TORONTO - Premier Dalton McGuinty says he never saw a memo from a government lawyer who sounded the alarm about Ornge almost eight years ago.
The lawyer warned in 2004 that there were problems with the original agreement that the government ended up signing with the troubled air ambulance service.
Opposition critics say it shows the government ignored the red flags about Ornge for years, even from its own bureaucrats.
Former health minister George Smitherman says the legal memo wasn't sent to him or his staff to the best of his knowledge, so allegations that he ignored the advice are inaccurate.
But Tory critic Frank Klees says he doesn't believe Smitherman, who signed the flawed performance agreement in 2005.
He says if Smitherman didn't see the legal memo, he wasn't doing his job as health minister.
"If the former minister really did not see that information, then it speaks to his own incompetence and the lack of attention he was giving to his file," Klees said.
"This is not a small regulatory change. This is a multimillion-dollar decision that changed the entire structure of our air ambulance system."
The document, dated Sept. 30, 2004, cities several problems with an internal memo to cabinet outlining the air ambulance proposal.
The government's role in Ornge and the amount of control it had over the organization wasn't "sufficiently addressed," health ministry lawyer Mel Springman warned in the letter.
"I continue to have serious concerns respecting the tone and substance" of the proposal, he wrote.
Whatever one may think of the final recommendation to cabinet on the air ambulance reform, "the various incarnations of that document have consistently stood on rather flimsy, indeed sometimes misleading grounds," Springman wrote.
But Smitherman notes that another branch of the health ministry disagreed with Springman's opinion.
In a Nov. 1, 2004 letter to a senior health bureaucrat, Malcolm Bates, director of the emergency health services branch, said some of Springman's comments were "factually incorrect."
They included Springman's assertion that 40 pages of background information and a 30-page appendix providing a history of Ontario's air ambulance service is "selective and insufficient," Bates wrote.
"In EHSB's opinion these comments are not legal advice, but are business advice with which we disagree," he wrote.
"The issue of governance and control of the consolidated program is exhaustively reviewed and a sample performance agreement is attached," Bates wrote.
"The ministry will retain its governance of the program and only a small statutory change to the definitions section of the Ambulance Act is necessary to empower the new non-profit corporation."
Cabinet approved the agreement and awarded the contract for air ambulance services to a corporation that was later renamed Ornge, after its orange aircraft.
The decision was made after a number of coroner's reports and the auditor general urged Ontario to fix its patchwork air ambulance delivery.
But in his investigation of Ornge, the province's auditor general Jim McCarter found the 2005 agreement was inadequate and the ministry failed to follow up on whether Ornge was adequately performing its duties.
Health Minister Deb Matthews blamed the agreement for tying her hands once she found out something had gone wrong at Ornge, preventing her from acting sooner to stop the waste of taxpayer dollars.
Smitherman, who left the health portfolio in 2008 for another cabinet post, testified before a legislative committee that he wasn't aware anything had gone awry at Ornge until it became front-page news late last year.
The Liberals have since signed a new performance agreement with Ornge and introduced legislation that they say will bring more oversight to the organization, which is under new management.
In his report, McCarter found that Ornge was given $730 million over five years with virtually no government oversight of how the money was spent. It was also allowed to borrow almost $300 million with the province's blessing.
He also found a "number of examples of questionable business practices'' at Ornge, which has been mired in controversy for months over high salaries and allegations that public dollars may have been used for personal gain.
The organization is currently under a criminal probe for "financial irregularities."
What's In The Ontario Budget 2012
The 2012 Ontario budget freezes pay for doctors, and extends a pay freeze for health care executives. The province will begin means-testing seniors' prescription drugs, paid for under the Ontario Drug Benefit Plan, effectively meaning that the 5 per cent wealthiest seniors covered by the plan will have to pay more into the plan. Seniors with incomes over $100,000 and senior couples with combined incomes above $160,000 will be affected. Increases in health care spending will be capped at 2.1 per cent per year.
The budget freezes pay for teachers. A pay freeze for educational executives, already in place, will be extended. School boards in low-population areas will be amalgamated, and "under-utilized" schools will be shut. Student transportation will be cut by $34 million.
The province will begin means-testing seniors' prescription drugs, paid for under the Ontario Drug Benefit Plan, effectively meaning that the 5 per cent wealthiest seniors covered by the plan will have to pay more into the plan. Seniors with incomes over $100,000 and senior couples with combined incomes above $160,000 will be affected.
Welfare rates will be frozen and planned increases to the Ontario Child Benefit will be delayed.
There are no tax hikes in the 2012 Ontario budget, but it does freeze the corporate tax rate at 11.5 per cent, foregoing planned reductions in the tax rate to 10 per cent. The freeze is expected to save $1.5 billion over three years.
Ontario will cap the 10 per cent hydro bill rebate at 3,000 kilowatt-hours, a limit high enough that most homes won't be affected, but businesses could be. Reducing the tax credit will save $470 million over three years.
Crime & Security
On top of the four jails the province already plans to close, the budget adds two more to the closure list -- one in Brantford and one in Chatham. Overtime for jail guards and the Ontario Provincial Police will be reduced.
Ontario plans to reduce spending on business support programs by $250 million by merging a number of different programs.
Gambling & Lotteries
The province aims to increase revenue by increasing the number of gambling facilities. [Details to come]