Provincial auditor-general Kim Adair released two reports today.
One, as reported earlier by Tim Bousquet, examined how the McNeil government contracted Dalhousie University to distribute $100 million in emergency financial assistance to people and businesses during the first wave of COVID in 2020.
The second report looks at $193 million the province put in a trust before handing it to Develop NS to deliver high-speed Internet to rural communities. Before we get into those details, Adair questions whether taxpayers received full value for money in both situations.
“It’s not so much putting the money in the hands of other agencies,” auditor Kim Adair explained to journalists during a briefing. “The common theme in both situations is that the money was set aside and put outside of government before the full costs were known. And any residual (unspent) monies will not come back to the province.”
Early COVID-19 emergency relief programs
“By spending and committing $100 million to Dalhousie University before relief programs were fully developed and costs were known, the province was no longer able to redirect any potential savings if the funding earmarked for relief programs was not needed,” states the written report.
Indeed, as of last August the provincial auditor found $24 million remains unallocated and another $35 million set aside as loan guarantees for large tourism operators that won’t be spent unless they default on their loans.
Essentially the province’s decision to contract out the relief programs means it gave up control of almost $60 million on which it could have been earning interest. That amounted to $500,000 this summer and the term of the contract with Dalhousie runs until 2027, for which no reason has been given.
On the plus side, Adair said the distribution of funds by Dalhousie was “well managed” and she found no questionable issues or lack of documentation. In fact, Dal’s record-keeping was in stark contrast to the confusion and lack of documentation the AG encountered when she looked at how the Department of Education and Early Childhood administered the payment of $30 million to licensed day cares and at-home child care providers to help them survive the lockdown between March and September 2020.
Adair reports the province and Dalhousie amended the contract months after it was signed to donate the interest and any unspent portion of the $100 million to a non-profit agency called Research Nova Scotia. Tens of millions will be used for public health research. (That potential $60 million surplus might also have been re-directed toward building more affordable housing or other projects had the province administered the program rather than turning it over to a third party. Food for thought)
“It’s commendable that the government responded so quickly with assistance,” said Adair. “The issue was giving $100 million upfront before they knew what was needed. Our recommendations get into the fact perhaps you should considering funding the program as the funds are needed, rather than picking a dollar amount and putting it in hands outside government.”
Internet for Nova Scotia Initiative
“The province predetermined the initiative’s cost to taxpayers before the project was tendered. Potential millions in unused trust funds may go to underserved municipalities or internet service providers, as unspent trust funds cannot return to the province,” states the audit on the rollout of high-speed Internet in rural Nova Scotia.
Sound familiar? Again, the auditor notes that the McNeil government’s decision to allocate $193 million from a 2018 offshore royalty windfall towards expanding high-speed Internet may have been well-intentioned but neglected to scope out the projected cost.
To date, only $33 million has been spent and a lot of interest accumulated in the two years before the first project got underway. Develop Nova Scotia says $163 million has been committed to projects and the $29 million which is so far unallocated will be spent by the time the rollout is completed in 2023.
The auditor general says she is satisfied the plan is sound and the project is “on track” to meet the 2023 target. Her concerns relate mostly to the need for Develop Nova Scotia to put more effort into comparing scheduled project completion dates with what’s actually happening on the ground. The agency has committed it will make regular on-site inspections to ensure it is receiving accurate information from Internet Service Providers.
Last but certainly not least for tens of thousands of Nova Scotians still patiently waiting to be connected in 2021, here is the progress report contained in the Audit.
Info from Develop Nova Scotia as of August 2021
• 85% of Nova Scotians have access to affordable high-speed internet (2023 target 99%)
• Over 42,000 additional homes and businesses can now access high-speed internet (target approximately 100,000), and 10,825 have signed up
• $33 million of $193 million Trust funds paid to date, with up to $164 million committed to expand service
Here are the auditor’s “value-for-money concerns”related to the choice of an external trust to do the job.
• Province prematurely relinquished control of $193 million to ensure revenue from an offshore royalty settlement was spent on the initiative
• Lost use of public funds almost two years before the initiative’s first projects were announced
• Province predetermined the initiative’s cost to taxpayers before the project was tendered
• Potential millions in unused trust funds may go to underserved municipalities or internet service providers, as unspent trust funds cannot return to the Province.
Hopefully the next time a government must make a quick decision about how to spend a great deal of money, these lessons will be heeded. At this time, the auditor was unable to look into how $462 million in federal COVID aid was disbursed by the province but that might also make for interesting reading.