Auditor general blames Service NB for rush to bungled tax assessment system

Auditor-General Kim MacPherson is blaming the leadership of Service New Brunswick for failing to acknowledge the "high risk" of "fast-tracking" a new property assessment system.

MacPherson says in an audit released Thursday morning that the new system, which led to thousands of assessment errors earlier this year, failed because Service New Brunswick moved too quickly and communicated poorly.

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She said she "could not determine" if Premier Brian Gallant himself ordered the fast-tracking of the new system, though she said a May 2016 presentation of the new system, and a followup call by chief of staff Jordan O'Brien "contributed to SNB's perceived sense of urgency."

And she said assessment staff admitted to her during her audit that "quotes attributed to the Premier," widely reported in the media, "were not based on direct conversations with him."

MacPherson calls one key quote attributed to Gallant in a slide show —"I want to see it in half the time" — as coming from what she calls "a fictional conversation."

She said the staff's "perception" that Gallant ordered the fast track was based on communications from Service New Brunswick executives, including then-CEO Gordon Gilman.

The government announced Gilman's retirement from the provincial civil service on Wednesday.

Tax bills inflated

Service New Brunswick's new digital property assessment system, launched last fall, produced inflated property tax bills for thousands of landowners.

Rather than catch and fix the mistakes, some officials made up renovation amounts on some homes to justify inflated values the new system was falsely detecting.

Property taxes on homes cannot rise by more than 10 per cent a year if there have been no renovations. The phoney renovation amounts allowed Service New Brunswick to raise assessments beyond the 10 per cent cap.

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A record 18,000 landowners challenged their assessments, and as of last week, 10,000 had won reductions.

A slide show presentation obtained by CBC News earlier this year said the new system would take three years to implement, but after the May 6, 2016, presentation to Gallant, Service New Brunswick was told, "I want to see it in half that time," a comment attributed to the premier.

Emails said Service New Brunswick CEO Gordon Gilman asked staff to accelerate implementation after the presentation.

"It comes directly from the premier," one staffer wrote. Another wrote that Gallant "subsequently requested to move faster" with the initiative.

Can't prove Gallant was culprit

That led the Progressive Conservative Opposition to paint Gallant as the main culprit in the fiasco.

But MacPherson said her audit was unable to establish if that's true.

She said SNB's director of modernization felt Gallant was "impressed" with the new system after the presentation, and O'Brien followed up by calling Gilman with questions about the technology.

That led Gilman to ask a vice-president "to prepare a business case for accelerating the implementation" of the new system's aerial photography.

MacPherson wrote that it's clear the presentation to Gallant "started the chain events" leading to "fast track," but she received "conflicting accounts" about "critical conversations" that took place over the phone.

She said there was "no apparent urgency" in an email from O'Brien to Gilman about the acceleration of the aerial photography. Gilman told her he didn't speak directly to Gallant about it.

O'Brien told her his followup with Gilman was based on concerns about the public reaction to a new system "and the tone was cautionary rather than urgent."

Denies asking for acceleration

Gallant told her he didn't ask for the acceleration and wasn't aware of it until March of this year. That's when problems with assessments became public knowledge.

MacPherson said internal SNB communications in June 2016 include a slide show that was obtained by CBC News earlier this year.

She says the slides attributing comments to Gallant were used to "inform and motivate" the assessment staff. One slide "depicts a fictional conversation" in which Gallant asks for faster implementation and another "paraphrases" the premier.

"Both of these communications are not direct quotes and incorrectly imply the Premier requested 'Fast Track,'" the report says.

Checked into progress

On May 25, 2016, O'Brien emailed Gilman to ask if there was "any word" on the acceleration. Gilman then emailed a vice-president of the Crown corporation to say O'Brien was "after me — so need for tomorrow at latest."

MacPherson said it's reasonable to conclude the vice-president "interpreted" Gilman's email as pressure from Gallant's office, but she did not see "a strong indication of a high level of urgency" from O'Brien's email.

Serge Rousselle, the minister responsible for Service New Brunswick, said Progressive Conservative Opposition leader Blaine Higgs should now apologize to Gallant for accusing the premier of wrongdoing before MacPherson's report was released.

Different interpretations

"There's not one person who has been interviewed who said the premier was involved," Rousselle said. "There's not even one document that shows that he asked for this fast-tracking process.

"Basically there's no piece of evidence whatsoever."

Higgs said he thought there were still "gaps" in the communications between O'Brien and Gilman, and he would not apologize to Gallant.

"Forgive me if I don't necessarily believe what the premier and Minister Rousselle are espousing," he said.

"What she's saying is the communications were vague and from that she says 'I can't make a direct link.'"

MacPherson told reporters that she felt she had uncovered all there was to uncover in the case.

Government accepts recommendations

Rousselle said the government would listen to MacPherson's recommendation against creating a new independent agency to handle property assessments separately from Service New Brunswick.

MacPherson said given turmoil at the Crown corporation, including toxic relationships and a lack of leadership at the time of the fiasco, another reorganization would get in the way of fixing the assessment system.

She made other recommendations on how to improve the existing Service New Brunswick system and Rousselle said the province would adopt them.