On­tario’s au­di­tor gen­eral: De­fi­ant and wrong

The Hamilton Spectator - - OPINION - Howard El­liott

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.

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