Lending Must Be Transparent

[Originally published in The Guardian (Charlottetown) · 21 May 2015]

An open letter to Premier Wade MacLauchlan: Dear Premier: My sincere congratulations on your recent  election victory becoming premier elect of a majority Liberal government!

I am writing this letter on behalf of all Islanders who trust that you were sincere in your promise to govern with the highest degree of accountability and transparency. With this in mind, I am asking that you take immediate action regarding how the government handles the matter of writing off and/or cancelling government debts.

The Auditor General recently provided insightful information in her 2015 Annual report concerning the lack of transparency and accountability with how the provincial government either writes off or cancels debts. Although the Auditor General is required to report the total amount of debt cancelled by the provincial government, she was unable to disclose all these amounts because government is keeping this
information secret.

The Financial Administration Act gives the Lieutenant Governor in Council authorization to either write off or cancel debts. A write off simply removes a debt from the books while the borrower remains legally obligated to repay; a “cancelled” debt removes the obligation to repay the debt. When a Lieutenant Governor in Council approval for debt cancellation is sought, an Order in Council is issued and becomes part of the public record. And herein lies the problem: many government debts are being cancelled
illegally without approval from the Lieutenant Governor in Council and are never made public.

Prior to the 2005-06 fiscal year, government departments and crown corporations consistently sought approval of the Lieutenant Governor in Council for all debt write-offs and cancellations. Until 2002-03, these requests contained the names of the debtors, but since 2002-03 the names of the debtors have not been included in requests. Since 2006-07, government lending organizations have not sought approval from the Lieutenant Governor in Council for any debt write-offs or cancellations.

So, for more than a decade, Islanders have been kept in the dark concerning the cancellation of many government debts while there has been nearly a doubling of the amount of government money loaned: from $228 million in 2003-04 to $443 million in 2013-14, an increase of 94 percent.

Although the former P.E.I. Lending Agency (now Finance P.E.I.) was delegated the authority to write off debts for accounting purposes, no specific delegation of authority to cancel debts has ever been enacted. Approval of the Lieutenant Governor in Council is therefore still legally required for debt cancellation. But this is not happening. For the 2013-14 fiscal year, the board of directors of Finance P.E.I. authorized the cancellation of 3.7 million of debt, which means that this is taxpayer’s money owed to the government  that can never be recovered. Think about it: in just one year 3.7 million of taxpayer’s money was given to a select number of people as a free-and-clear gift and under the current illegal practice of debt cancellation there is absolutely no way for any of us, not even the Auditor General, to find out why these debts were forgiven or who the debtors are!

Premier, given your promise that your government will be accountable and transparent, will you please do the following:

1. Clarify in law that all debt cancellation by government departments and crown corporations must be done through application to the Lieutenant Governor in Council and must include the names of the debtors so this information will be made part of the public record available to the Auditor General and all Islanders, and;

2. Compile and make public a report containing the names and amounts of all cancelled government debts (which have so far been kept secret) for all debts forgiven by the P.E.I. government from 2006-07 to the present.

I look forward to seeing positive changes being made with this important issue of government debt cancellation as well as many other improvements to government I am sure you will make as premier of our province.