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Auditor Aids Government

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On a lazy August 2018 afternoon, Scott Fielding, the newly appointed Finance Minister, issued a news release commenting favorably on a report issued by the Province’s Auditor General. The report, Public Accounts and Other Financial Statement Audits, included commentary that patted the Pallister government on the back while highlighting the annual deficit streak of the former NDP government. The report was on financial statements and transactions as of and ending March 31, 2017 – now 17 months ago. The bar is low.  Imagine a private company issuing financial reports way over a year out of date?

Anyway, the Finance Minister was delighted that the auditor prefers measuring government results based on the summary accounts, not the government’s core operations. Summary accounts include not only the results of the government’s direct operations (health, education, social services, Justice, etc.) but those of Crown corporations and other operations that the auditor considers to be controlled by government. These include Manitoba Hydro, MPI, Lotteries and Liquor, universities, hospitals, etc..

Trouble is, the auditor does not help taxpayers by mixing the results of core government operations – mostly funded through taxation and federal transfers – with the results of enterprises funded by utility ratepayers, gambling and liquor revenue, students’ tuitions and the like. Yet there is a good reason Pallister politicians would be praising their government with such a news release. The auditor’s focus may well help Pallister’s cabinet ministers get back salary lost because of the annual deficits as the summary account deficit falls.

With both core operations and separate operations (goods and services mixed together), the government has the ‘best of two worlds’. Government can levy various fees and taxes on Crown enterprises, pushing up fees and rates, enriching the summary accounts. The best example is found with Hydro – first, ‘core’ government annually taxes and fees on Hydro of $400 million plus. Then, Hydro, required to operate ‘in the black’ to have a satisfactory ‘balance sheet’ (despite its boondoggle expansion), will up utility rates. (Also, while government treats its’ charges on Hydro as income as received, Hydro doesn’t offset it as an immediate cost, boosting government’s summary account: a no-no in private industry.)

Returning to the scope and actions of the auditor, the auditor has no mandate to review and comment on government policy, unless directed to by government. Government doesn’t ask, thus the Hydro boondoggle rests untested: neither an independent and comprehensive inquiry nor a value for money audit.

If directed to by government, the Auditor General has the capacity, staff and knowledge to audit to assure government-controlled organized operations seek ‘value for money’, but appears not to do so with the large Crown corporations. Few would argue that Hydro doesn’t need a good value for money audit, but it has never been done. Same with MPI,  WCB, etc.

When such an audit would help bury the former government, the Pallister government has had the auditor do one – such was the case with the east-side road project. The auditor’s mandate needs a major make-over. And, cabinet members should earn back salary lost by deficit performances of core operations by focusing on improving their rock-bottom performance, not muddying that dismal picture by including backdoor fees and taxes.

And, let the taxpayers laud the auditor, not the government.

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