Metrolinx spending millions on LRT cost overruns, Ontario's auditor general says in latest report

Metrolinx, the provincial transit agency, came under fire Wednesday from Ontario's auditor general, whose latest report details delays and cost overruns in the hundreds of millions of dollars due to late changes in plans for light-rail transit projects, and allegations of political influence over decision-making about the placement of new GO Transit stations.

Auditor General Bonnie Lysyk unveiled the findings during a news conference at Queen's Park. Her office conducted audits of 15 provincial departments and programs.

According to Lysyk, Metrolinx, which controls regional transit across the Greater Toronto and Hamilton area, incurred about $436 million "in sunk and additional" — unrecoverable — costs between 2009 and 2018 due to changes in transit planning over the last decade, and problems with how the agency itself is doing its work.

"After certain projects were announced or agreed on, the provincial and municipal governments changed their decisions on what to build and when to build, even though significant investments had already been made," Lysyk said Wednesday after her report was tabled in the legislature.

She cited Toronto's Scarborough subway project as an example, with plans changing three times between 2011 and 2013. The city is still in the early planning stages of building a multibillion-dollar one-stop subway extension, although Premier Doug Ford has expressed a preference to build a three-stop version of the line.

The Sheppard light-rail project was also highlighted, with its 10-year delay beyond the initial expected completion date of 2013. These projects added up to some $125 million in "sunk costs, with $75 million to be recovered by the City of Toronto," Lysyk said.

She also cited Metrolinx's decision to sign what's called an Alternative Financing and Procurement (AFP) contract with the consortium tasked with building Toronto's Eglinton Crosstown LRT. Such contracts typically include a premium for the private-sector partners assuming the risks of cost overruns and delays. But according to Lysyk, under this contract, Metrolinx had to pay the consortium $237 million in 2018 to ensure the project still meets its September 2021 target date.

Meanwhile, Lysyk also took exception with how Metrolinx decided to recommend two new GO Transit stations after first recommending against them.

Metrolinx's initial assessment concluded that the associated costs and "disadvantages" of the Kirby and Lawrence East stations "significantly" outweighed their benefits and should not be recommended for construction for another 10 years.

But in 2016, "Metrolinx overrode that conclusion because the then-minister of transportation (Liberal Steven Del Duca) and City of Toronto made it clear they wanted these stations," Lysyk said.

In her comments, Lysyk said Metrolinx "undermined its own decision-making process and inappropriately changed its recommendations on the Kirby and Lawrence East stations." She pinned the blame on "influence" by Del Duca and the city.

What the parties are saying 

The Tories said the report demonstrates how ineffective leadership and reckless spending proliferated under their predecessors.

The Official Opposition New Democrats said that while the report reflects Liberal mismanagement, it should send a warning to the Tories.

"The things that the auditor flags ... are things that are already hallmarks of the Ford Conservatives," NDP Leader Andrea Horwath said. "This means that where the Liberals let you down, the Ford Conservatives are making things worse."

Interim Liberal Leader John Fraser said his party accepts the auditor's findings, noting Lysyk's reviews are "an important, critical part of our government, our democracy."

Fraser then suggested Ford's government is moving to reduce the level of government oversight by reducing the number of independent officers.

Green Party Leader Mike Schreiner also questioned the Ford government's recent decision to cut positions like the child youth advocate and the environmental commissioner; the PCs say they are folding these positions into larger offices, like those of the ombudsman and auditor general.

"I believe that the auditor general's report highlights the need for more government oversight and not less government oversight," Schreiner said.

He was also quick to pounce on the transit governance concerns raised on Wednesday.

"We need to end the political interference in transit planning, in particular."

Safety agency, Waterfront Toronto criticized

Other findings of the auditor general's report include:

• The Technical Standards and Safety Authority (TSSA), which is tasked with enforcing the safe maintenance and handling of everything from fuels and boilers to elevators and ski lifts, "is not operating in accordance with its mandate and is ineffective in protecting the public in nearly all of the areas for which it is responsible."
• Waterfront Toronto, created in 2002 to oversee the development of the city's waterfront, has only directly developed some five per cent of publicly owned waterfront land deemed "developable," and has provided help to other agencies to develop another 151 acres (14 per cent).
• The Ontario Student Assistance Program (OSAP) has seen an increase in those receiving grants and aid of about 25 per cent, but post-secondary enrolment has only grown by about two per cent.
• Ontario Works, which provided financial help to about 250,000 unemployed or underemployed Ontarians in 2017/18, helped only 10-13 per cent of clients find work in each of the last five years. The average length of time that clients received benefits rose from 19 months in 2008/09 to nearly three years in 2017/18.
• Ontario's Assisted Devices Program, which supplies things like mobility equipment and hearing aids to about 400,000 people, spent $514 million in 2017/18. While the program has made improvements to service delivery since its last audit in 2009, "efforts to improve oversight by identifying ineligible claims remain inadequate," as do efforts to ensure vendors are being paid reasonable prices for devices.

Lysyk's office also looked at the refurbishment of the Darlington Nuclear Generating Station, and found that Ontario Power Generation (OPG) "has put a clear accountability structure in place" to monitor the work and ensure it comes in on time and on budget. However, the project faces "significant risks," including a potential shortage of skilled tradespeople, that could affect both, she said.

Darlington, one of two nuclear stations operated by the province, opened in 1990 with four reactor units that are nearing the end of their working life. The facility provides Ontario with about 15 per cent of its electricity. The refurbishment project is estimated to be completed by 2026 and carries a price tag of $12.8 billion. The work will extend the life of the units to about 2055.

Issues that could lead to delays and cost overruns include stiff competition for skilled tradespeople during years when the refurbishment work will overlap with similar work at the Bruce Nuclear Generating Station, Lysyk said. There are also concerns that the OPG has had to provide more assistance to contractors that initially planned, and those costs have yet to be factored into the profit that to be paid to the contractors.