Hasty COVID-19 aid for N.B. workers lacked controls, says auditor-general

·6 min read
Acting Auditor-General Janice Leahy says the province failed to get social insurance numbers from 827 people receiving benefits, 'increasing fraud risk.' (Jacques Poitras/CBC - image credit)
Acting Auditor-General Janice Leahy says the province failed to get social insurance numbers from 827 people receiving benefits, 'increasing fraud risk.' (Jacques Poitras/CBC - image credit)

The New Brunswick government's emergency aid to laid-off workers rolled out in the early weeks of the pandemic with poor controls, weak contracts and inadequate monitoring, according to a new report by the auditor-general.

The New Brunswick Workers' emergency income benefit was hastily put together in March 2020 to provide $900 in one-time payments to people laid off when their employers were ordered to shut down.

"We recognize the department was operating under an accelerated timeline and external pressure to develop the NBWEIB program," says the report tabled at the legislature Thursday morning.

"We believe this led to gaps in the planning process and implementation."

The program distributed $37 million before the federal government stepped in with the Canada emergency response benefit.

The report by acting Auditor-General Janice Leahy says the province failed to get social insurance numbers from 827 people of the 40,000 receiving benefits, "increasing fraud risk."

The Department of Post-Secondary Education, Training and Labour, which ran the program, provided "little evidence for program planning or rationale for key decisions made" and there was no appeal process.

But Leahy also acknowledges in her report how fast officials had to move to create the program.

'Short notice'

The department had only five days to design the program and negotiate a contract with the Canadian Red Cross to run it, the report says.

"We understand the department was tasked with implementing this program on short notice," the report says.

"However, the weaknesses identified are important to understand in planning for future emergency benefit response programs."

Post-Secondary Education, Training and Labour Minister Trevor Holder told reporters it was important in March 2020 to address the anxiety of laid-off workers, and he was glad to see only two per cent of the approved claims were questionable.

"It was actually very remarkable that we reached that many New Brunswickers as quickly and as effectively as possible," he said.

"This was a get-it-done moment, and that's what I was operating under, and we got it done."

In June, Holder's department announced it was launching its own audit of the program and said anyone who was ineligible but who received money would be asked to pay it back.

Submitted by the Government of New Brunswick
Submitted by the Government of New Brunswick

New Brunswick confirmed its first case of COVID-19 on March 12, 2020 and the government declared a state of emergency, including the closure of non-essential businesses, one week later.

Premier Blaine Higgs announced the emergency benefit program on March 24 and details were rolled out five days later on March 29.

The report quotes one official telling the audit team that "we did not have any time to effectively plan, trouble-shoot or problem-solve."

The province originally budgeted $75 million for the program but a flood of registrations on the first day led cabinet to increase that to $100 million.

But after Ottawa launched the federal CERB program on April 6, the province decided to wind down its program ahead of schedule.

Only $54.5 million was advanced to the Red Cross, of which $38.7 million was distributed to beneficiaries. The province recouped the remaining $15.8 million from the Red Cross in January 2021.

The cost of the program was tacked on to the province's 2019-20 financial books, cutting into a projected surplus for that year.

Investing in rural internet services with little success

Leahy's report also describes almost two decades of government spending aimed at improving rural internet services, with few discernible results.

"We were unable to conclude if funding for rural Internet is achieving the desired outcome," it says.

The report says successive provincial governments have spent $39 million to improve rural internet since 2003, yet 36 per cent of rural households still did not have access in 2019.

"Despite these investments, rural households continue to grapple with lack of connectivity and low speed internet services."

According to the report, the $10-million first phase of the province's most recent program:

  • Lacked the bandwidth to meet the a goal of adding fixed-wireless internet access to 10,000 homes.

  • Was more than a year late upgrading 15 towers needed to transmit data.

  • Missed a 2020 deadline to offer internet service at a speed of 100/10 Mbps.

  • Saw customers charged $119.99 per month for the service when it was finally available, because the contract's requirement for a rate of $99.99 lasted only until March 2020, before the service was available.

Leahy said the COVID-19 pandemic made the lack of high-speed service more acute when public health rules restricted in-person services.

The report says Opportunities New Brunswick and the Regional Development Corporation selected Xplornet, a New Brunswick-based company, to provide the service without a competitive bidding process.

ONB accepted Xplornet's word that its proposed fix "cannot be replicated … by any other provider" through a public bidding process and did not verify whether any other companies offered the same solution.

The two provincial agencies didn't verify "the completeness and accuracy" of Xplornet's proposal and instead relied on the company's own needs assessment and design.

"In our view, ONB and RDC failed to ensure these were designed to meet the needs of rural New Brunswickers," the audit says.

It adds that Xplornet's technical solution "was not designed with sufficient bandwidth to allow for 100 per cent participation" of rural households.

In an email to CBC News, Xplornet spokesperson Johanne Senécal said many of the report's findings "are simply inaccurate" and the company had provided coverage to the 10,000 households it was supposed to reach in phase one of the program.

She said Leahy and her staff "never sought information directly from Xplornet" and the report mixed up elements of the first and second phases, "leading to a host of incorrect assumptions and assertions."

Senécal said that was her response to the report "at first glance" but the company would review it in more detail.

Fundy-The Isles-Saint John West Progressive Conservative MLA Andrea Anderson-Mason said she was glad to see the report, given she raised many of the same issues publicly a year ago.

"It's something that I hear regularly from my constituents," she said.

Xplornet had been hired to improve rural Internet service in 2008, and its new application "was presented as an upgrade or continuation of that work," the report says, but the province didn't check whether other service providers were now able to do the same work.

In contrast, Nova Scotia looked at 15 different companies when it went looking for a rural internet provider.

ONB also paid some claims in advance, not following its own policy requiring that it check that contract conditions have been met before it releases funds.

The province is expected to put more money into phase two of the program, and Leahy told reporters "there are certain risks that we saw" that the government can avoid if it looks at the pitfalls from phase one.

The report also says the lack of a single department or office clearly responsible for rural internet contributed to the weak oversight.

ONB Minister Arlene Dunn said in an interview that to address that problem, the responsibility for the file was recently assigned to the chief information office under the Department of Finance and Treasury Board.

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