The Government of P.E.I. recovers $60 million owed from Ottawa and Crown corporations
Senior PEI Department of Finance officials say efforts have been made to recover $60 million owed to the province by the federal government and two Crown corporations.
But months after the uncollected funds were flagged by the province’s auditor general, millions of dollars remain unpaid.
Speaking to the Standing Committee on Public Accounts on June 21, Comptroller Judy Killam described several activities undertaken since March 31, 2021, which marked the end of the period reviewed by the Auditor General.
“I fully realize that $60 million in accounts receivable is a lot of money. It’s about 2.5% of our total revenue for the year,” Killam told the committee.
In May, staff from the province’s auditor general’s office told members of the public accounts standing committee that as of March 31, 2021, about $20 million in federal funds had been outstanding for more than a year. Some of the outstandings dated back to 2018.
The Auditor General also found that two Crown corporations – the PEI Lotteries Commission and the PEI Agricultural Insurance Corporation – had failed to properly manage a total of $40 million in surplus funds as of March 31, 2021. Crown corporations required that excess funds be invested or paid to the province.
Killam said the province has since collected payments due from the federal government for fiscal years 2018 and 2019. She also said the Department of Finance is in the process of securing $3.2 million for 2020 and 2021. .
Killam also noted that a claim for $6.6 million owed to the federal fund for a low carbon economy was submitted in August 2021. Adjustments were then requested and made in May 2022.
Additionally, Killam said activity reports have been submitted or are expected to be submitted by July, for approximately $7 million due for the Official Languages in Education program. A total of $5.2 million is still due. The funding is intended to support French-language education, as well as teacher recruitment and infrastructure programs at École-Sur-Mer and the Belle Alliance Community Center in Summerside.
Killam did not mention $6 million in bad debt for youth justice services, which had been identified by the auditor general’s staff.
She addressed $24.9 million in excess revenue that remained in the PEI Lotteries Commission’s account as of March 31, 2021. Killam said the commission’s board has since transferred the funds to the province.
“The issue has been resolved and the process is in place to ensure annual transfers going forward,” Killam said.
An additional $16.4 million surplus was held in the PEI Agricultural Insurance Corporation account as of March 31, 2021. But Killam said the company’s funds were held in a trust account, which meant they could not be transferred to the province.
“They need to invest them and they are currently working with our investment group to determine how best to invest their excess funds,” Killam said.
Sustainable Debt Levels: Finances
The Auditor General’s report also raised concerns about the province’s rising debt levels. Expenses incurred during the COVID-19 pandemic have significantly increased the province’s spending. The province expects to continue to run deficit budgets over the next three years.
But Gordon MacFadyen, executive director of fiscal management, said most of the province’s debt is long-term, with an average maturity of around 15 years.
MacFadyen said that meant PEI’s debt portfolio was “sort of the envy of other provinces.”
“Most of our money is long-term money, so that would be the best defense against rising interest rates,” MacFadyen said.
MacFadyen said the province’s internal cost of debt has fallen from 11.3% interest in 2001 to 5.1% in 2021.
“We effectively cut the interest bite for the debenture in half,” MacFadyen said.
MacFadyen also said the province’s economic growth has allowed it to manage its current debt load.
“Yes, the debt has increased. But our ability to repay some of that debt has also increased. So I would say that’s one of the factors that’s going reasonably well,” he said.