Monday, October 10, 2005

Your recovery will be offset by the operating costs


There is in fact no such thing as government accounting. I don't mean government bookeeping is some what more shoddy than that of the private sector, it simply doesn't exist in any meaningful sense. Take the fairly recent example of the LCBO. The Financial Post's Diane Francis discovered the fact, hidden in plain sight for decades, that the Ontario government monopoly on retail alcohol counts liquor taxes as revenues, thereby inflating the crown company's profits. In reality the LCBO about breaks even. The liquor taxes are counted as revenue on government books because for the government taxes are a form of revenue. However, when the LCBO's profits are reported in the papers the public, and the MSM, assume that public sector profit means the same thing as private sector profit. The gap, and the GAAP, between the two is simply enormous. A similar stunt will be pulled on the federal surplus, which has now become something of a political liability, all that filty lucre sitting around not being spent on roads to nowhere and government studies of prairie dogs mating habits. Henceforth all those unexpectedly large surpluses, read politically massaged projection numbers to give lower than probable targets, so as to avoid calls for tax cuts or politically undesirably spending, will vanish.