The Ontario government understated its deficit and expenses by billions, according to Auditor General Bonnie Lysyk.
In its pre-election report issued Wednesday, Lysyk called the province’s finances “not reasonable.”
Lysyk found that the government understated expenses, thereby underestimating the true size of future annual deficits.
Specifically, according to the report, the deficit forecast should be higher by 75% in 2018/19 ($11.7 billion instead of $6.7 billion), 85% in 2019/20 ($12.2 billion instead of $6.6 billion), and 92% in 2020/21 ($12.5 billion instead of $6.5 billion).
“When expenses are understated, the perception is created that government has more money available than it actually does,” Lysyk said in the report.
“Government decision-makers might therefore budget more money to be spent on initiatives and programs, when that money is actually needed to pay for expenses the government has failed to record properly. Therefore, more money will need to be borrowed to pay for the unrecorded expenses even when government reports an annual surplus or a balanced budget.”
In the report, expense understatements relate to two items which include the improper reflection of the financial impact of the Fair Hydro Plan’s rate reductions, as well as future expenses related to two provincial pension plans.
Last year, Ontario passed legislation to lower electricity bills by 25%. When Premier Kathleen Wynne made the announcement at the time, she called the Fair Hydro Act “the largest cut to electricity rates in the history of Ontario.”
As for the report, Lysyk also noted that actual financial results will differ from the report estimates due to the uncertainty surrounding future events, such as renegotiation of collective agreements in the government and the broader public sector, and the future costs of new initiatives where the program uptake is difficult to predict.
The 42nd Ontario general election takes place on Thursday, June 7.