Downtown St. John's bar strip George Street is seen Wednesday afternoon. — Photo by Joe Gibbons/The Telegram
There were practices within the Newfoundland and Labrador Liquor Corp.'s (NLC) regulatory services division that Auditor General Terry Paddon found tough to swallow.
His 2012 Report on Reviews of Departments and Crown Agencies red-flagged a number of issues with the arm of the NLC that enforces liquor and smoking acts.
In fact, it found some legislation wasn't being enforced at all, and some of the enforcement taking place was inconsistent and not timely.
The report also identified that the division lacked policies, procedures, an accurate database and an actual inspection plan.
The latter was one of the items concerning Paddon most.
He told The Telegram it was clear the inspection process was not risk-based, and there wasn't enough attention paid to establishments where violations were more likely to arise - places serving high volumes of liquor, operating for extended hours, or having poor inspection histories.
"It's almost like the inspectors might have been looking at the low-hanging fruit," he said.
The review of NLC's regulatory services and the liquor corporation's response consumed 35 of the report's 780 pages.
Among the specifics noted on those pages - clerical staff issuing liquor licences without management review and approval, one lounge being inspected 10 times in 2011 while 358 weren't inspected at all between 2006 and 2011, and the NLC did not know how many of the 2,831 active liquor licences were actually operating as 2011 rolled into 2012.
As well, the report pointed out a number of occasions where visits to bars to drop off literature were being categorized as inspections and occasional incidents where licensees were issued satisfactory inspection reports despite an inspector identifying violations such as smoking on licenced premises and removing alcohol.
For the review, Paddon's office looked at 80 hearings held by the tribunal of the NLC's board of directors during the three-year period ending Dec. 31, 2011.
The tribunal, which can rule on enforcement, issued letters of reprimand in 14 hearings involving 25 serious infractions. However, those same violations had resulted in licence suspensions for other establishments.
This component of the AG's exercise also discovered the majority of licence suspensions were being served during weekdays, when the bar business would have been slower and the punishment would have less impact.
"There's issues there," Paddon said. "One, the time frame it takes to get a hearing done, and then, the consistency and the appropriateness of the penalty that's involved. One would think that to have a bit more oomph ... maybe the suspension of licences from Monday to Wednesday is not as effective as maybe a suspension from Thursday to Saturday. Ultimately, that's something the tribunal will have to look at when they're making their decisions on a go-forward basis."
This exercise also pointed to a lack of immediate enforcement, noting that, for the three-year period ending Dec. 31, 2011, it took an average of nine months before disciplinary action was carried out after inspectors identified serious violations.
"The other thing we found, too," Paddon added, "is that you've got people who had lost their licence had their licence reinstated, but there really wasn't an effective program to monitor those what you would call 'higher-risk licensees.' I think that's something they really need to ensure that they focus on."
Asked for reaction, Steve Winter, the NLC's president and CEO, said the corporation had already been focusing on the issues identified by Paddon's office before the report was released.
"The reality is that we weren't shocked by any of the findings at all," he said.
"Better again, we have taken steps in most cases to address all the issues that were brought forward."
Winter said the NLC has restructured the regulatory services division since 2011, and in varying degrees, had dealt with the suggestions that would eventually be put forth by the AG.
"I'm quite happy to say the recommendations are essentially along the lines of how we had proceeded anyway," he said.
The public will get to see how effective the NLC's plan progresses. Paddon expects his office will do another review of the division in two years or so.
Winter said there's no question the findings will be different then.
Before answering questions on the NLC portion of the AG's report, Paddon noted he sat on the liquor corporations board of directors in his previous role as deputy minister of finance.
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AG says government spending is not sustainable
Report questions overpaying of public employees
By James McLeod
Of all the things Terry Paddon has reviewed in the eight months since he became auditor general, it's the government's fiscal position that worries him the most.
In his review of the province's books, Paddon said government spending has jumped by 66 per cent in a little more than 10 years, and well over a third of all provincial government money comes directly or indirectly from the oil industry, and that puts it in a dicey position, heavily relying on a single industry.
On top of that, since 2002, the government has received $5 billion from the federal government in Atlantic Accord offset payments - which ended last year. Without those payments, Paddon said, the government would have run deficits for seven of the past 10 years, and in total, there would have been a $1.5-billion shortfall on the government books in the past decade.
He also pointed out current government expenditures are 50 per cent higher than the Canadian average - higher than any other government in the country.
"The biggest thing that is facing the province is the level of expenditures," Paddon said Wednesday. "Ultimately, you know, given that you've got a $725-million deficit ... that's not sustainable."
Paddon is probably one of the most qualified people in the provinces to look at this sort of thing; for the eight years before he became auditor general, he was deputy minister in the Department of Finance, the top bureaucrat in that department.
Finance Minister Jerome Kennedy was not available Wednesday to talk to The Telegram, but Tom Marshall, who was doing the job until last week's cabinet shuffle, defended the government's spending increases as necessary.
"It enabled (us) to address a significant infrastructure and a significant program shortfall, and then we had to stimulate the economy when the great recession hit, but we know that that level of spending is not sustainable over the long term," Marshall said. "I remember after I got elected and had to drive into St. John's, I mean, the roads in some sections were barely passable. The highway up the Great Northern Peninsula was terrible. Ferries had to be changed, water bombers had to be changed. These were serious issues, and we had to deal with them, and we did."
Paddon said by the time he took on the job, the review of departments and agencies was already well underway. In total, in the annual auditor general's report, the office looked at 13 government bodies as part of a 780-page report.
The report raises issues about enforcement when it comest to pesticides and liquor licensed establishments, and it deals with problems with the way public employees are hired, managed and paid across several departments.
At the NL Centre for Health Information, salaries and benefits have increased from $2.6 million in 2007 to $11.8 million in 2012 - a 354 per cent increase.
The centre is a Crown agency that reports to the provincial government. It is funded primarily by the provincial and federal governments.
The report documents salaries higher than other government employees, and massive pay increases for top managers. Between March 2008 and November 2012, the vice-president of human resources and strategic planning received a $68,492 pay increase; over the same period, the CEO received a 57 per cent pay increase, to the point where that person was getting paid $178,574 - more than the salary of the premier of the province.
The report found problems in other departments as well, it noted that less than half of the 28 departments reviewed had occupational health and safety programs as required under the government's health and safety policy.
The report also deals with problems in the income support division, the Forest Industry Diversification Fund, Western Health, and several other departments and agencies.
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AG takes college to task on hiring, HR issues
In his annual report, the auditor general said he saw some red flags at the College of the North Atlantic when it comes to hiring and human resources issues.
When they looked at a sampling of employee files, Auditor General Terry Paddon found evidence that qualified applicants were being passed over when it came to hiring decisions, and employees were taking days off on vacation and overtime that they weren't entitled to.
He said a lot of the issues they found are the sort of things that probably go on in many government departments and agencies, and hopefully their report will serve to improve things at the school.
"Record keeping is not up to scratch. People are not following through. ... There's probably a lack of attention to detail in a lot of cases, but these are the sorts of things that the report is designed to highlight," he said. "I don't think I would suggest that the college is much different than other organizations."
The most serious concern was when it came to hiring, though.
In one case, three candidates were screened out during the hiring process despite the fact that they appeared to meet the job qualifications, and they had more experience than the person who was eventually hired.
"For example, one applicant had six years of similar experience with a government agency and even years of similar experience in the private sector, a second applicant had 15 years of similar experience with government, and a third applicant had 11 years of similar experience with government and the private sector," the report said.
The candidate eventually hired was already an employee with the college, but only had five years of experience.
"Issues around ... screening of applicants and those sorts of things, they would give me a bit more cause for concern because, you know, there's obviously a perception then, that the merit principle in terms of hiring, they might not be following that," Paddon said.
CNA president Ann Marie Vaughan said they're taking the report very seriously, and she's not happy with what she read.
Perception of fairness important: CNA head
"No one likes to see that in their organization, right? Particularly if there are suggestions that competition is not open and fair and that we're not accounting for time and management the way that we should be," she said.
"We have to look at those processes to make sure that they are correct and that in every case, everyone is given the full screening that everyone should be provided."
Vaughan said when it comes to overtime and vacation days, the college is putting an automated system in place that will prevent that sort of thing from happening in the future.
When it comes to hiring, she said they're looking at doing training, and tightening things up to make sure there's no preferential treatment.
"We shouldn't be perceived as having any bias about who we hire in our selection processes, and it worries me when I see anything that may give any perception of bias," she said.
"We ultimately want to get the best person we can in every job we can."
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