Deficit would be on track to exceed $14-billion if settlement from big tobacco companies was accounted for correctly, Sheila Dodds says
B.C. Premier David Eby and Finance Minister Brenda Bailey in Burnaby, B.C., on July 7. Mr. Eby says the dispute between his Finance Ministry and the Auditor-General is just a technical disagreement about accounting tactics.
British Columbia’s independent Auditor-General says the province’s record-setting deficit forecast for this year is understated, because Finance Ministry officials were slow to account for aThe opposition Conservatives say the total is misleading because it counts as revenue a lump sum of $2.7-billion – an amount due to be collected in instalments from the big tobacco companies over the next 20 years – making this year’s deficit look smaller. But Auditor-General Sheila Dodds said in an interview Tuesday the province was correct to book the full amount as a lump sum, although it should have been counted against last year’s deficit instead.If accounted for as the Auditor-General preferred, the result would have been to reduce the deficit by $2.7-billion last year, and this year’s deficit would be on track to exceed $14-billion. Ms. Dodds signed off on the public accounts for the fiscal year that ended on March 31 with a qualification about the tobacco funds. “In my opinion, there is no uncertainty regarding the existence of an asset which was created with the approval of the settlement on March 6, 2025,” Ms. Dodds wrote in August. “At March 6, 2025, government should have recorded an asset, corresponding revenue and related legal expenses. This represents a departure from Canadian public sector accounting standards.” The historic deal, which calls for three major tobacco companies to pay out billions in compensation to provinces and territories, as well as former smokers across Canada, cleared its final legal hurdle in early March, before the end of the last fiscal year. The companies will pay more than $24-billion to provinces and territories over about two decades.Alberta is counting only its upfront payment this year – money it is putting into its Heritage Savings Trust Fund. Newfoundland tried to book the full amount in its budget in May, but backed down in the face of protests, and its updated books now only record the initial instalment, applied against the past fiscal year. In Ontario’s 2025 budget, unveiled in May, the province said it expected to receive $4.45-billion more than it had anticipated in “other non-tax revenue,” an amount it said mainly reflects its share of the tobacco settlement but also includes money from other sources. According to figures from the Canadian Cancer Society and reported by The Canadian Press, the province is set to eventually receive $7.1-billion in total from the deal – but as of Aug. 29, it was only to have received $1.8-billon. B.C. Premier David Eby said the dispute between his Finance Ministry and the Auditor-General is just a technical disagreement about accounting tactics. “What we did was we followed the spirit of the Auditor-General’s advice. We recorded the full amount in a single year,” he told reporters Tuesday. “If we had spread it out over multiple years, we’d be accused of manipulating future years’ budget numbers by assigning arbitrary values going forward. There’s just no way to claim this windfall in a way that wouldn’t arise in criticism of some kind or another.” An advocate for tobacco control says the provinces all have it wrong – the settlement money should be spent on health care, with a portion earmarked for prevention programs. “The premise of the lawsuit was to recoup previous health care costs resulting from industry negligence and deception,” said Les Hagen, executive director of the national advocacy organization Action on Smoking & Health. He said he was disappointed that provinces such as B.C. are simply absorbing their settlement funds into general revenues. The money should be earmarked for health care, he said, with an emphasis on smoking prevention programs.said the settlement would “deliver critical funding for health care systems across Canada and establish a foundation to support treatment research.”
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