Government Operations Committee on April 26th, 2021

[Karen Hogan]

There are two discussions here.

We were planning to start some other audits related to the pandemic that would have included the Public Health Agency of Canada, Employment and Social Development Canada and the Canada Revenue Agency. They've asked us to delay some of them, given the pressures on their people and the fact that we're in another wave now and are still dealing with and responding to the pandemic. We've agreed to delay some of the audits. We were going to replace them with other audit work.

In terms of pandemic work, as I mentioned, in May we'll have two reports, one on procuring personal protective equipment and medical devices, and one on support to indigenous communities, including personal protective equipment, access to nurses and so on. There will likely be some other pandemic reports in November that will include temporary foreign workers and protecting Canada's food supply.

You can access all of our upcoming audits on our OAG website. There's a planned audits section. You can see both COVID and non-COVID audits as well as commissioner of the environment and sustainable development audit work. They've all been posted there now for a couple of years.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

One of the challenges you highlighted in your report is the jurisdictional breakdown of responding to COVID-19. Of course, it is the provinces and the territories that are responsible for delivering health care. They're the ones who make the decisions on public health measures such as stay-at-home orders and vaccine prioritization, among other things.

How do you think the government can better work with provinces and territories to ensure we're responding to COVID-19 with a team Canada approach?

[Karen Hogan]

I think that's an excellent question, and as I mentioned in my message to Parliament in March when I tabled my reports, one that we need to study. Whether that means that an individual who can study the response country-wide is asked to do so...I think that would be smart. As the federal Auditor General, I can only look at federal responses, but I think having someone who could look across the country at what provinces and municipalities are also doing to respond would help the country better prepare for the next wave.

What I can do is the vaccine audit, which is coming up at the end of 2022. I'm trying to coordinate with my provincial counterparts—the auditors general in the provinces—to see if they can pick up the piece of the vaccination process where provinces take over the responsibility. My office can look at approval of vaccine all the way to delivery to the provinces, and then they can pick up the other half. If we can coordinate our work and coordinate when we might publicly release our report, I think that would help inform Canadians about how vaccines went from approval to shots in arms. That's something I can do, but as a country, I believe we need to figure out the best way to respond to the next health crisis.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Weiler.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you.

[The Chair, Conservative, Robert Gordon Kitchen]

Now we'll go to Ms. Vignola for two and a half minutes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much.

You pointed out that the Canada Public Health Agency had signed an agreement with Public Services and Procurement Canada to digitize traveller information recorded on paper.

As for immigrant files—I know I'm going off topic, but as you will see, I'll return afterwards to the subject at hand—at the beginning, we were getting paper versions of the records. It was then decided to use digital records because there was no access to the paper versions. When the digital records could not be found, a paper version was eventually sent.

Aren't we back with the same mess in terms of document digitization?

Does this process properly protect traveller information?

Are there other methods that have been used elsewhere in the world that might perhaps be more effective?

[Karen Hogan]

I don't really know if the two situations can be compared.

In our situation, traveller data was obtained in a timely manner. Digitizing the paper records required up to six days or more, as we mentioned in our report. When a quarantine lasts for 14 days and we need to follow up as quickly as possible to make sure travellers are actually complying with the quarantine requirements, we need the information as rapidly as possible.

An app was developed, but it wasn't used at the beginning. It became compulsory later on during the pandemic. During the period when we were conducting the audit, we found that for one out of every five traveller files, information needed for monitoring was missing.

This is an example of how, because of a lack of planning, the agency wasn't prepared to manage the situation. It's one of the challenges that it has to deal with to be prepared in the event of a future crisis that might require a national quarantine.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Is our system equivalent to, or better than, what is happening in other countries, or does it need to be improved?

[Karen Hogan]

I have no details about how other countries are monitoring quarantines, and so I'm unable to answer your question.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Ms. Hogan, and thank you, Ms. Vignola.

We'll now go to Mr. Green for two and a half minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you.

I'm still trying to figure out the classifications of “secret” versus “cabinet confidentiality”. I'm not going to let it go. You're going to see me back in public accounts, and I'll likely have another motion dealing with that sometime this week.

I'm just wondering. As an auditor, somebody who's reporting back to committees like this one and public accounts, are you confident that all measures were taken within the distinction between “secret” documents and “cabinet confidentiality” and that they meet the smell test? Are they within the parameters that would allow that to happen? When it comes to information during this pandemic, it feels an awful lot like everything coming out of this government—a government that's supposed to be open by default—is either deemed “secret” or it's “cabinet confidentiality”.

I'm wondering if you can help us unpack that a little bit.

[Karen Hogan]

I'm definitely not an expert, but I'll be sure to bring an expert when I go to the public accounts committee tomorrow, because I'm sure you'll keep asking these questions.

I guess what I can offer you up is that, when it comes to cabinet confidences, that is really in constitutional history. There's no discretion there, in my understanding. It's a question perhaps for the Clerk of the Privy Council Office, for more information, but as soon as something is a cabinet confidence that involves—

[Matthew Green, NDP, Hamilton Centre, ON]

I'm not as worried about that. What I'm concerned about is the way in which you have described that the authors are proactively taking.... We talked about proactive disclosure. This time last year there were hundreds of proactive disclosures, and if I remember correctly, throughout the last little while they have been in single digits, or there have been dramatically fewer proactive disclosures.

How do we get to a place where we have a government that's truly open by default, when it seems like we can have authors of a report just claim that everything is secret?

[Karen Hogan]

Within any organization, in order to follow the government's security policy, there are some clear outlines on security classifications, and while the author is the one who sits back and looks at the information and determines its security classification, there is typically one of their supervisors or a senior member of the management team who should challenge that classification to make sure that you do not overclassify a document.

As the auditor, what I can do is ask and question whether you are sure this is the right classification, but in the end I cannot change it. It is the author's discretion to classify.

[Matthew Green, NDP, Hamilton Centre, ON]

Here is my last question. Are you satisfied—

[The Chair, Conservative, Robert Gordon Kitchen]

Mr. Green, I hate to interrupt you, but we want to stay on time.

Mr. McCauley, you have five minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks.

I wish I could share my time with you, Mr. Green, because I enjoy where you're going.

I want to get back to the wage subsidy. Somewhere in the report here it is said that the Department of Finance did a full and complete analysis, which the department acted upon, but it sounds like only an analysis of how to give out the subsidy and not whether it's targeted.

I was talking about some of the market capitalizations. A perfect example is Lululemon, who saw their market capitalization go up $15 billion last year, yet were still accessing the subsidy.

I'm going to skip over that, please.

On page 13 of your report for the wage subsidy, paragraph 7.61 says:

With the limited data it had, the agency conducted a business intelligence exercise in June 2020—that is, the agency analyzed data....

Then it says:

In 35% of subsidy applications, the GST/HST collected in 2020 was 35% higher than the employer’s gross revenue as reported on its latest income tax return filed.

Am I reading that right, that the people self-attesting to claim the wage subsidy were claiming a higher GST collected than they actually had in entire revenue the previous year?

[Karen Hogan]

I don't believe it was that they had higher revenue. It was that when you look at GST you can infer what revenue would have been, and that made it appear that the revenue in 2020 was higher than in 2021. The first bullet on the 35%—

[Kelly McCauley, Conservative, Edmonton West, AB]

It says that in 35% of applications, the GST/HST collected in 2020 was 35% higher than the employer’s gross revenue as reported, not the employer's stated GST. They're saying that their GST was higher than the previous year's gross revenue.

It also goes on to say that with the wage subsidy there was concern because there was self-attestation for the revenue drop. Am I reading that correctly?

[Karen Hogan]

I think the areas you're highlighting are the areas we mentioned earlier that we felt could have and should have prompted the agency to do some targeted work. This was some of that suspicious information that came about that might have alerted you—it doesn't mean that something was wrong, but it might have alerted you—that a better investigation was needed. Again, though, the decision was made—

[Kelly McCauley, Conservative, Edmonton West, AB]

I'm a bit concerned. I'm not sure whether you're just being nice here, but “might have”, “could have”.... When we're talking about taxpayers' money, should the approach not be a bit more aggressive than to say, there “might be” some fraud, we “might” or “should” look at it, or we “could look at it”, as opposed to “the government definitely should take a look at this”?

[Karen Hogan]

I guess I'm choosing my words because I can't—

[Kelly McCauley, Conservative, Edmonton West, AB]

It might be just semantics, but I'm worried that throughout the report nowhere does it say that we “should” look after taxpayers' money or that we “should” ensure the right people are getting the money, as opposed to we “could”.

[Karen Hogan]

I can't compel a department to change its approach. I just want to be clear that I am always concerned when there's the potential that public funds have been misused. That is my job. I worry about the prudent use of public funds.

In this instance, yes, I believe they should have used this information to do targeted audits. The Canada Revenue Agency made the decision not to, but to focus on post-payment work. This was one of the instances that we alerted to them, and we put in our report that they should have used this information to include extra controls while the program was running.

As we mentioned earlier, it doesn't mean that they had to stop the payments, but this information indicates that there's further investigation needed. It doesn't indicate that there is a problem. That's why I said the “might”, because it doesn't mean that there is a problem. It just means they should take a better look at it.