25 July 2008

Accountants question government budget reporting

The Certified General Accountants Association of Canada said on Friday it is time for greater transparency around the budget process in Canada.

“The entire budget process needs to be more transparent. It’s become far too difficult for Canadians to make sense of the practice and to fully understand how their tax dollars are being spent,” said CGAAC president and chief executive officer Anthony Ariganello in a news release.

The CGA association questioned whether the surprise surpluses were actual surprises or part of a deliberate political strategy.

“You have to wonder whether these surpluses have allowed governments to be much less disciplined in their budgetary spending,” Ariganello noted. “The use of any federal surplus should be decided within the budgetary process, not as a consequence of poor planning.”

While Ariganello was referring specifically to the federal government, successive provincial budgets in Newfoundland and Labrador have followed the pattern to which the CGA president referred.

In the most recent budget news releases and comments by the finance minister referred to a projected surplus, but the budget documents tabled in the legislature forecast a $1.2 billion shortfall.  As well, the financial results for 2007 have been presented as yielding a surplus while the government actually borrowed $88 million to cover all financial transactions. 

That was the second straight year of provincial deficits, despite public claims of surpluses. Even Bond Papers was fooled (note the reference to record surpluses), until a thorough check of the documents revealed the real picture.

The chart shows total borrowing requirements from provincial government budgets between 2004 and 2008.

At the same time public sector spending has grown at a rate well beyond the annual rate of inflation.