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Prime Minister Stephen Harper walks with Industry Minister Tony Clement before making an announcement in Huntsville, Ont., on June 19, 2008. (Adrian Wyld/The Canadian Press)
Prime Minister Stephen Harper walks with Industry Minister Tony Clement before making an announcement in Huntsville, Ont., on June 19, 2008. (Adrian Wyld/The Canadian Press)

Tories misled Parliament on G8 spending: Auditor-General Add to ...

The opposition calls it explosive: a bombshell draft report by the Auditor-General, complete with charges of pork-barrel largesse, dubious government spending and a "misinformed" Parliament.

The Conservatives call it a dud.

Either way, the early draft of Sheila Fraser's forthcoming report, a chapter of which was shown to The Canadian Press, promises to rattle podiums Tuesday when the televised leaders' debates get underway.

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Ms. Fraser's confidential Jan. 13 draft says the government misinformed Parliament to win approval for a $50-million G8 fund that lavished money on questionable projects in Industry Minister Tony Clement's riding.

And it suggests the process by which the funding was approved may have been illegal.

Conservative candidate John Baird insisted Monday that the final report differs from the draft - most notably in that it doesn't say the government "misinformed" Parliament.

"The report has changed considerably," said Mr. Baird, who as infrastructure minister would have been privy to subsequent drafts of the report, but not the final version.

Ms. Fraser analyzed the $1-billion cost of last June's G8 summit in Ontario cottage country and subsequent gathering of G20 leaders in downtown Toronto and was to have tabled a final report in Parliament on April 5.

The report was put on ice when Stephen Harper's government was defeated, and now won't be released until sometime after the May 2 election.

The draft says a local "G8 summit liaison and implementation team" - Mr. Clement, the mayor of Huntsville, Ont., and the general manager of Deerhurst Resort, which hosted the summit - chose the 32 projects that received funding. It says there was no apparent regard for the needs of the summit or the conditions laid down by the government.

Among the questionable projects funded were:

» $274,000 on public toilets 20 km from the summit site.

» $100,000 on a gazebo an hour's drive away.

» $1.1-million for sidewalk and tree upgrades 100 km away.

» $194,000 for a park 100 km away.

» $745,000 on downtown improvements for three towns nearly 70 km away.

Mr. Clement, Mr. Baird and Huntsville Mayor Claude Doughty all denied Monday that there was anything untoward about the way funding was doled out.

During meetings of the so-called Local Area Leadership Group (LALG), which also included reeves, native leaders and senior municipal leaders, Mr. Clement "directed that any applications for infrastructure funding be submitted directly to Infrastructure Canada," Mr. Doughty said in a statement.

"Media scrums were routinely held after the LALG meetings to ensure that the greater community was made aware of the adequacy of the preparations for the G8 World Summit."

The merits of any particular application were never discussed, the statement continued.

"The LALG and the mayor of Huntsville had absolutely no authority to arbitrarily approve any G8 infrastructure funding."

News of the leaked report, which emerged the day before the first of the all-important televised leaders' debates, came as a new Canadian Press-Harris Decima poll suggested the Tories were closing in on majority territory.

The latest poll gave the Conservatives the support of 40 per cent of respondents, well ahead of the Liberals at 28 per cent. The NDP were at 15 per cent; the Bloc Quebecois and the Greens trailed at eight per cent each.

Hungry for a game-changer, Mr. Harper's rivals pounced on the news.

It was common knowledge the Conservatives were "spraying money around like drunken sailors in Tony Clement's riding" in the leadup to the G8 meetings, Liberal Leader Michael Ignatieff said.

"What we didn't know is that they lied to Parliament," he added. "What we didn't know is that they may have broken the law. This is not me telling you this, this is the auditor general of Canada."

Mr. Ignatieff urged Mr. Harper to agree to release the report immediately, and to explain to Canadians what he called a "scandalous" abuse of public money and the parliamentary process.

"These are shocking revelations," he said. "I don't know how Canadians can have confidence in a government that treats public money in this way."

Mr. Baird said the government would happily support the report's early release; a Conservative spokesman said it's now up to the Auditor-General and the Speaker of the House of Commons to do so.

Ms. Fraser said she can only issue the final version of her report when Parliament is sitting - and urged Canadians to base their conclusions on that version only.

The normal audit process requires sharing early drafts with government departments to validate the facts and to give departments an opportunity to offer additional information, she said in a statement.

"Sometimes during the process of fact validation, additional information is brought to our attention. Only the final report that is tabled in Parliament represents our audit findings and conclusions."

But it was clear from Monday's manoeuvrings that Ms. Fraser has been, and remains, a significant thorn in the side of the Conservative government.

CTV News reported that while a leaked copy of Ms. Fraser's February draft did not include mention of a "misinformed" Parliament, it was nonetheless highly critical of the way funding for the G8 meetings had been approved.

A separate CBC News report, meanwhile, quoted a letter Ms. Fraser wrote to the government last week complaining that she'd been misquoted in a parliamentary report tabled in the dying days of the Conservative government.

The report quotes Ms. Fraser as saying the government's G8 and G20 spending controls were "very good" and that "monies were spent as they were intended to be spent," CBC reported.

In fact, those comments were in reference to security spending by a previous Liberal government following the 9/11 terrorist attacks a decade ago.

Treasury Board President Stockwell Day apologized for the mistake during a CBC appearance Monday.

NDP Leader Jack Layton repeated his call for a public inquiry into the lingering controversies surrounding last year's G8 and G20 meetings, saying Fraser's draft report makes the need for such an investigation even more urgent.

He accused the Tories of "hiding facts from Canadians, leading Parliament down the garden path, and possibly breaking the law while doing so."

The draft report says that in November 2009, the government tabled supplementary spending estimates which requested $83 million for a border infrastructure fund aimed at reducing congestion at border crossings.

The government did not reveal that it intended to devote $50-million of that money to a G8 legacy fund, even though Huntsville is nowhere near the Canada-U.S. border.

The Canadian Press was not given access to the entire report on the $1-billion in G8 and G20 spending, and Ms. Fraser's conclusions on overall spending were not available.

In the draft chapter on the legacy fund, the Auditor-General notes the Appropriations Act stipulates that funding is supposed to be allocated based on the items presented in the estimates.

"This ensures that public funds are spent as authorized by Parliament for the purposes intended by Parliament," she writes.

"We found that money expended for the G8 infrastructure projects under the Border Infrastructure Fund were approved by Parliament without any indication that $50 million of the appropriations for border congestion reduction would be spent on G8 legacy projects.

"Therefore, in our opinion, Parliament was misinformed."

The report says the government disagrees with the Auditor-General's finding. Treasury Board officials maintain it is "normal practice" to aggregate expenditure information in the supplementary estimates and say it was done in this case "to avoid any delays that might occur if a new funding mechanism was created for the one-time (G8) event."

But Ms. Fraser says lumping the legacy fund into the border fund "created a lack of transparency about the purpose of the request for funding and, in our view, Parliament was not provided with a clear explanation of the nature of the approval being sought."

She adds that "this matter raises broader legal questions related to the use of appropriated funds by government. Parliament may wish to examine these competing interpretations to ensure that vote wording reflects Parliament's intentions."

The legacy fund was intended to help Parry Sound-Muskoka, the host riding represented by Mr. Clement, "enhance local infrastructure and showcase its natural beauty and support a safe, secure and successful hosting of the G8 summit."

Ms. Clement's local liaison team was responsible for identifying and proposing projects worthy of funding. To win approval, the team was supposed to work with Foreign Affairs' summit management office to ensure the proposed projects supported the needs of the summit.

"We asked the Summit Management Office to provide us with any documentation showing how they were involved in the review of projects but were informed that they were not involved," the Auditor-General says.

Ms. Fraser's auditors also asked Infrastructure Canada, which provided the funds, for documentation demonstrating how the projects were chosen and how they fit with the purpose of the fund.

"The department was not able to provide us with any documentation as they were not part of the selection process and informed us they were not provided with supporting documentation when given the recommended list of projects to be funded."

Indeed, the report notes that Mr. Clement announced several projects would receive funding before the government actually spelled out the conditions for funding.

"We are concerned by the lack of documentation around the selection of projects for funding," Ms. Fraser says, adding that documentation is vital to "demonstrate transparency, accountability and value for money" in the expenditure of public money.

Ms. Fraser's team also examined the list of 32 projects that received funding but "[we]were not able to determine how they supported the needs of the summit or met the conditions set out by government."

For instance, the report notes the government devoted $26-million to create a Huntsville G8 Centre, which was supposed to be the command centre for co-ordinating logistics for the summit.

"We were informed that at the time of the announcement for this project, [Foreign Affairs]had already determined the centre would not be suitable as it was not expected to be completed on time," Ms. Fraser says.

In the end, other facilities were rented for the command centre.

The report is likely to turn up the heat on Mr. Clement, who's already been accused of funnelling disproportionate amounts of federal cash into his riding.

The Liberal Party has calculated that Mr. Clement's riding has received about $92-million in federal infrastructure funding, including the legacy fund and other economic stimulus programs - more than four times the average $15-million to $20-million most ridings in the country received.

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