sousa have promised.)

The government appointed an expert panel to make a ruling, a four-person group led by Tricia O’Malley, former chair of the Canadian Accounting Standards Board — a job she had twice, with a long stint helping set international accounting standards in between. The others are a benefits lawyer, an actuary who consults for Ernst & Young on pensions, and New Brunswick’s chief accountant.

What they say doesn’t have the force of a judge’s order, but they have cred. And they say the government can count the money as a provincial asset.

Without getting too deeply into it, the provincial government co-sponsors the pension plans, so it’s effectively a half-owner.

That said, the government can’t directly draw on the surpluses the plans have just now; the money has to stay in the plans. If the government can’t take the money, Lysyk’s reasoning goes, the money isn’t really a government asset.

Nevertheless, the panel’s report volleys back, those surpluses work in the government’s favour.

“It is reasonable to expect that the plan sponsors will be able to benefit from lower contribution levels in the future, if the plans have surplus assets,” the panel’s report says.

Then follow several dozen pages of detailed reasoning, drawing on generally accepted accounting principles and guides.

Ultimately: “The surpluses in the plans can be used by reducing the contributions the government is required to make to the plans, freeing cash that would otherwise be required to make contributions to be used for other purposes.”

Purposes like, well, whatever the Liberals think is a good idea.

Sandals and Sousa refrained from crowing.

“We are committed to implementing the advice of this independent panel and will use it in preparing the province’s financial statements,” Sandals said in a written statement.

And in campaigning for 2018.