The B.C. government continues to have a strong financial bottom line, but the auditor general is warning that poor money managing at BC Hydro could change that.
Finance Minister Carole James presented public accounts on Tuesday, the province’s audited financial books for 2017-18, by announcing the province is making a $950-million adjustment to address the auditor general’s concerns about the former B.C. Liberal government’s approach.
“This does not fix the problem that was left with us, but it is a significant step. We are not ignoring it,” said James. “As early as 2009, auditors general have had concerns about the misuse of deferral accounts. The previous government’s repeated inappropriate interference with the BC Utilities Commission led to unsustainable growth in BC Hydro’s deferral accounts. This has serious consequences for the long-term sustainability of one of our most important Crown corporations.”
“People won’t see an increase on their hydro bill.”
Deferral accounts have been described as a smokescreen to create the illusion of profits in the short term by requiring the debt to be paid off in the future. These sorts of accounts are used by utility companies across North America and have historically been used to keep rates stable and avoid rate shock.
The adjustment is solely an accounting move, won’t see any money change hands and will have no immediate impact on the rates people pay to BC Hydro. There is an additional $4.5 billion that has been deferred by the government that will be paid off long term.
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Along with the update on BC Hydro, Auditor General Carol Bellringer also audited the province’s entire financial picture. After the audit, it was found that the province had a $301-million surplus in the 2017-18 fiscal year.
The strong economic picture was partly on the back of higher than expected property transfer tax revenues. The province brought in $266 million more in transfer tax revenues than expected.
But with housing prices going down in Metro Vancouver, there is an expectation that property transfer tax revenues will go down for the current fiscal year.
“Our government is committed to addressing the housing crisis,” said James. “We want the market to moderate. We think that is important not just for families and affordability, but for our economy.”
“So do I expect there will be changes in revenues. Of course I do. What concerns me is having an economy based on a speculative housing market.”
The province also had to deal with $1.3 billion in losses at ICBC. The government is in the midst of overhauling the public insurer in an attempt to deal with the “dumpster fire.”
“Our government has been working hard throughout our first year in office to clean up the problems we inherited, while delivering on our commitment to make life better for people,” said James. “Despite historic losses at ICBC and a $950-million adjustment to address the auditor general’s concerns about the former government’s approach to rate regulation, we reduced our debt and achieved a truly balanced budget.”