How big bucks from big tobacco prevented N.L.'s deficit from doubling
CBC
The Newfoundland and Labrador government included in this year's pre-election budget decades worth of revenues from the pending settlement of a lawsuit against tobacco companies, helping stem a flow of red ink that could have doubled the current projected deficit.
At this point, it is the only province that has decided to apply all of the cash — in Newfoundland and Labrador's case, more than half a billion dollars — to the financial ledger now.
And that has experts raising eyebrows.
"Given that it's exactly the same transaction, I don't know why there would be different recognition criteria and practices and that the provinces would account for this differently," Azfar Ali Khan, director of performance at the University of Ottawa's Institute of Fiscal Studies and Democracy, said in a recent interview with CBC/Radio-Canada.
"That would strike me as a bit puzzling."
His colleague — former Parliamentary budget officer Kevin Page, who is now CEO of the non-profit think tank — said that, in the final analysis, it will be Newfoundland and Labrador's auditor general who will opine on the implementation of accounting rules.
Former federal comptroller general Charles-Antoine St-Jean said Page's assessment is in line with his.
"If the minister of finance can satisfy herself — and make the case to the AG — that the payment stream is secured, there is a legitimate basis to record the full amount at this time," St-Jean wrote in an email to CBC/Radio-Canada.
"The real issue is the first word, i.e. 'if.'"
But the AG does not appear to have been brought into the loop.
Auditor General Denise Hanrahan confirmed to CBC/Radio-Canada that her office had not been consulted in advance of the decision.
The Department of Finance did not make anyone available for an interview, but in a statement said "it is not surprising to see other jurisdictions differ as to how to account for the legal settlement" as the process has been evolving over a number of years, and continues to evolve.
The government says it got an update from its external legal team on when proceedings are anticipated to wrap up.
"Based on this status update, it appeared reasonable to assume that an agreement on the payment terms of the legal settlement would be reached during the 2025-26 fiscal year," spokesperson Janelle Simms wrote in an emailed statement sent on behalf of the department.
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