In a scathing fall report, Jacques Lapointe said he found examples within the Nova Scotia Jobs Fund of unsecured loans and loans that were approved but did not always include the required financial and economic analysis.
"As a result, protection of taxpayers' money is inadequate and the economic benefits of these programs is uncertain," Lapointe told a news conference.
In some instances, employment and salary targets in final agreements the provincial government signed with companies that were offered public money were lower than those used to assess economic benefits, he said. Inaccurate information was also provided to cabinet where funding decisions were made, his report concluded.
The report said that since the inception of the Nova Scotia Jobs Fund in 2011, $611 million has been approved and $183 million disbursed as of Sept. 1.
Lapointe's auditors examined the 10 biggest loans approved by the previous NDP government, including the $304 million deal struck with Irving Shipbuilding to help it prepare for the $25-billion federal shipbuilding program and the $66.5 million offered to Pacific West Commercial as part of a larger package to help keep a paper mill operating in Port Hawkesbury.
Lapointe said deficiencies were found in all 10 loans and three, totalling $323 million, were approved without financial analysis. The transactions included grants and forgivable loans ranging between $8.8 million and $260 million.
In certain instances, the risks related to certain loans were not communicated to cabinet, Lapointe found.
Examples included a proposal for the Northern Pulp Nova Scotia mill that provided funding to help the company break even, despite the fact it is expected to experience product price declines over the long term.
Lapointe said in the case of the Irving Shipbuilding loan, the company did not provide sufficient security to cover the financial assistance it was offered.
He also flagged problems with the terms and conditions of a $25-million loan for Cooke Aquaculture that is intended to expand its operations, saying there is no security for the loan, net economic benefits to the province were found to be negligible, and the funds were not limited to use in Nova Scotia.
"The system itself is full of gaps," Lapointe said. "It looks systemic to us and it's consistent from loan to loan and grant to grant."
He also said the Jobs Fund Board, an independent advisory council, expressed concerns with loans to Chorus Aviation and Pacific West Commercial before they were approved. He did not specify what the concerns were.
Lapointe's report came a day after the Liberal government said it would introduce legislation to strengthen rules governing public assistance to the private sector and increase transparency on how taxpayers' dollars are spent.
The bill would require the government to post information for each transaction online, with a mid-year report on how the funds are used. It would cover transactions made after April 1 from the Nova Scotia Jobs Fund, the Nova Scotia Fund and strategic investment funds.
The Nova Scotia Jobs Fund, formerly the Industrial Expansion Fund, was introduced by the previous government of Darrell Dexter two years ago. At the time, Dexter said the new fund would provide clearer administrative reporting on economic assistance and transactions.
But Lapointe said that other than a name change, there are few substantive improvements.
Economic Development Minister Michel Samson said Lapointe's report was disappointing and confirmed his fears about how the New Democrats ran the fund.
"Any issues with the deals in question rest on the shoulders of the previous administration," Samson said.
He said the government will review the government's various loans programs to see which are the most effective but it will retain the cabinet-administered jobs fund despite Lapointe's recommendation that it be moved to the arms-length Nova Scotia Business Inc.
"We still believe that is a useful tool for government to have to grow the economy of Nova Scotia," Samson said.
NDP member Maureen MacDonald, who is expected to be named the party's acting leader Saturday,said she accepts Lapointe's recommendations that more can be done to improve the jobs fund, including increased risk assessment and more comprehensive financial analysis of deals.
But she defended the previous government's decision, saying help was quickly extended in some cases in order to save jobs.
"You can't sit around working through a number of scenarios forever as Rome burns," MacDonald said. "You do need to act."
Lapointe's report contained 30 recommendations for the Economic Development Department. The department said 20 have been adopted.