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Health Minister Deb Matthews responds to questions about the province's troubled air ambulance service ORNGE, after returning back to Queen's Park for the second time in a day to attend a last-minute committee meeting in Toronto on July 31, 2012.Michelle Siu/The Globe and Mail

It is a blessing for Premier Dalton McGuinty's Liberals that the scandal around the air-ambulance service Ornge is too Byzantine for most Ontarians to follow closely. But beneath the murky allegations of public funding being leveraged for private gain and excessive salaries being hidden from public view, the latest of which came forward at legislative-committee hearings this week, lies a straightforward lesson. As governments attempt new models for delivering public services, especially those engaging the private sector, they must keep close eyes on their creations.

In this case, the Liberals seem to have done the opposite. In 2005, the government announced that it was appointing a not-for-profit corporation to manage air-ambulance services, then effectively handed the keys to Chris Mazza, a former emergency-room doctor.

Ornge went on to create a web of both not-for-profit and for-profit companies, with a lack of firewalls. Perhaps the best example of the questionable conduct that followed, documented by the province's Auditor-General, was using public funds to purchase new helicopters from an Italian manufacturer, which then gave Ornge a contract for marketing services and made a donation to one of the charities it had set up. In another bizarre series of events, Ornge reportedly purchased a building for its headquarters, then leased it to itself at an above-market rate.

There is some debate about why the government only put a stop to all this, ousting Ornge's senior management and board of directors, once media had begun reporting on it. Opposition parties argue that the Liberals turned a blind eye. Health Minister Deb Matthews has countered that Ornge stonewalled efforts to investigate it.

Even if the latter explanation is correct, it is hardly an excuse. It may be unrealistic to expect a minister responsible for nearly half of program spending to keep close tabs on every expenditure under her watch. But that is all the more reason that strong measures to ensure accountability – clear rules, regular financial reporting, an effective audit process, an engaged board of directors – need to be locked in whenever any such agency or organization is established.

The cost of failing to do so cannot just be measures in dollars. One of the dangers of a scandal such as Ornge is risk-aversion, when it comes to new service-delivery models. At a time when innovation is required to make health spending sustainable, that would be the wrong lesson to draw. Governments need to keep taking risks; they just need to be smarter about them than Mr. McGuinty's was.