Blaine Higgs is 'not walking away' from fight over consultant audit

Premier Brian Gallant's Liberals say they'll use a scathing audit of an expensive consulting contract to question the credibility of Progressive Conservative Leader Blaine Higgs ahead of next year's election.

The report by New Brunswick's auditor general found that the province spent $13 million on a PC-signed contract for Ernst & Young, despite failing to achieve the $47 million in savings it was supposed to find in the Department of Social Development.

Liberal cabinet minister Donald Arseneault said his party will remind voters of the audit and Higgs's role in the contract ahead of the September 2018 election

"I think it's a benefit to New Brunswickers to know truly the kind of direction he's going to take with public services," he said.

The contract was awarded as part of a process improvement program Higgs oversaw as the finance minister in the Alward government.

• Province paid $13M to consultants to find $10M in savings — maybe

Higgs said he's ready to debate the issue with the Liberals, even though PC advisers have urged him to avoid the issue.

"There would be those who would suggest I have nothing to gain from taking part in this," Higgs said.

"I will probably take some abuse, but I'm not walking away from this."

There would be those who would suggest I have nothing to gain from taking part in this. I will probably take some abuse, but I'm not walking away from this.- Blaine Higgs, PC leader

​Higgs points out most of the payments to the consultants took place after the Liberals took power in October 2014.

He said it's because they eliminated his system of oversight.

"Up until the fall of 2014, I think we'd spent $1.6 or $2 million on this project," he said in a CBC interview last week.

"So since that time [the Liberals] spent another 11."

Higgs corrects numbers

But Higgs had to correct himself Thursday after an internal government document obtained by CBC News showed the Tories actually spent close to $4 million as of Oct. 3, 2014, the week the government changed.

Higgs said a staffer had looked up the wrong number in government public accounts records.

"It's a number I should have looked up myself," he said. "The 3.9 would appear to be the right number."

But he said the correction didn't change his point that most of the payments happened after the Liberals were in power.

"The same concept still follows through: the oversight stopped in October 2014," he said. "Another nine million was spent with zero oversight."

The audit released last week by Auditor General Kim MacPherson also criticized the Liberals for extending the contract in 2015 without changing it.

The Liberals say it would have been more wasteful to cancel the contract at that point because millions had already been spent.

Cancelled cuts

MacPherson's audit said Ernst & Young was paid for some initiatives that were never implemented. In one case, the firm was paid $1.85 million for two proposals never put in place.

Higgs acknowledged the PCs postponed some of the consultants' ideas in 2014.

The Oct. 3, 2014, internal briefing document said some Social Development projects worth $11 million in the 2014-15 election were "delayed due deferred decisions and timing."

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The same briefing note also said spending cuts of $17.9 million in the Department of Education in 2014-15, also developed by Ernst & Young, were also delayed because of  "deferred decisions and timing."

Higgs confirmed that "timing" is a reference to the election.

"Election years are even worse than normal in terms of making decisions to actually do something," he said.

Asked if he was blaming his PC cabinet colleagues for the delays, he said, "Yes, and myself. I'm part of it."

If the PCs had won in 2014, "absolutely they'd have come back," Higgs said.

Liberals say Higgs would revive proposals

But that comment opens Higgs to another Liberal attack — that becoming premier will allow him to make cuts that his fellow Tories rejected when he was minister of finance.

The document said some of the education cuts included "reduction in the number of teachers" and "closure of schools with low student population or not offering a reasonable academic experience."

"If Blaine Higgs becomes the premier of New Brunswick and wants to actually do it, he'll have the power to overrule the cabinet," Arseneault said.

"He definitely wants to complete the job that he started."

But Higgs said Ernst & Young was looking "across the network" for ideas and "most likely it wouldn't all be implemented. … There's a balance. Is closing down a rural school going to balance the books? Absolutely not."

Liberals criticize use of exemption

Arseneault also criticized Higgs for how he defended the awarding of a contract to Ernst & Young starting in 2013.

MacPherson said the Tories used an "emergency exemption" provision to award the first two phases of the contract to the firm without a tender, even though there was no emergency.

'Blaine Higgs has to realize he's no longer working for the Irvings. You're dealing with public dollars and therefore there's legislation in place. There's a Procurement Act in place. … There's a process to follow.'- Donald Arseneault, Liberal cabinet minister 

The exemption is so governments can sign contracts during emergencies such as floods and ice storms, she said.

Ernst & Young then had an advantage when it helped draft the tender for the third phase, which it bid on.

The firm scored "very high" in the tender and three other bidders were disqualified.

MacPherson called that "the most troubling" part of the audit and showed "a total disregard" for policies and regulations designed to make sure tendering is fair.

Higgs, a former Irving Oil executive, said last week the contracting paralleled what's done in the private sector, with a company coming in to see if there were "opportunities" for savings before a contract was tendered.

"Blaine Higgs has to realize he's no longer working for the Irvings," Arseneault said.

"You're dealing with public dollars and therefore there's legislation in place. There's a Procurement Act in place. … There's a process to follow."

​Higgs acknowledged Thursday that the auditor general was right and invoking the emergency exemption was improper.

"I accept her criticism on that and I appreciate it has to change, and I would like to see that changed," he said, suggesting he might allow more contracts to be signed without tenders.

"I would say an emergency for me is how we get better ability to pay for the services we need, but again the system isn't necessarily designed for that."