Ontario’s auditor general: Defiant and wrong
What is Ontario auditor general Bonnie Lysyk thinking? Auditors general in Ontario, Ottawa and across Canada are revered and trusted as financial watchdogs who blow the whistle on questionable government spending and bookkeeping. Citizens — and to be honest, editorial writers — owe them a huge debt of thanks for providing insight and objectivity in place of government spin and opacity.
Lysyk is putting that reputation and integrity on the line in Ontario. And she’s not on solid ground. Here’s the story in a nutshell.
Two jointly-sponsored public pension funds are running surpluses, totalling nearly $11 billion. Historically, the province is expected to list that surplus value as an asset. That doesn’t mean it can touch the money — that would be illegal. It means when the province balances its books, that figure shows up in the black as opposed to the red. This is more than just bookkeeping. Those assets could help the provincial government balance its books, which it has promised to do. If it can do that on schedule, credit agencies will maintain or possibly increase the province’s credit rating, which means borrowing costs the same or less. If those assets are excluded it makes balancing the books more difficult and risks a credit rating downgrade.
But that’s what Lysyk wants and is fighting for. Even though previous governments, including Conservative, have been allowed to claim those assets, she over- turned a previous auditor’s ruling and now says they cannot be listed as assets. She also says that if the pensions were in deficit, the negative value would be listed as a liability. How can a deficit listing be required if a surplus listing is denied?
Obviously, the government doesn’t agree. You would expect that, and ordinarily we would argue on the side of the auditor. But …
An independent panel of actuarial experts whose expertise and objectivity is unimpeachable examined this situation. One is a member of two national councils that oversee accounting practices to ensure they are sound. The council ruled, unequivocally, that Lysyk is wrong. Pension surpluses count as assets just as deficits would count as liabilities.
Lysyk’s response? The experts are wrong and I’m right. She isn’t backing down in spite of irrefutable evidence she is wrong. Why? All she will say is “We did our homework.”
That’s not good enough. Lysyk’s intransigence could jeopardize the government’s ability to balance its books on schedule, which could mean less or no money for critical areas like hydro relief and health care investment.
If the evidence supported Bonnie Lysyk’s position, we’d be the first to back her. But it doesn’t. She needs to respect that and back down.