Ontario could end up writing off at least $1.4 billion in unpaid taxes, much of which is owed by corporations and businesses, Auditor General Jim McCarter says.

In his annual report released Wednesday, McCarter revealed that the Ministry of Finance's collections branch is struggling to do its job with fewer staff, following a transfer of three-quarters of its tax collectors to the federal ranks after the HST was brought in.

Personal income tax is collected for the province by the Canada Revenue Agency, which also administers the HST.

However, the collections branch still handles the collection of corporate and retail sales taxes before they are transferred to the CRA.

But with the branch’s reduced staff numbers, McCarter said it is taking the remaining provincial tax collectors months to make first contact after delinquent accounts have been identified.

"What we found is on the average case, when an account went into collections it took them seven months before they even picked up the phone," McCarter said during a news conference in Toronto on Wednesday.

As of March 31, the collections branch estimated it may have to write off $1.4 billion of the $2.4 billion in taxes owed that it is responsible for collecting.

But McCarter believes that amount could be even higher.

"We felt that there was a risk that perhaps more than $1.4 [billion] of the $2.4 billion will be written off," he said.

Reacting to the report, Ontario NDP Leader Andrea Horwath said Wednesday that the fact the Finance Ministry has had trouble recovering such a large amount of tax dollars is indicative of the government’s inability to anticipate problems.

"It shows a government that in many ways doesn’t really prepare very well for the changes that they make," Horwath said.

"It doesn’t implement changes well."

Police costs rising, crime rate falling

In his report, McCarter also revealed that the costs of running the Ontario Provincial Police are steeply increasing at a time when the crime rate is dropping.

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Ontario's auditor general says that OPP costs are growing faster than the rate of inflation, while the crime rate declines. (Derek Oliver/Canadian Press)

"In all industrialized countries, when you have an aging population, really across the board, your crime rates go down, the severity of crimes go down. With respect to the OPP, the number of injuries on our highways have gone down significantly," McCarter said.

Yet total costs have gone up 27 per cent in the past five years, while the number of criminal offences in Ontario is down 20 per cent. Overtime costs have swollen 60 per cent since 2005.

McCarter said the same trend can be seen in police forces across the country, which may be part of the reason for the cost increases.

"The feedback we got is it’s almost like a piggy-back. As soon as somebody gets a pay increase, the unions all come forward and say: 'Well, we should be paid at that scale, we’re the OPP,'" he said.

"Our view was they need to tackle this issue, especially when we’re running a $13-billion deficit."

McCarter said the provincial police are using a computer program developed in the 1980s to determine its staffing needs.

"They are not using good information, good staffing-deployment models to determine how many officers they need," he said.

While provincial police staffing numbers continue to increase, a different joint model developed by the RCMP and OPP suggests they currently have too many officers.

"Our basic point was, you really need to do your homework to make sure that you need more officers year after year and that you can justify those kind of expenditure increases," McCarter said.

The auditor general also said that there are twice as many Crown attorneys in Ontario as there were 20 years ago, yet they are handling a similar total number of criminal charges.

Metrolinx under microscope

In his annual report, McCarter also looked at Metrolinx — the provincial agency building transportation across the Greater Toronto Area — and how it's managing multiple infrastructure projects.

According to McCarter, the Presto card system — an electronic fare card system that is supposed to be in use in all Toronto subways and surface vehicles by 2016 — will be among the most expensive of its kind in the world.

He is critical that Metrolinx did not tender the expansion of the project beyond its original conception. Taxpayers will spend $700 million to the contractor developing it.

The point of creating Presto was to have an integrated fare system for people living in Greater Toronto and the Hamilton area. But that hasn’t happened yet.

"What we’ve said to them is that to us it would certainly be one of the key objectives, you know, especially when you’re spending $700 million," McCarter said during the press conference.

The annual report from the auditor general also covered renovations at Toronto’s Union Station, where cost overruns have resulted.

According to the auditor general, it may cost as much as $270 million to restore Union Station's train shed, which is 25 per cent more than what Metrolinx had estimated.

Efforts to replace rail switches may end up being double the $38 million that was expected.

The auditor general also said that Metrolinx may have overestimated the number of people who would make use of a rail link between Union Station and Pearson International Airport. Plans to operate the system on a break-even basis "may not be feasible," he said.

The auditor doesn't just look at dollar figures, he also looks at whether government programs are doing what they're supposed to do.

This year, he's also examining whether seniors are getting timely placements into long-term care homes; whether X-ray and ultrasound clinics are working efficiently; and how universities measure the quality of teaching provided by professors.     

With files from the CBC's Mike Crawley and The Canadian Press