Nova Scotia Must Strengthen Its Over-Budget Spending Process: AG

                        Nova Scotia Must Strengthen Its Over-Budget Spending Process: AG

For release March 5 -- The Province prematurely spent more than $430 million in over-budget spending in the past two years and must do more to safeguard public funds and achieve value for taxpayer money, says Auditor General Kim Adair in a new report.

Nova Scotia needs to improve accountability and transparency of budget overspending. This is especially important given the concerning results of this audit and the magnitude of over-budget spending in recent years,” says Adair.

The new audit examined 11 grants and subsidies approved as over-budget spends in 2021-22 and 2022-23 and found there was no immediate spending need or adequate justification for any of them.

“In 100 per cent of the transactions we tested in our audit, the Province prematurely spent more than $430 million, and also lost millions of dollars in interest revenue,” says the Auditor General.

All of the funds – including $190 million to EfficiencyOne for energy efficiency programs, $121.3 million in healthcare grants for universities and $15 million in polar vortex funding to Horticulture Nova Scotia – went through an expedited approval process.

Many of them lacked key supporting elements including funding purpose, detailed cost estimates, risk assessments, and value-for-money considerations.

Since 2010-11, a total of $6.4 billion has been approved in over-budget spending, including almost $900 million in 2021-22. Last year’s $1.7 billion – an all-time high – coincided with higher-than-expected revenue.

“Fiscal capacity alone is poor rationale to distribute public funds in advance of need,” says Adair.

Adair is raising the issue of over-budget spending, also known as additional appropriations, for a third time since becoming Auditor General in 2021.  It’s the third time she’s made a recommendation to strengthen the Finance Act to improve accountability and transparency through the House of Assembly over the spending of public funds.

Although Nova Scotia is following the Finance Act, the process for over-budget spending is not in line with other provinces across Canada, where legislatures are required to review, vote on, and approve the extra amounts.

“The process is not accountable or transparent through the MLAs in the legislature and instead follows an expedited route through ruling-party approval by the Premier’s Cabinet,” the Auditor General says.

The Auditor General addressed this difference by recommending a change to the process in both her 2022 and 2023 Financial Reports and is standing firm to reiterate it again in this report.

The Department and Minister of Finance and Treasury Board have so far refused to implement the recommendation.

“Any spending outside the budget process requires proper consideration of value for money to ensure public funds are spent in accordance with the principles of effectiveness, economy, and efficiency.”

French news release communique