Ontario gave $210M in COVID-19 support to ineligible businesses, auditor general’s report finds

Ontario businesses that weren’t eligible for pandemic relief programs received more than $200 million in provincial supports, others were given more money than they lost, and some hard-hit vendors were excluded altogether, the province’s auditor general has found.

That’s one of the findings in Auditor General Bonnie Lysyk’s annual report, which looked at pandemic support for businesses among a total of 18 topics.

The topics covered by the report include: the use of ministerial zoning orders (MZOs) to fast-track development, Ontario Provincial Police staffing shortages stemming from medical leave, wait times for outpatient surgeries, and a lack of age verification controls by the Ontario Cannabis Retail Corporation, among other areas.

Pandemic programs for businesses totalled $11.2 billion, or about a third of the money allocated for provincial COVID-19 relief. But the auditor found those programs lacked clear goals or consultation with the most-affected businesses, and eligibility criteria was poorly defined, allowing thousands of ineligible businesses to receive the funds.

“Given the amount of money, the absence of better controls or assessment processes is troubling,” Lysyk said in a statement.

Better controls needed ‘even in a crisis’: auditor

“Even in a crisis, systems should be in place to make sure that only eligible businesses receive taxpayer dollars, and program funds reach those who need it most.”

One such program was the Ontario Small Business Support Grant, which the audit found lacked controls to weed out ineligible applicants. That meant $210 million went to 14,500 ineligible recipients — which the province isn’t trying to recover — and another $6 million in payments is still being investigated.

The audit found that nearly half of businesses that received grants got more money than they actually lost in revenue, to a total difference of more than about $714 million.

The province also paid $16 million in property tax and energy rebates to more than 3,000 ineligible businesses, and the audit also flagged issues with the Ontario Together fund, which offered help to businesses shifting their operations to assist with the province’s pandemic response.

In one case, a $1.8-million contract with that program went to a business that went bankrupt within eight months. In two instances, the audit found the Economic Development Ministry did not identify a potential conflict of interest, including when the CEO of a company that received $2.5 million was part of the COVID-19 Vaccine Task Force.

“It’s not acceptable. There should have been a declaration of a conflict of interest,” Lysyk said.

‘I think more people benefited than got hurt’: Ford

Payouts for COVID business relief funds haven’t been tracked centrally, the audit said, so the province doesn’t know how effective programs were at helping people or if the money went to the intended recipients.

Hard-hit businesses that lost revenue but didn’t have to close during the pandemic weren’t eligible to receive funds, the auditor’s report noted.

When asked about the findings, Premier Doug Ford said the province moved quickly to support businesses when the pandemic hit.

“When we’re rushing the money out the door to support the small businesses that were in desperate need of it, unfortunately, you’re going to see some fraud,” he said.

“We’re going to always continue looking into it, seeing where we can improve, but there’s a lot of people that were supported to a tune of $3.3 billion … I think more people benefited than got hurt.”

MZOs used often to fast-track development: auditor

The report also found the government is employing a previously little-used land-planning tool to fast-track development and circumvent normal planning processes.

The audit by Lysyk’s office says the government issued 44 Minister’s Zoning Orders between March 2019 and March 2021, when in the past, about one was issued per year.

It found that 17 of the 44 orders were issued to the same seven development groups or companies.

Lysyk says MZOs were originally intended to be issued in special circumstances, but the government is using them as a tool to overcome potential barriers and delays to development.

She also says there are no established criteria by which the minister assesses requests for the orders, so it’s hard to know what factors he considered when making decisions.

The auditor noted that the government also recently expanded its power to override local authority, with increased powers for MZOs as part of COVID-19 economic recovery legislation.

Here are some of the report’s other highlights:

• More than 80 per cent of the province’s emergency stockpile of PPE had expired by 2017 and the Ministry of Health had begun destroying expired PPE without replacing it.

• Medical leave taken by OPP officers diagnosed with post-traumatic stress disorder significantly contributes to increasing front-line vacancies at detachments across the province and many municipalities are getting less service than they should.

• The Ontario Securities Commission imposed $525 million in fines between 2011-12 and 2020-21, but collected only 28 per cent of that.

• The government gave $9.8 million to the Ontario Centre for Innovation for small- and medium-sized businesses to use a 5G network test platform and create or retain 3,000 jobs, but participants only created or retained 320 jobs.

• Wait times for outpatient surgeries vary across the province. For example, in 2019-20 patients waited 98 days for total knee joint replacement surgery in the Toronto region, but they waited 322 days in the Western region.
• The government spent $389 million on assisted living services for more than 23,000 Ontarians last year, but it’s often unaware of how many hours service agencies are providing and doesn’t effectively monitor programs.
• The Ontario Cannabis Retail Corporation doesn’t have sufficient age verification controls to prevent minors from buying cannabis online or receiving deliveries.
• Of a sample of private career colleges the auditor looked at, 33 per cent of them were charging students higher fees than they told the government. There are three times the number of international students at Ontario’s public colleges compared to almost a decade ago. The auditor said those institutions are relying on the foreign tuition for their financial health, which is risky.
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