P.E.I.'s reliance on special warrants undercuts democratic process, says watchdog

P.E.I.'s auditor general says the provincial government should bring more spending bills to the legislature for debate rather than authorizing additional expenditures through cabinet, sometimes months after the money has already been spent. 

Darren Noonan presented his office's recommendations to the province's public accounts committee on Monday.

Under P.E.I.'s Financial Administration Act, governments can authorize additional spending beyond what's included in the provincial budget through special warrants approved by cabinet.

Noonan said the current Progressive Conservative government is relying on special warrants more than any previous Island government — and, as a percentage of spending, more than any other province that allows for special warrants.

About 10 per cent of the province's current operating budget was authorized through special warrants. 

"On Prince Edward Island, the budgetary process within the legislative assembly is very extensive. There's a lot of questions asked by the Opposition and the Third Party," the AG said. "So when [with] 10 per cent of the current spend, there's no opportunity to debate that, that causes a little bit of a concern that maybe part of the democratic process is not being followed." 

Noonan said some other provinces bring forward additional spending bills to be debated in the legislature throughout the year rather than have cabinet authorize its own spending.

In the 2022-23 fiscal year, P.E.I.'s cabinet approved $327 million in special warrants. They included $88 million to top up money available in the province's free heat pump program and an extra $15 million for crop insurance payments, among others. 

Half of the total was approved after the money had already been spent, which goes against the Financial Administration Act.

"There's certainly always going to be situations where a special warrant may pop up, but it's the timing of the special warrants," Noonan said.

"A special warrant is supposed to be obtained prior to the expenditure being incurred, and typically we're finding that the expenditures have been incurred in some cases six, seven, eight months ago and the special warrants issued sometime after year-end to just pick up the over-expenditures."

If they're monitoring their expenditures, they should know where they're trending.— P.E.I. Auditor General Darren Noonan

The auditor general suggested the government bring forward two or even three separate spending bills throughout the year to coincide with legislative sittings. 

He said the government should have a good idea of how much it's spending — and overspending — on its yearly budget by the time the fall sitting rolls around in October or November each year. 

"If they're monitoring their expenditures, they should know where they're trending in terms of their original appropriation," Noonan said.

"At that [point], it gives them time to request additional funds through a second appropriation act."