Finance Committee on Dec. 13th, 2021

[Karen Hogan]

Well, fortunately there are representatives of the Canada Revenue Agency here, so I think you should put the question to them.

During our discussions, they informed us that people were doing pre-payment control work that was still ongoing and that was why they had delayed their post-payment control work.

However, it would be best if you confirmed this with them to find out all the reasons for the delay.

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

Thank you very much for your answer. I certainly will try to put this question to them subsequently.

Earlier you raised something that I think is crucial, both in terms of the CEWS and the CERB payment. At the beginning of the pandemic, everyone seemed to me to be acting in good faith, because urgent action was needed and something had to be done to help. So programs like CERB were set in motion very quickly. Basically, what we understood was that things would be checked out later, and the whole issue of possible fraud and controls would also be looked at later. For the first few months I certainly agreed, but after a few months, in my view, there should have been pre-payment verifications in place, as you said.

In your opinion, why was this not done?

[Karen Hogan]

Once again, I think you need to put the question to the Canada Revenue Agency representatives, but you are quite correct.

The current environment is not the same as the one we were living and working in at the beginning of the pandemic, in March, April and May 2020. In the new programs that will be put in place, I expect to see adjustments and improvements in terms of pre-payment controls.

[The Chair, Liberal, Peter Fonseca]

Thank you.

That's time, Mr. Ste-Marie.

We're moving to the NDP with Ms. Blaney for six minutes.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Thank you, Chair.

Thank you to everyone for being here today to share your valuable testimony. Of course I am sad to see that the Canadian Labour Congress is having technical issues and can't be here at this point, but I also respect how important it is to make sure that the interpreters who serve us so well get the sound quality that they require.

If I can come to you Ms. Hogan, your office did an audit on the CERB, looking at the period from March 2020 to January 2021, and you released a series of recommendations, including suggestions on what to consider when designing an emergency response benefit. Was your office consulted in the development of the Canada worker lockdown benefit?

[Karen Hogan]

You are correct. We did do two audits: one on the Canada emergency response benefit, and one on the Canada emergency wage subsidy. We looked at the design and the implementation of prepayment controls. That is where that first audit stopped, because it was so early on in the pandemic.

No, we were not consulted in the design of any future programs. It is a fine line. You can't really develop the policy or the management processes around it, and then come in and audit it. We can always provide advice on good controls, but we also expect that the departments will react and deal with the recommendations that we gave in previous audits and consider those as they design new programs and put in new controls to deliver them.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Just for a little bit more clarity, do you feel that your recommendations on previous pandemic income support benefits were applied in this latest piece of legislation around the specific benefits? Maybe “advice” is a better word to use.

[Karen Hogan]

I don't really know all of the details of the bill. I did look at the summary and read parts of it. I did not notice if there was a request, when it came to the extension of the wage subsidy, an advancement to ask for the social insurance number of employees linked to that. That was one of our concerns. I would expect that perhaps that was considered and that I just didn't see it in the bill, but that would be one example of where we did not see our recommendation acted on.

[Rachel Blaney, NDP, North Island—Powell River, BC]

That's very interesting.

Let's step back to the Canada emergency wage subsidy. You've been talking about that.

You did release a series of findings and implications, one of which was that:

...without effective controls for validating payments, the integrity of the program is at risk and ineligible employers might receive the subsidy.

This is an important factor to consider, and I appreciate what you just said about the social insurance numbers. Given the amount of public attention on the cost of the pandemic recovery and how the government is going to pay for it, I'm wondering again if your office was consulted at all about the executive compensation components within Bill C-2 and if you feel those provisions address the concerns that you mentioned in your report.

[Karen Hogan]

As I mentioned, I don't know all the details. I know that there was an inclusion around executive compensation but, sadly, I don't know the details of that. I'm sorry.

As I mentioned previously, we were not consulted on the design of the new measures or the policy you are studying.

[Rachel Blaney, NDP, North Island—Powell River, BC]

I'm just wondering. I know you're newer to this position, but is there any history of consultation? It seems to me that we're dealing with a lot of significant ramifications, which are allowing members from any of the parties to lay blame at the feet of some people and hide other people. It's starting to concern me that those are the next steps.

I'm just wondering. Has the government taken any role historically in actually consulting on what would be the best methodology moving forward to stop these political fights, which can really have an impact on people and their communities?

[Karen Hogan]

That is a great question.

While I am new to the role, I have been in the office about 15 years, and I must admit that I don't know whether or not our office has been consulted on developing other policies in the past.

I do know that we have provided advice on controls. Many of our audits do comment on gaps in policy, when we look at the implementation of a policy to see whether it's done effectively. As I mentioned, you do need to be cautious about being too involved up front and doing management work when you're then going to come in and audit. That's not our domain. Our domain is to audit the implementation of a policy and not to create the policy.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Hopefully you will have a government that listens to those audits so that the future is a better place for us all.

I know I have only a few seconds, but you talked earlier about best practices. Do you feel that the steps being taken in this new piece of legislation follow any of those best practices internationally?

[Karen Hogan]

I agree with your statement that the government needs to act on the recommendations in our reports and that they need to put their action plans in place in a timely way, which includes making sure that they're properly resourced in order to carry those out.

When I referenced international best practices, those had to do with emergency situations and finding the right balance between the speed of delivery of money and support, and the controls. I do believe after 20-odd months in a pandemic that it's time to start transitioning away from emergency management to a more long-term focus and improving the controls that are there prepayment.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Blaney. That's your time.

We are moving into our second round, and we have the Conservatives for five minutes. I understand there will be a splitting of time by Mr. Poilievre and Mr. Stewart.

[Pierre Poilievre, Conservative, Carleton, ON]

Ms. Hogan ironically said that stopping audits would not be a good idea when she was asked about small businesses being audited, and now she's stopping her audit of the agency's verification of CERB recipients.

My question will be for CRA, whoever wants to answer it. The Auditor General has agreed to delay her audit into CRA's verification of CERB abuses because CRA hasn't done any such verifications almost two years after the program began.

Is there someone here from CRA who can answer this? The Auditor General's being very generous with you over at CRA. I wonder if you apply the same rules to the people you audit. If a small business says to CRA that it has done no documentation or verification of its transactions, then presumably you'd have nothing to audit. Would you do for that small business what the Auditor General is doing for you and just say, “Don't worry. We're not going to audit you because there's nothing to audit and we'll give you a free ride”?

Is that what CRA would do if it were in the same situation in dealing with a small business filer that the Auditor General is in with the CRA right now?

[Marc Lemieux, Assistant Commissioner, Collections and Verification Branch, Canada Revenue Agency]

If I may, I'd like to answer that question.

Last year, when we started the small business verifications, we did show flexibility. We extended the deadlines for companies to respond to us, because we realized we were in a pandemic period and our approach had to be flexible towards small and medium-sized businesses.

In our work we also took into account whatever information they could provide to us.

[Pierre Poilievre, Conservative, Carleton, ON]

I understand that, during the height of the pandemic and the lockdowns, we were in extraordinary circumstances. We're now almost two years into the CERB program. I'm not asking about what extenuating circumstances you might have granted during that time. I'm asking about the present.

If the small business says it just hasn't done any verification of its work or documentation, do you then say, “No problem. We won't bother with the audit, because you have no documentation for us to audit” in the present?

[Marc Lemieux]

At this time, we are continuing our verifications with regard to these programs. We're also continuing to work with small and medium enterprises to complete our verifications, while being as flexible as possible.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you.

You have answered my question.

You do complete audits now of small businesses, even if they haven't got their verification and documentation in order. You're not granting the same flexibility today with small businesses that the Auditor General is granting you.

Back to the Auditor General, this article from Blacklock's Reporter says, “Internal records showed Smith”—who is a Liberal lobbyist—“was given privileged access to federal audits months before they were disclosed to MPs, senators or the public. 'I'll send you the...pdfs,' one staffer wrote—

[Julie Dzerowicz, Liberal, Davenport, ON]

I have a point of order, Mr. Chair.

What's the relevance of this to Bill C-2?

[Pierre Poilievre, Conservative, Carleton, ON]

I'm getting to that.

[The Chair, Liberal, Peter Fonseca]

Yes, keep it relevant.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you.

Furthermore, it says, “That way you can access them from your office.”

Madam Auditor General, is it in fact true that this Liberal lobbyist got access to your federal audits before members of Parliament?

[Julie Dzerowicz, Liberal, Davenport, ON]

Again, I have a point of order.

What's the relevance of this to Bill C-2?