E commerce project on hold after spending $167,267

A quarter of the money for the Yukon e-commerce project has been spent with almost nothing to show for it, and the project is now on hold. The waste shouldn't come to anyone's surprise, according to Sheila Fraser, auditor genera

A quarter of the money for the Yukon e-commerce project has been spent with almost nothing to show for it, and the project is now on hold.

The waste shouldn’t come to anyone’s surprise, according to Sheila Fraser, auditor general of Canada. The federal transfer that funded the project lacks accountability, she reported in a report tabled last week.

Only $167,267 of the $661,397 approved for the project was spent over the last two years.

The money flowed through the $40 million Northern Strategy Trust, which was launched in 2006 to finance community projects. The Council of Yukon First Nations and Yukon government apply for money from the trust.

“You get approved for a certain amount and it’s a multiyear project, but you don’t get it all at once,” said Gayle Corry, the council’s financial director.

The council received $100,000 in 2006.

“You get some to start and you see what you do. If it proves to be viable and something you want to keep going with, then you get to get more money later,” she said.

The council approved $560,000 for the project in 2007, but has only received two installments of $34,000 and $33,000.

There is no e-commerce to show for the money. The project’s fate has not been decided.

“There’s no agreement to get more money for this project until we evaluate the project again,” said Corry.

A meeting of the oversight committee will be held soon, she said. The committee consists of Corry, the Department of Economic Development’s policy director Stephen Rose, and Alastair Smith, a consultant from Outside the Cube management consultants.

Smith attends because of his work on the council’s community access program, which provides internet access outside of Whitehorse.

The $167,267 spent on the project went to salaries, travel and two consulting contracts.

“We did a fair amount of travel in the communities,” said Corry, “We wanted pretty much all the work to be done in the communities, not in Whitehorse because that’s our target audience: businesses in the communities.”

Southern Cross Solutions and Outside the Cube were contracted to travel to the communities and examine how the project should begin.

The project has yet to see the light of day.

It has a website with little information and there are no communities currently selling anything online.

The project was originally going to use eBay to sell, but the council nixed that idea.

Watermark Consulting trains people for eBay e-commerce in rural areas out of Anchorage, Alaska. Run by Joseph Davis, it specializes in visiting small Alaskan communities and carving

on-line niches for their products.

It demands careful attention to the socio-economic and cultural values of the First Nations he works with.

“We’re talking about empowering a community,” said Davis. “We’re talking about telling the story (of these communities through the product.)”

David decided to go into rural e-commerce work after a suicide occurred in a village he was living in.

“I had to decide if I was going to keep ignoring that,” he said. From there, he started Online Auction Workshop.

“It’s really a workshop about hope, but it’s disguised as e-commerce,” he said.

Davis attends a village for a $4,000, three-day workshop, where he teaches people how to manage an online store, from taking photos to starting a PayPal account. He also runs a computer camp in the wilderness for further instruction.

The eBay pages are modified to First Nations social values, like the tone of voice and the content of its message.

“It gives people the value that their work can have with monetary remuneration,” said Davis.

Davis has also done internet cafes in Africa and internet classrooms in Afghanistan, he said.

The Yukon is proving to be a little more difficult than those hot spots.

“I’d say go for it,” said Tony Malcolm, who runs Clubstore.ca in Whitehorse, a e-commerce site.

“It’s the way things are going, but it’s going to take a lot of time. It’s going to cost a lot of money and a bit of marketing,” he said.

A model like eBay could work, but eBay’s role is changing, he said.

It’s being used to link to other stores a lot more these days, he said.

But the project hasn’t even gotten as far as testing the market.

And it may have started because of the way it was funded, through Ottawa’s $40 million Northern Strategy Trust.

The mismanagement of the e-commerce project wouldn’t surprise Fraser, who criticized the use of trusts in her fall report, which was tabled in Parliament last week.

Ottawa uses three forms of financial mechanisms to hand money over to the provinces and territories, including trusts, a practice that began in 1999.

“In 2006Ð07, federal transfers amounted to approximately $50 billion, or just under 23 per cent of federal spending,” said Fraser in a report published last week.

Twenty-three trusts have been established since then and almost $27 billion has been transferred through them.

“In each case, the federal government has stated the intended purposes of the trusts in public announcements,” says the report. “Once the eligibility conditions for these trusts have been met, no additional legal conditions obligate provinces and territories to spend the funds for the purposes announced.”

Basically, Ottawa doesn’t have any legal recourse to make sure the money is spent properly.

Recently, trusts have operating principles that outline what the funding is for, says the report.

“However, because these operating principles are not part of the trust agreements, they are not legally binding on the provinces and territories with respect to how the transferred funds are spent,” it says.

Its a glaring gap in accountability.

Once the provinces and territories have their spending proposals approved, “they become accountable in principle to their own citizens, not to the federal government, for how they use the funds.”

The Yukon government doesn’t make it easy to find out what’s been done with the money.

Its Executive Office’s website posts the 2006 and 2007 approved projects with the amount, but not the actual amounts received. The approved projects for 2008 still haven’t been posted.

Contact James Munson at jamesm@yukon-news.com.