Finance Committee on June 16th, 2020

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Yes.

[Andrew Marsland]

—I would be happy to provide it.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Okay. Thank you for that.

I know the point has been raised already by several of my colleagues, but I am struggling to understand the difficulty in providing a fiscal update of some sort, or preferably a budget. The PBO has provided a fiscal outlook twice in the past several months. If the PBO can do so with significantly fewer resources than the Department of Finance, why can't the Department of Finance?

[The Chair, Liberal, Wayne Easter]

I think that message is noted. I don't believe there is a response to it.

Do you have one further quick question, Michael?

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

That's okay. I think my point was made.

[The Chair, Liberal, Wayne Easter]

Your point was made, along with several others.

We'll end with Mr. Peter Fragiskatos. The floor is yours.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Chair.

Thank you to the officials.

In the 2019-20 main estimates, the Department of Finance requested funding in the neighbourhood of $819,555 for the purposes of “Strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime”.

How was the funding deployed, and what successes have resulted from this expenditure?

[Leah Anderson]

I think our FINTRAC colleague answered a similar question earlier.

Bruce, did you want to take that one?

[Bruce Wallace]

We invested in five areas. The first is with regard to compliance. We continue to conduct a lot of outreach activities—education, training with the reporting entities, and particularly focusing last year and next year on real estate and casinos in British Columbia.

In addition, we're also ramping up work on public-private projects. We've had success with project protect, which was a collaborative effort between the banking sector, FINTRAC and law enforcement to target human trafficking. We've done the same thing with project guardian, which targets fentanyl as well. We're going to be investing more in these types of projects going forward.

In addition, we have two new disclosure recipients. We are now disclosing financial intelligence to the Competition Bureau as well as Revenu Québec.

Finally, we are working with CBSA to strengthen our capacity with regard to detecting trade-based money laundering.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

[Leah Anderson]

I would add, if I may, from a Department of Finance perspective, that we also requested funding for anti-money laundering. It was for two purposes mainly. First was to support the policy capacity, given this growing area of attention for the government and the need to further refine and elaborate policies and responses in this area. Second was to support our international memberships for anti-money laundering, for example, through the Financial Action Task Force, because those fees go up every year.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Ms. Anderson.

[The Chair, Liberal, Wayne Easter]

You have time for one quick one, Peter.

[Peter Fragiskatos, Liberal, London North Centre, ON]

OSFI is requesting funding of $1.2 million for program expenditures under vote 1. This amounts to a net increase of $35.6 million or 12.8% from the funding requested in the main estimates under that vote.

What are the major factors contributing to the increase in the amount requested under vote 1?

[Marc Desautels]

I had a somewhat similar question to that a little earlier.

If you look at the difference between our 2019-20 main estimates and the ones we presented this year, there is a notable increase. That said, post-production of the main estimates, we came out with a revised strategic plan that was anchored by four key goals. That drove a series of initiatives to support the evolution of OSFI in several areas, whether it is our financial risk capabilities, non-financial risk capabilities or our technology infrastructure.

Most of our funding comes from the institutions we regulate and supervise. Whether it is the banks, insurance companies or pension plans, we get roughly 93% to 94% of our funding from those sources.

That was the key driver behind the increase in our financial footprint: to support the new strategic plan that we put forward at that point.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thanks very much.

[The Chair, Liberal, Wayne Easter]

Thank you. We will have to end it at that.

There are a lot of witnesses on here today. You're seeing some of the difficulty of having to meet over Zoom on some of these complicated matters, and to complicate it even more, we've not had an economic update or a budget. As I think you can see from some of the questions from some of the members, a lot of the areas that members of the finance committee would like to delve into go beyond the estimates of the Department of Finance and the other two agencies on here.

In any event, I think that message has been made loud and clear. There's a desire by members of the finance committee for information on the broader-based policy approach. We'll leave it at that. You know the message I'm sending.

With that, we thank you for appearing today. Even more so, we want to thank each and every one of you—and, for that matter, your families—for the extra effort you've put in over the last several months. I know these are trying times. There's been mental pressure and there's been fatigue. You have our very heartfelt thanks for the work you do as we go through this difficult period in our history as a country.

With that, we will suspend for the next panel.

Thank you very much.

[The Chair, Liberal, Wayne Easter]

We'll call the meeting back to order and reconvene.

During this session, we're dealing with the main estimates for 2020-21: votes 1 and 5, under Canada Revenue Agency. I'd like to welcome the witnesses who are here from the Canada Revenue Agency.

Ms. Caron, I believe you have an opening statement. I will give the floor to you, and then we'll turn to questions.

Just for the benefit of the committee, the first questions will be by Mr. Morantz, Mr. Fraser, Mr. Lemire and Mr. Julian.

Ms. Caron, the floor is yours. Welcome.

[Janique Caron, Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency]

Thank you, Mr. Chair.

Good evening, and thank you for the opportunity to appear before the committee to present the Canada Revenue Agency's main estimates for 2020-21, and to answer any questions you may have on the associated funding.

My understanding is that a copy of my full remarks, in both official languages, has been provided to the clerk. To respect the members' time and to avoid technological issues, I will be providing my remarks in one official language and will be prepared to respond in either official language.

I am accompanied today by my colleagues: Frank Vermaeten, assistant commissioner, assessment, benefit and service branch; Geoff Trueman, assistant commissioner, legislative policy and regulatory affairs branch; and Ted Gallivan, assistant commissioner, compliance programs branch.

As you are aware, the CRA is responsible for the administration of federal and certain provincial and territorial tax programs, as well as the delivery of a number of benefit programs. Each year, the agency collects hundreds of billions of dollars of tax revenue for the Government of Canada and distributes timely and accurate benefits to millions of Canadians.

It should be noted that the CRA's 2020-21 main estimates do not reflect incremental resources required for the payments or the administrative costs in support of the Government of Canada's measures to support Canadians and businesses facing hardship as a result of the global COVID-19 pandemic. These measures include, as you know, the Canada emergency response benefit, the Canada emergency wage subsidy and the Canada emergency student benefit, to name a few. The cost of the emergency benefit payments will be funded through statutory authorities, including those under the Department of Employment and Social Development. The funding associated with the administrative costs will be sought separately by the CRA in the coming months. Our priority is to deliver on these measures as quickly as possible.

In the meantime, to fulfill its mandate in 2021, the CRA is seeking a total of $7.9 billion for these main estimates. Of this amount, $3.5 billion requires the approval of Parliament; whereas, the remaining $4.4 billion represents forecasts for statutory authorities that are already approved under separate legislation. These statutory items include the climate action incentive payments, children's special allowance payments, employee benefit plan costs and, according to section 60 of the CRA Act, the spending of revenues received or activities administered on behalf of the provinces and other government departments.

These 2020-21 main estimates represent a net increase of $3.4 billion when compared with the 2019-20 main estimates. Almost the entire amount of this increase is related to the forecasted statutory climate action incentive payments of $3.4 billion, which returns the bulk of direct proceeds from the federal fuel charge to eligible individuals and families living in provinces that have not met the Canada-wide federal standard for reducing carbon pollution. The CRA is responsible for administering the fuel-charge component of the Greenhouse Gas Pollution Pricing Act, which includes the climate action incentive payment.

Excluding the statutory climate action incentive payment, the agency's 2020-21 main estimates represent a net increase of approximately $33 million, or 0.7%, when compared with the 2019-20 main estimates. The largest component of this change is an increase of $69 million for collective bargaining adjustments for some 12,000 employees represented by the Professional Institute of the Public Service of Canada.

Other increases to the agency's budget include a $24-million adjustment to forecasted statutory payments under the Children's Special Allowances Act for eligible children in the care of agencies and foster parents. These payments are equivalent to the Canada child benefit paid to biological and adoptive parents. There is also $27 million in incremental funding for measures to improve tax compliance that were announced in prior budgets. Thanks to the significant investment made in recent years, the CRA has expanded its tools and capacity to target clients who attempt to conceal their assets to avoid paying their share of tax.

To give you a sense of the kind of programs that are being supported by this funding, allow me to touch on some specifics. To further combat tax evasion and aggressive tax avoidance, the CRA has hired additional auditors, conducted outreach and education, and built technical expertise to target non-compliance associated with cryptocurrency transactions and the digital economy. Offshore audit resources have been expanded, which directly supports the fairness and integrity of the tax system by ensuring that wealthy individuals and corporations do not circumvent their tax obligations.

Improved information technology tools and systems, combined with closer international co-operation, allow the CRA to focus on the higher-risk taxpayers. Although efforts in this domain have been affected by COVID-19, preparation for the eventual full resumption of this important work is under way.

These increases are partially offset by a $49-million adjustment associated with changes in the funding profile for various measures announced in previous federal budgets, a $25-million reduction in statutory contributions to employee benefit plans and in the forecast of cost recovery revenues for initiatives administered on behalf of the provinces and other government departments, and $13 million in transfers with other government departments, including an adjustment to accommodation and real property services provided by Public Services and Procurement Canada.

In closing, the CRA is listening to Canadians, changing how it works and improving services. The resources being requested through these estimates will allow the agency to continue to deliver on its mandate to Canadians by making it easier for the vast majority of taxpayers who pay their taxes and more difficult for the small minority who do not, and by ensuring that Canadians have ready access to the information they need about their taxes and benefits.

At this time, we will be pleased to respond to any questions you may have.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Caron, and thank you for the in-depth remarks that spell out where some of those expenditures have gone.

Next is Mr. Morantz, followed by Mr. Fraser.

Marty, you have six minutes.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

I just have a few questions. Regarding the climate action incentive, I understand that the budgetary allocation has essentially gone from $4.5 billion to $7.9 billion, which is a massive increase. When I first saw that, I was asking why, but it's clear that most of that $3.7 billion is for the refund of the climate action incentive.

What I'm getting hung up on though is your use of the word “majority” in your departmental plan. I think you call it “the bulk of”. My understanding, and we just had this confirmed by finance officials a few minutes ago, is that 90% of the monies collected under that program are supposed to be returned to Canadians through the climate action incentive. Can you confirm that it is actually 90%? I'm just curious why you used the word “majority”.

[Janique Caron]

Thank you for the question. Perhaps my colleague, Geoff Trueman, can take the question.

[Geoff Trueman, Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency]

Thank you.

Yes, I can confirm that the majority is returned to the provinces and those jurisdictions. I believe, as our finance colleagues noted a little earlier this evening, that the remaining portion is available to be distributed through a number of other mechanisms, some of which may return funds to businesses, for example. That's where the remaining 10% of the allocation would go.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Okay, so when you use the word “majority”, you're saying 90%. Is that right?

[Geoff Trueman]

That's subject to a final reconciliation of those amounts, but on an ongoing operative basis, that would be the target amount. That's correct.