Monday, October 25, 2010

Tories await stimulus program audit Auditor General Sheila Fraser will release the report

OTTAWA — Canadians will learn the answer Tuesday to a question that could turn federal politics upside down. Has Auditor General Sheila Fraser found shortcomings with Prime Minister Stephen Harper’s much-touted economic-stimulus program?



Ms. Fraser will release a report that includes an audit of the stimulus package from the 2009 budget, when the Conservatives rushed billions of dollars out the door to rescue the economy.



For months, speculation has been mounting about whether the report will be politically explosive or contain only minor revelations that would barely wound the Tories.



Two questions are at the heart of the matter: Did the Harper government bend the rules and allocate funds to economic-stimulus projects that didn’t qualify for the money? And did a disproportionate share of the cash get funnelled into ridings held by Conservative MPs?



Ms. Fraser is expected to provide an answer to the first question, and likely stray away from the second. Still, if she finds the government unduly acted in haste as it hurried to limit the political damage of the recession, it could leave the Tories scrambling to protect their claim of being good fiscal managers.



Moreover, the irony of Ms. Fraser’s report isn’t being lost on federal politicians.



It was Ms. Fraser who released reports in 2002 and 2004 that exposed shoddy spending controls in the Quebec sponsorship program established by the Liberal government then in power. This led to an RCMP investigation, an inquiry and the conclusion by many Canadians that the Liberals were using public funds to feather their own political nests.



The problems initially unearthed by Ms. Fraser also ignited voter anger, gave Harper a convenient campaign issue, and eventually led to the election of the Conservatives in 2006.



Is history about to repeat itself?



NDP MP Thomas Mulcair says he thinks it might.



“When the Liberals were faced with a real national unity crisis in the wake of the near-death experience we all went through in the 1995 referendum they convinced themselves that the normal rules don’t apply, the emergency is too great, and we got the sponsorship scandal,” he said.



“The Conservatives, looking at a real worldwide economic crisis, said the danger is too great, the normal rules don’t apply and they went ahead with their so-called infrastructure spending. What we’re going to learn probably from Sheila Fraser is that the normal rules were being bent.”



Mr. Mulcair said such a finding would be “devastating” for the Conservatives because the criticism will come not from political foes who can be attacked, but from an auditor general with “moral authority” and great credibility.



For her part, Ms. Fraser has been cautious to avoid publicly tipping her hand. Her office said the audit examined 11 programs under the government’s Economic Action Plan and “what steps it took to ensure that only eligible projects were funded.”



The audit also probed how the government complied with “financial management and environmental requirements” for the program.



Perhaps the best hint of what to expect came in a letter she wrote to the senior bureaucracy in 2009 as she launched the audit of the stimulus plan.



“I appreciate that managers will face challenges in implementing the plan, given the very tight time constraints. They will need to balance the government’s wish to move quickly with the requirement to exercise due regard; this will require a sound analysis of risk, and appropriate delivery mechanisms commensurate with those risks. The program design — notably the degree of flexibility and the specificity of eligibility criteria — will be a critical aspect of managing the plan.”



Ms. Fraser’s report on Tuesday also contains the audit findings of other issues that could prove embarrassing for the Tories: A military acquisition program of two helicopters (the Cyclone and Chinook); government preparedness for animal disease emergencies; the regulation of large banks; and tax shelters for people who give to charities.



“I have a feeling they’re going to get their butts kicked on Tuesday,” said Mr. Mulcair.



Liberal MP John McCallum said he isn’t so sure the audit on stimulus spending will be very informative. Apart from learning whether the Tories “followed their own rules,” he’s not counting on learning much from this report.



He said the real damage could come from a second audit being conducted by Fraser’s office of the stimulus program. It will examine the results of how the funds were spent, but the report won’t be released until the fall of 2011.



Mr. McCallum said Canadians deserve answers to a wide range of questions.



“Were all the environmental rules followed? Was the allocation of the funding politically neutral or not? Was the tendering process appropriate? There’s all sorts of questions that would be nice to get answers to, but my guess is those won’t come until 2011.”



The Tories have always delivered twin messages on the program: They discount research by opposition parties that suggests Conservative ridings have tended to benefit from the stimulus package. And while promising to provide oversight of the program, Mr. Harper’s ministers said they couldn’t guarantee perfection.



Finance Minister Jim Flaherty, in a speech just weeks after the January 2009 budget, spoke of how he was trying to quickly kick-start the economy.



“There will be some mistakes made,” he admitted, saying even Ms. Fraser knew this would occur.



“So is it worth taking a risk that there will be some mistakes? My answer is yes. The much greater risk is that — and I’ve had this discussion with the auditor general — we don’t act in time and that we see tens of thousands of Canadians suffer more than they have to.”







Read more: http://www.nationalpost.com/news/Tories+await+stimulus+program+audit/3719341/story.html#ixzz13LCFUWwc