THUNDER BAY – The provincial Auditor General has released his latest report. One of the key points made by AG Jim McCarter is that “Provincial ministries and agencies must do a better job of collecting meaningful and reliable information about their programs”. The problem isn’t a new one. The Auditor General stated that issue has continued for the past eight years and has yet to be addressed.
Auditor General Jim McCarter said on the release of his 2011 Annual Report. “Getting the right information to help ensure the best decisions are made is all the more important given the fiscal challenges Ontario currently faces,” McCarter said, noting that he flagged this problem in his eight previous Annual Reports. “In our audits this year, we found a number of instances where better information would help management improve program operations and guide long-term strategic planning.”
One of the areas that generated concern was the McGuinty Government’s energy policy. “Billions of dollars of new wind and solar power projects were approved without many of the usual planning, regulatory, and oversight processes”, Auditor General Jim McCarter says. “While this helped these projects get off the ground quickly, their high cost will add significantly to ratepayers’ electricity bills in the future.”
“Going forward, it will be critical for the Ministry of Energy and the Ontario Power Authority (OPA) to conduct an objective cost-benefit assessment of the progress made to date to provide government decision-makers with the information they need to strike an appropriate balance between the promotion of green energy and the price of electricity in Ontario,” McCarter added.
One objective of the Green Energy and Green Economy Act, 2009, was to increase production of wind and solar power to help make up for the planned phase-out of coal-fired generation plants by 2014. The government indicated at the time that it would lead to modest hikes in household electricity bills of about 1% annually, but this was later revised to a 7.9% annual increase over the next five years.
Following are some of the Auditor General’s significant findings:
• In 2009, the OPA was told to implement a Feed-in Tariff (FIT) program that provided generators of renewable energy with much more attractive prices for their power, partly to encourage the establishment of a domestic industry in Ontario. These higher prices will add about $220 million a year to the cost of electricity in the province.
• Under a contract with the Ministry of Energy to build renewable energy projects, a consortium of Korean companies is to receive incentives, including a payment of $110 million plus the already attractive FIT prices and priority access to Ontario’s electricity transmission system, if it meets job creation targets. No formal economic analysis was done to determine whether the deal was prudent, and neither the OPA nor the Ontario Energy Board was consulted about the deal.
• The Green Energy and Green Economy Act, 2009 was expected to support more than 50,000 jobs. However, about 30,000, of these jobs are likely to be short-term construction jobs. Studies in other jurisdictions have also shown that for each job created through renewable energy generation, two to four jobs are often lost in other sectors as a result of higher electricity prices.
Here are some of the other findings in other departments;
The following audits in the 2011 Annual Report are examples of the need for better information:
• Ontarians pay significantly more for auto insurance than any other Canadians due to high accident claim costs. However, the commission that oversees the auto insurance sector does not know whether insurers are handling claims judiciously and paying out the proper amounts, and it needs better information on the impact of auto insurance fraud on claim costs.
• The Green Energy and Green Economy Act authorized the government to fast-track the development of wind and solar power projects without many of the usual planning, regulatory, and oversight processes. On a go-forward basis, it will be important that government decision-makers are provided with information to assist them in striking the appropriate balance between promoting green energy and the higher electricity prices that households and business enterprises will be paying for such energy.
• Since 2002, consumers have paid a special debt retirement charge on their monthly electricity bill that was intended to pay off $7.8 billion in what is called the “residual stranded debt” of the old Ontario Hydro. Since then, consumers have paid $8 billion, but the Minister of Finance has never provided a public update on how much of the debt remains—even though the Electricity Act requires the Minister to do this “from time to time.”
• The Ministry of Natural Resources needs more reliable information about whether Ontario forests are being successfully regenerated by private-sector forestry companies. It can accomplish this by exercising more diligence in its oversight activities.
• In an effort to improve service to the public, the Ministry of Health and Long-Term Care has introduced significant changes to the way many family doctors and specialist physicians are compensated. Even though there has been a significant cost increase as a result of these changes, the Ministry does not know whether these measures have produced the expected benefits.
• On a per capita basis, Ontario spends more on legal aid than any other province but provides the fewest number of low-income residents with dedicated legal representation. As a result, more people have to rely on Legal Aid Ontario’s website and courtroom duty counsel. Legal Aid Ontario does not have the information needed to assess the impact of this on the legal needs of low-income people.
• As a matter of policy, the LCBO pays suppliers a percentage of the retail price it wants to charge for their products. However, if it took advantage of its purchasing power as one of the biggest buyers of alcohol in the world to obtain lower wholesale prices, it could then assess whether paying those lower prices would still allow it to meet its retail-pricing objectives and increase its profit margins.
• The Office of the Children’s Lawyer has historically exercised its discretion to refuse about 40% of child custody and access cases referred to it by the courts but has never formally assessed the impact of these refusals on the children, their parents and guardians, or the courts.
• The Ontario Trillium Foundation provides more than $100 million a year in grants to not-forprofit and charitable groups. While it has a well-defined grant review and approval process, the supporting documentation often could not demonstrate that the most worthy projects were funded for reasonable amounts and that the funds were spent for the intended purpose.
• Five years ago, the Ministry of Training, Colleges and Universities stopped collecting data from the province’s 470 private career colleges on graduation rates and post-graduation employment success. Students who responded to our survey said this kind of data would be extremely useful to them in deciding their future career path.
• The Ministry of Community and Social Services relies on hundreds of community agencies to deliver most of the services that its Supportive Services program provides to help people with developmental disabilities live at home and work in their communities. However, the Ministry did not know whether the agencies were delivering an appropriate level of service for the funding they received nor the extent of unmet service demand.