Paper trails can be useful when it comes to ‘ fudge-it’ budgets
Twenty-one years ago in British Columbia, a then-unknown civil servant in the provincial Finance Ministry, deputy minister Brenda Eaton, also secretary to Treasury Board, wrote a series of memorandums about the state of provincial finances.
I recall the Eaton memos given the news that 800,000 emails have been deleted by Alberta’s government, and which are under investigation by the provincial privacy commissioner. We obviously have no idea if the deletions were intentional, accidental or routine.
That noted, governments often like to hide potentially embarrassing facts. They sometimes go to extraordinary lengths to do so. The written-down notes from the British Columbia deputy Finance Minister two decades ago is a case study in that potential problem. It also illustrates how civil servants can help the cause of (eventual) transparency.
Some history in the British Columbia example: In 1995, the NDP government was worried about re-election.
Critically, its claim to be a prudent fiscal manager was already in danger from previous red-ink deficits.
Problem: In 1995, provincial revenues were tanking. A memorandum in late December 1995 from the minister of forests to Finance Minister Elizabeth Cull warned of a “significant shortfall” in revenues. Also, civil servants, including the deputy finance minister (Eaton), met with the likely winner of the NDP’s then underway leadership contest, Glen Clark.
He was told that forecast revenues for the existing budget year and the next had dropped by almost half-a-billion dollars from previous estimates.
Early in 1996, internal finance documents showed further declines in corporate and income tax revenues.
In March, finance believed a deficit for closing budget year would be $336 million. That was revised downward, just one week later, to $140 million.
As the auditor general later wrote, that lower estimate arrived after finance minister Elizabeth Cull “continued to strive for a 1995/96 operating surplus” and also desired more “optimism” in revenue estimates.
The government finally received what it wanted. In its 1996 budget released on April 30, the province claimed a $16-million surplus. Hours later, the NDP called an election, which it won on May 28, 1996.
Problem: On May 22, 1996, six days before the vote, deputy finance minister Brenda Eaton wrote a memorandum advising that the budget, the one with “optimism,” was subject to revision. The surplus had reversed into a deficit, forecast to be $211 million.
Another problem: On June 26, 1996, a new finance minister, Andrew Petter, tabled the same April 30 budget from his predecessor (with its surplus), despite Eaton’s late May memos. Two days later, on June 28, Petter publicly admitted that the province actually had a $235-million deficit for the previous year.
As the auditor general wrote in his review of how forecast deficits turned into surpluses, only to revert again into two deficits, in early 1996, a small informal “working group” had been established to work over the budget estimates.
They included the minister of environment, Tom Gunton, the deputy minister to the premier, Doug McArthur, and Eaton, among others.
At one point, as the auditor general wrote, “Ms. Eaton was requested to ask her staff to provide alternative forecasts” and were continually pressed to provide “what if” scenarios.
According to Eaton, the requests came from Gunton, whom she assumed was acting on behalf of the premier’s office.
It was Eaton’s memorandums, along with other documents later accessed through the province’s Freedom of Information Act, that later damned the government as having produced a pre-election “fudge-it” budget. It claimed two surpluses when in fact the province was in red ink territory and the politicians knew it.
Back to Alberta and 800,000 deleted emails. Whether on this or any other issues, perhaps Alberta’s civil servants may wish to write many things down on paper — their understanding of matters. Think of it as a backup when other accountability systems — and computers — fail.