National report shows Yukon deficit

Surplus or deficit, that is the question. The answer depends on whom you talk to. Territorial officials insist the territory has a small surplus.

Surplus or deficit, that is the question.

The answer depends on whom you talk to.

Territorial officials insist the territory has a small surplus. But Statistics Canada shows the territory in a deficit position.

So what’s going on?

The answer lies in the murky world of accounting.

For some reason, Statistics Canada doesn’t crunch data the same way the Yukon government does.

In a cross-country review of government finance released June 15, Statistics Canada reported the Yukon running a $13 million deficit in 2005-06.

That’s at odds with the territory’s budget, which showed a $38 million surplus in a supplementary budget released at year-end on March 31, 2006 —

a difference of $51 million.

“For 2005-06, our books show a surplus and we’re projecting a positive net financial position,” said Mark Tubman, budgets director with the Yukon Finance department.

“Our books are audited by the auditor general (Sheila Fraser), and she’s satisfied,” said Tubman earlier this week.

“We can’t, without knowing the methodology, explain what the differences are here.”

Statistics Canada’s periodical report, The Daily, showed six Canadian jurisdictions with deficits in 2005-06.

The consolidated surplus for all Canadian governments hit its second highest level in the past 20 years — $26 billion, said the report.

Recent gains can be attributed to an eight per cent hike in personal income taxes, it said.

Canada’s combined surplus is estimated at $3.7 billion.

But the Yukon is carrying a $13 million deficit, according to the report — significantly lower than the $28-million deficit recorded in 2004-05, but a deficit all the same.

“Ontario had the largest deficit, $3.3 billion, followed by Quebec at $1.2 billion,” it said.

“Manitoba, Prince Edward Island, Yukon and Northwest Territories also recorded small deficits.”

The report includes a caveat that the accounting systems of various governments “are not directly comparable because the policies and structure of governments differ.”

Furthermore, Statistics Canada “adjusts data” in order to calculate “inter-government comparisons” and “national aggregates that are consistent over time.”

The report warns that its numbers “may not accord with the figures published in government financial statements.”

But it’s not accurate to portray the Yukon in a net deficit position, said Tubman.

“It’s possible they’re doing something in their methodology that, just by looking at these numbers, I can’t figure out.”

It’s possible that Statistics Canada is compiling its data on a “national income accounts basis,” said Tubman.

It’s also possible that Statistics Canada is using a cash-based accounting system, rather than the full-accrual style that Yukon Finance has adopted in recent years, he added.

The Yukon Finance department, under minister Dennis Fentie, has prided itself in recent years in returning surplus budgets with unqualified audits and adopting full-accrual accounting measures that allow the government to book all its liabilities, past and present.

Most governments are moving towards the full-accrual system of accounting — some faster than others, said Statistics Canada spokesperson Jo-Anne Thibault.

“Cash accounting is everything that goes out, any payment you make, basically, is considered an expenditure, so it really follows the trail of the money.”

On an accrual basis, expenditures are recorded in the fiscal year they are purchased, even if they have not been paid for yet, she said.

“On a cash basis, it would be only considered as an expenditure when you paid for it.”

Statistics Canada began crunching its Yukon numbers with data received from the territorial government, so the Yukon is well aware of its reported deficit position, according to officials, she added.

“The territorial governments are apprised of our data and they do get copies once it is released.

“They are aware of the data and they would be fully aware of the discrepancies.”

The Yukon reported an even higher deficit — $41 million — for 2005-06, before Statistics Canada began its analysis, said spokeswoman Sarah Pearson.

“According to the documents they provided us, they’re minus $41 million,” Pearson said Monday.

Yukon Finance reported a $41 million variance in its first supplementary budget for 2005-06, indicating a drop in net financial resources to $23 million from $64 million.

But that variance should not be used to calculate a surplus-or-deficit position, said Tubman.

“If that’s the number they’re using, that’s incorrect.”