A report from Canada's auditor general has shown the B.C.-based developer of the Chilkoot Centre still owes money to the Yukon government.

In the report, the auditor general talks about concerns with the agreement the ex-NDP government entered into with Argus Properties Ltd. of Kelowna, B.C., to build the Chilkoot Centre between Two Mile Hill and Quartz Road in 1999.

According to the auditor general, after delays, the former Liberal government made a deal with Argus in May 2001 to get the deal done. In that case, the government agreed to pay for $1.76 million in infrastructure costs.

'The developer was supposed to pay back $705,000 of the government's contribution, and the city would pay its $750,000 to the government out of property taxes received on the development,' the report states.

'The city has paid $400,000 to the Yukon government to date and is expected to pay its full contribution. However, the developer has not yet paid any of its share to the government.'

The document makes it clear the government has to do more on deals like this to ensure it gets the money it should.

'Management needs to be more precise in entering into agreements with other parties, so that each party is clear on its responsibilities. It must exercise more discipline in holding others to their part of the arrangements.'

The auditor general recommended: 'When advances are required under contribution agreements, the government should schedule advance payments based on reasonable cash flow statements from the recipient in order to avoid providing funds in advance of need.'

In response, the government agreed with that suggestion.

Also on the deal, the auditor general notes the money spent by the NDP government on the shopping mall development was originally voted by the legislature for waterfront development.

'The legislative assembly did not approve this change in funding,' the report states.

The report recommends: 'In order to keep members of the legislative assembly informed, the government should communicate any reallocation of funding from estimate levels to the legislative assembly.'

The government also agreed to that recommendation.

The report, tabled in the Yukon legislature earlier this week, was written by Auditor General of Canada Sheila Fraser and her staff. The document looks at concerns her office has had with the government's spending from 2000 to 2003.

She also addressed a number of other incidents over that timespan.

Fraser notes a few instances from 1999-2000 fiscal year to 2001-02 where the government dealt with money in a different way than the legislature had given it approval to do so.

'We are concerned that these violations of authority continue to occur because they reflect poor spending restraint, inadequate budgets or a lack of respect for budget authority. The government should have systems and processes in place to ensure that these situations do not arise.'

One of the cases was where the NDP government in 1999 decided it wanted to look at buying two ports in Alaska, one in Skagway and one in Haines.

'The government purchased options to buy the land, meaning that no other offers to buy the land could be accepted by the owners for a specified period,' it wrote.

The government paid, initially, $215,000 US for the two options.

'However, the Department of Economic Development entered into these option agreements and transferred the funds to the landholders without proper authority.'

The report indicates the department did this without have approval from management board, which is made up of three cabinet ministers.

'The Department of Economic Development made a submission and received retroactive approval from management board in late October 1999. The approval was received only after both agreements had been signed and payments were made, meaning that management board had no choice in the matter,' Fraser's report states.

In the end, the auditor general stated that due to delays, the options cost the government $700,000 Cdn and eventually the Liberal government scrapped the plan.

The recommendation from the auditor general, which the government agreed with, was: 'To ensure that the government avoids entering into unusual transactions and making unproductive payments, departments should only enter into agreements where they have proper authority. Payments should not be made until this authority has been secured.'

The auditor general also chastizes the government for another move by the NDP regime.

The auditor general talked about the government handing out royalties from the Kotaneelee Fund to two first nations which had not settled land claims.

The fund was set up to collect royalties from the Kotaneelee gas fields in southeastern Yukon, and keep them in trust for the first nations until they signed their final agreements.

But the government, in the late 1990s, released $691,000 to two first nations to permit them to review oil and gas matters.

'This removed a financial incentive for the first nations to sign a final agreement,' Fraser wrote.

The problem was there was no process in place to verify the funds were used properly.

The report said it's not clear how much of the $691,000 was used toward an oil and gas review.

The report notes the two first nations have still not signed final agreements.

The recommendation, which the government agreed to, was: 'Contribution agreements should include means for the Yukon government to verify that funds have been spent as intended.'

The report also notes various departments have overspent what the legislature approved them to spend over the four fiscal years in review.

In 1999-2000, Health and Social Services overspent by $3.22 million, the Public Service Commission overspent by $650,000, the Women's Directorate by $6,000 and Renewable Resources by $2,000.

For 2000-01:

• Government Services by $1.7 million;

• Health and Social Services by $1.23 million;

• Education by $526,000;

• Renewable Resources by $26,000;

• Office of the Ombudsman by $22,000;

• Finance by $18,000.

For 2001-02, Justice overspent by $754,000 and Tourism and Culture by $49,000.

For 2002-03, the Public Service Commission overspent by $7.9 million and the Office of the Ombudsman by $4,000.

The auditor general recommends departments ensure their allocations are enough so they don't exceed their budgets.

In turn, the government, in its response, states most of the overspending is due to unusual circumstances but the government will try to ensure departments stay within their budgets.