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Ontario distributed $210-million in COVID-19 relief to ineligible small businesses but made no attempt to retrieve it, the province’s Auditor-General says in a report that also warns the province’s frequent use of special “ministerial zoning orders” to fast-track development projects has undermined the land-use planning process.

In her annual report released on Wednesday, Ontario Auditor-General Bonnie Lysyk said the province’s COVID-19 relief program for small businesses, which offered two payments of $10,000 to $20,000 each to eligible companies with fewer than 100 employees, handed out more than $210-million to 14,500 firms or individuals that did not qualify.

To be eligible, companies had to have been required to close in the provincewide shutdown announced Dec. 26, 2020, and have suffered a revenue decline of more than 20 per cent in April, 2020, compared to April, 2019.

The $210-millon represents 7 per cent of the nearly $3-billion the province handed out to small businesses in these pandemic grants. But the government made no attempt to recoup the missing money, the audit says, pointing to a decision by cabinet’s key priorities and planning committee to recommend against recovering the cash because it could take years and may “appear unreasonable and just” during the pandemic.

Ontario Premier Doug Ford, speaking to reporters at an unrelated announcement in Mississauga, said the government was trying to act quickly in a crisis.

“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 and we don’t take that lightly,” Mr. Ford said. “We’re going to always continue looking into it, seeing where we can improve.”

But opposition critics pointed to the audit’s findings that showed the grant program was put together only months after the pandemic began. Despite the onset of COVID-19 emergency measures in March, 2020, it was only on Dec. 17 of that year that then-finance minister Rod Phillips – later revealed to be vacationing in St. Barts at the time – directed staff to create the program, giving them just two days to draft it.

The grants lacked a number of basic controls, the auditor found. Procedures to flag applications with a business or mailing address outside Ontario, or to reject those with bank accounts outside the province, were only implemented the following March, weeks after the program launched. And the province failed to track all the cash, the audit says, meaning it does not know how much money each business received. Some businesses who needed the help, such as dry cleaners and hotels, were excluded. Others recouped more from the program than they lost in revenue.

Ontario NDP Leader Andrea Horwath said the government created a “half-baked, slap-dash” plan, even though it was already 10 months into the pandemic.

“I can’t imagine how a small business that had to shut their doors and walk away from their dreams is feeling right now knowing that Doug Ford shovelled all kinds of money out the door to businesses that didn’t even qualify,” she said.

Ms. Horwath added that if indeed there were fraudulent claims, there should be a criminal investigation into what happened.

Ontario Liberal Leader Steven Del Duca said the audit’s findings on the small-business grants show that Mr. Ford and his team simply don’t know what they are doing.

“They’re just not a competent government,” he told reporters.

Ontario is not the only government facing scrutiny for its pandemic spending. Just last week, Quebec’s Auditor-General said the Legault government provided $68-million in emergency pandemic loans to businesses that did not meet the test to receive help.

Ontario’s Auditor-General also investigated the provincial government’s regular use of what are known as “ministerial zoning orders” or MZOs, which exempt development projects from normal planning processes and environmental rules. Opposition critics have said too many are given to large developers who are also donors to the governing Progressive Conservative Party. MZOs have also allowed for the violation of environmental rules. The government says MZOs are needed to speed up construction of affordable housing and long-term care homes.

Ms. Lysyk’s report says the government’s “broad and frequent use” of MZOs is undermining the land-use planning process. The orders are overriding needed procedures that ensure new developments are studied with “due diligence” and allow for public consultation, she says.And her audit warns that a lack of transparency on how MZOs are granted has opened the government to “criticisms of conflict of interest and unfairness.”

She recommends the establishment of a formal application and review process for MZOs and more public transparency when they are issued. But her audit says the Ministry of Municipal Affairs has declined to implement her recommendations, which Ms. Lysyk acknowledged doesn’t happen very often.

Speaking to reporters, Municipal Affairs Minister Steve Clark defended his decision, saying the orders are needed to get more housing built. He said the province only approves MZOs on land the province doesn’t own when the order is requested by a municipality and that it is up to local governments to consult the public before they request an MZO.

“We’re acting quickly, because we’re in the middle of a housing crisis in this province,” Mr. Clark said.

The Auditor-General was also critical of the government’s plan to push ahead with Highway 413, a proposed 59-kilometre corridor that would arc around Toronto through its western suburbs and parts of its protected Greenbelt. Noting the plan has been criticized by environmental groups, the audit says the decision appears “disconnected from, or inconsistent with, land-use planning policies” meant to limit sprawl.

Ms. Lysyk’s year-end audits also found that the Ontario Provincial Police was short more 1,000 front-line officers in 2020, more than a quarter of its constable positions, meaning “many Ontario municipalities served by the OPP are getting less service than they should.”

On health care, the Auditor-General found that people are still waiting too long for outpatient surgery, with wait times that grew between 37 per cent and 57 per cent during 2020-21 because of the COVID-19 pandemic.

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