Auditor General Bonnie Lysyk has taken a wrecking ball to the Liberals’ use of private money to bankroll new hospitals and transit — and fired a rocket at MaRS.

In a 595-page annual report to the legislature that blasted a “high-risk” $224-million government loan for the medical and related sciences (MaRS) tower, Lysyk said Infrastructure Ontario’s use of private-public partnerships has cost $8 billion more than traditional public financing.

“Nothing is free,” she said at Queen’s Park, noting the premium is mostly because private-sector companies face higher costs of borrowing than governments.

“What this shows is that if the public sector could manage projects successfully, on time and on budget, taxpayer money could be saved.”

But Infrastructure Ontario CEO Bert Clark said the “$8 billion number does not tell the whole story” because large-scale publicly funded projects — such as the troubled Union Station renovation and the slow-moving Spadina subway extension to York University — routinely suffer from cost overruns and delays.

“Big projects have big risks,” said Clark, emphasizing Infrastructure Ontario, which is not involved in the construction of either of those, has saved $14 billion over the past nine years by putting the onus on private contractors to deliver on time or on budget — or not get paid.

He said that means the government is actually saving $6 billion by using P3 financing on the Eglinton Crosstown LRT and new hospitals, among other buildings.

Lysyk also took aim at the government’s controversial “bailout” of the mostly vacant MaRS biotech office tower at the corner of College Street and University Avenue, saying a $224-million loan to keep it afloat was questionable.

“The lack of transparency regarding the policy objectives and outcomes to be achieved from this loan create the perception that this transaction was a ‘bailout’ of a non-government organization,” she said.

Four years ago, the Liberals approved a rule change allowing the MaRS loan to go ahead after a U.S. developer partnering on the project failed to fill the building.

On Wednesday afternoon, Infrastructure Minister Brad Duguid will announce letters of intent from prospective tenants that would boost the occupancy of the 20-storey tower to 65 per cent from the current 31 per cent.

“There is a positive way forward for this project that is going to protect the taxpayers,” said Duguid, who also challenged Lysyk’s critique of Infrastructure Ontario, which has been so successful other jurisdictions come here to learn about it.

Gord Nixon, chair of the MaRS board, said the non-profit organization is in “advanced negotiations” that could lift the white elephant to 95 per cent occupancy.

“I’m confident that we will be able to lease up the building and get this project back on track,” said Nixon, the former chair of the Royal Bank of Canada.

Duguid and Nixon revealed that news minutes after Lysyk had warned “the government assumed significant risks in order to support MaRS’s mission.”

NDP Leader Andrea Horwath said the MaRS fiasco is emblematic of the Liberals’ “arrogance” and failure to curb their free-spending ways.

“By putting politics ahead of good policy, the costs keep going up on that project,” she said.

Horwath went on to call P3s “a waste of public money.”

Progressive Conservative interim leader Jim Wilson, a cabinet minister in the Tory administration that launched MaRS, said it was a mistake to expand the facility without a full roster of tenants.

“They should never have started construction on phase two,” said Wilson, stressing the original building is rented out and has been a success.

Among Lysyk’s other findings:

The province is inadequately overseeing programs from child care to vaccinations.

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$1.9 billion spent on “smart meters” did not help consumers reduce demand for electricity at expensive peak times.

People with developmental disabilities face huge waiting lists for residential placements — as of March 31 there were 14,300 adults awaiting services now being delivered to 17,400 people.

Key recommendations from the inquiry into the 2000 Walkerton tainted water disaster have not been implemented.

Lysyk said her overall goal is to make sure Ontarians get “value for money” from the dollars they send to Queen’s Park.

“Government is complicated. Every day the public sector is challenged to make decisions that Ontarians would consider to be the right ones.”

Before the report was tabled, Premier Kathleen Wynne said “the auditor general brings a new set of eyes to the operation of government.”

“We welcome accountability,” insisted Wynne.

Still, Lysyk dished out some harsh medicine for the premier’s government, needling the Ministry of Health over its $250-million annual vaccination program.

There is no way of knowing how many Ontarians get shots for infectious diseases such as measles and the flu, the auditor noted.

She raised questions about billings for flu shots, saying there were 21,000 incidents where the Ministry of Health paid doctors and pharmacists for giving shots “more than once” to the same person last year.

In one case, one physician billed 18 times for the same patient over six months last winter.

As well, the ministry has no idea what happened to more than 20 per cent — or 1 million doses — of flu vaccines purchased annually.

While there is a new computer system called Panorama to track vaccinations, its estimated cost of more than $160 million is $85 million over the amount budgeted.

“As is currently the case with the ministry’s older system, if all vaccinations administered are not included in Panorama, it will not provide the data needed to identify areas of the province with low immunization coverage rates,” Lysyk said.

Turning to fallout from the Walkerton tragedy that killed seven and left 2,300 ill, the auditor found the Ministry of Environment is still reviewing and approving local source water protection plans required by the 2006 Clean Water Act.

“The ministry still has no clear time frame when all source water protection plans will be approved,” said Lysyk, who also noted spills from industrial and commercial facilities pose a threat to water intake systems on the Great Lakes but that none of the protection plans address the prospects.

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