Government Operations Committee on April 26th, 2021

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

I believe that the three reports make the same recommendations, but in report 8, you mention that the Public Health Agency responded to the recommendations by saying they had noted them and would deal with them. That's often what happens. When there are government reports, there are always stock answers, and we find ourselves in situations like the ones we are experiencing now. The fact is that people weren't ready and no one knew what was going on.

Based on your discussions with the various agencies, do you think that the awareness level has risen and that people will begin to take action to ensure that it won't happen again?

Should the government acknowledge the shortcomings in the machinery of government and make major changes?

[Karen Hogan]

I hope so. I even attached a message to the three reports for Parliament. In it, I said that it was time for the federal government to look into known long-standing problems. I shouldn't have to come back every year and talk about the same shortcomings and the same findings. I hope that we will all learn from this pandemic so that we can improve how we do things once it's over.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Do you agree that it's not always a matter of money, and that it's also tied to human capacity and the desire to do things better?

[Karen Hogan]

We can affirm that during the pandemic, there was no shortage of resolve or desire to serve Canadians. There simply weren't enough hours in the day, as my colleagues can confirm. The public service never lacked willpower, but it was short of time.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Ms. Hogan.

We'll now go to Mr. Weiler for five minutes.

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

Thank you, Mr. Chair.

I'd also like to thank the witnesses, Ms. Hogan, Ms. Richard, Ms. Schwartz and Ms. McCalla, for joining our committee today and for the excellent reports and recommendations you provided on the response to the pandemic from January to June of last year.

There has been a lot of discussion already today about the CERB and about potential abuse of the CERB.

Ms. Hogan, you mentioned a couple of the controls, the ESDC and CRA non-doubling and the student benefit and CERB non-doubling controls.

Would the attestation form not also count as a control to be considered as part of this as well?

[Karen Hogan]

I think a personal attestation really isn't much of a control. There is always a personal attestation. If you look even at a normal program where there are lots of checks and balances to vet eligibility, an individual has to make an attestation.

What was missing was asking for the documentation and the proof. That's what I referred to earlier about that international best practice. In times of an emergency, you don't expect individuals to do all of that, but you expect them to have it all available so that, when you come in post-payment to verify eligibility, they'll have all that documentation and information and be able to demonstrate and prove their eligibility, versus just making a personal attestation at the beginning.

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

Absolutely. Thank you for that.

What other controls would you consider that the government might have looked at, again, considering the context here of wanting to get this money out very quickly to make sure that people have the opportunity to put food on the table and keep a roof over their heads?

[Karen Hogan]

Are you referring again to the Canada emergency response benefit?

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

I am.

[Karen Hogan]

I think the program was meant to be rather quick. At least in terms of being able to see better information sharing between the Canada Revenue Agency and ESDC, I do think that control, which was kicked in a few weeks later, possibly could have been done earlier. I understand the issue, that they felt that changing their IT system would have delayed it. Really, that's where that judgment call was made to prioritize getting payments out to individuals in a timely way.

It really was a policy decision that this was the priority. Then the departments designed the program and the way they administered around that policy decision. I think now we should focus on the post-payment controls and see how that work might be done.

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

Certainly. Hopefully, if we're ever in a similar situation to this in the future, we'll have the digital infrastructure so that we don't have to worry about the system collapsing in on itself with the 50-year-old EI system that is in place.

You also provided some suggestions with respect to the wage subsidy. You mentioned that the CRA should look at strengthening the integrity of it by using business intelligence information to conduct some targeted audits. I was hoping you could explain what you're recommending there in a little more detail.

[Karen Hogan]

Absolutely, and I will probably ask Philippe Le Goff to add in, since he was responsible for the detailed work.

In general, what I could offer up is that they have a lot of business intelligence information at the Canada Revenue Agency that they can use in so many ways. We felt that there were some opportunities where they could have used that to target audits for suspicious activity they might have seen or for applications that alerted them. They chose to just look at post-payment controls.

I don't know, Philippe, if you wanted to add something a little more specific, perhaps.

[Philippe Le Goff]

Yes.

We recommended during the audit to the CRA that they launch targeted audits based on the information they got from business intelligence. Even though they could not have stopped the payments, they could have sent their people after the businesses that were submitting information that was suspicious. The CRA did very little of that.

In our opinion, that would have helped target those who were really at risk of misusing the program.

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

Thank you.

One of the measures announced in the budget last week was the creation of a new Canada recovery hiring program. It will be based somewhat similarly on a lot of the criteria of the wage subsidy. I'm wondering if you have any suggestions here on integrity for the wage subsidy, which you might also recommend for such a program.

[Karen Hogan]

That's a really tough question to answer when you don't really know the nuances of how that program might be designed and laid out. I think any program that is targeting an emergency response likely has a different lens that you would look through than you would for a program that would be there for the long run.

Most programs need to have really good upfront eligibility checks. That's your best line of defence, to make sure that you try to limit giving out payments inappropriately. It's almost like comparing apples and oranges, but I think we'll do our best to monitor what's going on. If we are asked any questions, we can provide some advice on what we saw as some of the pitfalls during the emergency.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Ms. Hogan.

We'll now go to Ms. Vignola for two and a half minutes.

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

Thank you very much.

Ms. Hogan, the budget announced that the emergency wage subsidy will end in September or perhaps November. The arts and culture sector, and tourism, were particularly hard hit. All the stakeholders, or at least those in my riding, tell us that they're going to need this subsidy until 2022 in order to survive.

Based on your recommendations, would you say that unilateral measures from coast to coast or sector to sector are enough to restart the economy?

[Karen Hogan]

When we were looking at the emergency wage subsidy, we didn't really take that into account. The subsidy was designed to help as many companies as possible, no matter what their size, location or line of business. The goal was to maintain relations between employers and employees. Your question is about analyzing the options that went into the program's design. That question would be better put to the Department of Finance, which did the analysis for the design of the program.

As I don't know all the details, I can't really give you a better answer.

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

Thank you.

I don't know whether this was part of your research, but we've just learned that approximately $9 billion were spent to buy vaccines.

I'm not asking you for details about this. However, as the Auditor General of Canada, have you seen the procurement contracts or, as was the case before, were you not allowed to see them?

[Karen Hogan]

For our public accounts financial audit, we received the agreements for the vaccines. These expenditures will be published in the Public Accounts of Canada. We also obtained all other information that we deemed necessary. For the time being, we are not anticipating any difficulties in having access to this information about the vaccines. We're going to try to finish this audit towards the end of 2022.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Ms. Vignola.

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

[Matthew Green, NDP, Hamilton Centre, ON]

In testimony, we heard that there was information, and that CRA had at its disposal tools to monitor the reasonableness of applications as they relate to the wage subsidy. In an Order Paper question, I asked about the CRA's decision to temporarily suspend, as of March 2020, the programs and services for high-risk audits, including international large businesses, high net-worth compliance, GST of large businesses and so on.

In other committees, you've heard me, Ms. Hogan, reference the $120 million of subsidies that Imperial Oil took, and the $300-plus million it paid out in dividends. I've tried to find a rationale to that, and I have had some challenges.

In ESDC's policy development and program design, is it your opinion that it adequately had analysis around the inevitability of companies taking the wage subsidy and paying it out in dividends?

[Karen Hogan]

I want to confirm that I have the question correct, because you referenced Employment and Social Development Canada. It was not involved in the wage subsidy program; it was involved in CERB.

[Matthew Green, NDP, Hamilton Centre, ON]

Finance Canada was supposed to provide the analysis. If you'd like to refer to Finance Canada, I would be happy to receive an answer on whether you think it was adequate in analyzing the risk assessment of the inevitability that companies would take in wage subsidies and then pay out dividends.