Ontario AG audit finds public spending hasn't brought "anticipated benefits"
Ontario's Auditor-General's latest audit says not only did the previous Liberal governments lack being cost-effective with its spending in areas like health care, transit, social assistance and infrastructure, but the government also hasn't been thorough enough in making sure eligibility requirements are met and overpayments have been recouped.
Bonnie Lysyk's 2018 Annual Report includes 15 value-for-money audits and found financial problems on projects ranging from controversial Metrolinx GO stations, Waterfront Toronto, Ontario Works, power plant refurbishments and these of consultants.
"A central finding in almost all of our audits this year was that spending of public monies did not consistently result in the cost-effective achievement of anticipated program benefits," she said.
It's widely expected the PC government will use the report's findings to justify its future financial policy decisions, as well as slam previous Liberal governments.
Premier Doug Ford often pointed to Lysyk's previous report during the recent provincial election campaign.
The report found Metrolinx' decision to recommend GO train stations at Kirby and Lawrence East lacked transparency and that the Minister of Transportation and the City of Toronto clearly influenced the decision-making process.
• Transportation went so far as to issue news releases announcing the stations before the Metrolinx board made its final recommendations.
• Metrolinx moved the stations from the original 'not recommended' list to the 'low-performing list' and in an updated analysis in Feb. 1018 used outdated information announcing expected benefits had increased.
The report also found Metrolinx incurred about $436 million in sunk and additional costs between 2009 and 2018 because the municipal and provincial governments asked for changes after work had already begun.
• EGLINTON CROSSROWN LRT: Metrolinx' contract with the consortium building the LRT didn't include a premium for cost-overruns and delays, resulting in Metrolinx having to pay $237 million to hold the completion date of September 2021.
• SCARBOROUGH/SHEPPARD TRANSIT: The city's decisions to change the project three times between 2011 and 2013 resulted in cancellation, while delays to the Sheppard LRT were delayed by 10 years. The result? $125 million in sunk costs, with $75 million recovered from the City of Toronto.
• BOMBARDIER LRT CARS: After Metrolinx signed a deal with Bombardier for 182 light rail cars, procurement of the vehicles were finalized before contracts were finalized. As plans changed, Metrolinx paid Bombardier $19 million for disruptions and when the number of vehicles were reduced to 76, it cost $30 million more than what it would have been under the initial contract. Finally, when Metrolinx raised concerns about Bombardier progress and design, it spent another $25 million in oversight, administrative and legal costs to manage the situation.
The audit found Ontario Works has only helped 10 to 13 per cent of recipients to leave the program for employment, with no target to reduce the time individuals spent on assistance. In 2017/18, more than 450,000 individuals received $3 billion in assistance.
• Success rates for Ontario Works varied across service managers: the percentage of recipients getting work ranged from a low of two per cent at one manager to a high of 29 per cent at another.
-Service managers also aren't taking steps to make sure all recipients are eligible; reviews in April 2017 found almost $11 million in overpayments, the need to terminate 4,200 cases and managers didn't complete 40 per cent of eligibly verification cases.
• Managers are about one year behind investigating about 6,000 fraud tips.
TECHNICAL STANDARDS AND SAFETY AUTHORITY
When asked which aspect of the audit made her shake her head the most, Lysyk pointed to issues with the Technical Standards and Safety Authority. The TSSA is responsible for promoting and enforcing public safety in the handling and storage of fuels, boilers, pressure vessels and even stuffed animals.
• The audit found "the TSSA is is not operating in accordance with its mandate and is ineffective in protecting the public in nearly all of the areas for which it is responsible:
-The TSSA couldn't explain why it didn't inspect some fuel sector areas, including pipelines
-The TSSA's computer system is extremely outdated with incomplete information. As a result in 2018, it renewed operating licences for 300 elevators that at the same time, were still shut down for being unsafe to operate.
-The TSSA never inspects many jobs by technicians who install fuel-burning appliances.
-When it comes stuffed animals, the TSSA would find an item that's deemed a risk to the public, but won't check if it's sold in other stores or online.
-For years, the small number of elevaotor maintenance companies that dominate the market have been failing most safety laws.
• For example, at St. Michael's Hospital, it was found that five elevators were not up to code.
The report says the Ministry of Health and Long-Term Care could do a much better job when it comes public education, specifically around how Ontarians are not fully covered for the cost of care outside the province, especially out of the country.
• In the last five years, the Ministry paid Ontarians five cents for every dollar they were billed by a foreign doctor or hospital under the out-of-country travellers program.
• Ontario also gives more in-patient services to people from other provinces/territories than Ontarians in other parts of the country. Sometimes, Ontario hospitals provide services to out-of-province patients in excess of what they can actually bill back to the other provinces.
• The Ministry also doesn't monitor foreign patients' impact on Ontario and their wait-time impact on Ontario patients.
One of the bright spots was while wait times for MRI and CT scans in Ontario were the lowest of six provinces that track data, more remains to be done for semi or non-urgent patients. However, those wait times still don't meet Ministry targets.
• Of the 137 public hospitals in Ontario as of April of this year, 78 had at least one MRI or CT machine
The audit also found the Ministry of Health and Long-Term Care consistently overpaid vendors for ineligible claim for the Assistive Devices Program. However, it only had two compliance staff conducting payment reviews for approximately 1,200 vendors submitting over 400,000 claims a year.
• Over eight years, the staff were only able to review 235 of those vendors and recover about $10 million in overpayments.
• In 2017/18, the ministry provided about $514 million dollars to help Ontarians purchase devices.
• Over the last 10 years, expenditures grew by 48 per cent, with the number of clients increasing by over 47 per cent, while Ontario's population has only grown by 10 per cent.
The report found a ton of structural factors that kept Waterfront Toronto from delivering its mandate, including the three levels of governments only giving it one per cent of the land it was tasked to revitalize.
• Waterfront Toronto has only been able to develop about 55 acres of five per cent of the total publicly-owned developable land.
• The three governments gave about $700 million of their $1.5 billion in funding to other agencies for projects and public announcements gave the impression they were investing more than they actually were in waterfront revitalization.
• However Waterfront had its own issues, such as not providing sufficient oversight of projects when it transferred funds. Five of 13 projects also costs more than their estimate. For example, the Union Station Second platform ended up costing $49 million over budget and overall Waterfront spent $49 million on cancelled projects.
Lysyk says one interesting finding is how hiring permanent employees would've cost less than the amount of consultants used in certain cases. The provinces does not track spending on advisory services, Lysyk's estimate is about $4 million. While overall spending on consultants by ministries has dropped more than 15 per cent in the past 10 years, efficiencies can still be found.
• Most consulting contracts don't have specific costs attached.
• In one case where a consultant was hired for IT services, the initial contract was for $210,000, but extended three times to March 2018 for a total cost of over $900,000. The audit found this work could've been done for about 40 per cent less by permanent, full-time staff.
The audit found the Ontario Power Generation is being "diligently" monitoring the refurbishment of the Darlington Nuclear Generating Station, but there's still some future risks. The project is estimated to cost $12.8 billion and the station produces over 15 per cent of electricity in Ontario.
• As of June 2018, OPG forecasts it will meet the time and cost estimates from January of 2016, however refurbishment work has only been done on one of four reactors.
• There may be more challenges when it starts working on multiple units in 2021.
• OPG estimates over 30 per cent of management staff and nearly all executives will be eligible to retire in 2025, a year before scheduled completion, which could create a staffing gap. There's no plan in place yet for replacements.
• While there have been no serious injuries to staff, OPG has not met its safety targets and there have been some minor issues. For example, an incident resulted in a contractor stopping its 800 staff from working for two days, costing OPG $700,000.
When it comes to higher education, the audit found while eligibility for the Ontario Student Assistance Program was expanded in the 2017/18 year, cost of the aid rose by 25 per cent over the previous year, but enrollment only went up two per cent. However, Lysyk said since it's just the first year of eligibility rules, it may not yet be possible to draw long-term conclusions.
• About $69 million in defaulted student loans have been transferred to the Ministry of Finance for collection in each of the last five years.