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Ontario Auditor General Jim McCarter. (Frank Gunn/THE CANADIAN PRESS)
Ontario Auditor General Jim McCarter. (Frank Gunn/THE CANADIAN PRESS)

Globe editorial

Ontario must heed A-G's advice if it is to achieve fiscal balance Add to ...

This year’s report of the Auditor-General of Ontario – a mixture of surprising and quite predictable elements – shows an insufficient respect on the part of the provincial government for the best interest of the taxpayers.

One might have expected, notably, that the enormous purchasing power of the Liquor Control Board of Ontario – a wholly-owned subsidiary of the provincial Crown – would enable it to negotiate favourable prices.

Instead, Jim McCarter, the provincial Auditor-General, and his colleagues found that the LCBO in effect works backward from the retail price it hopes to charge. The suppliers of alcoholic beverages adjust their prices so that the LCBO can keep its mark-up in the range it hopes for. It does not test the waters in the wholesale market and thus maximize its profits – and the ultimate return to taxpayers.

Among the predictable findings are those that have to do with renewable energy. Premier Dalton McGuinty proposed to “kick-start” the green economy – a verb that implies haste and impatience. Consequently, there were conscious decisions to dispense with much of the normally required planning and regulatory procedures. According to Mr. McCarter, there was no thorough evaluation of the whole policy’s effects on electricity prices, employment and carbon emissions .

It was reasonably foreseeable that the provincial government’s prediction that hydro bills would go up by 1 per cent a year would not be fulfilled, and indeed they rose by 8 per cent a year – and more than half the increase can be attributed to the green-energy policy.

In remarkably unqualified language, the report says that, before the Ontario government entered into a $7-billion contract for renewable-energy projects with a consortium led by Samsung Group, “no economic analysis or business case” was done to assess the prudence or cost-effectiveness of the agreement.

The larger question of pay levels in the broader public sector, above all health care, is beyond the scope of Mr. McCarter’s report. But it must shake citizens’ confidence that the Ministry of Health lost its own analysis of a program to shift some physicians from fee-for-service to “capitation,” an annual per-patient fee.

The Liberal government will have to absorb the disturbing findings of the Auditor-General’s report, if it is stay in power, despite its tenuous minority position, and return the province to fiscal balance, on schedule, in 2017-2018.

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