It’s no secret that Ontario’s government is strapped for cash – squeezing its workers, struggling with deficit and debt, trimming services in times of growing need. So it’s both infuriating and disheartening to see billions of dollars being bandied about in ways that don’t benefit the public.
Two big-ticket items stand out in the 595-page report that the province’s auditor-general, Bonnie Lysyk, delivered with a thud on Tuesday:
• The government’s determination to build projects through what used to be called public-private partnerships – and now goes by the even more bureaucratic label of Alternative Financing and Procurement (AFN) – has cost taxpayers a premium that adds up to a staggering $8 billion.
• The government has spent $1.9 billion over the past decade on installing “smart meters” designed to shift demand for electricity and save on new construction on Ontario’s power system. That’s twice what the program was supposed to cost – and it has produced hardly any of the benefits that were supposed to flow from it.
There’s a host of other worrisome findings in Lysyk’s report. The province’s immunization program seems rife with problems: it doesn’t know what happens to fully 20 per cent of the flu shots it doles out. And there’s a troubling lack of oversight over licensed daycare centres; some were caught breaking rules repeatedly, putting kids at risk, but were never punished.
But at a time when the province’s debt is expected to soar to $325 billion by 2017-18, the government needs to focus first on areas where it could save substantial amounts of money.
Take infrastructure, where the government plans to spend many billions more in coming years. Lysyk reviewed 74 projects that have already been built and her conclusion is shocking: The province could have built the projects itself for $28 billion, but instead chose to build them through so-called AFN arrangements with the private sector and ended up spending $36 billion.
That’s a 28-per-cent premium – mostly because the private sector must pay far higher financing costs than government. Disturbingly, Infrastructure Ontario, the provincial agency that oversees these projects, says by way of explanation that it would be even worse if government built the projects itself because of delays and cost overruns.
The better solution, of course, would be to figure out a way for government to deliver projects a lot closer to budget. But apparently, after a decade of being wedded to the “P3” model, the government has given up even the hope that it could work efficiently. That has to change.
Another concern: Lysyk raises an eyebrow over the controversial $235-million government loan to bail out the mostly empty MaRS Discovery District building facing the legislature across College Street. She says the benefits of that are at best “unclear.”
The price-tag for the smart meter program doesn’t come close to the money going out for infrastructure projects, but if anything the story there is worse.
Before it was launched back in 2004, Lysyk found, the McGuinty government never made a proper cost-benefit analysis of bringing in smart meters. It’s bad enough that the cost almost doubled to $1.9 billion, but the benefits are nowhere to be found.
One-sixth of smart meters haven’t transmitted any information at all. Pricing has not succeeded in shifting the time when consumers use electricity (thereby avoiding big peak demands and reducing the need for new power plants). And the true cost of energy has been hidden in a catch-all “global adjustment” fee that now amounts to 70 per cent of the cost of power.
Consumers are being charged a fortune – Lysyk estimates it at $50 billion between 2006 and 2015 – in these fees.
Premier Kathleen Wynne inherited these problems when she took office last year, even though her party has been in power now for 11 years and pushed both P3s and smart meters.
As a believer in the value of government, she needs to fix these issues long before she faces the voters again three years from now. The auditor-general’s report gives her no excuse to turn away.