Housing Corp. overspends by another $50 million
MLAs threaten leadership review over news of more cost overruns
Updated Sept. 27, 11:17 a.m.
Less than a week after former housing minister Hunter Tootoo was shuffled out of the portfolio, the Nunavut Housing Corporation announced it could run up $50 million over budget on another housing project.
The Government of Nunavut revealed Sept. 21 that the Affordable Housing Initiative, created with $100 million of federal money, could run as much as $50 million over budget.
But the GN is spinning the development as “delivering 1,000 homes as promised.”
“With this investment, we will have completed 1,011 public housing units,” new housing minister Tagak Curley said in a news release. “This represents significant progress in addressing the housing needs of Nunavummiut.”
In his last interview as housing minister, Hunter Tootoo, now education minister, said the housing corporation continued to use flawed budget figures from the Nunavut Housing Trust in the Affordable Housing Initiative.
The NHT saw labour costs skyrocket 72 per cent higher than forecast. It now appears a similar problem is plaguing the Affordable Housing Initiative.
“The numbers that we were operating by weren’t accurate….The labour was significantly over budget,” Tootoo said. “It’s not like there was any money missing or anything like that. It just cost more than what was anticipated.”
Tootoo added no one at the housing corporation picked up on that bad math until December, 2009, when a new chief financial officer took over.
Regular MLAs were also livid at news of new cost overruns at the housing corporation. Akulliq MLA John Ningark said MLAs should hold a leadership review as soon as the fall legislative session wraps up. The next session starts Oct. 19.
Aariak said in a statement she’s comfortable with the idea of a leader ship review. “As this government is nearing the halfway mark of our term, we did expect that a review would take place in the coming year. We look forward to discussing the details of this review with all members.”
Speaking before the Sept. 21 news release, South Baffin MLA Fred Schell said he expects the task of finding $50 million is going to derail the new agenda laid out by Premier Eva Aariak’s government last week, which includes plans to fight poverty, reorganize the public sector and strike financial partnerships with other levels of government.
“Where’s the money going to come from? It’s a disaster,” Schell said.
Schell said the continuing problems mean it’s time for a forensic audit, a public enquiry and sweeping changes at the Nunavut Housing Corporation.
That’s an idea echoed by James Eetoolook, the acting president of Nunavut Tunngavik Inc. In a news release, Eetoolook called the situation at NHC “unacceptable.” He said the corporation should never have walked away from a 10-year housing accord with NTI and should consider a new deal with the land claim organization to build houses.
Eetoolook said NTI is concerned about the housing corporation’s competence and called for a review of NHC.
Premier Eva Aariak said an audit of the Nunavut Housing Trust “will be forthcoming very soon.” She said she’s seen a first draft of the report, but wouldn’t discuss its contents during a news conference Sept. 15.
The ongoing debacle also represents a significant hit to the territory’s budget. In June, MLAs passed a suite of cuts to help pay for $60 million in cost overruns at the Nunavut Housing Trust, including $16 million in cuts at most GN departments.
Most of the cuts came through trimming benefits and eliminating unfilled government jobs, because MLAs were reluctant to cut program spending. Now, it’s not clear where the money will come from.
Meanwhile, Johnny Ningeongan, MLA for Nanulik and co-chair of the regular members caucus, led the chorus of MLAs fretting about the impact the housing debacle will have on the GN’s bottom line.
“The situation at the Nunavut Housing Corporation poses a grave risk to the government’s overall fiscal health and its ability to deliver programs and services to Nunavummiut.”
In June, Finance Minister Keith Peterson said the GN paid for part of the first $60-million overrun by trimming departmental budgets—except for Education and Health and Social Services—by three per cent each.
But Nattilik MLA Jeannie Ugyuk wondered if the GN will have to consider wider and deeper cuts to cover the other $50 million shortfall.
“The $110 million that the NHC needs to pay contractors is money that is no longer available for such important goals as establishing a new substance abuse treatment centre in the territory or supporting training and education programs for our constituents.”