Special report of the Acting Auditor General of Québec concerning the special audit on the change in the budget balance of the government for 2014-2015

QUÉBEC, June 3, 2014 /CNW Telbec/ - Today, Mr. Michel Samson, Acting Auditor General of Québec, made public his report concerning the change in the budget balance of the government for 2014-2015.

On April 24, the government gave the Auditor General the mandate to audit the information produced by the Ministère des Finances du Québec (MFQ) and the Secrétariat du Conseil du trésor (SCT) concerning the change in the budget balance of the government for 2014-2015 up until April 7, 2014.

The Acting Auditor General considers that the efforts that need to be made to meet the target related to the negative budget balance of $1,750 million have hardly changed between November 2013 and April 2014. They are around $4 billion. Yet, Mr. Samson estimated, following his work on the November 2013 Update (the Update), that this forecast was unreasonable. He had therefore qualified it as ambitious. The scope of the efforts required the implementation of structuring and sustainable measures. This report confirms the judgment held at that moment and adds to it an additional perspective.

On April 7, 2014, the MFQ and the SCT informed the new government that substantial efforts should be made to respect the anticipated negative budget balance of $1,750 million in 2014-2015. Two reasons were given: revenues below those anticipated in the 2014-2015 budget tabled in February 2014 (the Budget) and expenditures revised upward.

As for budgetary revenues, the forecast for the decrease was estimated at $485 million. The Auditor General's work confirms the increased probability that the anticipated revenues will not be present. In addition, it shows that these forecasts do not include a prudence margin to counter blips in the economy.

In terms of program expenditures for 2014-2015, Mr. Samson notes that the information held by the MFQ and the SCT clearly established the scope of efforts that need to be made to respect the objectives planned since last fall. His work demonstrates that these efforts diminished by about $400 million between November 2013 and April 7, 2014. Therefore, the amount of efforts that need to be made has gone from $3,666 million to $3,248 million.

In terms of non-budget-funded bodies and special funds, the government has required from them additional efforts since November 2013. In this regard, a target of $190 million was set in the forecast of their net revenue in the Budget.

Overall, the efforts that need to be made to reach the target related to the budget balance are close to $4 billion. The Update and the Budget presented a limited vision of the state of public finances and did not disclose the scope of these efforts. The report the Acting Auditor General presented in February 2014 also showed an incomplete portrait given the fact that we were not given access to the relevant information.

In addition, Mr. Samson wants to point out the fact that certain non-negligible risks should be taken into account to fully understand the state of public finances as at April 7, 2014. The information communicated to decision makers at that date does not clearly expose these risks. Among them is his difference of opinion with the MFQ concerning the recording of transfer expenditures. This difference could lead to, according to the MFQ, additional expenditures of about $1 billion for 2014-2015. Table 3 of his report details all these additional risks.

The Acting Auditor General wishes to state again that he demonstrated many times in his previous reports that, from one budget document to another, the reduction in the growth of the gross debt and the one in the debt representing accumulated deficits were continually postponed and that the achievement in 2026 of these debt-reduction targets as a percentage of the gross domestic product (GDP) will require considerable efforts and a rigorous follow-up.

According to Mr. Samson, it would be appropriate for the government to adopt a multi-year game plan that includes intermediate targets.

Furthermore, Mr. Samson considers, taking into account his recent interventions, that improvements should be made to documents of a financial nature in order to better respond to the needs of parliamentarians and of the population. The recommendations made, both in his report presented in February 2014 and in this report, fall within that perspective.

The message from the Acting Auditor General, Mr. Michel Samson, is available on the Auditor General of Québec's Website, at http://www.vgq.qc.ca, under the "Report Concerning a Special Audit or an Investigation" tab in the "Publications" Section. The full report is available only in French.

SOURCE: Vérificateur Général du Québec

Source: 
Lucie Roy
Director
Cabinet, communications et affaires stratégiques
Auditor General
Tel.:  [phone]