Wednesday, 1 May 2013

Lost & Finance: (re)Reading the AG

I'll walk a fine line with this post because it puts myself in the precarious position of defending - perhaps that's too strong a word, but there it is - the Harper Government. Much has been made of the 'fact' that the government has 'lost' over $3 billion dollars in counter-terrorism program spending. Indeed, this is somehow proof of economic mismanagement. The Twittersphere has, predictably, latched on by adapting the Prime Minister's recent gaff, admonishing Harper that this is no time to commit accounting.
The media dove headfirst into the shallow end of the pool - as usual - and taken one of only two acceptable paths when discussing Auditor General (AG) reports. The first: call it 'damning', note that the AG has 'slammed' the government and run with the story of gross mismanagement and lax accountability. The second: downplay, or omit entirely, those aspects of a report that are less harsh. Competent management is not newsworthy.

Partisans have quite naturally had a field day with the headlines as it provides an opportunity to undertake a selective reading of a document and run with the sound bite. (Of course this is entirely different than taking a 10 year old speech, hacking it up, and using it -devoid of context and without addendum- to sully the reputation of an opponent, right?). It didn't take Thomas (or is it Tom, I can never remember what his image handlers prefer) Mulcair long to trot out a classic and seldom used trope: welcome back, Billion Dollar Boondoggle! (More on this below).
Here the media was once again a willing accomplice. John Ivison over at the National Post claimed that the report is "like manna for ‘government-in-waiting". Well, Auditor General reports are basically that. 'Neutral and apolitical' fodder from on high, often critical, easily taken widely out of context. No doubt many see this as the Conservative government's sponsorship scandal. The comparisons are, however, spurious. Certainly the Conservative sin by sheer magnitude (Billions! not millions has been 'lost') is worse but only when deprived of context. There is no intimation of anything criminal here in which case, given even suspicion of fraud or malfeasance  the RCMP would be asked to investigate.
Mulcair's use of the '(three) billion dollar boondoggle" is apt, not because it correctly captures anything about government, but because it illustrates how AG reports are themselves captured by the media and opposition to fit particular frames. The first 'billion dollar boondoggle' was the result of an internal accountability mechanism and media incompetence.  After examining a billion dollars of spending at the former Human Resources Development Canada, an internal audit found that there were inconsistencies in the paperwork trail and accounting practices. The media seized on the billion dollar figure and despite the fact that only a fraction of that sum was called into question, framed the issue as if the government has lost or misappropriated a billion dollars. Subsequent audits exonerating the government - and embattled minister, Jane Stewart - received far less attention.
So, what did the Auditor Generally really say about the 'three billion dollar boondoggle'? First of all, he explains where the money likely went - remember, no allegations of fraud have been made - positing that:
  • The funding may have lapsed without being spent. 
  • It may have been spent on PSAT activities and reported as part of ongoing programs spending.  
  • It may have been carried forward and spent on programs not related to the Initiative.
In essence, the government has been admonished, not for misplacing or misappropriating funds (this is not the border infrastructure project), but for poor labeling of funds once it enters the common pool, remains on the books or has yet to be spent. Moreover, the audit examined only the Treasury Board's monitoring practices and, as the Auditor notes "We did not examine the implementation of individual department programs and projects. We also did not examine spending by provincial and municipal partners". In short, the Auditor never went looking for the 'missing' money.
The audit does point to a number of failings at the Treasury Board which has been unable to enforce departmental compliance with its accounting procedures and maintain a centralized and accurate record of public spending once it has been dispersed. Of course, it is important to remember that the AG's audits are small picture snapshots of a single program, over multiple years, crossing numerous departments and jurisdictions. They cannot be, as it were, extrapolated to a larger level.
This episode is about appearances. It is a symptom of the current malaise in Canada politics that image matters more than substance. The myth of the Conservatives as 'solid economic managers' is a talking point picked up by the media and hammered repeatedly into received wisdom. It's not surprising then when it deflates. As with the HRDC grant scandal of the past, the appearance of mismanagement trumps the reality. Moreover, while accountability ultimately rests with the government, the day to day operation of government is not in the hands of ministers but deputy minsters and the bureaucracy. Perhaps we are beginning to witness the cumulative effects of stringent multiplicity of paper trails, coupled with a longstanding decline in public service moral, something exacerbated by the constant threat of the need to create efficiencies and reduce overhead and staffing.
What is surprising is that neither the AG nor the Treasury has bothered to clarify where the money is. At present, three billion dollars is sitting idle across numerous departments and jurisdictions or has been deployed without being tagged 'the terror monies'. Even if every penny is (re)accounted for, it is unlikely the dominant narrative will be undone. As far as the media, partisans and the public are concerned, three billion dollars has evaporated, sucked into a black hole of oblivion.




*Aside* This raises an interesting issue related to Officers of Parliament of which the Auditor General is the most well-known. In short, support for the Auditor General, Chief Electoral Officer et al is contingent upon one's agreement with their findings. Questions about the AG's independence from the government are now gone. On a related front, the Chief Electoral Officer - once decried for lack of progress on robocalls - is now, apparently, in the good books because his budget has been cut and we won't be rolling out eVoting. Funny how that works.


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