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Manitoba election Day 10: McFadyen draws first blood

Ten days into the Manitoba election campaign, neither party can claim to have momentum.

But Conservative Party leader Hugh McFadyen has drawn first blood.

Or, more accurately, Winnipeg Sun columnist Tom Brodbeck drew first blood and McFadyen is riding piggyback on Brodbeck's work.

Still, when even NDP apologist Dan Lett has to admit, grudgingly and reluctantly, in the Winnipeg Free Press that he was wrong, and Brodbeck and McFadyen were right, it's time to call in the cut man.
It's too early to say if this is the game changer, but the NDP's phony deficit figures could turn into just the integrity issue that tips the election.

Unelected Premier Greg Selinger thought he was being clever when he delayed officially calling the provincial election until after his government released the final accounting of the 2010-11 budget on Friday, Sept. 2.

The public accounts allegedly showed that Manitoba ended the 2010 fiscal year with a deficit of $298 million, which was a whopping $247 million less than the government forecasted. Selinger preened at being such a fantastic money manager, especially on the eve of an election.

He never expected anyone to actually read the report any further than the summary, especially over the September long weekend.

And he was almost right. Nobody did---except for the Sun's Brodbeck, who either plodded through pages of numbing numbers or was handed a treasure map by somebody and followed it straight to the money pit.

"NDP cooking the books to conceal real deficit" read the Sun's Saturday headline.

The province prepares two sets of books to explain its budgets. There is the operating budget, which details the revenues the government receives and all the money the government spends.

Then there is the summary budget which is a record of all provincial finances, including Crown Corporations that allegedly operate at arms-length from government.

Since 2008 the NDP, with the knowledge and connivance of Manitoba auditor Carol Bellringer, has been hiding loans and advances to Crown organizations by simply calling them "assets" in the books, and not spending.

As well as disguising these expenditures, the NDP has been able to use surpluses from Manitoba Hydro and MPI to cover deficits in the operating budget. Together, this has allowed the government to claim lower deficits than they actually incurred, lower by hundreds of millions of dollars.

The NDP winced, then shrugged off the Sun story. They bet it had no traction. Budget stories are a storm of numbers that nobody can understand and few voters will spend the time to read.

When, four days later, Tory leader McFadyen, in a scrum, belatedly raised the matter of the NDP's "fudging" the budget numbers, the usual NDP apologists rushed to put out the fire.

"Provincial budget not doctored: auditor/ Deficit figures above board despite allegations", read the headline in the Winnipeg Free Press over a story by Mia Rabson and Bruce Owen.

"Auditor general Carol Bellringer dismisses Tory suggestions the Selinger government doctored its financial books in order to hide a larger deficit," they wrote.

"Anyone who aspires to be premier should have enough sense to respect the auditor general when she weighs in on such an important matter. Disputing Bellringer's statement is a triumph of partisanship over dignity." sniffed FP columnist and NDP defender Dan Lett.

But the story stayed alive on the blogosphere. Brodbeck, on his blog Raise a Little Hell, reported how Bellringer walked him through the books and showed him the way the government hides its deficits. Bruce Owen, on his little-read newspaper-sanctioned blog, revisited the issue with former Conservative finance minister Eric Stefanson:

"The smoking gun for the Tories is on page 4, Details and Reconciliation to Core Government Results. The blood on the floor is money moved from Manitoba Hydro ($150 million) and the Workers Compensation Board ($64.1 million) into the summary budget...They really are not part of the core government,” Stefanson said of the Crowns. “They really are funded by ratepayers.”

"Without that $191.8 million, the deficit is actually almost $490 million, Stefanson said."

"Stefanson’s second point was on another page, Loans and Advances. In particular, loans and advances to Crown organizations and enterprises like Manitoba’s post secondary institutions. '
"The money, roughly $400 million, will only be repaid to government through future appropriations, according a note at the bottom of page 114 of the Summary Financial Statements."

On Thursday, the pressure of truth finally cracked the defence wide open.

"Tory charge of NDP fudging needs closer examination" declared the headline over a rapidly backpeddling column by Dan Lett.

"In an election, it's not necessary to be right when launching an attack on your competitor. In most instances, being not entirely wrong is good enough."

"Such is the case with the lingering allegations from the Progressive Conservatives that the NDP government deliberately hid hundreds of millions in expenses and liabilities to make its current deficit position look better. Although balance sheets and accounting are pretty dry stuff, this particular issue is a key theme of the Tory campaign."

...
"It is, however, an instance where
those making the allegation are, at most, not entirely wrong."
...
"It is true that only using the summary budget allows a government to use revenues from Crown corporations like Manitoba Hydro
to hide a spending problem on the core side."
...

"The other reason auditors don't like core budgets is they usually exclude certain liabilities and costs to make the bottom line look better. This is what the Tories have seized upon."

"McFadyen and some allies, including former Tory finance minister Eric Stefanson and U of M economist John McCallum, argue Selinger deliberately misled Manitobans by not properly recording cash in from Crown corporations and outgoing loans and other advances in the core budget. A note in the public accounts confirmed these exceptions. If they are added in, the operating deficit would be $190 million higher."
"McFadyen's numbers are essentially correct..."

Desperate to give the NDP a fig leaf to hide behind, Lett clutches at another interview with, guess who, Carol Bellringer who says that all governments use accounting tricks to hide deficits.

Aha, blares Lett, remember that Gary Filmon, Greg Selinger's bete noir, used his "rainy day fund" to "muddy the waters." The rat.

But, forced to concede that "McFadyen may have a point", Lett concludes that the NDP don't have to explain to anyone why they're misleading the public on the deficits they're running.

The onus, he declared, is on McFadyen.

That is the Winnipeg Free Press way of reporting the, ahem, truth.

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