Aside: politicizing the provincial comptroller?

I’ve seen a lot since I started paying attention to politics, but this takes the cake. Who is so koo-koo for Coco-Puffs that they start politicizing the Province’s financial statements?

Material misstatements? in accounting?

So, the Government of Manitoba has apparently been overstating the deficit for the past two fiscal years by excluding the Worker’s Compensation Board and MASC Trusts from the Province’s Summary Financial Statements.

The Auditor-General found this to constitute material misstatements that make the Province’s claimed financial position inaccurate and unreliable. (Wouldn’t this be considered fraud in the private sector? Guess we are lucky that the Auditor-General has already warned everyone not to rely on them, so no one can complain.)

The real numbers

If the Government of Manitoba had done its accounting properly, the deficit in 2017/18 would have been $347 million, instead of the $694 million they reported, an overstatement of $347 million (so they doubled the deficit). And, there wouldn’t have even been a deficit in 2018/19. There would have been a surplus of $9 million, instead of the $163 million deficit that they claimed to have, this time an overstatement of $172 million.

In addition, if they hadn’t put an extra $357 million into the Rainy Day Fund for fiscal year 2018/19, the surplus in real terms would have been $366 million.

It is not clear how and where all this money gets accounted for when you start moving it around from savings to operations, but safe to say, the Government of Manitoba actually a healthy pot of extra cash by the end of the 2018/19 fiscal year.

And worse (if you are a government that doesn’t want good fiscal news), because the Public Services Sustainability Act only applies to new collective agreements that are negotiated as the old ones expire, and because only a relatively small percentage had come up for renewal between June 2017 and March 2019, there hadn’t been that many new agreements reached under the PSSA by the end of fiscal year 2018/19.

That means that Manitoba already had a surplus of $9 million, and an extra $357 million to play with, long before most of the intended savings of the Public Services Sustainability Act have kicked in.

I think that was the problem. The Government of Manitoba based its whole case for the Public Services Sustainability Act, in court and out, on their declarations of urgent financial need. Leave the accounting numbers as they should be, and that all falls apart. So, I have a better idea. Let’s play political games with the Province’s financial statements.

Dear Government of Manitoba, you may, at any time, select whatever political narrative you wish that fits with the actual accounting numbers. You are not, however, free to fart around and fix the accounting numbers to fit with whatever political narrative you want to there to be.

We get it. When you are campaigning, you are making a play. It’s all about marketing, and building your brand. And we all understand that this government’s brand is focused on financial management and fiscal prowess. So, if you want to tell us how great you are going to be when you are trying to get elected, and how great you certainly are when you first take the reins, then go ahead. It’s not like we take you that seriously anyway.

But, when it comes to how you govern, and how you manage the Province’s money, these are excruciatingly critical matters. So listen, Government of Manitoba,

You had better not be lying about what you are doing with our money.

And, by the way, do you know why we even have an Auditor-General?

So that yahoos in government can’t lie to us about what they are doing with our money.

So do you know what you should do when the Auditor-General tells you that you have got your accounting all wrong?

Do exactly what he tells you to do, so that nobody thinks you are lying to us about what you are doing with our money.

You wanna play games? Save it for Campaigns. 

All Provincial Financial Statements should be antiseptically accurate and absolutely poop-free.

No wonder the credit ratings agencies question the quality of your financial forecasting abilities.

so, why are you doing this, exactly?

Was there ever a good reason to enact the Public Services Sustainability Act? The government didn’t prove that they needed it before they started, and the actual numbers that stumbled out demonstrate that they don’t need it now.

I don’t get it then. If the PSSA wasn’t necessary then why did you do it? And if you didn’t know whether the PSSA was necessary or not when you planned it, then why didn’t you just let the PSSA die when it became clear that it wasn’t? 

It’s bad enough that it appears that Manitoba doesn’t need the PSSA. But, upon realizing that truth, the only action you take is to twiddle the numbers so that you can pretend that Manitoba still has big deficits that need to be addressed? And you are so determined to go there that you are willing to try to politicize the independent office of the Auditor-General in the process? 

It’s hard to tell, but from where I am sitting, this all seems to be just making cuts for the sake of making cuts.

So is limiting public sector compensation just part of your political strategy to play to your base?

Or is all this just some thought-free adherence to some theoretical ideology? A neo-liberalistic nightmare induced by reading the Powell Memorandum too many times?

I’m not here to argue with the Government of Manitoba about public policies that may be derived from such philosophical beliefs. But I think they know already that they don’t have a mandate from the people of Manitoba to implement them.

Wanna know why? If the Government of Manitoba could start slicing away whatever parts of the public sector they wanted to and whenever they felt like, then they would have just done it. But no, we have had two and a half years and a 13 day trial, of the government saying –

No, no, these aren’t just cuts to make cuts, and who said anything about union-busting? We don’t want to be making these tough financial decisions. We need to control our expenditures because the financial circumstances we face are very dire indeed. We need all hands on deck, and we thank the public sector employees for helping us.

No wonder they wanted the Auditor-General to help them hide the truth, moving money around in the financial statements like a shell game played by a carnival clown.

No one in Manitoba voted for that.

thank you norm ricard

Thank you to Mr. Norman Ricard, the Auditor-General who stayed the course on the Province’s practice of improper accounting. And yet, he is our Auditor-General no more. Some time in the middle of 2019, Mr. Ricard announced that he is retiring in the middle of his term. He says he made it clear he probably wouldn’t finish out his term when he signed on. 

Maybe so.  But it makes me uncomfortable when an independent public officer resists the government of the day, and in Mr. Ricard’s case, clearly and firmly, and then suddenly annouces his retirement. It raises the question of whether the government wanted Ricard out, so that they can replace him with someone who might be more willing.

Greg Juliano was another actor who’s truth embarrassed the Government of Manitoba was doing. As discussed in the Testimony of Dr. Mark Hudson, Juliano testified before the Labour Relations Board that the government had essentially forced the University of Manitoba to engage in a unfair labour practice in order to “not embarrass the Province” which was entering into its “let us limit all wages of all public employees” phase.

Juliano left the University a few months after the Labour Relations Board decision came out.

And now Aurel Tess is no longer the Provincial Comptroller. As of January 2020, he is the Vice-President and Chief Financial Officer at Manitoba Hydro. It is still in his wheelhouse, but I suspect that CFO at Hydro is a step down from the CFO for the whole province.

It makes me nervous, and enough to go on alert. And I think that if one more person gets punted, or, especially if the new Auditor-General suddenly magically finds that the Government of Manitoba can overstate the deficit in the way that they tried, then it is probably time for Manitobans to raise the red flag, and channel Emile Zola and start chanting J’accuse.

• • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

There are deeper questions that arise from all this. If the Public Services Sustainability Act  wasn’t actually necessary, because our finances aren’t anywhere nearly as bad as the government has been claiming, then is any of it necessary? The health cuts? The nickel and diming of social services for Manitoba’s most vulnerable people? Closing the Dauphin jail?

No one would ever suggest that the Province shouldn’t be wise about how it spends money. But that is very different from cutting to save money when it isn’t required. 

The Trial Begins

Setting the scene in Courtroom #210 as the trial of MFL v. Manitoba begins. We get some background and meet the players.

Opening Statements

The proceedings begin with opening statements. Here, the lawyers for each side give us an outline of the course they are going to take (and why it is going to take 13 days to get there).

The Testimony of Kevin Rebeck

The President of the Manitoba Federation of Labour testifies about consultations between the government and some Labour leaders prior to the PSSA being passed. They weren’t very fruitful, and there seems to have been some question as to whether the government was being truthful.

Passed but Not Proclaimed?

Why is the government waiting to proclaim the PSSA? I thought there was a financial emergency, and dire warnings of our precarious fiscal position. But it has been 2 1/2 years. Don’t they need it yet?

The Testimony of Elizabeth Carlyle

Elizabeth Carlyle gets cross-examined about what happened in a negotiation between CUPE and the Winnipeg School Division. It wasn’t a lot, and it doesn’t sound as though it was very good.

The Testimony of Dr. Mark Hudson

Remember when the faculty at the University of Manitoba when on strike in November of 2016? Dr. Mark Hudson is here to tell us why it happened. And he fills us in on what was happening between the University and the Province behind the scenes.

The Testimony of Tom Paci

Tom Paci appears on behalf of the Manitoba Teachers Society. His story? A quest for justice for Manitoba’s 15,000 teachers and an appeal to the gods of justice – how can we be bound by the PSSA when it is not law?

Indirect Taxing & Discriminatory Taxation

If a tax by any other name would be as taxing, could wage freezes be indirect taxation? And if members of public sector unions are paying more in taxes to support public services, would this qualify as discriminatory taxation?

The Testimony of Michelle Gawronsky

The leader of the Manitoba Government and General Employees Union recounts her experiences since the advent of the PSSA. Everything she says about her automatic approach to understanding concerns and finding ways to solve problems makes me think ” leader, leader, this is a great leader.”

The Super Six Speak

Six experienced union negotiators come to tell us about what has been happening in their collective bargaining worlds. We learn more about what the PSSA means for public sector unions and their collective agreements.

Labour’s Collective Bargaining Expert

Dr. Robert Hebdon testifies about the impact of the PSSA on collective bargaining in Manitoba’s public sector. It isn’t good.

The Testimony of Sheila Gordon

We end the union tales of collective bargaining under the PSSA in passed-but-not-proclaimed limbo with MGEU’s GEMA. Sheila Gordon, MGEU’s senior negotiator was there. And she is here to tell us how those negotiations did not go anywhere.

Labour’s Read-ins and One Last Reveal

You never know what read-ins from discovery might reveal.

The Testimony of Richard Groen

Richard Groen, an Assistant Deputy Minister from the Ministry of Finance, testifies about the Province’s budgets and such.

I was expecting him to demonstrate what all the financial fuss in 2017 was about, you know, why our financial ship was sinking so much that we needed all hands on deck. But …

A No-Compete Treat for the Labour Market?

I don’t understand why the government doesn’t think it should have to compete in its own labour market. It does everywhere else.

The Testimony of Garry Steski

Is it wrong to admit that before this I didn’t really know what a bond market was? Well, I do now, and we learn a little about how Manitoba’s bonds were affected by the fiscal challenges in 2016. Or not.

Bean Counters, Businessmen & Business of Government

If businessmen go into government to bring the principles of good business to government, then shouldn’t they act like good businessmen when they get there?

The Government’s Collective Bargaining Expert

It is best to talk about what happened here as little as possible. So we’ll talk a bit about the importance of turkey instead.

The Testimony of Aurel Tess

How a short day of seemingly tedious technical testimony on Manitoba’s Summary Financial Statements turned into a most unpleasant surprise.

Politicizing the Provincial Comptroller

Ok, Manitoba. Politicizing the Office of the Provincial Comptroller?

That takes the poop-cake.

The Government’s Economics Expert

The government’s economics expert, Dr. Livio Di Matteo, has a motto he lives by: Agimus Meliora – Let us do better.

It makes me wonder, Manitoba, can’t we do better than the PSSA?

Labour’s Economics Expert

Dr. Eugene “the Earnest” Beaulieu testifies that the PSSA is not only not necessary, it is a harsh measure that puts an unfair burden on public employees.

Bye Bye, Dumbo

Let’s take one last look at the Elephant in the Room, and then say goodbye.

The Mandamus Application

A day of argument about whether a statute that says “the Minister SHALL FORTHWITH” means that the Minister can decide not to do something and make up his own reasons for why he shouldn’t.

Decision on the Mandamus Application

Justice Keyser, the judge on the Mandamus Application, has spoken. Here’s a hint – MGEU wins.

Bill 9: We’re Gaming Again …

Before we begin all the good stuff, Garth Smorang has some objections to yet another litigation game the Government of Manitoba is playing.

Labour’s Final Argument

Labour’s last stand. Shannon-the-Hammer and Smorang-the-Smasher pull it all together and wrap it all up.

There is an awful lot of it, so Labour’s final arguments have been separated into four separate posts, which start here …

Butt-First Buffoonery

How did the Government of Manitoba get to such an embarrassing PSSA place? They backed into it.

The Government’s Final Argument

Forget the Elephant-in-the-Room.The Government of Manitoba has got many other ways to try to move the goalposts, as they try to change the game.

Kind of seems like they know they are losing.

Labour Replies

The Finale of the Finale. Labour replies.

(This means we are finally done. At least with the evidence and arguments.)

The Onion of Outrage

Why am I here? Why spend so much watching lawyers and judges and reading endless cases? It’s a pretty simple answer.

I was mad.

The Decision is In!!!

The Honourable Justice Joan McKelvey has ruled. Labour won. The PSSA is unconstitutional.

This is what she decided and why.

What Have We Learned?

There’s lots to discover from considering Justice McKelvey’s decision, and not just for labour lawyers. Let’s take a look at what we have learned.