Angry in the Great White North

In 2003, under the Progressive Conservative government of Ernie Eves, the Auditor-General delivered a report on the mismanagement that plagued the Ministry of Enterprise, Opportunity and Innovation.

MEOI was a ministry that was supposed to foster growth in the Ontario economy:

The mandate of the Ministry of Enterprise, Opportunity and Innovation is to foster competitive businesses and a prosperous economy in Ontario. Through this mandate, the Ministry promotes innovation, economic growth, and job creation. The Ministry's science and technology goals are to provide leadership for and co-ordination of related programs and activities government-wide and to develop strategies that foster a culture of innovation in the Ontario economy.

MEOI was only created in April 2002, but by a year later, the wheels had clearly come off this bus:

Given the limitations on our access to information as discussed above, we cannot provide reasonable assurance that our audit identified all matters that should be brought to the attention of the Legislative Assembly. However, our review of the Ministry's science and technology spending of $1.3 billion between April 1, 1998 and March 31, 2003-primarily for research grants-revealed a number of significant concerns. A major concern was that the Ministry had committed to spending $4.3 billion without an overall strategic plan to set parameters and consistent policies for existing programs or to guide the development of new programs to meet the objectives of promoting innovation, economic growth, and job creation. Other significant concerns and deficiencies in the Ministry's practices and procedures included the following:

• Contrary to government directives on alternative service delivery, the Ontario Innovation Trust was set up through a trust agreement between the former Ministry of Energy, Science and Technology and a trust corporation without a business case justifying its creation. As noted in our previous annual reports (1999-2002), the Ministry did not implement the mandatory accountability controls to ensure that more than $1 billion in public funding, provided or committed to the Trust, is being spent for the purposes intended. The Ministry receives virtually no information from the Trust and does not have the required monitoring processes in place to ensure compliance with the Trust agreement. Therefore, neither the Legislature nor the Ministry have any control over spending by the Trust.
• The contract between the Ministry and the Innovation Institute of Ontario (IIO) regarding the administration of the Ontario Research and Development Challenge Fund states that no documentation is to be destroyed without ministry approval. But the IIO did not retain panel reviewers' assessments of research proposals and often disposed of these assessments without the Ministry's consent. Therefore, management could not demonstrate that appropriate practices were followed in the decisions made to fund specific projects.
• The Division often did not have the supporting documentation that was necessary to properly calculate Ontario Research Performance Fund grants. We obtained documentation from other sources for a sample of 2001/02 recipients, recalculated the grants, and found that one institution was underpaid by $277,000 and another was overpaid by $147,000. We notified the Ministry of these errors, and the errors were subsequently corrected.
• We reviewed in detail the summary score sheets for one round of competition for the Premier's Research Excellence Awards and found that the marks on the reviewers' individual score sheets did not match the marks on the Ministry's summary score sheet, and the marks on the summary score sheet did not match the summary of scores on the short list of recipients recommended for funding. Such findings limit the Ministry's ability to demonstrate the fairness and transparency of the selection process.
• The Ministry does not have adequate procedures in place to monitor potential conflicts of interest. For example, a review of advisory board minutes revealed occasions on which a conflict of interest should have been declared, but there was no indication in the minutes that a conflict had been declared.
• In July 2000, the Ministry single-sourced the administration of the Ontario Research and Development Challenge Fund to the Innovation Institute of Ontario, a subsidiary of the Ontario Innovation Trust. According to ministry documentation, a request for proposals (RFP) was not issued because once an RFP is out, anyone who is eligible must be treated fairly in the process, and problems could arise if a bidder was not dealt with fairly after an investment of time and resources in the preparation of a proposal. Single-sourcing, especially for such a reason, contradicts the basic principles of government procurement.
• Although the Ministry has spent hundreds of millions of dollars on science and technology research, it has made little effort to ensure that intellectual property rights arising from funded research ultimately benefit the province.
• The Ministry did not have a process in place for measuring and reporting on the achievement of its overall goals of promoting innovation, economic growth, and job creation. The Ministry measured its performance in terms of growth in the value of non-government-sponsored research over the next five years. This measure is a future-oriented target or benchmark and does not reflect the ongoing impact of the Ministry's expenditures to date.

Did the MEOI fix the problems? It might have started work on it, but probably didn't get far. The audit was delivered in December 2003, but by then, the government had changed. Dalton McGuinty and the Liberals had won the election that was held in October, and the MEOI was shutdown completely. Indeed, the Wikipedia entry dates the end of the MEOI as 2003 -- it is just as likely that the MEOI was closed down before the auditor-general's report was delivered.

Officially, the MEOI changed into the Ministry of Economic Development and Trade under minister Sandra Pupatello. The focus of the ministry is helping businesses with exporting opportunities, investing, loans for skills training, and so on.

Frankly, MEDT doesn't sound all that much like MEOI, with the MEOI's focus being on high tech and research.

So what of the original MEOI? It looks like it became the Ministry of Research and Innovation in 2006:

We recognize that successful innovation is a partnership. By working together and giving our innovators the tools they need to succeed, MRI is creating a culture of innovation in Ontario within which creative ideas will flourish.

Major branches within the ministry are:

Outreach, Promotion and Business Development Branch

The Outreach, Promotion and Business Development Branch’s mandate is to:

• Develop a strategic framework for MRI’s international activities and lead specific international activities and programs
• Develop an overall marketing and promotion plan to showcase Ontario internationally and raise the profile and awareness of Ontario’s innovation agenda internationally
• Increase MRI’s outreach activities, including developing a new Innovation Ontario web site and implementing key youth outreach programs, including YSTOP and TSTOP
• Implement the government’s commitment to the Ontario Venture Capital Fund

The Innovation Policy Branch

The Innovation Policy Branch assists the ministry though [sic] its:

• Integrated, evidence-based policy framework for research and innovation across government
• Support for the Innovation Deputy Ministers’ Committee and the Assistant Deputy Minister’s Committee on Innovation
• Arrangements to work horizontally with key ministries across government to ensure coordination of innovation-related activities

Yes, the website misspelled "through" as "though". I guess copy-editing is not innovative enough.

The MRI gives out large sums of cash to foster innovation in innovative individuals by thinking innovatively...oh, enough of that.

Consider the $30 million dispersed through what are called "Year-End Investments":

Ontario’s future prosperity depends more than ever on investment in research and innovation. Whether created in public institutions or the private sector, it is critical that new innovative ideas achieve their commercial potential in a manner that is beneficial to the Ontario economy.

The government is committed to expanding Ontario’s foundation in research, innovation and commercialization by investing $1.7 billion over five years to 2009-10, including $527 million for the Ontario Research Fund and $279 million for the Ontario Institute for Cancer Research. Other highlights include:

• $15 million to the University of Toronto, which is advancing research in structural genomics – the study of human proteins to treat diseases such as cancer
• $2 million to the Northern Centre for Advanced Technology in Sudbury, which has a solid track record for helping northern Ontario companies bring innovative products to market
• $3 million to the Canada-Israel Industrial Research & Development Foundation, an organization that promotes collaborative research and development between Israel and Canada
• $2 million to McMaster University, home to one of Canada’s most technically advanced telesurgery centres: the Centre for Minimal Access Surgery
• $8 million for the MaRS Discovery District, an organization that helps ensure the delivery of high-end acceleration services to innovative companies.

All high-tech stuff, like what the discredited MEOI focused on.

The MRI was only created last year, three years after the MEOI audit. As a new ministry, I doubt there is any formal follow-up from the auditor-general related to the 2003 audit.

But when you look through the MRI website, you see the same sorts of programs, under new names of course, that formed the MEOI.

And though the MRI makes a point to talk about accountability, that is no guarantee, as the 2003 audit discovered:

Program staff use annual progress reports to determine whether milestones and targets agreed to in the project contract have been met and whether the project is on schedule.From our sample of active projects, we found that only about 10% had submitted the required annual report on time. Most annual reports were submitted late—missing the deadline by an average of eight months—and 30% of these projects had never submitted an annual report. The IIO did not follow up to ensure that all annual reports were submitted on time. Periodic reporting and follow-up are essential to help identify,for corrective action, situations where funds are not being used for the purposes intended.

The Ministry has not established an overall policy regarding when audited reports, outlining where grant monies were spent, are required. Consequently, the requirement for audited reporting was inconsistent. The frequency of reporting was loosely based on the value of the approved grant. Some projects were required to submit audited reports annually, others at the end of a project, and still others at other specified times. In addition, there are no clear guidelines on the audited report’s required contents.

Are these problems present in the new incarnation of the MEOI?

I suppose we could depend on Premier McGuinty to ask his MRI minister to report to him on accountability.

But that's when we hit a snag.

The Minister in charge of the MRI is...wait for it...Dalton McGuinty!

Indeed, this is the only ministry McGuinty personally manages. McGuinty has a science background from university (a B.Sc in biology) but he switched to law and never pursued science as a postgraduate student or as a career.

Still, why run the MRI himself? Why not hand it over to one of his other ministers (Pupatello, for instance) or promote a backbencher?

Think about the core reason for the MRI to exist. If you're thinking it is to foster innovation, you'll have to go to the back of the class. "Fostering innovation" is not really measurable. How do you know if you've fostered enough innovation per tax dollar spent?

Put the real reason is in that last sentence...per tax dollar spent.

This ministry is about writing cheques and being seen to deliver them.

I don't mean to say that Dalton McGuinty doesn't hope that the person getting the cheque will suddenly get more innovative, but really, who can tell? It's not like building a portion of highway -- you can measure that.

But highways are not always required, and they are expensive, and then there are those pesky environmental impact studies. Money for health care is associated with sick people and that's always a bummer. And taxation? There's never a good photo-op there.

Show up at a university with a $100,000 cheque and suddenly you're all over the local papers and on the local TV news. It's an easy cheque to cut and deliver -- small in amount and the money is not burdened with expectations with the local voter. Deliver money for a new road, and there had better be a road before too much time passes. Deliver money to support some research effort at the local university or college, and no one is going to wonder what happened in a year's time.

So this rather light-weight ministry with the potential for some very friendly photo-ops is run by Dalton McGuinty himself.

And who is going to ask Dalton McGuinty whether he is running his MRI better than the MEOI was being run?

Michael Colle lost his job as Minister of Citizenship and Immigration because his ministry was doling out cash in order to look popular and to be seen intensely spending money. But since no one was interested in spending the money wisely, and more importantly, even checking to see how the money was being spent, recklessness turned into a scandal, and then into a massive political headache for Dalton McGuinty:

Mr. McGuinty also rejected a suggestion that Mr. Colle was trying to build political goodwill by handing out money to so many ethnic and cultural organizations.

Provincial Conservative leader John Tory said the program was another example of the "repeated disdain" the Liberal government has shown for taxpayer money. "The standard here is set by the boss," suggested Mr. Tory, who said Mr. McGuinty must accept responsibility for the lack of spending controls in the grant program.

The question of responsibility is key. It's one thing to say that Dalton McGuinty is responsible for the lax attitude being displayed at Citizenship and Immigration, which was being run by Michael Colle. But Dalton McGuinty is directly responsible for the MRI. If you really believe Dalton McGuinty is responsible for the lack of controls at one grant program, is it such a stretch to wonder what is happening at McGuinty's own frant program?

Even as the evidence built that the grant program at Citzenship and Immigration was out of control, McGuinty defended his minister and refused to call for an audit, essentially asking Ontarians to trust him when he said there was no problem in the distribution of the grants.

As the auditor-general's report showed, that trust would have been misplaced.

I'm sure that Dalton McGuinty would insist that the MRI, a ministry that is essentially nothing but grants, is a ministry that is distributing the money responsibly, despite the failures at Citizenship and Immigration, and despite the documented problems in the previous version of the MRI. I think I would be forgiven for not taking this on trust, and hoping to see some sort of evidence that this is true.