Former premier Brian Gallant came out swinging Tuesday in defence of a controversial $22.8 million bailout package extended by his government last year to the City of Saint John.

Gallant was testifying before the legislature's standing committee on public accounts.

The public hearings were scheduled after the release of Auditor General Kim MacPherson's June 11 report that zeroed in on the three-year financial assistance package, saying it represented "excessive risk" to provincial taxpayers

Her report also noted the bailout package did not include targets and said there was "no evidence of documented approval" by cabinet or by the Department of Environment and Local Government.

In her June report, Auditor General Kim MacPherson said a $22.8-million bailout package by the Gallant government for the City of Saint John represented 'excessive risk' to provincial taxpayers. (Michel Corriveau/Radio-Canada)

Gallant, whose Liberal government was defeated in a Nov. 2 confidence vote in the legislature, accused the current Progressive Conservative government of interfering with a non-partisan process adopted to prevent "devastating cuts" to municipal services in Saint John.

Gallant said talks with the city began in earnest days after the announcement of the cancellation of the Energy East pipeline early in October, 2017.

We're not financially sustainable and we didn't get here on our own. - Don Darling, mayor of Saint John

"The purpose of the new deal was to find time to find long-term solutions to Saint John's challenges instead of seeing the city spiral," Gallant said.

He seemed particularly upset with questions raised about the legality of the process by which the package was approved for the city.

Noting the Blaine Higgs government will continue to meet the obligations of the three-year deal, he challenged the Progressive Conservatives to produce their own legal opinion on the matter.

"They are continuing to move forward with the new deal, which means they must believe it is in their legal authority to do so," he said.

Gallant also said the standing committee should "compel" the Higgs government to produce a pre-election draft of a report prepared by a working group composed of provincial and city civil servants.

The working group has been looking into long-term municipal reforms that could help Saint John in the future.

Not an 'ideal situation'

Earlier, the committee heard from Judy Wagner, former clerk of the executive council, who said that the Saint John bailout was not an "ideal situation," but that she had seen similar cases.

Gallant and Saint John Mayor Don Darling agreed to a three-year bailout package for the city. (Rachel Cave/CBC)

She said it was not unusual for previous New Brunswick governments to assist individual communities dealing with economic problems.

As an example, she used the closing of the CN locomotive shops in Moncton in the late 1980s.

Darling prepares to testify before about the $22.8 million financial aid package for the city. (Connell Smith/CBC)

The hearings opened with testimony from Saint John Mayor Don Darling, who told MLAs the city is facing a "bleak future."

He said that in 2000, the city had the largest tax base in New Brunswick, but now it is in third place, behind Moncton and Fredericton.

The municipality needs property tax reform more than anything, he said, claiming that over the past five years heavy industry has invested more than a $1 billion in the city, while the assessed value of the industrial tax class has dropped 3.6 per cent.

"We're not financially sustainable and we didn't get here on our own," Darling said.

The public hearings continue Wednesday with testimony from senior provincial and city civil servants.