The B.C. government has underreported the provincial deficit by $520 million, according to the auditor general of B.C.
The B.C. government said Wednesday morning the province posted a $1.8-billion deficit for the 2011/12 fiscal year, in part because of a $1.6-billion repayment to the federal government for axing the HST.
But provincial auditor general John Doyle says parts of the province’s financial summary don’t follow Canadian Generally Accepted Accounting Principles (GAAP).
The impact on the bottom line, according to Doyle, is there is a larger deficit than has been stated by government.
"If the summary financial statements were prepared fully in accordance with GAAP, the recorded deficit for the year would have been $520 million higher at $2.36 billion," said Doyle.
Doyle said that in 13 of the last 17 years B.C.’s auditors general have had concerns about the financial statements and have issued qualified audit opinions, "reflecting a long-standing trend of shortcomings in the transparency of government's finances."
'A safe harbour'
According to the Finance Ministry’s numbers, the deficit came in $915 million higher than forecast because of the HST repayment to Ottawa. But excluding that one-time repayment, the province would have posted a deficit of $241 million.
The ministry says the provincial economy grew 2.9 per cent in 2011, according to preliminary data from Statistics Canada, making B.C. third among provinces and better than the national average rate of 2.6 per cent.
"While once again results were better than expected, B.C. remains in a period of great economic uncertainty with continued fluctuation in commodity prices and potential economic impacts from the ongoing European debt crisis," the ministry said in a statement.
"British Columbia stands out globally as a safe harbour for investment because our government continues to keep spending and debt under control. The huge debt and deficits facing European governments clearly shows the perils of the tax-borrow-and-spend mentality," Minister of Finance Kevin Falcon said in a written release.
"Through prudent fiscal management, British Columbia is on track to eliminate the deficit and return to a balanced budget by 2013/14."
Provincial debt, actual vs. budget, in millions
Source: B.C. Finance Ministry