Transcript: Accounting Matters, Part 2 | May 07, 2018

Steve sits in the studio. He's slim, clean-shaven, in his fifties, with short curly brown hair. He's wearing a gray suit, lilac shirt, and spotted purple tie.

A caption on screen reads "A 20 billion dollar accounting dispute. @spaikin, @theagenda."

Steve says THE DISPUTE BETWEEN
THE PROVINCIAL GOVERNMENT AND
THE AUDITOR GENERAL OVER WHAT
THE REAL BUDGET DEFICIT IS MAY
BE FASCINATING FOR ACCOUNTING
NERDS, BUT DOES IT MEAN ANYTHING
FOR THE ECONOMICS AND POLITICS
OF THE PROVINCE GOING FORWARD?
HERE TO HELP WITH THAT:
SHEILA BLOCK, SENIOR ECONOMIST
AT THE CANADIAN CENTRE FOR
POLICY ALTERNATIVES...

Sheila is in her forties, with short white hair. She's wearing glasses, a black blazer and a white shirt.

Steve continues WALID HEJAZI, ASSOCIATE
PROFESSOR OF ECONOMIC ANALYSIS
AND POLICY, AND ACADEMIC
DIRECTOR, AT THE U OF T's ROTMAN
SCHOOL OF MANAGEMENT...

Walid is in his early forties, clean-shaven, with short gray hair. He's wearing a gray suit and shirt, and a striped gray tie.

Steve continues AND MARTIN REGG COHN, ONTARIO POLITICS COLUMNIST AT THE
TORONTO STAR.

Martin is in his early fifties, clean-shaven, with short brown hair. He's wearing glasses, a gray suit and shirt, and a checked yellow tie.

Steve continues IT'S GOOD TO HAVE ALL THREE OF
YOU BACK AT TVO TO HELP US OUT
WITH THIS.
LET US GET YOUR POSITIONS ON THE
RECORD BEFORE WE START HERE.
YOU KNOW THAT THE PROVINCE OF
ONTARIO CLAIMS THAT THE BOOKS
ARE BALANCED, IN FACT A SMALL
SURPLUS FOR THE FISCAL YEAR WE
ARE JUST EXITING.
THE AUDITOR GENERAL SAYS NO.
IN FACT, WE HAVE A 20 BILLION DOLLAR
ACCOUNTING DISPUTE BECAUSE SHE
THINKS THE BOOKS ARE IN MUCH
WORSE CONDITION AND HAS NOT,
QUOTE, UNQUOTE, SIGNED OFF ON
THE MINISTRY OF FINANCE'S MATH.
LET'S GO THROUGH THIS.
WHO'S RIGHT?

Sheila says WELL, THEY BOTH ARE.

Steve says I WAS AFRAID YOU WERE
GOING TO SAY THAT.

The caption changes to "Sheila Block. Canadian Centre for Policy Alternatives."
Then, it changes again to "First impressions."

Sheila says I REALLY THINK IN TERMS OF
THE VALUATION OF THE PENSION
ASSETS, YOU KNOW, OUT OF THE
BLUE THE AUDITOR GENERAL SAID
THERE'S A PROBLEM HERE.
THE PROVINCE REALLY ESTABLISHED
A BLUE RIBBON PANEL AND THEY
SAID, NO, THERE'S NOTHING
OFFSIDE HERE.
AND SOMETHING THAT MAYBE
SHOULDN'T HAVE STARTED, REALLY
SHOULDN'T BE CONTINUING.
SO THAT'S THE PENSION PART OF
IT.
THE OTHER PART OF IT IS HOW THE
DEBT ASSOCIATED WITH THE FAIR
HYDRO PLAN IS BEING TREATED, AND
ON THAT WE HAD A CHANGE IN
ACCOUNTING POLICY THAT HAPPENED
TO COINCIDE WITH THE POLITICAL
AND POLICY DESIRES OF THE
CURRENT GOVERNMENT, AND EXPERT
OPINION ON THAT ONE SEEMS TO BE
AT BEST ON THE FENCE.
SO A LITTLE BIT OF BOTH IN MY
VIEW.

Steve says WALID, HOW ABOUT YOU?

The caption changes to "Walid Hejazi. Rotman School of Management."

Walid says I THINK WHEN
IT COMES TO THE FAIR HYDRO
POLICY, I THINK IT'S COMPLETELY
MISLEADING WHAT THE GOVERNMENT
HAS PRESENTED.
AND I THINK THE CHANGE IN THE
POLICY OF THE GOVERNMENT IN
TERMS OF HOW TO REPORT THIS WAS
NOT A COINCIDENCE.
I THINK IT'S DONE SPECIFICALLY
FOR THE PURPOSE OF MAKING THE
BOOKS LOOK BETTER THAN THEY
ACTUALLY ARE, AND THE FACT THAT
SEVERAL OF THESE ACCOUNTING
FIRMS HAVE APPROVED IT MEANS
IT'S LEGAL BUT IT DOESN'T MEAN
IT'S FAIR.
AND THE LAST THING I HAVE TO SAY
IS THE COMMENTARY BY THE C.D.
HOWE THAT WAS JUST RELEASED
SHOWS THE TRANSPARENCY GRADES
FOR THE ONTARIO GOVERNMENT, AND
THEY'VE GONE FROM A MINUS TO B
TO C.
CLEARLY THE GOVERNMENT HAS BEEN
IMPLEMENTING THESE KINDS OF
CREATIVE ACCOUNTING PRACTICES TO
MAKE THE BOOKS LOOK BETTER THAN
THEY ACTUALLY ARE, AND I THINK,
AS AN ACADEMIC AND AS THE
INFORMED PUBLIC, THAT SHOULD BE
BROUGHT OUT FOR THE PUBLIC TO
UNDERSTAND THAT THAT'S THE
MOTIVATION FOR IT.

Steve says OKAY.
WE HAVE ONE VOTE FOR THE AUDITOR
GENERAL, WE HAVE ONE SORT OF A
LITTLE BIT ON EACH SIDE.
MARTIN, WE KNOW WHERE YOU ARE ON
THIS.
GO AHEAD.

The caption changes to "Martin Regg Cohn. Toronto Star."

Martin says WELL, IT DEPENDS WHO YOU ASK.
IF YOU ASK THE AUDITOR AND WHICH
AUDITOR YOU ASKED, IF YOU ASKED
THE AUDITOR THREE YEARS AGO IF
THE PENSION ACCOUNTING WAS
ACCURATE, SHE NOT ONLY WOULD
HAVE SAID YES, SHE SIGNED OFF ON
IT.
SO IT HAS BEEN ACTUALLY LEGAL
AND ACCEPTED, GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES... IF
THERE ARE SUCH A THING... SINCE
2002 UNDER THE PROGRESSIVE
CONSERVATIVE GOVERNMENT.
ABOUT TWO OR THREE YEARS AGO,
SHE HAD A CHANGE OF MIND.
SHE DECIDED TO CHANGE HER
PREVIOUS ACCOUNTING PRACTICES,
JUST AT THE TIME AS THE
LIBERALS... BEFORE THE LIBERALS
WERE ABOUT TO BALANCE THEIR
BUDGET.
PERHAPS THAT WAS A CONSTABLE COE
DENSE, WALID, I DON'T KNOW.
SINCE GOVERNMENTS CAME UP WITH
THE CONCEPT OF DEPRECIATION,
WHICH IS ABSTRACT, IF YOU THINK
ABOUT IT.
ON THE PENSION ONE, THEY BROUGHT
IN A BUNCH OF EXPERTS, AND THEY
SAID SHE WAS DEAD WRONG.
ON THE FAIR HYDRO PLAN, THAT'S A
REALLY MORE COMPLICATED ONE AND
I THINK IT IS AGGRESSIVE
ACCOUNTING BUT IT'S THE SAME
ACCOUNTING THEY USED AT TORONTO
HYDRO, THAT'S BEEN USED IN
ALBERTA.
I STRUGGLE WITH DEPRECIATION.

Steve says HOLD ON.
LET ME FOLLOW UP ON ONE THING
YOU SAID.
IT IS A FACT AS YOU HAVE
CHRONICLED IT THAT THE AUDITOR
GENERAL CHANGED HER MIND.
WHAT PREVIOUSLY SHE WAS OKAY TO
SIGN OFF ON SHE NOW SAYS IS NOT
ACCEPTABLE AND IS NOT REASONABLE
ANYMORE.
HER POSITION ON THIS HAS BEEN...
SHE WAS ON THIS PROGRAM, SHE
TOLD US... HER POSITION ON THIS
HAS BEEN I HAVEN'T REALLY
CHANGED MY MIND.
I ALWAYS THOUGHT THIS.
SINCE THIS WAS THE WAY IT HAD
ALWAYS BEEN DONE IN ONTARIO
HISTORY, I WASN'T PREPARED TO GO
TO THE WALL AT THAT POINT.
BUT NOW SHE SAYS IT'S TIME.
DO YOU ACCEPT THAT EXPLANATION?

The caption changes to "Martin Regg Cohn, @reggcohn."
Then, it changes again to "Auditing the Auditor."

Martin says THAT'S FAIR BALL.
I DON'T THINK WE SHOULD... IN
CANADA WE HAVE THIS PECULIAR
CANADIAN LOVE OF DEBATING TWO
THINGS: PROROGATION, FOR ONE
THING, AND YOU'RE PROBABLY
GUILTY OF THAT; AND THIS IDEA OF
TREATING AUDITOR GENERALS AS
GODS, AS ROCK STARS, AND IT
STARTED WITH KENNETH DYE WHO WE
COVERED DECADES AGO AND SHEILA
FRASER AND THEY'RE LIKE THE
POPE, THEY'RE NEVER WRONG.

Steve says THEY'RE
NON-PARTISAN, THAT'S WHY THEY
GET EXTRA WEIGHT.

Martin says I'M NOT QUESTIONING THAT.
ANDRE MARIN WAS AN INDEPENDENT,
NON-PARTISAN, AN OMBUDSMAN WHO
RAN FOR THE PROGRESSIVE
CONSERVATIVES.
THE ENVIRONMENTAL COMMISSIONER
RAN FOR THE GREEN PARTY AS SOON
AS HE QUIT.
LET'S NOT PRETEND THAT THEY'RE
GODS.
I'M NOT SUGGESTING SHE IS DEAD
WRONG ABOUT EVERYTHING.
I THINK SHE DOES A LOT OF
TERRIFIC WORK.
MOST OF WHAT SHE DOES IS QUITE
VALUABLE.
ON THE PENSION THING, I'M NOT AN
EXPERT, BUT THEY BROUGHT IN FOUR
EXPERTS WHO SAID SHE WAS DEAD
WRONG.

Steve says I HAVE AN EXPERT
SITTING BESIDE ME HERE, SO I
WANT... CAN YOU TAKE US THROUGH
IN AS ECONOMICS 101 A WAY AS
POSSIBLE, THE NATURE OF THE
DISAGREEMENT ON THE PENSION
ISSUE.
THE GOVERNMENT CLEARLY THINKS
ONE WAY.
THE AUDITOR GENERAL OBVIOUSLY
THINKS A DIFFERENT WAY AND THE
RESULT IS A MULTI-BILLION DOLLAR
DISAGREEMENT.
WHAT'S THE NATURE OF IT?

The caption changes to "Pension assets and hydro numbers."

Sheila says THE NATURE OF
IT IS HOW DO YOU TREAT ASSETS IN
A PENSION PLAN, RIGHT?
AND I THINK THE NATURE OF IT IS,
YOU HAVE ASSETS AND YOU HAVE
LIABILITIES.
THERE IS GOVERNMENT
RESPONSIBILITY IN PART FOR THOSE
ASSETS AND LIABILITIES.
AND I THINK THE ISSUE IS REALLY
ONE OF CONSISTENCY.
THAT IF SHE WAS WILLING TO TAKE
ON THE LIABILITIES WITH THE
GOVERNMENT, THEN YOU ALSO NEED
TO, IN THAT KIND OF BALANCING,
ALSO ACCOUNT FOR THE ASSETS.
BUT I THINK, YOU KNOW, I THINK
WE WANT TO STEP BACK A LITTLE
BIT FROM THIS AND TALK ABOUT
WHERE THIS AUDITOR GENERAL HAS
KIND OF STEPPED OUT BEYOND HER
EXPERTISE.
AND I KNOW ON SOME ECONOMIC
ISSUES, I'VE HAD SOME QUESTIONS
ABOUT HER CLAIMS.

Steve says LIKE WHAT?

Sheila says FOR EXAMPLE, WHEN SHE DECIDED
THAT SHE WANTED TO CALCULATE HOW
LONG IT WOULD TAKE TO PAY OFF
GOVERNMENT DEBT, AND THAT WAS
MAYBE TWO OR THREE YEARS AGO.
AND THAT'S... GOVERNMENTS DON'T
HAVE TO PAY OFF DEBT BECAUSE AS
WE ECONOMISTS LIKE TO SAY
GOVERNMENTS ARE INFINITELY
LIVED, RIGHT?
SO IT'S NOT A RELEVANT CONCEPT.
BUT AGAIN I THINK IT WAS
SOMETHING THAT WOULD GRAB A
HEADLINE.
AND SO I THINK SIMILARLY WITH
THIS ISSUE, SHE'S CROSSING A
LINE BETWEEN ACTUARIAL EXPERTISE
AND ACCOUNTING, AND SHE SLIPPED
THERE.
AND I HAVE TO AGREE WITH MARTIN,
SHE SLIPPED THERE AND DIDN'T
ACKNOWLEDGE IT AND I THINK, TO A
CERTAIN EXTENT, WE HAVE AN
AUDITOR GENERAL HERE WHO IS
CRIED WOLF, AND WHEN SHE RAISES
SOMETHING THAT'S I THINK MORE
LEGITIMATE, LIKE THE ISSUE
AROUND THE BORROWING AROUND THE
FAIR HYDRO PLAN, SHE'S GOT A
LITTLE BIT LESS CREDIBILITY
BECAUSE WE'VE HEARD THIS BEFORE
FROM HER.

Steve says LET ME GET WALID
FROM THAT.
THE EXPRESSION IN POLITICS IS
SHE IS TOO FAR OUT OVER HER
SKIS.
DO YOU THINK SHE IS?

Walid says I DON'T THINK.
I WANT TO STAY ON THE EXACT
ISSUE WE'RE TALKING ABOUT.
EVEN IN VALUING THE PENSION
ASSETS THERE'S A FOOTNOTE IN THE
C.D. HOWE INSTITUTE COMMENTARY
THAT SHOWS THE DISCOUNT RATE THE
GOVERNMENT IS USING FOR THE
LIABILITIES IS HIGHER THAN WHAT
THE PENSION PLAN IS USING.
ALL OF THIS TO SAY IN ENGLISH IS
THAT THE GOVERNMENT IS
OVERSTATING THE ASSETS THEY HAVE
IN THE PENSION.
BUT I THINK IT'S REALLY
IMPORTANT...

Steve says SORRY.
TO WHAT END?

Walid says TO MAKE IT LOOK LIKE THEY
HAVE MORE ASSETS AVAILABLE TO THEM.

Steve says AND THEREFORE THE
BOOKS LOOK BETTER...

Walid says ABSOLUTELY.
SO THERE'S THREE BIG THINGS
GOING ON.
ALL THREE OF THEM WORK IN THIS
GOVERNMENT'S FAVOUR.
I THINK THE BIG ADVANTAGE FOR
THIS GOVERNMENT, HOWEVER, IS THE
FACT THAT THE CRITICISMS FROM
THE NDP AND THE CONSERVATIVES IS
VERY DISINGENUOUS.
I THINK IT'S VERY IMPORTANT FOR
THE VIEWERS TO UNDERSTAND THAT
THE BOOKS THAT THE GOVERNMENT IS
PRESENTING AND THAT THE OTHER
TWO PARTIES HAVE ALSO BLESSED IN
THEIR PLATFORM DEVELOPMENT,
THEY'RE NOT GIVING AN ACCURATE
REPRESENTATION.
JUST THINK FOR A MINUTE THAT
THERE'S A STRUCTURE THEY CREATED
AND WITHIN THAT STRUCTURE THIS
TRUST, THEY HAVE AN ASSET.
WHAT IS THE ASSET THAT THIS
GOVERNMENT HAS CREATED IS THE
RIGHT TO GET THESE ADDITIONAL
SUBSIDIES FROM FUTURE RATE
PAYERS.
WHAT KIND OF AN ASSET IS THAT?

Steve says THIS IS THE HYDRO
ARGUMENT NOW.

Walid says YES.
IT TIES THE HANDS OF FUTURE
GOVERNMENTS AND I THINK SECONDLY
AND MOST OFFENSIVE IS THE IDEA
THAT BY USING THIS CREATIVE
APPROACH, THE COST TO FINANCE
THIS CREATIVE APPROACH IS
4 BILLION DOLLARS HIGHER THAN HAD THE
GOVERNMENT SIMPLY TAKEN THOSE
LIABILITIES AND PUT IT ON THEIR
OWN BOOKS.

Steve says BUT AS A POLITICAL
PROBLEM, IT'S GONE AWAY.

Walid says AS A POLITICAL PROBLEM, IT'S
GONE AWAY.

Steve says WELL, THAT WAS THE
POINT, WASN'T IT?

Walid says AND THEY'RE SUCCESSFUL AT IT
AND WE KNOW HYDRO COSTS HAVE
COME DOWN.
IT'S NO LONGER A TOP CONCERN OF
ONTARIANS.

Steve says LET ME FOLLOW UP
WITH MARTIN.
IT IS A FACT THAT THE
PROGRESSIVE CONSERVATIVES AND
NEW DEMOCRATS HAVE PUT FORWARD
TO THE EXTENT THEY HAVE, THE NDP
A LOT, THE PCs NOT SO MUCH,
SPENDING PLANS BASED ON THE SAME
ARITHMETIC, BASED ON THE SAME
ACCOUNTING PRINCIPLES THAT THE
LIBERALS ARE NOW BEING
CRITICIZED FOR.
AND WHEN THE TORY FINANCE CRITIC
WAS ASKED THE OTHER DAY: ARE YOU
THEREFORE, WHEN YOU GET INTO
GOVERNMENT, IF YOU GET INTO
GOVERNMENT, GOING TO ABIDE BY
THE AUDITOR GENERAL'S RULING,
THERE WAS A... WELL, WE'RE NOT
ANSWERING THAT QUESTION YET.
SO REALLY, IS EVERYBODY KIND OF
COVERED IN MUD ON THIS ONE?

The caption changes to "tvo.org/theagenda."

Martin says EVERYBODY.
TO USE WALID'S TERM, A FOOTNOTE.
THE DEMOCRATS ARE ACTUALLY NOT
ENDORSING THE FAIR HYDRO PLAN.
THEY SAY THEY'LL SCRAP IT, TO
THEIR CREDIT, I GUESS.
THEY ALSO SAY THEY WILL REDUCE
HYDRO COSTS BY 30 percent.
THEY HAVEN'T SAID HOW.

Steve says WELL, BY BUYING BACK
HYDRO ONE, IS WHAT THEY SAID.

Martin says WHICH HAS SOMETHING TO DO
WITH RAISING OR LOWERING COSTS,
AS YOU KNOW, WHICH COSTS
BILLIONS OF DOLLARS MORE TO BUY
BACK THE CORPORATION...

Steve says YOU HEARD IT.

Martin says BUT THE PROGRESSIVE
CONSERVATIVES ARE ON RECORD IN
THEIR PLATFORM WHICH THEY ISSUED
AND THEN DOUG FORD SUSPENDED AS
SAYING THAT THEY WOULD ENDORSE
THE FAIR HYDRO PLAN AND THEY
ACCEPT THE AUDITOR GENERAL'S
NUMBERS.
THEY DON'T ACCEPT IT.
THEY'RE USING IT.
THEY'RE BASING THEIR PLATFORM ON
IT.
SO EVERYONE WILL HAVE THE SAME
NUMBERS.

Steve says THEY HAVEN'T SAID
THEY'LL DO THEIR BUDGETING IF
THEY'RE GOVERNMENT TO SATISFY
THE AUDITOR GENERAL.

Martin says NO, BUT DOUG FORD HAS SAID,
THE LEADER OF THE PCs, THAT HE
WOULD CALL IN AN INDEPENDENT
OUTSIDE GROUP OF AUDITORS TO
AUDIT WHAT'S GOING ON.
SO ALL THAT COMPLAINING THAT THE
LIBERALS BROUGHT IN SOMEHOW A
STACKED PANEL OF EXPERTS TO DEAL
WITH THE AUDITORS, LOOKS LIKE
THE TORIES ARE GOING TO DO THEIR
OWN OUTSIDE PANEL.

Steve says DOES THAT LOOK TO
YOU A LACK OF FAITH IN THE
AUDITOR GENERAL'S ABILITY TO GO
THROUGH LINE BY LINE THE BOOKS?

Martin says I DON'T KNOW IF THAT'S FAIR
FOR ME TO DRAW BUT THAT COMES
BACK TO SHEILA'S POINT THAT I
THINK THERE IS A BIT OF A
CREDIBILITY PROBLEM THAT
ATTACHES TO THE AUDITOR GENERAL.
WALID RAISED THIS FOOTNOTE OF
WHAT'S THE DISCOUNT RATE.
BY THE WAY, THE AUDITOR PLAYS
WITH THE SOCIAL DISCOUNT RATE AS
WELL.
SHE DID THAT WITH THE GAS PLANTS
TO COME UP WITH HER BILLION
DOLLAR BOONDOGGLE.
SHE PLAYED WITH ALL KINDS OF
NUMBERS TO MAKE IT HIGH.
I'M NOT SUGGESTING THAT WASN'T A
BOONDOGGLE.

Steve says BUT YOU WON'T KNOW
FOR 20 YEARS HOW MUCH IT COST.

Martin says THIS IS PROJECTED COSTS OVER
TIME OF TRANSPORT COSTS AND
TAXES AND EVERYTHING ELSE.
THIS IDEA OF A FOOTNOTE MAY BE
HIGHER OR LOWER.
THERE IS A SURPLUS.
EVERYONE AGREES THERE IS A
PENSION SURPLUS, WHETHER IT'S
10 BILLION DOLLARS OR 8.4 BILLION DOLLARS, IT
DOESN'T MATTER.
IF IT'S 11 BILLION DOLLARS THE AUDITOR
STILL SAYS, POOF, THAT SURPLUS
DOESN'T EXIST.
IF THERE WERE A LIABILITY, IF
THE PENSION FUND HADN'T
PERFORMED AS WELL AS IT HAS, IF
THE GOVERNMENT HADN'T PAID THOSE
PREMIUMS AND THE UNIONS AS WELL,
YOUR DEBT IS HIGHER BY
6 BILLION DOLLARS AND YOUR DEFICIT.
WHAT SHE HAS SAID IS THAT
SURPLUS DOESN'T COUNT FOR
ANYTHING...

Steve says YOU CAN'T TOUCH IT.

Martin says THE GOVERNMENT CAN'T RAID THE
PENSION FUND.
WELL, NO ONE CAN RAID PENSION
FUNDS IN ONTARIO.
IT'S A MYTH YOU CAN DO THAT, LET
ALONE A GOVERNMENT.
WHAT A GOVERNMENT CAN SAY IS WE
HAVE ALL THIS MONEY PILING UP.
AT SOME POINT WE COULD REDUCE
OUR CONTRIBUTIONS AND THAT WOULD
REFLECT POSITIVELY ON THE
BALANCE SHEET.

Steve says YOU MADE QUITE A
FACE.
CAN YOU TELL US WHY?

The caption changes to "Sheila Block, @Sheila_M_Block."

Sheila says IF WE JUST TAKE A FURTHER
STEP BACK HERE AND THERE ARE A
COUPLE OF KIND OF BIG ISSUES
HERE, ONE OF WHICH IS, IF
GOVERNMENTS WANT TO GET MORE
ENGAGED IN THE ECONOMY OR
SOCIETY BY REDUCING HYDRO RATES
OR BY DOING OTHER THINGS,
THEY'VE GOT TO PAY FOR THOSE
THINGS.
AND A LOT OF THIS CREATIVE
ACCOUNTING COMES FROM THAT FEAR
OF RAISING TAXES.
SO I THINK THAT'S ONE ELEMENT.
AND THE OTHER ELEMENT OF IT IS
PART OF THE WAY THAT YOU KIND OF
SHUFFLE ASIDE FROM THAT IS BY
PRIVATIZATION.
AND I THINK WHAT WALID WAS
SAYING WAS, THOSE PRIVATIZATIONS
DO WIND UP COSTING AND THEY COST
BECAUSE YOU HAVE HIGHER
BORROWING COSTS IF YOU'RE AWAY
FROM GOVERNMENT, AND THERE'S
ALSO COSTS ASSOCIATED WITH IT
BECAUSE VERY LEGITIMATELY
PRIVATE ENTITIES NEED TO MAKE
PROFITS BUT GOVERNMENTS DON'T.
AND WHEN YOU HAVE A NATURAL
MONOPOLY LIKE HYDRO, THERE'S NO
BENEFITS IN ANY OF OUR COURSES
THAT WE TOOK FROM COMPETITION IN
THAT NATURAL MONOPOLY.
AND SO I THINK OVER THE LONGER
RUN, THERE WOULD BE A DECREASE
IN HYDRO COSTS ASSOCIATED WITH
BRINGING IT BACK INTO THE PUBLIC
SPHERE AND THERE'S RESEARCH THAT
KIND OF BACKS THAT UP IN TERMS
OF HYDRO PROVIDERS IN ONTARIO
WHEN YOU COMPARE THEIR COSTS AND
NO DIFFERENCE IN EFFICIENCY, SORRY.

The caption changes to "Connect with us: TVO.org. Twitter: @theagenda; Facebook, YouTube, Periscope, Instagram."

Steve says DO YOU AGREE WITH
MARTIN REGG COHN'S POINT,
THOUGH, THAT TAKING ALL OF THAT
BORROWING OFF OF THE GOVERNMENT
OF ONTARIO'S BOOKS, PUTTING IT
ON THE BOOKS OF ONTARIO POWER
GENERATION, BORROWING WHATEVER
IT WAS, 13 BILLION DOLLARS TODAY,
HAVING TO PAY OFF 40 BILLION DOLLARS
DECADES DOWN THE ROAD IN ORDER
TO SUBSIDIZE ELECTRICITY COSTS
FOR THIS GENERATION, DO YOU
AGREE THAT THAT'S OVERLY
AGGRESSIVE IN TERMS OF ACCOUNTING?

Sheila says THAT'S PRETTY AGGRESSIVE
ACCOUNTING.

Steve says PRETTY AGGRESSIVE.
THAT'S AS FAR AS YOU'LL GO.

Walid says WHAT'S INCREDIBLY UNFAIR
ABOUT THIS IS WE'RE AFFECTING
FUTURE GENERATIONS, THIS POLICY
TO HAVE A POLITICAL END, IT'S
AFFECTING FUTURE GENERATIONS
THAT NEVER HAD A CHANCE TO VOTE
ON IT.
BUT I WANT TO STEP BACK AND MORE
BROADLY...

Steve says YOU HAVE A MINUTE
AND A HALF TO STEP BACK MORE BROADLY.

Walid says IN 30 SECONDS.
I HAD A CONVERSATION WITH A
MINISTER AND I ASKED THAT
MINISTER, IF YOU HAD A YEAR TO
COME TO ROTMAN AND WRITE, WHAT
WOULD YOU WRITE ABOUT?
HE LOOKED AT ME AND SAID, WALID,
I WOULD WRITE ABOUT PUBLIC TRUST
IN GOVERNMENT.
AND I WOULD ARGUE THAT THIS KIND
OF LACK OF TRANSPARENCY EATS
AWAY AT THAT KIND OF PUBLIC
TRUST.
I JUST THINK IF THE GOVERNMENT
WANTS TO REDUCE HYDRO BILLS, I'M
NOT OPPOSED TO IT.
I JUST THINK THEY SHOULD BE
TRANSPARENT AND LET THE PUBLIC
UNDERSTAND THAT THIS AFFECTS THE
BOTTOM LINE NOT BY HIDING IT
SOMEWHERE ELSE.

Steve says I'M TAKING NOTES HERE.
THE NAME OF THAT MINISTER WAS...

Walid says I CANNOT SAY.
I'LL TELL YOU OFF THE RECORD.

Steve says YOU CAN TELL ME
AFTER WE'RE DONE.
IN OUR LAST 30 SECONDS, I KNOW
THIS HAS BEEN A SUBJECT OF
DISCUSSION AMONG A CERTAIN TYPE
OF PERSON, LET'S PUT IT THAT
WAY.
COULD THIS BE AN ELECTION ISSUE?

Martin says OH, ABSOLUTELY.
THIS PREELECTION ANALYSIS BY THE
AUDITOR IRONICALLY WAS SOMETHING
THAT WAS BROUGHT IN BY THE
LIBERALS IN 2003 AFTER THEY HAD
BEEN IN OPPOSITION, IN ORDER TO
BRING OUT TRANSPARENCY IN
REPORTING.
SO THE OPPOSITION CAN AND WILL
USE IT DESPITE THEIR THE FACT
THAT IT MIGHT COME BACK AGAINST
THEM.
BUT THIS IDEA THAT SOMEHOW THIS
HAS BEEN HIDDEN, ALL OF THESE
NUMBERS ARE COMPLETELY
TRANSPARENT.
THAT'S THE POINT.
I THINK, WITH RESPECT, WALID,
THE LIBERALS SET IT UP YEARS AGO
SO THAT THEY WOULD HAVE TO
REPORT IT BEFORE AN ELECTION.
SO THIS IS ALL OUT THERE. ALL
THESE NUMBERS. THAT'S WHY WE'RE
HAVING THIS CONVERSATION. THERE
IS NO HIDDEN NUMBERS HERE. THAT
IS WHY BAY STREET HAS LOOKED AT
IT AND SEEN THE CREDIT RATING
AGENCIES HAVEN'T DISAGREED
WITH THE ACTUAL NUMBERS.

The caption changes to "Producer: Meredith Martin, @MeredithMartin."

Steve says AND THE MEMBER FOR
NUMBER ONE YONGE STREET GETS THE
LAST WORD TODAY ON THIS PROGRAM.
WALID HEJAZI FROM THE ROTMAN
SCHOOL, SHEILA BLOCK FROM THE
CANADIAN CENTRE FOR POLICY
ALTERNATIVES. MARTIN REGG COHN
FROM THE TORONTO STAR. GREAT TO
HAVE ALL OF YOU ON TVO TONIGHT.
THANK YOU.

Watch: Accounting Matters, Part 2