BRITISH COLUMBIA
04/30/2013 06:59 EDT | Updated 06/30/2013 05:12 EDT

Adrian Dix Using Deficit Numbers From Bond Agency's Unique Method

CP

VANCOUVER - New Democrat Leader Adrian Dix has repeatedly said the Liberal party's deficit numbers are askew.

The latest criticism came during a televised leaders' debate when Dix claimed the Dominion Bond Rating Service pegs British Columbia's deficit projection at $1.7 billion, contrary to the balanced budget the Liberals have been touting.

Indeed, DBRS released a report last month saying the agency projects B.C.'s budget deficit will be $1.7-billion, but the projection is based on a unique accounting method that lumps capital expenditures into the years they are incurred, rather than amortizing them over the lives of the assets the way governments do.

DBRS released a similar report in 1999 — the last time the NDP tabled a budget in the B.C. legislature — adjusting the government's projections higher by more than a billion dollars.

"B.C.’s DBRS-adjusted deficit is expected to rise from $1.4 billion (1.3% of GDP) in 1998-99 to near $2.0 billion (1.8% of GDP) in 1999-2000," the 1999 report reads, citing numbers that were significantly higher than the NDP deficit projection of $890 million at the time.

While the DBRS accounting methodology has changed slightly since 1999, the agency still makes adjustments to budget projections in order to facilitate inter-provincial comparisons and to reflect actual spending compared to income, according to a report explaining the Toronto-based agency's methodology.

"DBRS converts capital expenditures from an amortization basis to a 'pay-as-you-go' basis to get fiscal results that are more reflective of the full extent of government spending and of external financing needs for a given year," the report reads.

While the Liberals have projected a small surplus this year, DBRS adjusted the number, as they do for all Canadian provinces.

Dix used the DBRS-adjusted deficit to criticize Clark during the TV debate Monday evening.

"In fact, Dominion Bond Rating Agency, if you have the whole report there, says that you ran a $1.7-billion deficit," Dix said.

Speaking to reporters Tuesday, Clark responded to Dix's claim.

"DBRS equalizes everything all around the world by using a different accounting system," she said. "So, what (Dix) said was not true. It does not reflect what DBRS said."

"But again, trying to figure out Adrian Dix's math is pretty tough," she said. "Don't ask me to do NDP math. I couldn't do it in the 1990s and I can't do it today."

Dix, also speaking to reporters on the campaign trail, clarified his statement.

"My point is the DBRS not only didn’t say they’re running a balanced budget, but they have an alternative view of their deficit, which are the facts," he said.

"The argument isn’t the numbers. The argument is that the Liberal party and the Liberal premier are saying the rating agencies said she balanced the budget and that is simply false on the facts, and it’s time she stopped saying it."

Earlier in the campaign, during an April 22 radio interview, Clark said the DBRS report backed up her claim that her government will operate on a balanced budget.

She later dialled back her statement and said, "What they say is we have a superior record of fiscal management and they say that our revenue targets are absolutely on."

In a report issued April 12, Standard & Poor's affirmed the province's AAA rating but did not proclaim the budget balanced, nor did an April 4 Moody's Investors Service report.

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