British Columbia Liberals will be spending a fortune over the winter to boast about their economic record, and one of the key items is the upcoming balanced budget.
But after a couple of hours of debate in a legislative committee this week about accounting standards, its clear people should suspend judgment on budget claims for a while yet.
Balancing budgets, or at least trying to, was the cardinal tenet of B.C. Liberal rule for the first seven years. It got sidelined by the economic meltdown in 2008. But a key part of the Liberal ad blitz is that they are on track to get the province out of the red ink. It is scheduled to happen when the budget for the upcoming fiscal year is delivered in February. The provincial election is May 14.
A balanced budget years ahead of key competitors like Ontario and Alberta is the launch pad for the governments re-election campaign. But the final independent pronouncement on the current state of the books - balanced or otherwise - wont come until the public accounts are released in July. That includes auditor general John Doyles verdict on how the books have been kept. And there is the potential for trouble. It arises out of Doyles penchant for issuing qualifications about how the Finance Ministry keeps the books.
He has done so several times in the five years hes been on the job, and each one includes a recalculation of what the numbers would look like if the government did it his way. Hes continuing a tradition in the office: 13 of the last 17 audits of the governments books have included qualifications. The arguments over his reservations are esoteric ones. They have to do with how gas-well royalties are handled, or how the Transportation Investment Corp. is treated on the government books.
Doyle has his preferred method. Experienced professionals in the ministry have theirs. So far, the auditor generals recalculations have had the effect of changing the bottom line by varying degrees, but not the essential outlook.
Last year, for example, the government stated a $1.8-billion deficit. The accumulated effect of the changes Doyle suggests would have added $520 million, making the deficit $2.3 billion, by his reckoning. But a deficit is a deficit is a deficit, so the changes dont get much attention.
What is different next year is the margin of error. Finance Minister Mike de Jongs last update shows the February budget is going to be a close call in terms of balance. Slumping natural-gas prices mean less revenue for B.C. And the tightness applies to the current year as well. So what if the governments bottom line cited in February turns out to be significantly worse when Doyle reports on it in July?
Ask the NDP how that works out.
Former premier Glen Clarks government tabled a balanced budget in April 1996 and said the fiscal year just closed was balanced as well. Then he called an election two hours later and boasted about NDP budgeting prowess through the campaign. After winning, they admitted in July the books werent balanced after all, in either year, and the controversy dogged them for years.
Apart from the thin margin for error, theres another factor working against the government. Doyle told the committee if errors identified by the audit arent corrected, they are re-calculated the next year. So you end up with a snowballing effect over time where you have very, very significant adjustments, he said.
The ongoing argument is getting to some veteran Liberals. After some exchanges over Doyles version of how royalty credits should be booked, Liberal MLA Kevin Krueger said: I think its nonsense.
Its normally a constant exchange of views between the Finance Ministry and the auditor general that never gets much attention.
But every four years, an election crops up between the time the budget is presented and the time the books are formally closed on the fiscal year that ended a few months previously. It intensifies the interest in the topic. And this year, theres a lot less leeway than usual when it comes to making claims about performance, based on the numbers.
Its the main reason given for the idea of moving election day to the fall, rather than the spring. Voters would have a budget in front of them thats been signed and certified as the straight goods.
