Skip to main content

The Globe and Mail

Auditor-General questions Nova Scotia loans to private sector

Nova Scotia Auditor-General Jacques Lapointe.

Andrew Vaughan/The Canadian Press

More than $500-million in public money has been approved to go to some of Nova Scotia's major employers, such as Irving Shipbuilding and the Pacific West Commercial paper mill, through a cabinet-controlled business loans program that is poorly managed and lacks monitoring and accountability, the province's auditor general said Wednesday.

In his fall report, Jacques Lapointe said he found examples within the Nova Scotia Jobs Fund of unsecured loans and loans that were approved but did not always include the required financial and economic analysis.

"As a result, protection of taxpayers' money is inadequate and the economic benefits of these programs is uncertain," Lapointe told a news conference.

Story continues below advertisement

In some instances, employment and salary targets in final agreements the provincial government signed with companies that have been offered public money were lower than those used to assess economic benefits, he said. Inaccurate information was also provided to cabinet where funding decisions were made, his report concluded.

"The information in the files is not always consistent with the information sent to cabinet for approval," Lapointe said. "We questioned whether any of this work should in fact remain with the department."

The report said that since the inception of the Nova Scotia Jobs Fund in 2011, $611-million had been approved and $183-million had been disbursed as of Sept. 1.

Lapointe's auditors examined the 10 biggest loans approved by the previous NDP government, including the $304-million deal struck with Irving Shipbuilding to help it prepare for the $25-billion federal shipbuilding program and the $66.5-million offered to Pacific West Commercial as part of a larger package to help keep a paper mill operating in Port Hawkesbury.

Lapointe said deficiencies were found in all 10 of the loans and three, totalling $323-million, were approved without financial analysis. The transactions included grants and forgivable loans ranging between $8.8-million and $260-million.

Auditors found that in certain instances, the risks related to certain loans were not communicated to cabinet.

Examples included a proposal for the Northern Pulp Nova Scotia mill that provided funding to help the company break even, despite the fact it is expected to experience product price declines over the long term.

Story continues below advertisement

Lapointe said in the case of the loan to Irving Shipbuilding, the company did not provide sufficient security to cover the financial assistance it was offered.

He also flagged problems with the terms and conditions of a $25-million loan for Cooke Aquaculture that is intended to expand its operations, saying there is no security for the loan, net economic benefits to the province were found to be negligible, and the funds were not limited to use in Nova Scotia.

"What we find is that the system itself is full of gaps," Lapointe said. "It looks systemic to us and it's consistent from loan to loan and grant to grant."

He also said the Jobs Fund Board, an independent advisory council, expressed concerns with loans to Chorus Aviation and Pacific West Commercial before they were approved. He did not specify what those were.

Lapointe's report came a day after the Liberal government said it would introduce legislation to strengthen rules governing public assistance to the private sector and increase transparency on how taxpayers' dollars are spent.

The bill would require the government to post information for each transaction online, with a mid-year report on how the funds are used. It would cover transactions made after April 1 from the Nova Scotia Jobs Fund, the Nova Scotia Fund and strategic investment funds.

Story continues below advertisement

The Nova Scotia Jobs Fund, formerly the Industrial Expansion Fund, was introduced by the previous government of Darrell Dexter two years ago. At the time, Dexter said the new fund would provide better and clearer administrative reporting on economic assistance and transactions.

Report an error

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at