Finance Committee on June 11th, 2020

[Annie Koutrakis, Liberal, Vimy, QC]

Can you explain what type of mechanisms can be put in place to identify deliberate fraudsters, as opposed to a well-meaning Canadian who is making a mistake?

[Ted Gallivan]

Right now the system was set up with controls in place around something like a change in bank account information. We have certain flags right now that are picking up claims or applications for this program by people who just yesterday had changed their direct deposit information. That seems suspicious, so we're able to ask questions. Right now, even without enhanced controls we have a situation like that.

We have other situations where we find one practitioner who has 4,000 clients, and 3,900 of their clients have qualified for the program. There could be an innocent explanation for that, but maybe not. If that person is either inciting fraud or committing fraud on behalf of 3,000 people, we think it's important to have a criminal sanction at the end.

Criminal sanctions that are being sought are to deter people operating at scale, because merely asking them to pay back the money won't have the deterrent effect we need.

[Annie Koutrakis, Liberal, Vimy, QC]

Mr. Gallivan, do we know how many fraudulent cases there are? Do we have a number on that?

[Ted Gallivan]

No, and I think one of the questions, again, is the definition of fraud.

There are a number of Canadians who, in all good faith, applied for this program and are now realizing that they have to pay the money back, and several hundred thousand have already paid it back.

That's not who we're talking about. I can tell you that four or five people who were already under criminal investigation by the CRA and law enforcement for other reasons also chose to engage in CERB fraud. In some cases, their communications are being intercepted, which is why we're aware of it. So there are a number of cases where people who are involved in criminal activity have expanded that activity into the CERB space, and what we're trying to do is to get the authority to respond accordingly.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you.

[The Chair, Liberal, Wayne Easter]

Turning to Mr. Barsalou-Duval, Xavier, are you there?

There you are. Go ahead Xavier. Your mike is on.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you, Mr. Chair.

My question is for the representative of the Canada Development Investment Corporation.

Due to the COVID-19 pandemic, oil prices have collapsed. As a result, investment in certain sectors will potentially be more difficult, particularly the oil sands. Indeed, the break-even point in this sector is quite high.

Mr. Carter, does this affect Trans Mountain, which is now owned by the Government of Canada?

[The Chair, Liberal, Wayne Easter]

Mr. Carter, I believe.

[Michael Carter]

Thank you for the question.

We have two partly related subsidiaries in the energy business.

In one case, the government owns an 8.5% interest in the Hibernia oil field offshore in Newfoundland. It is still producing, and obviously prices are lower, so the revenue is lower, but it is still producing at full steam.

The other company is the Trans Mountain pipeline. The pipeline is full and continues to be full, so COVID has no effect on its business. The expansion of the pipeline is going ahead because it was deemed by the Alberta and British Columbia governments to be an important project, so construction can continue, obviously with all sorts of safeguards for COVID.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

With regard to additional protective measures, would it be possible to have a cost projection or an update on the costs associated with the construction of this famous pipeline? I suppose it will cost more than was originally planned. Isn't that right?

[Michael Carter]

The cost estimate that was produced last January was for $12.6 billion. So far, we don't see any likelihood of an increase in that cost. At present, things are going according to plan, and the pipeline should be completed by the end of 2022. Every indication we have is that the $12.6 billion number is still a very sound number.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you for your answer.

I must admit I'm somewhat surprised to hear that costs aren't expected to go up. In fact, certain measures must be put in place, particularly with respect to physical distancing and protective equipment for personnel. These extra precautions must certainly result in additional costs and perhaps even additional delays for suppliers. Workers need more time to complete their tasks and companies are not as productive as they would like.

My next question concerns the Large Employer Emergency Financing Facility. Who will benefit from this program and what are the terms and conditions of the program? I know a decision has been made on this and it will be made public, but can you tell us when the information will be released?

[Michael Carter]

Our intention is that as soon as loans are made, we will announce those. I think there is a requirement that the minister puts them to Parliament first—I'm not sure about that—in which case they will go that way. If that is not the case, we will publish them on our website, much the same as EDC does now with its loan portfolio.

[The Chair, Liberal, Wayne Easter]

This will be the last question, Mr. Barsalou-Duval.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you, Mr. Chair.

I'm glad to hear that, Mr. Carter, because I think it's important to be transparent.

My last question concerns the air transport sector. I was wondering whether there was any aid planned, or, at least, whether there were ongoing negotiations with companies in the airline industry.

Is the government considering requiring air carriers to reimburse consumers whose flights have been cancelled, even though this is not one of its loan conditions?

I think people would be very upset to see the government helping companies that don't pay back consumers and don't obey the law.

[The Chair, Liberal, Wayne Easter]

I think that would go to the Department of Finance. Is anybody there willing to take that question?

I don't know if it's one that the bureaucracy, the public servants can answer. Does it have to go to the minister? Is anybody willing to take a stab at it?

Go ahead, Ms. Dancey.

[Evelyn Dancey, Associate Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance]

In respect of discussions with air carriers, of course the large employer emergency financing facility program is available to air carriers that meet the size threshold of that program. In respect of the issue of vouchers, that would be a matter that is discussed outside the context of that program. That would involve government policy, government decision-making, were there to be a movement from a regulatory or other perspective. We wouldn't anticipate that being adjudicated through the lending program.

The officials or the minister best placed, I believe, to comment on that issue would be the Minister of Transport and Transport Canada.

[The Chair, Liberal, Wayne Easter]

Thank you.

We are turning to Mr. Julian, followed by Mr. Cooper.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

I appreciate all the witnesses being here. We hope your families are safe and healthy.

I have two comments and then five questions. I'll put them all out and hopefully have—

[The Chair, Liberal, Wayne Easter]

You only get five minutes to get the answers in, too.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Yes, fair enough.

I have two questions for the Department of Finance and three questions for Mr. Carter.

As a comment to CRA, I'm glad you put that out. These are all elements covered under the Criminal Code already. The police can already do a follow-up when it comes to systemic fraud or people misusing social insurance numbers. I'm glad you have publicly said that. That's very important.

My comment would be that we have publicly available information around the Bahamas papers, the paradise papers, the Panama papers, the Isle of Man scam. No corporation has ever been charged, let alone convicted. I think it's a bit rich to focus on widows and students who may have inappropriately gotten the amount.

My questions are first for Mr. Carter.

You mentioned Trans Mountain. The construction costs obviously have to be revised. I'm a few blocks from Trans Mountain and there's not a single person in the Lower Mainland who believes that the costs will not be anything less than 50% higher than what you're projecting. I think it's about time that Trans Mountain did a revised construction schedule. My question is this: How much did we lose on Trans Mountain, including interest payments last year?

In terms of the LEEFF program, I have two questions. First off, how does CDEV intend to monitor executive bonuses and all of the things that are supposed to be conditions around the LEEFF, such as not to issue executive bonuses? What is the process in terms of LEEFF loan forgiveness? We've seen a lot of loans that have turned into grants and gifts in the past, even in January of this year. What would be the process if a company just wanted their loan forgiven? Is it the finance minister going to the board? Is it the board making a recommendation?

I have two questions for the Department of Finance.

Could I have some clarity around the supplementary unemployment benefits? There is still inconsistency about whether or not somebody on the CERB can receive a SUBP. We're hearing from other ministries that they can't. We heard from Finance that they can.

Last, I have a question on ferries as designated organizations. I'm thinking of BC Ferries. Where are we in designating ferry companies as organizations that are able to obtain the wage subsidy?

Thank you very much.

[The Chair, Liberal, Wayne Easter]

I don't know whether we'll have time to get through it all, but we'll go to Mr. Carter on the first couple of questions.

[Michael Carter]

Thank you, Mr. Chairman.

I'll answer them in reverse order.

There is no intention that any loans will be forgiven. Our mandate from the minister is that once we make a loan, we become purely commercial, the same as a bank.

As for the second one, with respect to executive compensation, there are limits put on executive compensation as a part of the loan program, and those will be strictly enforced. They will be attested to by the senior officers of the company and by the directors of the company on an annual basis.

As far as the Trans Mountain numbers are concerned, I don't have them in front of me. Our annual report was put up on our website and was tabled in Parliament recently. I'd be happy to come back to you with a written answer to that specific question.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you.

[The Chair, Liberal, Wayne Easter]

If you could, Mr. Carter, that would be great.

I think the other question on supplemental EI benefits would go to Employment and Social Development.

Go ahead, Mr. Ram.