N.S. auditor general calls out billions in spending outside budget process

Nova Scotia's auditor general is vowing to continue her fight to get more accountability for billions of dollars in government spending that isn't approved by the provincial legislature.

In a new report released Tuesday, Kim Adair said expenses outside the official budget process rose to $7 billion over the last decade, with the government spending $1.38 billion in the 2023-24 fiscal year that wasn't first authorized by a majority vote in the legislature.

"Change is needed to ensure MLAs and taxpayers clearly know where all public funds are going," Adair told reporters.

For the third consecutive year, Adair recommended changes to the province's Finance Act that would give more oversight authority to the legislature, something the government has refused to do.

She pointed out that Nova Scotia is the only province that doesn't require extra spending to be vetted by its legislature, adding that the federal government is also required to take its over-budget spending before Parliament.

"Nova Scotia is unique," she said. "I will make it [the recommendation] every year until it's done."

Extra-budget spending

The report says extra-budget spending — called "additional appropriations" by the provincial government — accounted for 8.2 per cent of total expenditures in 2023-24, compared to only 1.3 per cent in the 2014-15 fiscal year.

In four of the past five fiscal years, government revenues exceeded budget forecasts — affording the governing party additional money to spend, she said.

The Finance Act should be amended so that new programs or activities — spending for which must be tabled in the legislature — are more clearly defined, she said. As well, she said, the act should require government to provide more detail on its spending outside of the budget process.

Meanwhile, Adair's report also highlighted $2.4 billion in untendered contracts issued by Nova Scotia Health and other government departments and agencies over the past five years. That figure includes $291 million issued by the province's health authority in fiscal 2023-24 alone.

The report also provides three examples of health-care transactions that didn't go through the government's standard procurement process and were either missing from data provided to the auditor's office or were not publicly disclosed until the auditor flagged them as missing.

They include a five-year $67.5-million contract to Shannex to operate the transitional-care facility in West Bedford, N.S.; a $49.6-million contract with Think Research YourHealthNS and urgent virtual care; and a $24.8-million consulting contract with Ernst & Young.

Adair said single-source contracts can be appropriate during emergencies or exceptional circumstances.

"However, the intent behind the procurement policy and legislation is to have transparency, competition and fairness," she said. "So we explain what has been going on and that there seems to have been an increase in recent years of the amount of untendered contracts."

Transparency concerns

Asked whether provincial governments have become more secretive, she told reporters, "It's not for me to say definitively if that's the case."

Lisa Lachance, the Opposition NDP's finance critic, said transparency around spending outside of the budget remains a big concern.

"I don't think the status quo's acceptable, we need to take this recommendation to amend the Finance Act really seriously to make sure Nova Scotians know where their money is being spent," Lachance said.

Focus on meeting budget

Liberal finance critic Iain Rankin said the auditor general's warnings should be heeded.

"Public debt and overspending does have a negative relationship with economic growth so we would like to see more focus on actually meeting the budget [estimates] that are tabled in the legislature."

In a statement Tuesday, Finance Minister John Lohr defended the government's approach, saying it follows the Finance Act to ensure "accountability and transparency."

"We follow the same process that every government has followed since 2010," Lohr said. "We share additional appropriations openly with the media and the public four times through the year, so Nova Scotians know how government is spending their taxpayer dollars."