UCP'S Covid-related programs face scrutiny
Lack of oversight obscures results: auditor general
Alberta's auditor general's office is unable to determine value for money spent on pandemic-related programs due to a lack of oversight by the province.
Auditor general Doug Wylie, in an interview with Postmedia on Friday, highlighted the Small and Medium Enterprise Relaunch Grant (SMERG) program, which put only 1,055 of 101,762 approved applicants through a post-payment verification process.
“When we talk about reporting back, it isn't a perfunctory task. This is where this value proposition is assessed,” he said. “How well is management working? How well is the system working to achieve the desired results?”
SMERG paid out $657.6 million. In its post-payment verification oversight, the province separated applicants into low-risk and high-risk categories. It then focused its oversight on the highrisk applicants, which represented 5,462 applications, accounting for $48,362,598.
Of those put through the verification process, 546 (52 per cent) failed, resulting in an overpayment of more than $5 million. So far, the province has been able to recover $562,000.
None of the 96,300 low-risk applicants, accounting for more than $609 million, have been put through the verification process.
Assistant auditor general Rob Driesen said there were two main criteria for an organization to qualify for SMERG funding: If they were required to close their doors or curtail operations due to the public health orders, and if their revenues dropped at least 30 per cent. Due to the expedited nature of the rollout, many applicants were forced to submit projections, some of which didn't match the reality.
“That's why this process is really important to follow up and to make sure that there is support for those assertions that were made at the beginning,” he said.
The auditor's office recommended the province complete the verification process, which Driesen said it had accepted.
Jobs, Economy and Northern Development Minister Brian Jean said in an emailed statement that SMERG delivered much-needed financial assistance to almost 50,000 businesses and 345,000 Albertans affected by public health orders.
“These were unprecedented times, and the program successfully served its important purpose of supporting small businesses and protecting peoples' livelihoods,” he said. “We have learned lessons from the incredibly quick and largely effective rollout that will inform government programs going forward.”
He did not respond to questions about timelines for completing verification of applicants or on the government's ability to recoup funds from organizations that did not meet eligibility standards.
The Canadian Federation of Independent Businesses (CFIB) said it is wary of the province's attempts to recover funds. Annie Dormuth, the CFIB'S Alberta director, said the programs delivered critical financial aid to these organizations over the past couple of years, and many are still in a precarious state heading into another economic slowdown.
“Our recommendation to government is, this was desperately needed relief for businesses in a very, very difficult time,” she said. “And if the relief was provided in good faith by the government, and if there was a government error … then they shouldn't be recalling any of that grant funding.”
Issues were also prevalent with the delivery of the $108-million COVID-19 Emergency Isolation Support Program, in which the Alberta Labour and Immigration Department attempted to verify the eligibility of only 150 of 93,887 benefit recipients. Only 41 individuals responded, most with incomplete information.
Wylie noted other departments, such as Education, did manage proper oversight for pandemic funding.
There were also issues with the Alberta Treasury Board and Finance Department's $2-billion COVID-19 Capital Stimulus Initiative to quickly create jobs and economic growth during the pandemic.
The audit found the program spent $789 million of the projected $927 million on capital maintenance and renewal projects in the 2020-21 and 2021-22 fiscal years, leaving about $78 million for the next two years.
However, for its 11 strategic capital projects, only $144 million of the forecasted $1.12 billion of funding was spent on shovel-ready projects in those two years of health orders. Part of the delay was due to supply chain issues, but it calls into question the province's definition of shovel-ready or construction-ready when several of the projects are still in the design phase — missing the objective of stimulating the economy during the pandemic.
“People think the projects are going to be delivered quicker than they usually are,” said assistant auditor general Brad Ireland. “It's probably just the reality of some of the projects that they selected in terms of where they were at, and in terms of delivering on large capital projects, they just take time.”
In addition, while the program set out to generate 7,500 jobs between the two project strategies, there was no mechanism to record how many jobs were actually created.
Finance Minister Travis Toews, in an emailed statement, pointed to Alberta's unemployment rate dropping from a peak of 15.3 per cent in May 2020 to 6.5 per cent in March 2022 when the program expired, and now down to 5.8 per cent.
“The results of the Capital Stimulus speak for themselves,” Toews said in the statement. “Today, we have fully recovered all the jobs lost since the pandemic.”
But the auditor's office said it is not enough to point to the change in unemployment rate as there is no correlation of the actual number of jobs connected to this stimulus package. As a result, the auditor is unable to determine the actual effectiveness of the program.
The auditor will continue to monitor the province's oversight of these programs in future reports.