12/06/2010

Several value-for-money audits of interest to AMO and municipal governments.
The Auditor General looked at 11 matters that this year included casino gaming regulation, discharge of hospital patients, Family Responsibility Office, home care services, hospital emergency departments, organ and tissue donation and transplantation, school safety and infrastructure asset management at colleges.

Of interest to municipal governments is: Municipal Property Assessment Corporation, Non-Hazardous Waste Disposal and Diversion and Infrastructure Stimulus Spending.

Municipal Property Assessment Corporation:
The Auditor General assessed whether the Corporation ensured the assessment rolls it provides to municipalities are complete, accurate and based on up-to-date information about individual properties.  (In 1998, property assessment responsibilities were transferred from the Ministry of Finance to MPAC, a non-share capital, not-for-profit corporation, of which every municipality is a member. MPAC assessment information is used by the province, municipalities, school boards and others.)

Auditor’s Findings: The Auditor’s Recommendations centred around three main areas:

i) accuracy of assessed values and property inspections;
ii) procurement and expenditures; and
iii) MPAC’s computer system.

It is worth noting that the Auditor General has not questioned the merit of current value assessment nor MPAC’s valuation models used to assess 4.7 million properties in Ontario. The Report does site some variances between sale prices and assessed value; however the timeliness of sales investigations and property inspections can affect the variance.
  
MPAC Response:
MPAC has initiated improvements to sales investigations by establishing a threshold between the sale price and assessment which would trigger an investigation. An accelerated property inspection cycle based on an improved municipal/MPAC building permit information sharing has also been initiated. In 2009 MPAC initiated new procurement and expenditures guidelines which addressed the Auditor’s recommendations.  No recommendations were made regarding MPAC’s computer system.

AMO Comment:
In the absence of full voluntary municipal participation efforts to facilitate the exchange of building permit information used to improve the property inspection cycle, municipalities should expect this to be regulated. Some of the Auditor General’s recommendation may have staff and budget resourcing implications for MPAC. MPAC annual expenditures of $185.5 million are paid for by municipal governments, although MPAC data is used in the generation of $6 billion per year in education tax for the provincial treasury. MPAC will be available to municipalities over the coming days to answer questions about the Auditor General’s Report. The Corporation has also drafted a letter to all Heads of Council and MPAC representatives and it will attend AMO’s January Board meeting to provide an update on how the Corporation is responding to the Auditor’s recommendations.

Non-Hazardous Waste Disposal and Diversion: The Auditor General assessed whether the MOE had adequate procedures in place to encourage the sound management of waste, including compliance with related legislation, regulations and policies.

Auditors Findings:
The Auditor General’s report found that “only about one-quarter of the waste generated by Ontario’s households and businesses is being diverted from landfills—well short of the government’s own goal of 60%.”

The Auditor General found:

  • The industrial, commercial, and institutional sectors generate about 60% of the waste in Ontario, but divert only about 12% of its waste.
  • Although the overall diversion rate for residential waste is about 40%, rates for individual municipalities varied significantly, ranging from about 20% to more than 60%. As well, only about 15% of Ontario municipalities have organic waste-composting programs, which collect from about 40% of the province’s households in total.
  • While there are regulations in place to require large generators of industrial waste to source-separate waste for reuse or recycling, the Ministry has little assurance that the regulations are being complied with.
  • A number of municipalities expressed concerns about insufficient landfill capacity. The existing capacity will be filled more rapidly once export of residential waste to U.S. landfill sites largely ends after 2010.
Ministry of the Environment Response: 
The Ministry indicates that it has been implementing a framework that focuses on reducing waste while promoting reuse and recycling. It points to its successes in these areas such as the blue box and is looking ahead to newer programs such as those focusing on tires and electronics. The Ministry indicates it is committed to improving its non-hazardous waste program in the future.

AMO Comment:  
The Auditors findings, from AMO’s perspective, continue to point to the need for Extended Producer Responsibility, as does the Environmental Commissioner. The makers of waste should not get a free pass and leave taxpayers stuck with disposal costs.  Ontario has filled up 649 of 730 landfills and we have few incentives for manufacturers and industry to reduce waste and improve products and packaging. We need to expand waste management approaches that begin with product development, reduce packaging and increase the usefulness of products in a reuse, recycling framework if we are to improve our environment.

Infrastructure Stimulus Spending:
The Auditor General assessed whether adequate systems were in place to ensure the timely distribution and prudent administration of three program funds: the Infrastructure Stimulus, Building Canada Fund – Communities Component and the Recreational Infrastructure Canada  and Ontario Recreational Infrastructure Programs, and to report on the effectiveness of these programs.

Auditors Findings:  
“Although efforts were made to establish appropriate procedures to quickly distribute billions in federal–provincial economic stimulus fund¬ing, improvements can be made to enhance the effectiveness of any such future stimulus programs.”

In particular, the Auditor General’s report notes that: there was a huge volume of project applications submitted (often many by the same municipalities); the government did not assess each project as rigorously as it may have given the need to move quickly on approvals; while attestations that projects could be completed on time were required from municipal governments, the high volume of large and complex projects chosen for funding has presented challenges for completion by the deadline; and projects chosen did not always reflect the needs and priorities in municipalities.

The Auditor General also noted that the projects chosen did not always prioritize those which would have 50 per cent of funding allocated in the first of the two-year program as was intended. This has resulted in fewer jobs being created to date by the program.

Ministry of Infrastructure Response:
The Ministry of Infrastructure indicates that it welcomes the auditor’s findings and that many of the auditor’s recommendations are being implemented in the stimulus funding program already as the program is still ongoing. The Ministry notes that as of October 2010 over 90 per cent of stimulus projects are on track to be finished by March 31, 2011 and that it moved to quickly make funding available while remaining transparent and accountable. In addition, the Ministry has worked to improve the accuracy of monitoring information and to roll out a risk assessment tool to monitor projects.

AMO Comment:
Municipal governments have invested dollar-for-dollar with the federal and provincial governments in municipal infrastructure stimulus projects. The Infrastructure Stimulus programs provided welcome support to municipal infrastructure in Ontario and municipalities are working flat out to complete these projects as quickly as possible.

Municipalities were asked to submit lists of shovel ready projects for consideration for funding and did this in record time in response to the federal and provincial governments desire to stimulate the economy. The number of project applications submitted and the value of these projects reflect the huge municipal infrastructure deficit in Ontario, which is thought to require $6 billion per year for ten years to make up, or approximately an additional $1,200 per household per year.

AMO will assess how the Auditor’s recommendations for a more risk-based approach may impact any future capital-grant programs and factors affecting program delivery, including project suitability, demonstrated and achievable benefits reasonableness of timelines, and the capacity of and demand on ministry resources.

Summary:
AMO will work to undertake any necessary follow up with the impacted Ministries. A meeting with MPAC is organized for January.