AG’s report on connectivity in Nova Scotia finds disconnect with taxpayers

Nova Scotia’s auditor general said on Tuesday that the province “did not make the best use of the funds” intended to pay for rural internet infrastructure.

Kim Adair’s report said Nova Scotia Internet Funding Trust has allocated $164 million of the $193 million originally set aside to various internet service provider projects. The project’s goal was to reach 99 per cent of households and businesses in Nova Scotia by 2023. However, the trust only made actual payments of $33 million up to August 2021.

“The province prematurely relinquished control of $193 million,” Adair’s report said.

The report noted that the province lost use of $193 million in public funds almost two years before the initiative’s first projects were announced. This led to the trust having to pay $2.6 million in income taxes to the government that could have been used to enhance internet access for Nova Scotians.

Additionally, the uncommitted funds, totalling about $29 million, if unused by the end of the initiative, would not return to the province but would go to the underserved rural municipalities or internet service providers.

Asked if after achieving 99 per cent connectivity, whether there would be room for the funds to go to underserved rural areas, Adair said, “It is surprising that they (internet service providers) will achieve some benefits at the end that they didn’t anticipate.”

But Adair said that Develop Nova Scotia intends to spend all the money by 2023.

In 2018, the Liberal government established the trust to help bring affordable, high-speed internet to homes and businesses across the province. An external trust was used to ensure that funds remain available for the designated purpose without risk of reallocation to other government priorities from year to year.

According to the internet initiative, the funds in the trust are meant to subsidize infrastructure costs for service providers. The portion paid by the trust differs for each provider, depending on the provider’s proposal, and has ranged from 25 to 70 per cent of total project costs covered. However, according to the report, the government has no legal control over the funds in the trust and cannot make decisions on where the funds are disbursed or to whom.

Adair also pointed out that the province did not show enough evidence that establishing a trust to ensure high-speed internet for all made sense.

“With a project this large, we would expect to see documentation on the various options considered to fund the Initiative. The lack of a comprehensive analysis is concerning because the province relinquished control of the trust and the $193 million before knowing how much the project would ultimately cost the taxpayer,” the report said.

The auditor general, however, commended Develop Nova Scotia for implementing the trust’s funds and increasing internet connectivity from 70 to 85 per cent in the province since the trust’s establishment.

“Based on the contract signed and the work underway, government is on track to achieve its goal for access of affordable housing internet for 95 per cent of Nova Scotians by 2023,” she said.