Understaffing led to questionable lease

Understaffing in the departments of public works and finance apparently led to the signing of a lease agreement that now costs the government 50 per cent more than it would have cost the government to build the building.

Bob Vardy, the deputy minister of finance, offered this explanation at an appearance before the legislative assembly’s standing committee on operations last week.

“I guess we have learned some lessons from our leasing experiences so far,” Vardy told MLAs. “In at least one instance we probably paid too much of a premium.”

Vardy said early in 1999, when the lease was signed, there were “only four employees in the department of public works,” and that there was “less than full capacity in department of finance.”

Because of that, GN staff couldn’t analyze the deal properly, Vardy said. At the same time the new government found itself desperately short of staff housing and office space.

The committee, which is responsible for scrutinizing the finance department, organized the meeting to discuss the auditor general of Canada’s recent report on the territorial government’s public accounts for 1999-2000.

In that report, the auditor general criticized the government for entering into leases for buildings without knowing whether it’s cheaper to buy them.

“[I]t is unclear to us why the government decided to lease and not buy,” the auditor general said of the lease that contains the 50 per cent premium. It is the only lease that the auditor general analyzed that way.

Responding to questions from Iqaluit Centre MLA Hunter Tootoo, the committee’s chair, Vardy said that the government now scrutinizes lease agreements more carefully

“Since that date we have gotten more capacity and we are insisting on much more thorough reviews of decisions,” Vardy said.