Auditor urged to probe cost of service shutdown
Four months after the final Saskatchewan Transportation Co. buses ground to a halt, a grassroots group concerned about the financial implications of the controversial decision to shutter the long-running service is calling on the government to appoint auditor Judy Ferguson to look into the matter.
In a Sept. 18 letter to Premier Brad Wall, Finance Minister Donna Harpauer and Crown Investments Corporation Minister Joe Hargrave, STC Stories suggested the Sask. Party government has not made a thorough business case for its decision, and that a fouryear-old auditor’s report from Ontario suggests Crown corporation divestments can be hugely expensive.
“We believe the divestment of STC should be halted pending a review by our auditor to investigate the validity of the estimated savings. In the meantime, federal funding should be obtained to cover the subsidy. The people of Saskatchewan deserve the same due diligence regarding this divestment that the people of Ontario experienced,” STC Stories said in the letter.
“We need an audit,” STC Stories spokeswoman Cathy Holtslander, one of the six signatories to the letter, said in an interview on Monday. “We need an audit of the cost of shutting it down and the true costs of running it because the numbers we received either were highly questionable or (failed to take into account) the big picture.”
The Sask. Party government announced as part of its unpopular 2017-18 budget plans to “wind down” the 71-year-old Crown corporation effective May 31. It said at the time that the decision was prompted by “unsustainable” costs, and that it would result in taxpayers saving $85 million in subsidies that would otherwise have been paid out over the next five years. It did not say how much divestment would cost.
Government spokeswoman Kathy Young said in an email that the total cost of closing down STC has not been determined because “a project of this magnitude takes time and due diligence to ensure that it is managed effectively within
The numbers we received either were highly questionable or (failed to take into account) the big picture.
the legal and regulatory requirements for Saskatchewan.”
“This wind-up is unique to Saskatchewan, in that no other province has maintained a transportation system as widespread as the STC, and as such, no comparisons can be made to other jurisdictions,” Young said in the email, adding that, “Regular reporting periods for the Crown corporation will be adhered to and provided publicly as has been the case annually during operations.”
Ferguson was not available for an interview Monday, according to a spokeswoman.
STC Stories said in the letter that it has not yet seen a “a thorough business-case analysis that provides objective, complete and defensible information for decision-making,” which is concerning given Ontario auditor Bonnie Lysyk’s conclusion that the proposed divestment of the much larger Ontario Northland Transportation Commission (ONTC) could have cost three times as much as expected.
The Ontario government in 2012 announced plans to divest itself of the ONTC, which ran trains and buses and provided telecommunications in northeast Ontario and, like STC, operated at a loss. The government said in its next budget that the divestment would lead to $266 million in savings over the next two years, but did not say exactly how much the process would cost.
Lysyk concluded in her December 2013 report — which did not take into account socio-economic costs — that while taxpayers would have saved money over the long term, the proposed sale could have cost taxpayers up to $820 million, more than three times as much as estimated.
“It was only well after the divestment announcement of $266 million in savings that the government obtained the information that would normally be needed for a comprehensive business-case analysis,” Lysyk wrote. “This information, along with information we obtained during our work, indicates that there are both known and not-yet-known costs associated with divesting the ONTC.”
“This is what we believe is probably the case here, too,” Holtslander said. “We’d like to have somebody who has the authority to actually look at the numbers to actually make that known, so that we can have a public discussion about this that’s based on reality and not just claims.”