AG's latest report once again warns P.E.I. government to 'rein in spending' on debt

Prince Edward Island’s auditor general is again raising alarm about the province’s finances, including a nearly $100,000 payment made to a “fraudulent party” by one government department. 

Darren Noonan’s latest annual report paints a bleak picture of P.E.I.’s financial situation, warning that a growing debt, aging population and rising health-care costs are combining to put the Island at risk.  

“It’s time to … rein in spending on that [debt]. Our operating deficits are starting to get to unseen levels for a province of our size,” Noonan told CBC News on Thursday. 

“I’m really interested to see the current year budget and plans for the government to deal with some of the issues that we’ve raised in this year’s annual report.”

The auditor general’s report comes on the heels of the Progressive Conservative government’s announcement this week that it’s established a new committee tasked with reviewing spending and cutting red tape.

The province projected the largest deficit in its history when the 2025-26 operating budget was tabled last spring: $183.9 million. 

But in December, the PCs announced the projected deficit had nearly doubled, to $367.4 million. And the province has since approved nearly $150 million in unbudgeted spending — which means the deficit will be even higher when the updated budget is delivered in March.

Noonan’s report estimates the province’s net debt could double by the end of 2031.

The auditor general calls for more “robust controls” to be put in place after P.E.I.’s Department of Social Development and Seniors reported that it was defrauded of $98,000. 

During his audit, Noonan said he was told about the payment to "an unknown fraudulent party, who posed as an existing payee of the Department."

He said someone contacted the department claiming to be an entity entitled to grant funding, informing the department that their banking information had changed. 

The department’s staff processed that payment, but later realized that they had paid the money to someone else. 

“Failure to address the control weaknesses that allowed this payment to be issued could lead to additional public funds being paid to fraudulent parties in the future,” Noonan writes in his report. 

In response, department staff said as soon as it was made aware of the issue they “updated their procedures to strengthen oversight and to reduce the risk of fraudulent transactions.”