More Than Half Of Nova Scotia’s $100-Million Relief Fund Still Unspent
HALIFAX — More than half of the $100-million Nova Scotia pledged to help individuals and businesses make it through the Covid-19 pandemic hasn’t been spent.
Near the beginning of the pandemic, the province asked Dalhousie University to help administer Covid-19 relief funds. The result was a contract for the university to hand out $100-million through a series of programs, like the Small Business Impact Grant and the Small Business Reopening Grant
Today, more than half of that money remains unspent or tied up in loan guarantees that may never be paid out.
Programs ‘Well-Managed’ But Not Properly Though Out
Nova Scotia’s auditor general, Kim Adair, released a report today that looks at the province’s early Covid-19 spending, from March to September of 2020.
The report examines the province’s contract with Dalhousie, as well as the $30-million it spent through the Department of Education and Childhood Development to support childcare providers.
Adair said the government deserves credit “for its quick response in setting up relief programs in the early days of the pandemic.”
She said the Dalhousie fund was “well-managed” but that the province was too quick to commit such a large chunk of money to the university.
“The province locked in the amount and gave up control of the funds before knowing how much was needed,” she said. “That means the province can’t redirect any savings to other provincial priorities.”
Almost $60-Million Still Unspent
Right now, only $41.4-million of the Dalhousie fund has been spent on Covid relief programs. Another $34.7-million has been set aside for loan guarantees for the tourism and hospitality sector.
A loan guarantee is a promise to pay all or part of a loan if the borrower defaults. As part of its support for the tourism and hospitality sector, the province made loan guarantees that allowed businesses to borrow more money.
But if those businesses survive, the province won’t need to spend the money it set aside to guarantee their loans.
Meanwhile, $23.9-million of the Dalhousie fund remains unspent. Combined with the $34.7-million in loan guarantees, that means more than $58-million of the Dalhousie fund still sits in a bank account.
No Plan For Leftover Money
Adair said the agreement between Dalhousie and the province didn’t clearly specify what would happen to any of the $100-million that was left over after Covid-19 relief programs expired.
She said that only changed once her office began its audit. When the audit started, the government updated the agreement so any remaining money would go to Research Nova Scotia for public health research.
Adair said even that change is not ideal. She said wants to see leftover money come back to the province.
“By putting significant public funds in the hands of external third parties there are limits on the amount of oversight that government continues to have — and cannot have once they do that,” she said. “That means the province can’t redirect any savings to other provincial priorities.”
And the amount leftover could be significant.
The government’s contract with Dalhousie lasts until 2027, and some of the $58-million that’s left will likely be spent.
But the money is also collecting interest. As of July 31, Dalhousie had already recorded about $500,000 in interest revenue on the province’s contributions.
Both Dalhousie and the province have said interest will be put back into the fund to be spent on relief programs. But with almost $60-million still unspent, it’s not clear if that will happen.
Auditor Recommends New Guidelines
Overall, Adair said the Dalhousie fund was managed well, with few errors.
Her report said the bodies created to administer the Dal funds “had a clear understanding of the roles and responsibilities as defined in the Agreement.” It said there were “some weaknesses” in the contribution agreement, both from the lack of clarity about what happens to leftover money and the lack of conflict of interest and confidentiality clauses.
But those have to be considered in the context of the pandemic.
“This was an emergency situation. There were good things pointed out [in the report]. It was commendable the pace at which the programs were set up,” Adair said. “The province was dealing with a lot.”
She recommended the Department of Finance and Treasury Board develop guidance on providing grants in emergency situations based on how it handled its Covid-19 programs.
The department and board agree that the development of guidance in emergency situations is appropriate.
Trevor Nichols is the associate editor of Huddle, based in Halifax. Send him your feedback and story ideas: [email protected].