Nova Scotia auditor questions province ceding control of COVID-19 relief program

HALIFAX -

Nova Scotia's auditor general commended the government on Tuesday for quickly establishing a COVID-19 relief program, but she questioned a $100-million contract to Dalhousie University to administer some of the funds.

By ceding control of some spending programs that were designed to help individuals and businesses, the government lost the ability to redirect money that was no longer needed, Kim Adair said in her report.

"We are concerned that this money, spent before the government knew how much it would need, will never return to the province," the report said. "It is important for the province to consider its options regarding potential significant residual funds."

The contract with the university, signed in March 2020 by the previous Liberal government, doesn't expire until March 31, 2027.

Adair's report said more than half the $100 million was either unallocated or related to loan guarantees, which could also remain unused. That figure includes $24 million that had not been used and a $35-million loan guarantee for the tourism industry, which Adair said may not be drawn down.

Adair told reporters Tuesday the contract included a provision to redirect remaining funds to Research Nova Scotia for public health research. "That means the province can't redirect any savings to other provincial priorities," she said.

The report also found that as of July 31, Dalhousie had recorded just over $500,000 in interest revenue related to the funding program -- money the agreement did not address. Both the province and the university, however, say that money will be spent on future relief programs or will go to Research Nova Scotia.

Adair said in her report that she couldn't find evidence that the distribution of $30 million in child-care grants had been properly monitored. She said, however, that the money, distributed through the Department of Education and Early Childhood Development, met the "overall goal of supporting the financial viability of child-care providers."

"The audit found numerous concerns with implementation, including inadequate oversight, guidance and monitoring," Adair said.

She said there was no evidence child-care centres were required to submit information supporting the accuracy of their expenses, such as invoices or lease agreements. In one instance, she said, one child-care centre received an estimated overpayment of $132,000 after it overcounted staffing costs for multiple rounds of the grant.

Adair said that while the audit, covering March to September 2020, found no significant errors or fraud, the absence of guidelines on how to allocate the funds left the province open to risk.

The government said it accepted all her recommendations, including a call to develop better guidance for emergency relief programs and to increase expectations for documentation requirements.

Meanwhile, the auditor general expressed similar concerns over a trust fund established in 2018 to help bring high-speed internet access to all areas of the province. Tuesday's report questioned the government's decision to cede control of the $193-million fund -- composed of settlement money related to offshore petroleum royalties -- before any of the work was done.

Adair noted it was almost two years before the first projects were announced, and she said that to date, $29 million remained unallocated.

"So again, any remaining funds will not come back to the province," Adair said. "In my view, it's not the best use of public funds."

This report by The Canadian Press was first published Nov. 23, 2021.