As proprietors of a $2-billion real estate empire, Edmonton’s Ghermezian brothers seem unlikely candidates for federal assistance. But last year, despite a $30-billion budget deficit, the Conservative cabinet in Ottawa overruled its own civil servants and approved a $5-million development grant to the Ghermezians’ mammoth
Fantasyland amusement park in West Edmonton Mall. That revelation, contained in Auditor General Kenneth Dye’s annual report on government spending, fuelled a fierce three-day debate in the House of Commons last week. New Democratic Party MP William Blaikie accused the Conservatives of breaking the rules “in order to give a $5-million grant to a couple of Ghezillionaires.” In response, Deputy Prime Minister Don Mazankowski—who, reversing an earlier rejection by federal officials, obtained cabinet approval for the grant—defended the payment as an economic spur to Western Canada.
While the Fantasyland payment drew wide publicity, Dye had other unkind things to say about Ottawa’s spending habits. His 692-page report contained 1,000 examples of sloppy financial management. Among them was a defence department decision to spend $7.5 million to purchase 12 million rounds of small-arms ammunition that do not shoot straight. Many feder-
al departments, Dye said, had made progress in keeping spending under control, and the “the wild abandon” of earlier years had all but vanished. But he also cited “far too many examples of taxpayers’ dollars continuing to be spent with no assurance that value for money is being obtained.”
With Dye’s timely fistful of political
ammunition, the opposition chose to concentrate on the Ghermezian grant. The amusement project—which includes four submarines, a water park and a skating rink—did not qualify for an industrial and regional development program grant because, Dye said, the project could have proceeded without federal help. In fact, it was already under construction when the grant came through. New Democrat Lome Nystrom charged that Mazankowski approved the grant to help his “buddies,” the Ghermezians. Federal records show that the four brothers have contributed $34,500 to the federal Tories since 1984, while giving just $450 to the Liberals.
Angrily defending the decision, Robert de Cotret, minister of regional industrial expansion, said that the government had approved the grant request—scaled back to $5 million from $20 million—because of economic troubles in Alberta. The opposition parties, added Prime Minister Brian
Mulroney, were making an issue out of it “because they are opposed to the interests of Western Canada.” Furious, New Democrat Jim Fulton shot back that the Prime Minister was a “lying scum.” The next day, when Mazankowski asked Fulton to withdraw his remarks, he touched off a bitter shouting match that forced Speaker John Fraser to delay debate for an hour.
The opposition also questioned federal involvement in the 1986 sale of the ailing Bank of British Columbia to the
Hongkong Bank of Canada. According to Dye, finance department officials helped to negotiate a deal designed to help the Hongkong Bank avoid paying more than $100 million in taxes—by channelling a $200-million payment to the Hongkong Bank though its parent company in Nassau.
Dye also criticized the government for proceeding with a $l-billion income-support program for grain farmers last year—the largest ever—without assessing how much money they actually needed to supplement falling incomes.
Defending the government’s record, Mazankowski called the report “one of the best and most optimistic” received in the 10 years since one of Dye’s predecessors warned that Ottawa was in danger of losing control of the public purse. However, Dye made a distinction between knowing where its money is and spending it efficiently. On this point, he issued a failing
grade, saying that “the government hasn’t got a clue about its costs.”
That comment was typical of the blunt-spoken Dye. During his six years as auditor general, governments have come to fear his annual scolding. Still, some critics argue that the auditor general has exceeded his role by questioning federal policy decisions. Professor Sharon Sutherland of Carleton University’s school of public administration, for one, said that Dye should recognize that governments have the right to make such decisions. Her advice to Dye: “Stick to the figures and leave politics to the politicians.”
For his part, Dye acknowledged that it is not his role to get involved in government policy. Government, he conceded, “is a political system, not a rational business system.” But Dye insisted that he would continue to speak out when political considerations led to spending decisions that ran counter to federal procedures— and wasted taxpayers’ money.
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