Scandal and reform in the Newfoundland and Labrador House of Assembly.

• Author: Marland, Alex

In 2006 Newfoundland and Labrador was rocked by news of a spending scandal in the provincial legislature. Dozens of Members of the House of Assembly (MHAs)--sitting, retired, leaders, ministers, critics, backbenchers--from all three political parties had spent money in a dubious manner for more than a decade. This article looks at the details of the scandal and the subsequent reforms outlined by a special commission. It concludes that while confidence in the Office of the Auditor General and the current Premier increased, the public's trust in politicians and government was seriously eroded.

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Beginning in 1989, members of Newfoundland and Labrador's legislature were allocated an annual "constituency allowance" to offset costs associated with performing their duties, such as office equipment, newspaper subscriptions, and miscellaneous business supplies. The available allowance varied, with St. John's representatives each drawing up to $14,400 annually, whereas Members of the House of Assembly (MHAs) in some geographically vast and distant ridings accessing up to $84,800 per year (2006 figures). To access these funds members were required to submit expenditure claims and supporting documentation to the legislature's Director of Financial Operations. This public servant was tasked with approving, correcting, or rejecting each claim. If approved the expenditure amount was reimbursed to the member.

Between the fiscal years 1989-90 and 2005-06 approximately 18,400 claims for nearly $25 million were processed for 115 MHAs. (1) This suggests that, on average, every member had been reimbursed $216,960 for 160 approved claims. However some of them held office for less than a year while others were responsible for large sums. Moreover, there were serious accounting issues, much of which centered on a handful of officials.

The arbitrary nature of the constituency allowance expense process was, in hindsight, a major problem. MHAs and their legislative staff frequently sought guidance from the legislature's staff as to what goods and services could be claimed as well as about the requirements for supporting documentation (e.g., receipts). According to the Auditor General, the Clerk of the House of Assembly "concentrated on parliamentary matters and delegated the weight of financial management to the Director of Financial Operations". House staff provided inconsistent advice and even prepared some members' claims. The result was a mishmash of expenditures that were at times unethical or fraudulent.

Inappropriate and Questionable Spending

Constituency allowances were established in 1989 upon the recommendation of an independent commission. Gradually, elected officials adjusted compensation practices in their favour, and when challenged would evoke the principle of legislative independence. By 1996, some of the original framework safeguards were being replaced by block funding for MHAs.

In 2000, the Office of the Auditor General discovered that claims for artwork and wine had been processed for a sitting Cabinet Minister. (2) This was brought to the attention of a bipartisan (Liberal and Progressive Conservative) committee known as the Commission of Internal Economy (IEC)--of whom the Minister in question was one of seven members. The IEC ruled that constituency expenditures would be off limits to the Auditor General. Furthermore it coordinated an amendment to the Internal Economy Commission Act which eliminated the need for adequate proof of payment when claims were submitted. There was consequently no scrutiny in subsequent years when financial data were tabled in the legislature incorrectly indicating that members were spending within their approved limits.

In early 2006, with the approval of Premier Danny Williams, the Office of the Auditor General began examining constituency allowance spending. During that summer, the government auditor issued several preliminary reports, followed by a final report in September 2007. Spending was grouped into nine categories: advertising...