N.S. government’s lack of accountability on overspending ‘terribly disappointing’ for taxpayers: auditor general

For a second consecutive year, Nova Scotia’s auditor general has recommended that the province’s finance minister amend the Finance Act to provide accountability and transparency for all public spending.

“There is still one area of major concern for me,” Kim Adair said Tuesday in a news briefing to support her year-end report on the financial statements from 100 organizations under the province’s control, including government departments, Crown corporations and others.

“That is the lack of accountability through the legislature of additional appropriations,” Adair said.

She said additional appropriations are necessary when a department can’t stay within budget estimates.

“To be clear, the (additional spending) process is driven by the Finance Act and the government is following the legislation correctly but over the last 10 years successive governments have approved $6.1 billion in extra spending,” Adair said.

“That is $6.1 billion in public funds that were spent above and beyond the original budget without debate or challenge from the legislature,” she said. “Other jurisdictions in Canada require budget overspends to return to the floor of the House for debate and approval but not here in Nova Scotia.”

All-time high

The auditor general said the practice of government overspending hit an all-time high of $1.7 billion in 2022-23, more than 10 per cent of the entire $14-billion budget.

Adair repeated her recommendation to government from a year ago that it should amend the Finance Act to align the additional appropriations process with legislated practices elsewhere in Canada.

Finance Minister Allan MacMaster’s response, recorded in the report, is that the department appreciates Adair’s work on the matter but “the minister is satisfied that the current parameters of the Finance Act ensure accountability and transparency over the spending of all public funds.”

Adair said, as auditor general, what she can do is make a recommendation.

“The response from the minister is that he feels the current situation is fine as it is, however, I find that terribly disappointing for the Nova Scotia taxpayer,” Adair said. “In my view, they should expect the same level of accountability and transparency when it comes to budget overspending as happens in every other province in this country, as well as the federal level. Nova Scotia is unique.”

Adair said she is the third successive Nova Scotia auditor general to point out the unbudgeted spending drawbacks but she has taken it to the repeated formal recommendation stage because of the significant dollar amount.

Short sessions

“It was $1.7 billion in 2022-23 of overspending that did not go to the floor of the legislature for debate by way of an appropriations act. It’s over 10 per cent of the budget and in my view it calls into question, why have the budget and the original budget process and the appropriations process when you can overspend to that extent.”

Exacerbating the situation, Adair’s audit shows Nova Scotia’s legislature sits fewer days than the national average, limiting opportunity to question additional appropriations.

In 2022-23, the Nova Scotia legislature sat a total of 45 days, which is 11 days or 19 per cent less than the national provincial average that year of 56 days.

Sitting days represent opportunities for debate and discussion on required additional appropriations and the fewer there are, the lower the opportunity to conduct this oversight.

“It demonstrates the lack or the very limited ability of legislators to ask questions about this additional spending,” Adair said.

 “Not only is there an issue that you don’t have an appropriations act about this additional spending that goes through the full process, first reading, second reading, third reading, debate and vote, what you have in Nova Scotia is question period. What we’re pointing out is that is a very limited time to ask about, for example in the last year, $1.7 billion in additional spending when the legislature doesn’t sit on average the same number of days as the rest of the country.”

The opposition parties have been making that very point for months on end.

“What strikes me about this is the lack of regard the Houston government has for taxpayers’ dollars,” said Liberal Leader Zach Churchill. “They are willing to spend literally billions outside of their budgetary process, throw hundreds of millions and not even get returns for Nova Scotians.”

Churchill said an amendment to the Finance Act is required.

NDP bill

Susan Leblanc, the NDP representative for Dartmouth North, said the extra spending is a real problem.

“If you look at the numbers, the majority of this type of spending over the last 10 years has been in the last two years with this government,” Leblanc said. “I don’t think it is in their political interest to change it.”

After Adair’s recommendation on overspending last year, Leblanc said the NDP tabled a bill to amend the Financial Measures Act to address the issue.

Adair said there are quarterly updates by the finance minister with some information released “but in my view that’s a poor substitute for debate in the legislature over spending of public funds.

“It’s not the government of the day’s money, it’s public funds. I think it’s time it needs to be addressed.”

The auditor general said her office is currently conducting a performance audit on the use of grants and subsidy expenditures that are part of additional appropriations, an audit that will assess the value for money of the budget overspends. That audit is to be presented early next year.

The audit pointed to the 2022-23 operating surplus of $115.7 million, due in part to provincial source revenue coming in $1.9 billion higher than budget as the provincial economy continued to rebound stronger than anticipated.

“The province’s liability to clean up Boat Harbour is growing while the project awaits federal approval,” she said. “It is now estimated at $350 million, with almost $83 million in increases due to inflation alone since 2019,” Adair said.

The province spent $6.7 billion on health and health-care capital asset acquisitions in fiscal 2022-23, with annual health-care operating expenses up $1.7 billion over the last five years, Adair said. 

Adair said last year newly acquired capital assets for the Health Department totalled $172 million, with the majority going to construction in Cape Breton, Bayers Lake and Bedford.

“We’ll look at some of these acquisitions in more detail in an upcoming audit of the development of transitional care facilities, which will also be released in the new year.”