Finance Committee on Dec. 13th, 2021

[Yvan Baker, Liberal, Etobicoke Centre, ON]

I have a point of order.

[Pierre Poilievre, Conservative, Carleton, ON]

—but we want to have this tabled.

Thank you.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Chair, I don't believe this is a point of order.

[The Chair, Liberal, Peter Fonseca]

Mr. Poilievre, if you'd like to table it, please send it to the clerk.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Before we move to the Liberals for six minutes, I'd let members know that we are trying, through our technical people, to get the Canadian Labour Congress to be able to link to us. Once they do, if they do, we will give them an opportunity also to make an opening statement.

We're now moving to the Liberals, and we have Mr. Baker sharing time with Ms. Dzerowicz. Is that correct?

[Yvan Baker, Liberal, Etobicoke Centre, ON]

That's correct. I'll start off.

[The Chair, Liberal, Peter Fonseca]

Go ahead, Mr. Baker.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you very much, Chair.

I do have a question for you, Ms. Hogan, but before I ask it I need to respond to what was said just a moment ago by Mr. Poilievre.

I think it's important to note that the CRA has a number of measures in place to ensure that only those who are supposed to receive the supports, whether that be the CERB or the wage subsidy, receive them. Post-payment verification is one of those. My recollection—and I could be corrected by my colleagues—is that the officials who were here with us last week spoke to the timing of this and I think they told us that work was to begin in January.

I also want to mention that CRA officials have worked, I believe, incredibly hard during a very difficult time to get these programs out to Canadians during a global crisis, during a pandemic, and that these programs, by delivering that support, have saved businesses from bankruptcies, have protected jobs and have allowed some people to put food on the table that they wouldn't have been able to put on the table otherwise. To me, it's incredibly disrespectful for Mr. Poilievre to suggest that the CRA officials are not doing their jobs, that they're not working as hard as possible or that they're not able to do their jobs capably. That's what he was suggesting. I find that really disappointing and disrespectful.

With that said, Ms. Hogan, I want to thank you for taking the time to be with us here today. Again, I want to echo that we appreciate it, especially on short notice.

On November 25 of 2020, National Post published an article called “Tories ask CRA to pause audits of wage subsidy recipients during pandemic. Experts say that's a bad idea”.

That's an article, Chair, that I'll be tabling with this committee.

The article quotes two experts in fighting tax-related crimes. One of them, Toby Sanger of Canadians for Tax Fairness, says in the article the following: “CRA should be concerned and empathetic about the plight of small businesses, but to stop all audit programs or simply not proceed with them on a carte blanche basis? I wouldn’t agree with that”.

The other expert, Denis Meunier, the former head of CRA's criminal investigations division, said the following: “It is the CRA’s responsibility to do this pilot project. And I think it’s totally unacceptable and irresponsible for political parties to request that a particular sector not be audited. It makes no sense”.

My question to you, Ms. Hogan, is this: Do you agree with the opinions expressed by the experts here regarding the demand the Conservative Party made regarding stopping wage subsidy audits?

[Karen Hogan]

Thank you. It's always a pleasure to be here. I would have been here last week when I was originally requested to be invited, but as you may recall, I tabled four reports on COVID measures last Thursday and was unable to be at the committee at the same time.

I do believe that audits are a good deterrent in that they are critical when a decision is made to limit post-payment controls and rely on post-payment efforts. I think that audits should be targeted and random, and that every file or every sector or every individual should have equal opportunity of being subject to an audit. You should have some that are targeted based on risks, but then you should also have some that are done randomly.

As it is my job to audit the government, and I have been in the audit field for over 25 years, I see the value and the importance and the need for audits.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you.

Stopping audits would not be a good idea. Is that fair to say?

[Karen Hogan]

That's correct. Stopping audits would not be a good idea. It would make our office not very useful. I think that we serve Parliament and Canadians, and we provide very valuable work in helping Parliament hold government to account.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you very much.

I'll pass the rest of my time to Ms. Dzerowicz.

[The Chair, Liberal, Peter Fonseca]

You have 20 seconds.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I want to thank the officials for being here today. Thank you so much for being here. It's really important, the work that you do.

I really appreciate your testimony, Ms. Hogan, as well as the officials who are here from the CRA. We hope that we can get the CLC here as well.

I think it's also important to remind ourselves that we are in a pandemic and that, with much of the emergency supports—all of the emergency supports—that were sent out, there had to be a balance between getting them out the door and making sure that we put enough measures in place to ensure they were getting where they were supposed to go.

Ms. Hogan, in your sixth report, specifically the report on CERB, you say the following: “Accepting risks in order to expedite payments to those in need is consistent with best practices promoted by the International Public Sector Fraud Forum and its Principles of Fraud Control in Emergency Management.”

Would you say that this principle could apply to the emergency supports that we sent out the door very quickly?

[Karen Hogan]

You are referring to our report on the Canada emergency response benefit program. In that program we absolutely recognize that the government applied what were best practices in the international sector when it came to emergency management. Those practices point to the fact that the priority in an emergency should be to get money and services out to those in need.

The government did that in a way that limited some prepayment controls. While there were some automated checks in the two programs that we looked at, the focus was put on post-payment preventative controls. There is a time, however, when you have to make that shift from emergency management to more long-term management, and you need to start introducing more controls on the preventative side instead of the detection side, after the fact. After 20-odd months in a pandemic, I would expect that the government is starting to adjust and implement those controls—

[Julie Dzerowicz, Liberal, Davenport, ON]

Ms. Hogan, I'm so sorry to interrupt, but my time is just about over.

[The Chair, Liberal, Peter Fonseca]

Ms. Dzerowicz, that's the time.

[Julie Dzerowicz, Liberal, Davenport, ON]

I just want to point out that it is consistent with best practices. I hope further questions will show that the CRA is looking to start those post-pandemic verifications in January 2022, which is just next month.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you.

We'll now move over to the Bloc with Mr. Ste-Marie.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I would like to begin by welcoming our guests, Auditor General Hogan and Principal Le Goff, and all the senior officials of the Canada Revenue Agency. I want to thank them for the important work they have done.

My first questions will be for Ms. Hogan.

Ms. Hogan, in the last two years, or at least since the beginning of the pandemic, your predecessors have continually delivered the message to the Standing Committee on Finance that the Office of the Auditor General lacks funding to carry out its investigations.

What can you tell us about that today?

[Karen Hogan]

Thank you very much for that question about funding.

As you know, I was appointed Auditor General in June 2020, which was in the middle of the pandemic.

After my appointment, one of the first things I did was to update our funding application to the government. We received the amount of money we had requested, which was an increase in our permanent budget of $25 million. We received that amount.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

I see.

I am very glad to hear that, because we have often asked the government to increase your funding. Your office plays a central role for the public and for all members of Parliament.

In your presentation, you mentioned audits relating to CERB post-payment verifications. You explained that your audits would have to be done later, as the Canada Revenue Agency had not been able to do its own audits.

In your opinion, are such delays normal? What is your analysis of the situation?

[Karen Hogan]

The post-payment verifications were to be carried out by the Canada Revenue Agency, and I expected them to be delivered by the end of 2021.

I had planned a second round of audits on CEWS and CERB, which was to start early this year. However, I will have to do my audits later, as the work has been delayed. I obviously cannot audit what does not exist.

I am concerned about the delays regarding this work, as post-payment verification is essential when a decision is made to eliminate or limit pre-payment verification. It is important that the agency take this work forward.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you for your response.

Ms. Hogan, please feel comfortable answering my next question or not.

In your opinion, could the Canada Revenue Agency verification delays be intentional, in a way? For example, could it be that they did not want to reveal a large-scale fraud? If not, could these delays be due to a misallocation of resources within the agency? The employees could, for instance, have been assigned to other tasks. Are the delays due to a lack of resources, or are they due to the fact that existing resources were working under pressure during the pandemic?

What do you think accounts for these delays?