Sousa says books will be balanced despite budget watchdog’s warning
But Finance Minister Charles Sousa said the Liberals will balance the books on schedule in his next budget.

TheStar.com
Nov. 3, 2016
Robert Benzie

A bullish Finance Minister Charles Sousa insists “we are balancing the books next year” despite Ontario’s budget watchdog warning that controversial accounting changes will make that difficult.

“The economy is growing, our spending is controlled . . . exports are up; unemployment is down. We have outperformed and as a result we’re coming to balance next year and the year after that,” Sousa said Thursday.

His comments came after the Financial Accountability Office said an accounting change by the auditor general means this year’s deficit is higher than forecast and that red ink will continue to flow in 2017.

According to the independent legislative officer, the deficit for 2016-17 will be $5.2 billion and $2.6 billion the next fiscal year.

In his February budget, Sousa had projected a $4.3 billion shortfall for 2016-17 before returning to a surplus in 2017-18 ahead of the June 2018 election.

“Eliminating the budget deficit by 2017-18 will be more challenging given assumed impact of the change in accounting treatment,” said David West, the office’s chief economist.

“Achieving budget balance in 2017-18 may still be within the government’s reach through the sale of public assets, the allocation of new revenues to existing spending or other steps.”

Sousa said higher than expected tax revenues are bolstering the treasury and that Ontarians will get a clearer picture when he releases his fall economic statement later this month.

“We have beaten our deficit reduction targets seven years in a row and our recently released public accounts showed that we have once again beaten our targets,” he noted.

Last month, auditor general Bonnie Lysyk blindsided the government by announcing that two public pension funds co-sponsored by Queen’s Park should no longer be booked as government assets — even though that has been the case since 2001.

Lysyk, who last year counted the pension funds as assets, said the province does not have ready access to the funds so should not be applied to the bottom line.

The accounting change — which provincial bureaucrats, political staff, and some experts dispute — has wiped $10.7 billion from the assets column, meaning the net debt is $305.2 billion instead of $294.5 billion.

That’s the equivalent of a $1.5 billion hit on next year’s budget, the financial accountability office projects.

Treasury Board President Liz Sandals is asking independent experts to weigh on the clash.

Lysyk has said she amended her accounting interpretation after examining the province’s claim to the co-sponsored Ontario Public Service Employees’ Union Pension Plan and the Ontario Teachers’ Pension Plan.

“I had my staff review that asset much more than in past years,” she said last month.

Progressive Conservative MPP Vic Fedeli (Nipissing) said the FAO has confirmed what he has long said — that the Liberals’ sell-off of the majority share of Hydro One is the only way they can get back into black.

“He confirmed the government is using one-time money from the sale of assets to artificially balance the budget in an election year,” said Fedeli.

“Are they raising taxes again, or can we expect more cuts to front-line services?”

NDP MPP Catherine Fife expressed concern that the cash-strapped Liberals might end up selling off assets like Ontario Place to eliminate the deficit.

“This is very much a real possibility here at Queen’s Park,” said Fife.

“The selling off of Hydro One needs to stop,” she said.

Premier Kathleen Wynne is using the proceeds from the sale of shares in the electricity transmission utility to bankroll new highways, bridges, and public transit.