Finance Committee on July 22nd, 2020

[The Chair, Liberal, Wayne Easter]

I'll call the meeting officially to order. Welcome to meeting number 43 of the House of Commons Standing Committee on Finance.

This will be the first panel of two today. Today's meeting is taking place by video conference, and the proceedings will be made available via the House of Commons website.

We are meeting on government spending, WE Charity and the Canada student service grant.

For the first panel, which will go for two hours, I welcome the witnesses on that panel. If you could, try to keep your remarks to about five minutes. That would be helpful and will give members more time for questions.

We will start with the Canadian Women's Foundation, Paulette Senior, president and CEO.

Ms. Senior, you're on. Welcome.

[Paulette Senior, President and Chief Executive Officer, Canadian Women's Foundation]

Thank you, committee, for the invitation.

My name is Paulette Senior. I'm president and CEO of the Canadian Women's Foundation, which is Canada's only national public foundation for women and girls, and one of the 10 largest women's foundations in the world. Our three decades of granting work has focused on moving women out of poverty and violence and into safety and confidence.

Thank you for the invitation to appear before the committee to discuss the question of the government's pandemic response.

The mission of the Canadian Women's Foundation is transformative change in the lives of women and girls in Canada. The COVID-19 pandemic has heavily impacted women. For this reason, we would like to encourage the government to ensure that women's safety, livelihoods and well-being are central to all parts of the pandemic response. Women have been put at risk—most severely, women from communities that are marginalized by systemic discrimination.

In terms of women's work during the pandemic, the disproportionate effect of the pandemic on women at work cannot be overstated. The latest numbers from Statistics Canada show that women throughout the country have been hit harder than men when it comes to job losses. There has been a 17% drop in female employment, compared with a 14.5% drop for men. Additionally, women aged 15 to 24 are suffering the most, with a 30% fall in employment. Overall, women earning the lowest 10% of wages experienced job loss at 50 times the rate of the highest wage earners. This type of granular data, which is revealed by intersectional gender-based analysis, is needed to support decisions on next steps.

In terms of women in the recovery, under the present economic conditions, women are falling out of the workforce. They have stopped looking for work due to high unemployment in their sector and/or the pressures of children not in school or day care. With uncertainty about how long this situation will continue, there is little confidence among these workers. Given that women have lost jobs more than men and are not regaining them, the government must ensure that ongoing plans take into account this disproportional effect.

Major sectors where women are affected directly will need special attention, as they take longer to rebuild. These sectors include retail, the care economy, the non-profit and charitable sectors and the service sector in general, including travel and tourism. Given the number of people who have lost work already, plans to stimulate the reopening of any economic sector cannot go ahead without guarantees that parents will be able to depend on a reliable child care plan. The foundation supports the work of the “Child Care Now” campaign, which advocates for affordable, high-quality early learning and child care to be available to all families. We know that this is key to women's economic security and to violence prevention specifically.

In responding to gender-based violence in the pandemic, stay-at-home orders increased the risk of domestic violence and decreased women's ability to leave abusive homes for the safety of shelters. Evidence of increases in gender-based violence is now clear all across Canada. In Ontario, the York Regional Police saw domestic incidents grow by 22% since COVID-19. The Ontario Association of Interval and Transition Houses says that women's shelters are experiencing a 20% increase. Several provincial crisis lines have reported an increase of 30% in the number of calls they receive.

The organizations we work with are critical organizations when it comes to ending gender-based violence in Canada. From surveys and consultations with the sector, we know that since the start of the pandemic 92% of organizations of all kinds have seen an increase in gender-based violence. More than 50% have seen an increase of up to 30% in the demand for their services, and 67% have launched new services and programs to respond to the crisis, while 82% think that they will not be able to emerge from this crisis.

The government must continue to offer ongoing support to women's services. It has taken decades to build a sector that provides not only essential programming services but knowledge and advocacy that have put women's equality issues such as gender-based violence in the public eye and on the government agenda. We cannot afford to have the sector fail.

Before I finish, I would also like to bring to your attention three key recommendations for budget 2021 that we feel should be included in the response to the consultation. Any items in the recovery budget must have a GBA+ and intersectional analysis. There must be data to monitor the impact of the budget in terms of gender and intersecting identities.

Canada needs a stabilization plan for the non-profit and charitable sector, and funding to ensure thriving women's movements. Imagine Canada estimates that the cost to bring this sector into a strong recovery is $9 billion. Any stabilization fund must have an intersectional lens, with investments in diverse communities.

Finally, Canada needs to revitalize its social infrastructure through care-sector investments. This means strengthening social policies for long-term care, child care, violence against women and gender-based violence, and prioritizing investments in community and in state models.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Senior.

We'll now turn to GlobalMedic, with Rahul Singh, executive director.

[Rahul O. Singh, Executive Director, GlobalMedic]

Thank you, Chair.

GlobalMedic is a registered charity that has run 220 missions in 73 countries and delivered life-saving aid to 3.4 million people.

When the COVID pandemic began, we turned our full attention to helping Canadians. We deployed our critical infrastructure tenting to help hospitals and keep food banks open, launched an emergency cash transfer program, distributed PPE, assembled and distributed over 100,000 hygiene kits, and packed and distributed over 400,000 pounds of food.

[The Chair, Liberal, Wayne Easter]

Mr. Singh, could I get you to slow down just a little?

You'll have time, and the interpreters are having a little difficulty.

[Rahul O. Singh]

Sure. No problem.

We delivered aid across the country and worked with hundreds of local charities.

On April 21 the government announced a $350-million fund that was programmed through three large partners to help the charitable sector. While this is a well-intentioned idea, it does have several drawbacks.

The first major drawback of having major partners program money on behalf of the government is that it creates what's called a double administration fee, because the partner that's programming the money takes an administration fee and the partner receiving the money takes an administration fee. Let's make an assumption—and if you read the detailed documents I've sent you, you'll see what I'm basing these assumptions on—that each party is taking 10%. That means that up to $70 million of the $350-million fund ends up as dead money in administration and is not converted into food or hygiene items or for shelter support.

I understand that sometimes governments will pay for speed and efficiency, and that's why they'll run programs like this, but if you take a very serious look at this project, you'll see that in this case speed has not occurred. Again, I've given you very detailed commentary from other partners. If you ask, as a committee, for a real-time evaluation of how much money is spent and who has received what money and when money is transferred, you'll see that speed has not occurred in this case, which makes it hard to imagine why we're spending the extra several million in administration.

Last, when we program through large partners, often many agencies get left out and don't get funding, which is disappointing because they may have capacity and good programs. If we weren't losing double administration, we'd be able to reach more of those agencies with the money, which means that more Canadians would get help.

A more direct approach that would yield better results would be to have charities talk directly to public servants, so that the public service could administer funds directly and avoid that duplication. Perhaps a series of strategic grants would be more effective. For example, if the government simply subsidized the salary costs of charities that were fighting COVID, it would yield a better result without losing those administrative costs. Furthermore, it would help protect jobs.

Ms. Senior mentioned how women have been so adversely affected by COVID-19, and the government has raised concerns about the number of jobs lost, especially by women. In this sector, 81% of the people employed are women. The government could go further and offer to underwrite 100% of the existing jobs of charities and agencies fighting COVID for, let's say, 12 months, and then say to those agencies that they'll underwrite that if they hire 50% more people. Not only would a program like that save administration, it would guarantee jobs and increase the number of jobs. Since 81% of the sector is female, there would probably be more jobs created for women, creating a win-win situation and helping charities fight COVID more effectively.

I want to turn to the Canada summer jobs program, because it's a good program but it needs to be improved. This is the third year in a row that GlobalMedic has participated in the program. Some of the drawbacks to the program are that it places an administrative burden on charities without compensation. It's slow. The lack of responsiveness to the program existed before COVID and is now compounded by COVID.

One of the major policy failures this year was the announcement by government to pay 100% of the jobs without infusing more funds. Simply put, when you increase the amount of money paid per job, you're left with fewer jobs. In our case we received three initial jobs. When we realized that we were setting up aid packing sites in different high school and university and college gyms, where volunteers could be packing food kits and hygiene kits, we asked for more jobs. It made sense to us to have the government support students with summer jobs so they could make money to go back to school. We could give them a safe place to work and the work they would be doing would be meaningful because they would be packing aid we were getting to families in need through many charitable partners. We asked for 80 positions; we received two.

The Canada summer jobs program is probably too rigid to handle a crisis response, and it can't meet the needs on the ground. I've gone into detail in my submission on specifics as to why, to give you a better understanding, but I just want you to be aware of that.

Then I want to talk about the student service bursary, and then sum up.

When the Prime Minister announced a program about bursaries on April 22, we were really excited. Our program was a perfect and natural fit—the ability to place students to pack aid and help us fight COVID and help us help families, and the students could make some money to go back to school. Immediately on April 22 when that happened, we reached out to the Prime Minister's chief of staff, other people in the PMO, several cabinet ministers and several MPs. We also invited elected officials to come and visit the sites where we were packing aid, because we wanted them to see the work that was being done. We even got them to pack some aid.

We never heard anything back from the government. This is disappointing because we could easily have hosted 20 students per shift per site, which totals 840 students a week in the GTA, and we could have scaled up launch sites in additional cities.

On June 15, we received an email from WE and were told that they were administering the program. Our agency explained the positions we had, and we entered into a partnership agreement. We have recruited students to participate, and now I'm very concerned that the students will not get a bursary.

When this thing fell apart with WE and the government, we were told by WE that the government would take over. We have room at our sites every day for more students to participate. I immediately wrote to several MPs and to Minister Chagger and was told by Minister Chagger's office that the government was taking over and would be in touch. That was a couple of weeks ago. To this date, we have yet to hear from the government.

I am going to conclude, Chair.

The biggest loser in this will be the students. I am very worried about people falling through the cracks because of poor policy decisions and how they adversely impact people. We're not at the end of the fight against COVID, and we need to learn from what is currently being done to simply improve the process and the programs that are meant to help Canadians. As a nation, we need to rally together to fight COVID. There's simply too much at stake.

My reason for testifying today is just to raise concerns with some of the ways in which the programs that are designed to help Canadians in need have been rolled out. We all need to do better.

Respectfully, Chair, the government needs to do better. There are too many people relying on the support.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Singh.

We'll now go to individuals, with Ms. Krause, researcher and writer.

Go ahead, Vivian. You've been before the finance committee before. You know how this works.

[Vivian Krause, Researcher and Writer, As an Individual]

Good morning, everyone. Thank you very much for the invitation to testify today, and also thank you, everyone, for the hard work you're doing on this file.

I've been following the WE Charity from afar for several years now, and over the last couple of weeks I have taken a closer look at its annual reports, website, videos, social media, press releases, financial statements and tax returns—both Canadian and U.S. tax returns. I also looked at the job ads for about 20 positions to see what type of work WE has been hiring staff to do. I have spoken with former staff who have been employed by WE. I'll just say that unless I specify otherwise, I'm referring to WE, the registered charity, when I say “WE”.

Overall, what I see is an organization that has grown fast, unusually fast, and has shifted its focus. In terms of revenue, WE Charity has soared from annual revenue of about $1million to $66 million in the span of about 15 years. In total, I find that since 2003, WE Charity, a Canadian-registered charity alone, has reported total revenue of nearly half a billion dollars, about $490 million in revenue, and about $470 million in expenditures. That's just what WE Charity, the Canadian-registered charity, has reported.

What has surprised me is that only about one-quarter of the total revenue of WE Charity is from tax-receipted donations. What this means is that three-quarters of WE Charity's revenue is from sources that for some reason are not interested in a tax receipt.

In 2019 alone, WE Charity, according to its U.S. tax returns, was granted a total of $118 million from U.S. sources, including some very large amounts: Allstate Finance, $32 million; Microsoft, $10 million; Unilever, $10 million; Walgreens, $8.3 million; and KPMG U.S.: $4.6 million. The thing that strikes me about this list of donors who account for $118 million is that so many of them are big brands. In addition to those names that are on the list on U.S. tax returns, WE Charity also partners with the Royal Bank, Telus, Nordstrom, Holt Renfrew, Staples, DavidsTea, The Keg restaurants, Virgin Atlantic, DHL and other for-profit companies.

As I watched some of the WE Charity's videos, I was surprised to see the corporate logos of some of these companies pop up: KPMG t-shirts, Royal Bank t-shirts, the DHL delivery trucks, and so on.

Looking through the job ads, I found that WE Charity has advertised only for positions in sales and marketing. I could not find one job ad for staff in any other country. Now, that just may be the function of the ads that were available at the time. However, a couple of the ads in particular did catch my eye, and I'll give you one example. WE Charity advertised.... The description of the job states that this program between Allstate and WE Charity—and I quote—plays a vital role in Allstate's success. Then the job ad goes on to explain how “by advancing the business priorities of the corporation with reputation-building strategies." That job ad also goes on to say that this program drives business results through improved external reputation with investors, policy-makers, media, customers, consumers and opinion leaders.

I'm almost done here.

I notice that WE has a program called “Track Your Impact”, which allows a consumer to go online and input a code when that consumer purchases a WE product. That code links the consumer to information about the village that the consumer is helping with that purchase.

That data, consumer data, is collected by WE—consumer data mostly for children, for young people. WE says, as part of their literature for this specific program, that they have almost four million people in their movement. If that’s the case, that’s a gold mine of consumer data about a highly desirable, hard-to-reach market segment—children and millennials.

Lastly, this got me thinking: What does WE do with all that data? So I read their privacy policy. I found in their privacy policy that WE clearly spells out the restrictions that WE Charity has promised to adhere to with regard to personal information. It also specifies very clearly that WE does share data with third parties. Last week I wrote to WE and asked, “Who do you share your data with? Do you share it with your corporate partners? Is that part of the reason, perhaps, big companies like Microsoft, Telus and Nordstrom are paying so much to WE?” I also asked whether WE Charity provides this data to political parties, and specifically to the Liberal Party of Canada.

This brings me to the conclusion of my opening remarks. I could say much more, but I will leave it at that for now. In summary, I think questions need to be asked about whether WE Charity is operating for purposes that are exclusively charitable, as is required by law under the Income Tax Act, or whether WE Charity is tapping into the advertising and marketing budgets of these big companies, like Allstate, that granted WE Charity at least $40 million. This of course raises a series of troubling questions about not only whether the federal government did proper due diligence, but furthermore, whether in fact the government, in awarding this contract to WE, was on the cusp of awarding a $1-billion contract to a charity that is offside of the law.

Thank you for the opportunity to testify. I'll be glad to answer any questions.

[The Chair, Liberal, Wayne Easter]

Thank you, Ms. Krause.

Our last witness will be Jesse Brown, the publisher of Canadaland. After that, the first round of MP questions will go to Mr. Cooper, Ms. Koutrakis, Mr. Fortin and Mr. Angus.

The floor is yours, Mr. Brown.

[Jesse Brown, Publisher, CANADALAND, As an Individual]

Thank you, Mr. Chair, and thank you for the invitation to appear before this committee.

By way of context, I'm a journalist and publisher of Canadaland, which is a small independent news organization and podcast network, which is funded directly by Canadians who support our reporting and want to make it available to everyone. I'm here today in that spirit.

I want to stress that as a journalist with no political affiliation, I take no position on the outcome of these proceedings. Five years ago, Canadaland news became aware of issues concerning the WE organization, and began reporting on them, eventually publishing a series of in-depth stories by reporter Jaren Kerr and a number of more recent articles.

WE is active in over 7,000 Canadian schools. It has received millions of dollars in public funding over the years. The WE organization engages directly with hundreds of thousands of Canadian children. For those reasons, Canadaland felt the public had a clear interest to know more about the WE organization.

I want to use my time here to share with you a summary of facts that Canadaland verified and reported through our years of investigation. I'll be happy to answer any questions you may have about our reporting.

Canadaland has reported on the misuse of charitable funds by WE Charity; fraud and embezzlement within WE Charity, as alleged by WE Charity itself; a culture of systemic racism, which the WE organization has acknowledged and apologized for; and a history of suppressing criticism from within and suppressing journalistic scrutiny from without through intimidation and legal threats that our news company experienced first-hand. Canadaland has also reported on WE's labour issues in terms of youth and youth volunteers. I'm going to describe those in some detail, because they might be relevant to matters before this committee.

Canadaland collected accounts from over two dozen former and current WE employees and obtained supporting documentation that confirmed the WE organization had a troubled history in terms of its treatment of young volunteers and workers, many of whom first encountered WE through their primary and secondary schools when they were children and teenagers.

According to the WE organization itself, employees joined for minimum wage and worked around the clock. Former employees told us that overtime was for many years unpaid, so with all hours counted, employees worked for less than the minimum wage. The excessive hours became a safety risk and health concern in several instances. Former employees described to Canadaland a high-pressure environment, where loyalty and commitment to the “Live WE” philosophy were paramount, and where criticism or failure to meet fundraising targets resulted in being frozen out socially, being shamed and eventually being fired. Fourteen former employees likened WE to a cult.

A former director-level employee told us that it is “incredibly toxic and inappropriate” the way that they treat young people. A former associate director, who left in 2014 said, “The culture of bullying and fear is very pervasive, and that comes directly from the founders”. Twelve former employees said they had been verbally abused, yelled at or bullied by Marc or Craig Kielburger directly. One former WE manager, Dan Mossip-Balkwill, said that he was made to feel guilty about doing expense reports, because he was told that the money would otherwise go to “educate starving students in Africa”.

Others told us similar things, saying they were told by superiors that if WE provided the resources these employees requested, it would mean less clean water, fewer vaccinations and less education for impoverished children in Africa. Other young employees expressed ethical concerns about what they were asked to do for WE, particularly with regard to aggressive fundraising campaigns in schoolrooms. One widely expressed concern from our sources was that they had signed up to do charity work for WE Charity, but ended up selling products, doing labour and generating revenue for a private for-profit company.

ME to WE, the company controlled by Marc and Craig Kielburger, was described to Canadaland by a former employee as “first and foremost about money, despite its noble beginnings”. While the WE organization insists publicly that the two entities are completely separate and distinct, internal WE organization documents obtained by Canadaland reveal that WE's mission is to create a “single brand experience” with one overarching brand.

The WE organization's claim that 90% of the profits earned by ME to WE are then returned to WE Charity was not something that Canadaland was able to independently verify. What is known is that money flows in the opposite direction, from WE Charity to the Kielburgers' private company. The amounts are significant, $11 million over the last 10 years.

The amount of money transferred out of the charity and into the private company has increased sharply in the last two years, a period of time in which WE Charity was in breach of its bank covenants, as revealed by WE's own audited financial statements.

As our reporting progressed, the revelations about WE became more serious. Canadaland obtained a recording of Marc Kielburger in conversation with a senior employee who talked openly about bribing government officials in Kenya. This employee made violent threats towards another WE employee.

[The Chair, Liberal, Wayne Easter]

Jesse, you're out of time, but we'll give you a little more. I'm interrupting to ask you to move your mike a little further from your lips. The interpreters are having a problem. You're coming through a little fuzzy.

[Jesse Brown]

Okay.

[The Chair, Liberal, Wayne Easter]

If you could wrap up in a minute or a minute and a half, that would be helpful.

[Jesse Brown]

That's about what I have left.

When WE was questioned about this recording, WE's lawyer told Canadaland that the employee had been stealing charitable funds from WE and that Mr. Kielburger made the phone call at the request of Kenyan police. When asked by Canadaland to provide documentation supporting this claim, Mr. Kielburger did not.

There was another instance of misused charity funds. The WE organization publicly insisted that they had never paid members of the Trudeau family for speaking at WE Day, but Canadaland discovered this was simply not true. Not only had it paid Margaret and Sacha Trudeau over $300,000, but $64,000 of the payments to Margaret Trudeau came directly from WE Charity.

Canadaland also revealed that a daughter of Finance Minister Bill Morneau spoke without pay at a WE Day event and received an endorsement from Marc Kielburger for her book, and that later another daughter of Minister Morneau went to work for WE Day in the same month that Minister Morneau announced $3 million in government funding for WE.

In conclusion, the information that Canadaland reported and that I just shared did not come easily. The employees who spoke with us did so despite contracts that WE had asked them to sign, which prohibited them from criticizing WE for the rest of their lives, and which claim to hold their heirs liable if they ever do so.

When Canadaland sent the WE organization 11 early questions, they sent us 33 questions back, asking why we were asking questions, what we would be publishing and so on. They later asked us who our sources were. They told us that they wouldn't answer our questions unless we answered theirs, which we refused. Our reporting persisted.

As we continued to investigate, their lawyers hired a private investigation firm to investigate us. Specifically, they investigated the personal life of our reporter Jaren Kerr and my personal life. The information this firm investigated included, for some reason, the name of my then eight-year-old son and speculation about which school my children attended.

My colleagues and I endured these pressures to put all of what I just said onto the public record so that those considering engaging with the WE organization, be they a youth volunteer, a school, a donor or a possible partner, could make informed decisions about how to proceed. In fact, most of the information I just shared has been available on the open Internet for over a year to anyone who cared to run a Google search on the WE organization.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Brown. I got it wrong: They're still getting an echo in the interpretation booth. Can you put the mike closer than it was before? That's my mistake. We'll see how that works when we get to questions.

Mr. Cooper, you're on for six minutes.

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

Thank you, Chair. I'd be pleased to go, but my understanding is that it's Mr. Poilievre's turn.

[The Chair, Liberal, Wayne Easter]

Okay. Are you there, Mr. Poilievre?

[Pierre Poilievre, Conservative, Carleton, ON]

I'll let Michael go ahead. I'll wait for the second round, if everyone is okay with that.

[The Chair, Liberal, Wayne Easter]

Go ahead, Michael.

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

Thank you, Mr. Chair, and thank you to the witnesses.

I'll direct my first question to Ms. Krause.

Ms. Krause, you indicated that you sent a letter to WE seeking confirmation or clarification about whether they share their data with any political parties, including the Liberal Party. Have you received a response?

[Vivian Krause]

The question I asked is whether they share data with corporate partners or political parties, or anyone who supports them, and I did not receive a response.

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

Is there any basis upon which you have to suspect that they may be sharing their data with political parties, such as the Liberal Party of Canada?

[Vivian Krause]

Yes.

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

Could you elaborate upon that?

[Vivian Krause]

I have heard that they have done so.