Good intentions, mushy-headed thinking
Given all we know now about the Government of Nunavut’s longstanding administrative weaknesses, the $60 million financial debacle inside the Nunavut Housing Trust, disclosed last week by Housing Minister Hunter Tootoo, ought to come as no big surprise.
The housing trust is a special fund created in 2006 to hold a $200 million contribution the Conservative government announced in May of that year to build social housing in Nunavut.
This money is a surviving remnant of the so-called Kelowna accord, a set of unsigned political promises that ex-Prime Minister Paul Martin announced at a federal-provincial gathering held Nov. 25 , 2005. On that day, Martin announced $300 million to pay for “1,200” new public housing units in “the Far North.”
But despite all the bragging and political pandering that flowed from the gaping mouths of those assembled at the 2005 Kelowna gathering, no one in government at the time was actually able to provide any reliable information about how this housing money would be spent. As it turned out, Nunavut got about 725 new units — and even that took many months to reveal.
And so began the unceasing flow of mushy-headed thinking and administrative bungling that led to last week’s embarrassing admission.
It wasn’t until May 2006, long after the passing of all realistic sealift deadlines for big projects, that the newly-elected Conservative government was able to confirm that $200 million of this money would indeed go to Nunavut — in the fall of that year.
But inconvenient realities such as sealift deadlines did not prevent Inuit Tapiriit Kanatami from making a well-intentioned — but highly foolish — promise to ensure construction materials would sail to Nunavut that summer.
Another inconvenient reality was the sad state of the Nunavut Housing Corp. Then, as now, the corporation suffered from severe staff shortages. Then, as now, more than one in four of all positions at the corporation sat empty.
All this, however, did not prevent the Nunavut Legislative Assembly from voting $11 million, in June of 2006, to ship construction materials to Nunavut on the last cargo ships of the year.
This was the first blunder. Having just been assigned a $200-million construction project, the Nunavut Housing Corp. should have been given at least a year or more to plan the job. Construction should not have started until at least 2007 or even 2008.
Tootoo said last week that the housing trust’s $60 million overrun is rooted in early cost estimates that turned out be inaccurate. The corporation first estimated that each new housing unit would cost about $275,000. It turns out the actual cost is at least $350,000 per unit. Multiplied by the 725 units the program is intended to build, this accounts for most of the $60 million.
This is what happens when you ask an understaffed, overworked organization to take on a big new job: they make mistakes, especially when their greatest staff weakness is in financial management.
But this wasn’t the only blunder. The housing corporation then hired an inexperienced firm called Aarruja Development Corp. to prepare and assemble building materials for the sealift. The company botched the job, sending the wrong materials to the wrong communities. In a report done in 2007, the Auditor General of Canada, Sheila Fraser, found the housing corporation did not properly evaluate this company and its southern partner to find out if they were capable of doing the work.
The housing corporation put local housing associations in charge of project management, and tried to interest local construction companies in bidding for local social housing construction contracts.
But many contractors weren’t interested in making bids, while others submitted bids that were too high. And during construction, there were numerous delays in getting units finished and problems with workers not showing up at construction sites.
The housing corporation was also asked to take on another burden: a training program aimed at turning out 30 new trades people. The auditor general found that about half the apprentices hired to work on social housing construction quit after the first year.
The result of all this bungling was that by December 2007, only 20 of 96 units planned that year were finished.
Last week, Tootoo said the largest element of the cost over-run appears to be labour. Did the training program contribute to this? Was this training adequately funded? Did contractors overbill the government for labour costs?
We hope the special audit that Tootoo announced last week will answer these and many other questions. In the meantime, he and his other colleagues in cabinet face the unwelcome task of asking MLAs to vote an extra $40 million in spending to help bail out the housing trust. The only other conceivable option is to build fewer social housing units than originally planned.
The lessons are obvious. First, don’t let political pandering get in the way of good planning.
Second, acknowledge the Government of Nunavut is too short-staffed to even manage its current responsibilities. The next time someone dreams up a big expensive new program and dumps it onto the GN, they should take this reality into account.
Third, acknowledge that when you create a full-blown government with province-like powers to serve only 31,000 people, a crippling lack of capacity in that government may be the most likely consequence.
Fourth, prepare for more boondoggles. Good intentions and mushy-headed thinking usually lead to this — unintended consequences that blow up in your face at the most inconvenient times. JB