Deputy finance minister and senior officials defend Ottawa’s unprecedented decision to backdate nearly $10 billion in spending

Canada’s Deputy Finance Minister Michael Sabia has defended the government’s unprecedented decision to reopen the books from last year and backdate nearly $10 billion in new spending, telling MPs on Tuesday that the move led to a more precise description of the federal accounts.

Sabia, Auditor General Karen Hogan and Treasury Board Comptroller General of Canada Roch Huppé appeared before the House of Commons public accounts committee on Tuesday to answer questions about the government’s unusual accounting decision.

The Globe and Mail reported in December that the Liberal government had reopened the federal books to backdate nearly $10 billion in spending, something never before done under current accounting rules.

This decision was tied to the Public Accounts for 2020-21, which is the final detailed breakdown of spending at the height of the federal government’s response to the COVID-19 pandemic. Ottawa posted a deficit of $327.7 billion that year, up from $39.4 billion the previous year. The documents contain important financial information that MPs, journalists and researchers use to analyze government spending.

These public accounts were tabled later than usual, and more than eight months after the end of the fiscal year.

A section of the Public Accounts showed the Auditor General originally approved the Public Accounts on September 9, 2021, but then approved a change on November 19 that added billions in new backdated spending for the children’s child welfare system. First Nations. The accounts were made public on December 14, just days before the House of Commons adjourned for a six-week recess.

Fiscal policy experts noted at the time that although the Auditor General’s endorsement indicated that all the rules had been met, backdating new spending provided a political advantage to the Liberals by allowing the government to show more improvement. the state of federal finances after the peak levels of emergency spending.

The public accounts were released the same week the government announced $40 billion to compensate First Nations children and reform the child welfare system. Finance Minister Chrystia Freeland’s fall economic update, which was also released the same week in December, showed $16 billion of new funding had been earmarked for the 2020-21 fiscal year, an increase $9.6 billion from the $6.4 billion previously allocated for this year.

Government officials said on Tuesday that the effect of a Sept. 29 Federal Court ruling on Canada’s legal obligations meant it was appropriate to increase the size of its projected liabilities.

Ms Hogan said that although public accounts have never been reopened before under the current rules, her second signature means she believed the decision was in order.

“I looked at why the adjustment was made and how it was made. And I believe it was appropriate,” she said.

Sabia said the Auditor General’s approval shows the government made the right decision.

‘From our perspective, ultimately, the unqualified audit opinion speaks volumes about the validity of the decision that has been taken,’ he told MPs, outlining the government’s approach like one that provides the public with “a more accurate reflection” of the state of the federal government. finance.

Tory MP Kelly McCauley, who raised concerns about the reopening of public accounts when it came to light, attended Tuesday’s meeting and said he was unconvinced by the officials’ statements that the situation warranted an unprecedented accounting decision.

“I believe it was politically motivated,” he said. “I just have a hard time understanding how this is the only cataclysmic event in Canadian financial history that we have to reopen the books.”

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