Finance Committee on Dec. 7th, 2021

[Catherine Demers]

That's correct. They would need to attest that they did. As well, we would be sharing information between the CRA and Service Canada to ensure eligibility with respect to not having claimed EI for the same week they are requesting the lockdown benefit.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you.

I hope you can appreciate how it may be slightly concerning that it appears that we are relying on the identical system of attestation and eligibility criteria that we did in the first section, which led to a significant number of people—in fact, at least 400,000—receiving CERB payments who were deemed to be ineligible. That mistake or confusion cost taxpayers at least $50 million at that point. I'm a bit concerned that the only additional safeguards we're actually putting in this time around are just additional questions that people will attest to. As we have seen previously, obviously people were either confused or purposely misled on their application forms.

Thank you.

[Catherine Demers]

This—

[Adam Chambers, Conservative, Simcoe North, ON]

I'm sorry, but that wasn't a question.

Thank you, Mr. Chair. There is 30 seconds left.

I suppose the question is whether we are actually going to consider the government taking any additional measures to check verification eligibility criteria before we send a cheque out.

[Catherine Demers]

In this context, as I've mentioned, additional measures have been inserted as part of verifying eligibility for the Canada recovery benefit, and they are being transposed to the lockdown benefit. These are being verified by the Canada Revenue Agency.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Chambers.

We're moving to Madame Chatel for the Liberals for five minutes.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you, Mr. Chair.

Much like Mr. Chambers, I worked at the Department of Finance for several years. I'd like to acknowledge my former colleagues and recognize the efforts they have put in during the pandemic to ensure that Canadians received excellent service. I commend them for their work.

My first question is related to the programs, specifically to Part 1, which deals with the wage subsidy and the rent subsidy. As we know, these programs have been critical to Canada's economic recovery. We also know that we need to continue offering these programs in certain targeted sectors.

In general, what impacts were reported during consultations with the businesses or sectors hardest hit by the pandemic? What are the current needs? How will these programs help address them?

[Maximilian Baylor]

I will let my colleague Yves Poirier answer. As I mentioned, he was in closer contact with stakeholders about the wage subsidy and rent subsidy programs.

[Yves Poirier]

Thank you for the question, Mrs. Chatel.

Broadly speaking, as stated in the answers to the previous questions, after these programs were officially announced, consultations were held with the various stakeholders. That formed the basis, in part, for the definitions that were put into the bill, but also for establishing the revenue loss thresholds at which it was felt that businesses really needed the assistance. That's the kind of information we took into account when designing these programs.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you.

Now I would like to follow up. We know that in Quebec and across Canada, the cultural sector is very important and it is still suffering. I saw that you expanded your definition of a tourism or hospitality entity to include the cultural sector.

Can you tell us a little more about this definition that is in the bill?

[Yves Poirier]

Indeed, the definition of an eligible entity for the tourism and hospitality recovery program largely encompasses the cultural sector. For example, one of the provisions mentions organizing, promoting, holding, supporting or participating in activities that meet the cultural or artistic interests of the entity's clients. Therefore, this provision is quite broad and covers a large part of the cultural sector.

Other provisions would include, for example, owners of buildings used for holding artistic activities and other activities like that. They could also benefit from the tourism and hospitality recovery program.

I believe my colleague Mr. McGowan wants to add something.

[Trevor McGowan]

Thank you, Yves.

I just wanted to build upon the question and get at one of the points about how the hospitality program is intended to help businesses in the sector, and the approach to defining the sector in the regulations. You'll see in the draft regulations a fairly extensive list—expanded, perhaps—of what qualifies as a tourism or hospitality type of business. The reasoning for that is to provide the maximum amount of certainty possible for applicants under the wage subsidy.

There are a lot of organizations across Canada that are relying on these subsidies and will want to know if they qualify or not. To that end, the decision was taken to try to provide as clear and comprehensive a list as possible of the types of business activities that could qualify for the wage subsidy, so that each applicant would know whether or not they did qualify. That's part of the reason the list spans a number of pages; it's to help out businesses in the application process.

Also note that—

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. McGowan. That's the end of the time for Madame Chatel.

We are moving into our third round. The Conservatives have the floor now for five minutes.

Go ahead, Mr. Stewart.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Thank you, Mr. Chair.

I want to thank all of the witnesses for being here today. Any of the witnesses can answer my questions. Whoever feels they are best suited to answer them, that's fine by me.

One of the things we discovered here today, very early on.... Obviously, $7 billion is a lot of money, and we saw the lack of safeguards put in initially with this program. Today we're unable to determine where any of that money is coming from. We do know that billions and billions of dollars in revenue in this country pour in from the energy sector. We also know that this government is trying to kill that sector. There's likely a good case that money from oil and gas and other revenue is probably enabling some of this spending, despite the constant cry of a climate crisis.

As for where my first question lies, the Canada Revenue Agency, during a hearing of this finance committee in July 2020, advised that both the CERB and the CEBA were being targeted, could potentially be targeted, by criminal organizations. Today I'd like to know, from whichever witness feels best to answer the question, what directives were given to department officials by government for the drafting of this new bill based on and taking into account what was foretold in July 2020 at the Standing Committee on Finance.

[Trevor McGowan]

I just want to confirm that it relates to the Canada recovery benefit and the lockdown support in part 2 of the bill more so than the emergency wage subsidy and rent subsidy in part 1. I'd be happy to discuss the safeguards against fraud and abuse in those subsidies, but I understood the question to be more focused on part 2.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

I think with the $7 billion that's going out here today, unaccounted, rather than getting right into exact programming.... We're talking about $7 billion in unaccounted dollars here. With the recent report from FINTRAC, I think it's important that whichever safeguards you want to talk about that were put in place to prevent criminal organizations from getting their hands on any of this money.... Those are the answers I seek.

[Catherine Demers]

I can perhaps provide a bit more detail related to the integrity measures that are part of the proposed legislation on the Canada worker lockdown benefit. As I mentioned previously, some measures were taken in the context of the Canada recovery benefit. One in particular, the requirement to have filed taxes in the preceding year, is being repeated in this proposed bill or piece of legislation. In order for workers to be able to receive or be paid the lockdown benefit, they would need to have filed taxes in 2020. That would be verified by the CRA to ensure that they meet the income eligibility.

Ensuring that claimants or applicants meet the income eligibility is part of the verification process and the integrity measures.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

I appreciate that answer. Thank you for that, by the way.

There was a request for an investigative audit into the monies that bled into criminal enterprises during the course of the pandemic, with all the benefits that we're discussing here today. Of course, now we're discussing a brand new suite of $7 billion....

I'm sorry...?

[The Chair, Liberal, Peter Fonseca]

I didn't say anything, but we've gone well past the time. Thank you.

We are going to move now to the Liberals and Mr. MacDonald for five minutes.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you, Chair.

I'm curious. I want to follow up on Mr. Stewart's comments relevant to the security measures being applied to minimize fraudulent activities.

Are you comfortable with what the CRA and national revenue are applying to ensure that this is minimized?

[Trevor McGowan]

I can provide some quick comments on part 1 of the bill, before turning it over to my colleague for comments on part 2.

The Department of Finance has, since the inception of the wage and, later, rent subsidy rules, worked with the Canada Revenue Agency to help prevent fraud and ensure compliance. To that effect, it has taken a number of measures, including significant penalties for misrepresenting or artificially inflating entitlement amounts, requirements for attestation and requirements that payroll numbers or business numbers had to have been obtained before the crisis to prevent fake companies from being set up.

We work with the Canada Revenue Agency. In talking with them, they would be best situated to describe their specific programs, but I know that they provide the initial triage of applications based upon a risk assessment. The government provided the authority for the Canada Revenue Agency to not pay the amounts under the wage, and later, rent subsidies if the minister is concerned about fraud or integrity matters. That goes back to the first bill introducing the wage subsidy, I think in subsection 164(1.6) of the act.

Those are built into the platform for part 1, and the new measures here would continue to rely upon that.

I'll turn it over for part 2.

[Catherine Demers]

I cannot speak on behalf of the Canada Revenue Agency to explain how those integrity measures are applied. What I can say is that there were strengthened integrity measures put in place for the Canada recovery benefit that have been applied to the lockdown benefit. These allow for it to meet that balance between ensuring that supports are available when workers need them and, at the same time, allowing for that rigorous verification of eligibility.

[Heath MacDonald, Liberal, Malpeque, PE]

Can you tell me how many people benefited from the existing programs that were put in place after COVID-19?

[Catherine Demers]

If you don't mind, I would like to ask my colleague George Rae if he's able to support me in providing an answer on this for the Canada recovery benefit. Otherwise, we would be happy to come back with an answer on the specific number.

[George Rae, Director, Policy Analysis and Initiative, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development]

There were approximately 2.3 million unique applicants for the Canada recovery benefit, with a total gross dollar value of $28.3 billion. That is for the Canada recovery benefit. Those figures are as of November 28.