Government Operations Committee on Feb. 20th, 2007

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

I want to follow up on a question that was raised regarding the social insurance numbers. It's just to clarify that, as far as you can tell, there's no commitment on the part of government to address the situation you identified in paragraph 24 of your remarks today.

[Sheila Fraser]

No, the department agreed with us and indicated it would continue to try to improve the quality of the register.

The question was around rigorous sampling and testing of the register, and we're not aware of any plan like that.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

I just wanted to clarify that.

Thank you very much.

[The Chair, Liberal, Diane Marleau]

Mr. Wrzesnewskyj.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Thank you, Madam Chair.

Madam Fraser, you mentioned in our previous round that for the new social insurance numbers that are being issued there's a tighter regime.

I look at the numbers: 1.5 million were issued in 2005-06. Was that an unusually high number, or is it part of an existing trend?

[Sheila Fraser]

We looked back at an audit we had done previously—about three years ago, I believe—and at that point they were issuing about 1.2 million, so it would seem to be in that order of magnitude each year.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

So it was 1.2 million, which seems high, but there's a little bit of a spike there, by another 25%—another 300,000 on the 1.2 million, which is a 25% increase on the previous figure.

With a commerce background, I hate it when numbers don't add up. Can you help me with some of these numbers? There are youth entering the workforce. If we look at the population and do some estimates, and if we're very generous with those estimates, there should be about 400,000, potentially, entering the workforce.

We have approximately 200,000 immigrants per year. We're at 600,000.

There were 1.5 million new social insurance numbers. Who did the other 900,000 go to?

[Sheila Fraser]

Again, I think that's something that has to be asked of the department, but there are people who need social insurance numbers for many reasons. For example, if you have a registered education savings program for a child, you need to have a social insurance number for that child. If there is a student who is getting a scholarship, they have to have a social insurance number for tax purposes. If someone is claiming some of the tax benefits, filing tax returns in order to get credits and things, they need a social insurance number.

So there can be a variety of needs. Honestly, we don't have that information.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

You just answered my next question. It appears we're guessing; we have no idea. Yet we're dealing with numbers not in the thousands, but potentially in the millions, with potential taxpayer consequences in the hundreds of millions or more. I'd certainly like us to sink our teeth into this particular chapter, because I think it's critical, not just in terms of budgetary consequences but also because of the whole security aspect of this. I look forward to potentially dealing with this.

[Sheila Fraser]

Perhaps I can add something, Madam Chair.

[The Chair, Liberal, Diane Marleau]

Sure.

[Sheila Fraser]

Just because we don't have the information it doesn't mean that the department doesn't have it. You're right, I may be guessing at it, but I would presume they would have that information.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

I think that's a strong enough signal for us to perhaps consider bringing in department officials.

Coming back to transfer pricing, you gave us a very good explanation of that. Do we have any legislation specifically dealing with sanctions for the use of transfer pricing as a method of tax avoidance? We have legislation dealing with tax avoidance, etc., but do we have something that really zeroes in on transfer pricing?

[Sheila Fraser]

I presume the agency would use the general avoidance legislation. I know in income tax legislation that was introduced a good 15 years ago or so there were very specific requirements around transfer pricing, the documentation that companies have to keep, the kinds of explanations that they have to provide to the agency, and I'm not aware if there are any specific sanctions related to that. I would think they would probably use the more general ones, but again, that would be something to ask the agency.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

The concern with transfer pricing is obvious, but in a lot of the developing countries these days--those I've visited--they've set up these tax-free ports, or so-called tax-free ports; often they're inland, not even ports. I've noted in a number of the Caribbean countries that a large number of Canadian manufacturers have shifted significant portions of their manufacturing processes there. It's not the full manufacturing process, but as you've stated, in textile they've shifted the portion that would still allow them not to face all the various high-tariff barriers that exist. It's worrying when you see Canadian manufacturing companies quite engaged in shifting operations to these tax-free ports. Products are being shipped back to Canada with just small component parts being finally assembled here in Canada.

Have there been any studies done in that particular area by the government?

[Sheila Fraser]

I'm not aware of that. The agency might have done something, but I'm not aware of it.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Thank you.

[The Chair, Liberal, Diane Marleau]

Mr. Warkentin, go ahead, please.

[Chris Warkentin, Conservative, Peace River, AB]

Thank you, Madam Chair.

Thank you, Ms. Fraser, for your work. I know that this is only the public part of your work, and you spend hours and hours going through things. I think for the most part, a lot of the questions have been exhaustive, and we've talked a number of these things over. I'm wondering if you could give us some information as to where you're headed next and what areas you're currently investigating.

Could you give us a kind of brief outline of what the next reports will be about?

[Sheila Fraser]

We have a report scheduled for the beginning of May.

I'll ask some of my colleagues to help me on this. We have HR management in foreign affairs. We have the NORAD system in North Bay. We have the CAIS program in agriculture.

I see some smiles going up.

I'm trying to think what else, or if there are any more. I'm just trying to remember what else is coming.

There is support for education, which will obviously include the federal government and the millennium scholarship fund. We would be glad to provide that to the committee.

[Chris Warkentin, Conservative, Peace River, AB]

That would be very interesting. When did you say the report on CAIS would be available?

[Sheila Fraser]

It will be on May 1.

[Chris Warkentin, Conservative, Peace River, AB]

That would be fantastic.

If you need to interview anybody in terms of the validity—

[Sheila Fraser]

We've—

[Chris Warkentin, Conservative, Peace River, AB]

—I have hundreds of farmers in the Peace country who would be happy to give testimony.