Scathing pre-election report by Lysyk says Ontario deficit is doubled
Ontario’s fiscal watchdog is again questioning the government’s accounting, warning the province’s deficit projections are far greater than outlined in last month’s budget.
Auditor general Bonnie Lysyk, who has an ongoing accounting dispute with Premier Kathleen Wynne’s Liberals, said Wednesday that this year’s shortfall is $11.7 billion, not $6.7 billion, as Finance Minister Charles Sousa forecast March 28.
“When expenses are understated, the perception is created that government has more money available than it actually does,” Lysyk wrote in a scathing 27-page pre-election report to the Legislature.
“Government decision-makers might, therefore, allocate money to initiatives and programs that is actually needed to pay for expenses the government has failed to record properly,” she continued.
Lysyk calculated that the deficit forecast for next year is $12.2 billion, not the $6.6 billion Sousa predicted, and for 202021 it’s $12.5 billion, not $6.5 billion.
“More money will need to be borrowed to pay for the unrecorded expenses even when the government reports an annual surplus or a balanced budget.”
Her report is a political gift to Progressive Conservative Leader Doug Ford and NDP Leader Andrea Horwath as Ontarians head to the polls in six weeks.
The accounting disagreement stems from whether around $11 billion in the government co-sponsored Ontario Public Service Employees’ Union Pension Plan and the Ontario Teachers’ Pension Plan can be counted toward the bottom line.
While Lysyk and her predecessors had booked the pension holdings as an asset starting in 2002, she changed her mind two years ago.
“I had my staff review that asset much more than in past years,” she told the Star at the time. She concluded that they should not be considered assets, because
the government doesn’t have ready access to the funds.
It is unclear whether the Progressive Conservatives or the New Democrats would adopt Lysyk’s accounting practice and not count the pension funds if either party topples the Liberals in the June 7 election.
Wynne conceded Wednesday there is an “ongoing discussion” with the auditor general over the accounting “disagreement.”
“I know one of the discussions is over the Fair Hydro Plan. We made a decision that we needed to reduce electricity bills by 25 per cent. We have done that,” said the premier.
“We’ve kept that debt within the electricity system. That is the responsible step that we have taken,” she said.
Lysyk has had a fractious relationship with the governing Liberals in recent years.
Aside from being at odds with the government over its Fair Hydro Plan scheme to borrow money to reduce electricity rates by 25 per cent, she has railed against the Liberals diminishing her authority when it comes to overseeing government advertising.