Government told to reconsider spending on leases

KIRSTEN MURPHY

Call it a drop in a financial sinkhole.

The Nunavut Govern-ment will pay some $476 million in building leases and another $145 million in future leases over the next 20 years to keep roofs over the heads of several thousand employees both at work and at home.

The GN should reconsider its office and housing agreements, according to the 2001 Auditor General’s report. The AG report was tabled in the Legislative Assembly on Nov. 27.

Several hundred buildings in Nunavut, including the legislature, are leased. The Nunavut Construction Corporation holds most of the contracts.

The problem with leasing, like renting, is you have nothing to show for your money.

Kelvin Ng, Minister of Finance and Administration, defended such spending, noting the majority of agreements were inherited from the Northwest Territories government at division.

The alternative is buying — which is not a feasible option.

“The ideal situation is you have a lot of money to pour into your own facilities,” Ng said. “If we don’t have the money, how do we do it?”

Ng was quick to point out the benefits of leasing. “Leasing arrangements provide an economic stimulus for the economy, whether to the owners of the facility or job creation for construction and maintenance.”

He denied the money could be better spent on social programs. “There are infrastructure requirements for any government to support civil services. Otherwise, we wouldn’t be able to provide those social services, health services or income support,” Ng said.

He said a new leasing policy is up for review. “Buying is always an option for any government if you have the cash available. It depends on what your polices and objectives are. In a lot of cases, leasing arrangements are made to stimulate economic initiatives, whether through employment or investment by Nunavut beneficiaries or shareholders. All those factors will be taken into consideration as we move toward finalizing a policy.”

The report lists the following recommendations:

• Information to the Legislative Assembly should allow MLAs to see the total cost of the government’s capital plans for the next year.

• If the government continues its long-term leases, it should establish formal objectives and periodically evaluate whether those objectives are being met.

• The government should compare the costs of leasing with the costs of buying before making a lease or buy decision.

• The government should consider what lessons it can learn from its recent long-term leases. It should assess the premiums it has paid to lease rather than buy, and any objectives that might justify the decision to pay these premiums.