What Is Our Actual Provincial Debt

[NAB]

Debt, or deferred assumption of debt, it's all the same to me and should rightfully be added to the total commitment of taxpayer dollars this government has made. I am appalled to learn that some of this extends out as far as 60 years!!!

What's more, although the suggestion is the 80 billion in hidden commitments should be added to an estimated 53.4 billion of direct provincial debt as of this past March (for a total of 133.4 BILLION), ...I am reminded that the direct provincial debt is budgeted to grow to in excess of 60 billion by fiscal 2013/14 and which, combined with any new indirect debt added during that time, could easily see that total rise to exceed 150 BILLION over the next two to three years! (And don't forget to add the ever growing debt of all BC Municipalities to that figure - there's still only one taxpayer!).

IMO it is way past time to stop spending or committing taxpayer dollars on or to any new private sector activities via such things as public private partnerships. It's going to take a generation or more just to dig us out of the monster hole we are already committed to as a result of this government, ....and that's a best case scenario.

Nab

[coffeeFreak]

If the govt can rewrite the rules of accounting to accommodate their reporting practice, how can we expect to ever know the true extent of BC's debt.

Opinion: The government of ‘accountability’ taken to task for its bookkeeping
BY VAUGHN PALMER, VANCOUVER SUN COLUMNIST SEPTEMBER 30, 2011

VICTORIA - Auditor-General John Doyle’s latest verdict on the B.C. Liberal government’s bookkeeping can be reduced to a single word: “Unacceptable.”

The longer version of the independent financial watchdog’s “observations” on provincial financial accounting was spread over a 54-page report, released Thursday in Victoria.

Doyle cited the Liberals for a range of accounting errors, some major, some minor, some debatable, others falling under the heading of just plain wrong.

One of the latter concerns prompted him to brand the B.C. public accounts with the most damning label in the auditing lexicon — a “qualification,” meaning that in one key respect, “the information is not auditable or is misleading.”

Such findings are supposed to be a “rare occurrence” in the realm of public-sector auditing, but that has not been the case in B.C.

“During the last 15 years, this office has issued qualified audit reports on the provincial financial statements 12 times,” said Doyle, referring to his own tenure and that of four predecessors. “For a government that strives for transparency and accountability, this is unacceptable.”

Some overlap there with the term of the previous New Democratic Party administration. But the B.C. Liberals took office a decade ago promising to implement the highest standards for public sector accounting. Whereas Doyle rounded on them for several decisions that defied those standards.

He challenged the government’s recent decision to exempt itself from a key provision in accounting standards, thereby continuing the practice of deferring hundreds of millions of dollars in costs at BC Hydro. Without that escape clause the deficit would be half a billion dollars larger this year alone.

He also elevated a growing concern about long-term contractual obligations, undertaken as part of public-private partnerships and other contracts. They currently total $80 billion, an almost three-fold increase in five years, largely because of long-term power purchases by BC Hydro.

The government reports a running tally in the fine print of the public accounts, a point noted here previously. It thereby meets the bare minimum requirements of public sector accounting standards, a point Doyle concedes.

But he goes on to say that’s not good enough to satisfy the broader public interest in accountability.

“The expected payment streams associated with these obligations directly impact the remaining amount of discretionary funds available to government to meet future needs,” wrote Doyle, as he urged the government to disclose considerably more detail to help taxpayers better understand the multi-billion-dollar commitments being undertaken in their name.

The Liberals insist that many of Doyle’s findings — he cites 77 errors of one kind or another — amount to no more than a clash of accounting philosophies between the auditor-general and the in-house comptroller-general.

Doyle acknowledges that sometimes “we agree to disagree.” Still he insists that all errors should be fixed: “Call me old-fashioned if you like.” According to the running tally in the report, only half of the identified errors were rectified, the rest being dismissed by the government as “not significant” (25) or a matter of opinion (14).

On the clash of philosophies, Doyle says “that’s a nice line,” but sometimes the government is “just plain wrong.”

Heading that list is the matter that provoked his decision to put a qualification on the books, namely the government’s persistence for the third year in a row in treating the Port Mann Bridge project as a self-supporting enterprise.

The B.C. Liberals maintain that the overseer agency for the Port Mann, the Transportation Investment Corp., qualifies as “a government business enterprise” because “it is able to maintain its own operations from revenues raised outside the government reporting entity. The corporation will support its operations from toll revenue.”

Doyle: “The new bridge is under construction. Until it is built and the toll booths are operational, it will not be ‘selling’ a service to anyone. The only revenue source the corporation has at present is the interest income being earned on the funds provided by government debt.”

Moreover, a lot of “high-risk assumptions” have gone into the assertion that the twinned Port Mann, when fully up and running in 2013, will bring in enough tolling revenue to service a projected $3.3-billion debt plus hefty operating costs.

Just think of the way TransLink’s new Golden Ears Bridge has fallen short of delivering its projected revenue streams, never mind the precarious state of the economy overall.

The financial shape of things to come was very much on Doyle’s mind as he prepared his report, he told me during an interview Thursday.

These are times of “very limited financial flexibility.” Provincial spending, debt and obligations are on the rise. Only revenues are flat. “Good financial management is critical.”

And in such straightened circumstances, every British Columbian has an interest in the auditor-general’s call for fuller disclosure of what is being signed for on the collective, taxpayer-backed credit card.

[email protected]

http://www.vancouversun.com/opinion/editorials/Opinion+government+accountability+taken+task+bookkeeping/5480274/story.html

[Smurf]

I think of the government as a company with all taxpayers as shareholders. Because of that I believe we need the whole story and that includes BC Hydro, BC Ferries and anything else they own or control and how the parent company (the government) affects their day to day environment. I believe these contracts form part of that knowledge that we require, and are part of the debt we aquire as shareholders. Even more so because we are also the ones paying the bills for those commpanies.

[Madtaxi]

This thread makes me laugh. It reminds me of the late 90's when the BC Liberals were all over the media(their friends)talking about the provincial debt while they were standing next to the provincial debt clock in downtown Vancouver. Isn't karma a *bleep*.

[NAB]

I was watching some Senate hearings on public private partnerships ("PPP's") the other day, and the confusion surrounding how they work (not all of them are created equal or follow some specific standard model - particularly in BC). Many of the questions surrounded who if anyone really "owns" the assets contracted, when they "own" it , who owns and operates it at the end of the contracted period, who's money is at risk, what happens if the private sector partner runs into financial trouble performing during the term of the contract, ...and particularly what happens if the private sector partner defaults on the contract or goes bankrupt, out of business, or their debt based financing falls apart at some stage of the contract (and as a result what rights the holder of the debt has to recover on their loans). Scary stuff for taxpayers, ratepayers, and users IMO. I think we have seen some of that related to the owelimpics as a matter of fact (owelimpic village?), even the notorious sea to sky highway, ...as well as a couple of bridges in the lower mainland. There seems to be a lot of smoke and mirrors associated with these things that will come back to haunt us big time in future years.

And since these things seem to be based almost 100% on borrowed money that apparently doesn't immediatly show up in provincial budgets as deficits (current year or future years), or even as long term debt, when the taxpayer (government) starts paying for the contracted service or asset, along with ongoing repair and maintenance costs for the term of the contract (usually at "substantial completion") - a considerable part of that cost passed on by the private sector partner is accumulated and ongoing interest. And when those interest rates rise (as they undoubtedly will), along with other unknown cost factors, there are probably contractual clauses that will accommodate upward "adjustments" in the public sector payments to their private sector "partner".

The real worry is that when setting up such things, both sides need to do their due diligence very carefully and accurately, and take the huge risk undertaken into account. Something I am not convinced the public side of such relationships is competent at. We need only look to the owelimpic village fiasco for proof of that charge.

Jeeesh, the more I learn about this stuff, the more such things as the fast ferries, even the federal bribe related to the HST whatever it turns out to be upon settlement, take on the character of chump change or petty cash more and more. And I certainly find it hard to listen to the real small 'taters things like relative peanut arguments associated with the cost of haircuts, pants, or restaurant meals ;-) Besides, when it comes to restaurant meals, if paying the provincial portion of the taxes bothers someone, they can simply deduct it from the tip to win it back

To me, it all looks like we get something today for "free" (at least on the books), while shuffling off paying for it into some future neverland.

Nab

[steven lloyd]

To me, it all looks like we get something today for "free" (at least on the books), while shuffling off paying for it into some future neverland. Nab

Reminds me of Campbell’s haphazard and reckless cuts made through the public service sector in his first term (cutting workers while appointing and hiring ministers and bureaucrats to “manage" the transition) for which he is still highly lauded. I know that in certain sectors the government had to finally but quietly admit that many Ministries were already operating at bone dry levels, and they now have to spend even more money in hiring and training new people to replace the already trained and experienced people we lost (some who just left in disgust). Ya, we’ve been “saving money” all over the place.

[NAB]

Yup, one ideology does it based on socialism and welfare for the "people" to the detriment of the corporations, the other side does it based on socialism and welfare for the "corporations" to the detriment of the people, and the third side does it based on socialism and welfare for all sides based on ever expanding debt and unfunded liabilities that will crunch our kids and grandkids.

Solid as Canada always was BT (before Trudeau), it appears we have finally drunk the last of the USA Koolade, ....with ever extremely polarized BC over the recent few decades setting the example and designing/applying the book-keeping techniques for getting there quickly and relatively painlessly (from an economic perspective) on so many fronts.

Nab

[DeepEnd]

(moved to proper forum)

Gotta a question

"In the auditing profession, a qualified audit report is a rare occurrence: it indicates to the users
of the financial statements that some of the information is not auditable or is misleading," said
Doyle. "During the last 15 years, this Office has issued qualified audit reports on the Province’s
financial statements 12 times. For a government that strives for transparency and accountability,
this is unacceptable."
The 2010/11 reservation relates to the improper consolidation of the Transportation Investment
Corporation, the Crown corporation responsible for constructing and managing the new Port
Mann Bridge.

http://www.bcauditor.com/pubs/2011/report6/observations-financial-reporting-sfs-2010-2011

After reading this report I feel like I should take away the kid's credit card. The possibility of a actual BC debt of 150 billion in the next few years is staggering. Just the interest payments alone would be staggering.

How is a deferred payment not a debt of a taxpayer?

The government is the user of the credit card but the card is in the name of the taxpayer therefore it's not the users debt and they don't have to report it.

Should we not be reporting this debt somewhere on our tax forms?

[NAB]

BC Hydro bookkeeping creates $2.2 billion risk for ratepayers, auditor general warns
Questionable bookkeeping methods deferring large debts

Excerpt:

He said Hydro's bookkeeping methods – as defined by the provincial government – “create the appearance of profitablity where none actually exists, and place undue burdens on future ratepayers,” according to a statement in a news release from Doyle's office.

Doyle said that the government is essentially inventing its own bookkeeping standards for Hydro's use, and that the practice also casts a cloud over the province's finances as well.

“It concerns me that government is willing to override the due process that is involved in the setting of Canadian accounting standards, and instead legislate an accounting result that will have a significant impact on both the financial statements of BC Hydro and the province.”

http://www.vancouversun.com/business/Hy ... story.html