Auditor general would benefit from an editor

Ontario’s auditor general generally gives good value for money. Like clockwork, Bonnie Lysyk uses her annual reports to expose government waste and incompetence, providing endless fodder for damning reports in this newspaper and other media.

She calls out teachers for calling in sick in droves. Catches out the Liberal government for high prescription prices. And demands greater scrutiny of hydro costs.

But just as columnists need editors, so do auditors. All that fine print, brimming with outsized numbers, adds up to a whopping 1,119 pages in two volumes.

Her introductory chapter is titled, “Reflections” — as if our auditor general has become our philosopher general. In her chapter critiquing government finances, Lysyk strays from her non-partisan, value-formoney mandate by inserting her own values about borrowed money.

The auditor suggests the government’s deficit and debt are too high, normally the purview of independent economists, partisan politicians and opinionated columnists — not auditors. Which is why a good auditor needs a good editor, the better to watch over the watchdog.

Left to her own devices, what sticks out about Lysyk’s latest report is what she leaves out. Such as, for example, the other side of the story.

By tradition, the annual report leaves space for a government response to any specific findings. Call it professional fair play, or best practices.

But Lysyk does it her way: She has her say — and then, in section after section, truncates the government’s written response into a single terse sentence that reads, “Treasury Board Secretariat does not agree with the recommendation.”

At first, one assumes these repetitively terse official responses to be a fit of pique by a government being passive-aggressive-churlish in its uncharacteristic brevity. But the giveaway comes later in the report, in the space normally allotted to the government: “The response from the Treasury Board Secretariat did not address the (auditor’s) recommendation.”

Ah. Put another way, the auditor disagreed with the government’s disagreement — and unilaterally decided not to print any of it.

Throughout the report’s most contentious chapter, Lysyk takes several pages to critique the government’s finances. Public servants rebut her conclusions, but note diplomatically that “The government is open to continue to discuss the matter in the hopes of resolving this matter.” Yet Lysyk deletes those words, and the rest of the rebuttal, printing instead just this one-sentence summary in her own (six) words: “Treasury Board Secretariat does not agree.”

The ordinary reader has no idea of the government’s position (unless you are a columnist who happens to have obtained the correspondence received by Lysyk, which she believes no one should see, having also rejected previous Access to Information requests).

Ah, you might well say, she’s just editing out Liberal press lines to save space — notwithstanding the 1,119 pages she takes to make her points. In fact, the government’s responses are put together by nonpolitical civil servants who interact with the supposedly non-partisan auditor general.

It’s no secret they’ve had a longrunning professional disagreement about accounting standards. Deadlocked, the government brought in an outside panel of experts last year who heard the auditor out, then threw her conclusions out. Lysyk responded by withholding final approval of the government’s books.

In a burst of melodrama, she writes that “the government uses these incorrect accounting treatments to claim it has balanced the books, but in reality, legislators (and) the financial community . . . will be misled as to the true condition of the province’s finances.”

News flash: MPPs have already drawn their own conclusions, depending on their partisan affiliations. Bay Street analysts who have read all those warnings from the auditor who cries wolf are still lining up to buy government bonds with minimal risk premiums.

Yet this ancient and arcane accounting dispute refuses to go away, because it has a bearing on the books going forward: The Liberals now claim to have eliminated the deficit, whereas Lysyk insists they (and everyone else) must be wrong — that the current deficit is actually $4.5 billion.

This is where it gets interesting, because Lysyk has suddenly become the odd auditor out. For it turns out that not only the government but the opposition Progressive Conservatives are going by the books — the Liberal books.

In their election platform released late last month, the PCs pointedly adopted the Liberal budgetary framework as their starting point — assuming, in other words (but not other numbers), that the budget is balanced. Asked again Wednesday, opposition finance critic Vic Fedeli declined to embrace the auditor’s deficit numbers, which would saddle his party with an even higher burden should they win power next year.

In fact, the Tory platform calls for a deficit of their own making that adds up to $2.8 billion next year — which, when added to the auditor’s putative number of $4.5 billion, would suggest a PC deficit of more than $7.3 billion.

This accounting dispute will escalate into a political clash in the months leading up to next June’s provincial election. Under legislation brought in by the Liberals after they toppled the Tories in 2003 (and the then-auditor discovered a “hidden deficit” of $5 billion), Lysyk — alone among Canadian public auditors — is empowered to evaluate the government’s pre-election budget next spring, which will have implications for the PC platform’s assumptions, too.

It is a tall order for any auditor, with or without a good editor. It will prove especially challenging for someone who has so strained credulity and credibility in recent years. Martin Regg Cohn’s political column appears Tuesday, Thursday and Saturday. mcohn@thestar.ca, Twitter: @reggcohn