“Improperly” Moved $26B in Hydro Debt: Liberals Under Fire for 'Cooking' Ontario’s Books
Ontario’s Auditor General Bonnie Lysyk revealed this week that Kathleen Wynne’s government hid the cost of its “Fair Hydro Plan” from taxpayers.
The way they did it has raised concerns that other governments across the country could follow suit and bury deficits.
Although ratepayers will get a temporary, 25% break over four years on their hydro bills, the plan will cost “up to $4 billion more than necessary” in interest, Lysyk said.
The Liberals also “improperly” moved $26 billion in hydro debt off their books, borrowing the money through Ontario Power Generation, and as a consequence hydro ratepayers will face increases for 30 years.
Lysyk argued that was like claiming your credit card debt is an asset.
Tory leader Patrick Brown was more blunt, accusing the government of “cooking the books” to “look good in an election year”
“Ontario’s Auditor General uncovered an appalling attempt to hide the true $4 billion cost of Kathleen Wynne’s hydro rebate scheme, a price which will be paid by ratepayers, Brown said in a statement.
“She concluded senior government officials knowingly ignored the government’s own policy for preparing financial statements to create an unnecessary, complex, financing structure designed to keep the true financial impact of its rate reduction scheme off the province’s books.
“More damningly, the Auditor General said the Canadian Public Sector Accountability Standards are the standard for all federal and provincial governments of Canada and that the Liberal Government “has brushed aside these standards,” he said. “The unavoidable and very strong suggestion is that something highly improper has transpired.”
Meanwhile, Ontario’s budget slight-of-hand is raising questions across the country.
“Listen, if Ontario can legislate an asset in this case, and everybody thinks that’s okay, then you can bet your booties Quebec will be right on the train following them and so will British Columbia,” said Tim Besuchamp, the former director of the Public Sector Accounting Board (PSAB) of Canada. “Anybody who’s got a deficit – they’ll just make it go away by creating an asset.”
If Ontario’s method of accounting for expenses spreads, taxpayers might never know if their government is truly in the red or black or even how big a debt has been run up, said Beauchamp, who’s spent 27 years helping develop clear and open accounting standards so citizens can see what their governments are doing.
“And so the bottom line, everything balanced to zero,” he said. “And that’s just not the way it is.”
For their part, Ontario Energy Minister Glenn Thibeault said the government wanted to make sure the borrowing costs for the Fair Hydro Plan were borne by hydro customers, not taxpayers.
Rate-regulated accounting is commonly used in the energy sector, he said, and cast doubt on the auditor’s projection of $4 billion in extra borrowing costs.
Colin Nekolaichuk, a spokesperson for Thibeault, said in an email that “It was essential that we get the structure right (of the Fair Hydro Plan) while delivering the meaningful relief Ontario families needed,”
Beauchamp acted as a consultant for Lysyk but said she only asked him what he thought of the accounting plan, not to confirm her opinion.
Lysyk also canvassed Auditors General across Canada, and everyone agreed that Ontario was going down the wrong path, he said.
“If they get that through to the province’s financial statements, then every province, every municipality in Canada, will take advantage of it,” Beauchamp said. “It will destroy what the Public Sector Accounting Board has worked for ever since it started.”
Public accounting standards, in the U.S. as well as Canada, mandate that governments not treat taxes yet to be levied as an asset, he said.
He dismissed the position of the Ontario government, that this is at its heart an accounting dispute.
“(This) is going to bleed through the whole public sector in Canada,” Beauchamp said. “It sets a precedent...It’s not two accountants sitting in a boxing ring having it out with each other.”