Human Resources Committee on April 17th, 2007

[Peter Simeoni]

Yes, Mr. Chair, we've been looking into this, prompted by the Auditor General, and there are two studies that have come to our attention.

The first was done roughly a year ago by the OECD, and it estimated that the number of Canadians living outside Canada--Canadians born in Canada who are living outside Canada in an OECD country--was roughly 1.5 million people, but that is only in OECD countries. There were concerns about the methodology, which the authors were only too happy to express, but it was an estimate.

A more recent piece of work by the Asia Pacific Foundation tells us that their estimate, based on Statistics Canada information, is something like 2.8 million people living outside Canada. So it tells us that an awful lot of Canadians are currently not in the country. They may come back, they may not.

We need to think about the risks that poses for our social programs and the risks it poses for the integrity of the SIR and take action in the way the Auditor General has described. We need to be consistent in how we deal with the dormant flag. It needs to work in all programs like it does in EI, and if it doesn't, then we have to have some control that mitigates that same risk.

[Patrick Brown, Conservative, Barrie, ON]

Thank you, Mr. Chair.

The department now uses a dormant flag on inactive SINs, but Ms. Fraser has expressed some concern about this process. Can you please briefly explain the dormant flag policy, and also how it can potentially help in reducing social insurance fraud?

On that note, does the department track patterns with social insurance fraud, and what have we learned from tracking those patterns that can help alleviate it in the future?

[Peter Simeoni]

Beginning with your second question, we do look at SIN-related fraud. An awful lot of it tends to be related to employment insurance. It's individuals who are on claim and are able to obtain, one way or another, an alternative identity through a social insurance number. And then they're able to work while on claim as someone else, either a fictitious identity or they borrowed someone else's. So they're collecting EI and they're working at the same time, and probably not remitting tax on their job. We investigate quite a few cases like that.

The risk profile for SIN fraud is one that's based on our business intelligence. We update it all the time. If we see individuals, for example, who come into our offices and they have a recently issued birth certificate from any of the provinces, and it's recently issued and they're more than 20, right away we want to send them to one of our investigators to have a chat, because that seems odd. It's hard to get to be 20 years old and not have received a birth certificate already.

If you haven't worked, if you haven't applied for a SIN and you're over 20...there are a number of risk flags that we're constantly working with, and we provide that information to our staff in the field.

At the same time, we're constantly updating our training. I mentioned a certification program for staff on the identification of fraudulent documents, so that someone can't come in and obtain a SIN fraudulently using a false birth certificate.

[Patrick Brown, Conservative, Barrie, ON]

The Auditor General also reported that the department needs to do a better job of reporting to Parliament on social-insurance-related activities. What is the department doing to act upon that?

[Peter Simeoni]

Well, we've reported, I'd go so far as to say inconsistently, since 2002 in various reports to Parliament—the RPP and the DPR—about things like reaching vital events agreements and the various activities we'd undertaken, but the Auditor General is pushing us to become more results based. And we agree. We need to become more results based. We need to set targets, and we need to achieve them. And the principal area we need to do that in is the social insurance register.

So the next step for us is to set the goals for the integrity of the SIR, and then start to report to Parliament on how close—hopefully we'll have exceeded them. If we haven't, then we'll need to report on where we're at and what we're doing to meet those goals.

So that would be the next results-based move we could make, when it comes to reporting on performance.

[The Chair, Conservative, Dean Allison]

Thank you.

Ms. Fraser, you have a quick comment.

[Sheila Fraser]

Can I just make one point of clarification? We looked at the recommendation from the committee, and it was the committee that asked for that information. It wasn't the Auditor General.

[The Chair, Conservative, Dean Allison]

Okay. Thank you very much.

That concludes our first round. We're now going to move into our second round, where questions and answers will be five minutes.

We're going to start back on the opposition side with Mr. Savage. You have five minutes, sir.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Thank you, Chair.

Thank you to the witnesses today.

I want to just talk a bit more about the register. In the Auditor General's report, in February, she says in the preamble:

While the Department has continued its efforts to improve the Social Insurance Register...its progress is unsatisfactory. It has set no goals for the accuracy, completeness, and reliability of the data, and its measurement of data quality has been unsystematic and limited in scope.

And it goes on to say, among other things, in more detail:

...Service Canada currently has no goals for data accuracy, completeness, and reliability, and we consider the lack of systematic and comprehensive measurement of the Register's data quality a significant risk....

And you highlight this weakness again today.

Mr. Simeoni, I think in your presentation you referred to the register, indicating:

...we are setting goals for Register accuracy and completeness to understand how effective our measures.... To do this, we are first determining the current level of accuracy of key data. We will then determine the potential cost....

I would like to ask the Auditor General if she has anything further on that, but then I'd like to ask Mr. Simeoni to give us a schedule on how this is. In terms of setting goals, that seems pretty basic, in the sense that we can't go where we need to go if we don't know exactly where we are.

So I'd just like some more detail on those two things, if the Auditor General has anything else to add on that. If not, then I would go directly to Mr. Simeoni.

[Sheila Fraser]

I have nothing to add.

[Peter Simeoni]

Mr. Chair, a small digression.

I mentioned earlier that we have not set goals, that we need to set goals, and that we're working on setting goals. But the department chose, over the past four years, to fix the process by which SINs were issued to make sure all future SINs after 2002 had it; we were sure of their integrity. So that was a management decision.

We think we're doing all the right things to maintain and improve the integrity of the SIR, including pursuing those vital events agreements. As far as setting goals goes, it would be tempting--and we've looked at other jurisdictions like the United States, for example, the social security administration—to pick a number like 99%, or 99.5%, and even then on a database as large as the SIR, you would be talking about an awful lot of inaccurate fields, even at 0.5%.

But we need to understand first what an error really means. Does it matter that for my birthday, say, the numbers are transposed in the SIR if no federal government program operates on day but rather month and year, for example? We need to understand better how the information is used, what a critical error is, and a far less critical error, and then set our goals for accuracy based on that. We are in the midst of that study right now, and we will have goals set by this fall.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

There will be goals set in terms of what, specifically?

[Peter Simeoni]

Key fields of the social insurance register--identify them and decide how accurate they need to be.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

It seems to me it's a very basic piece of the puzzle: first of all, identifying what matters, and then identifying how you're going to get to the targets you set. I don't know what the targets should be, but I assume you guys should know that, and then determining the potential cost to federal programs of any errors, etc., and monitoring and reporting. Is that something we as a committee can ask for up-to-date information on—how that process is going—so we can see how the progress is being monitored? That would be something I'd be interested in.

How much time do I have, Chair?

[The Chair, Conservative, Dean Allison]

One minute.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

I will just ask one question.

Mr. Simeoni mentioned placing dormant flags on SINs that have not been used for five years. I'm interested in this: how many Canadians who are living in the country would go five years without using a SIN for something? How would you do that? Is it possible to go five years living in Canada without using your SIN?

[Peter Simeoni]

I'll ask Mr. Kremers to comment on this.

My guess would be it's unusual, except in the case of all the SINs we're now providing to children, who may receive them at five years of age. Parents buy the education grant for some time, discontinue it; five, six years pass, and they become dormant. Then they enter the workforce and they have the issue of dealing with a dormant SIN, which is something they can deal with if they provide us with a birth certificate.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

But are the SINs of children under a certain age not identified separately from everybody else's?

[Peter Simeoni]

We can do that, but dormant is dormant, and we think there is a risk associated with all dormant—

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

It seems to me you would expect children wouldn't use their SIN number, but you would expect adults to.

[The Chair, Conservative, Dean Allison]

That's all the time we have, Mr. Savage.

We're going to move now to our next questioner.

Mr. Lessard, five minutes.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Mr. Chairman, you know as well as I do that members of Parliament find it very difficult to read everything we need to be able to keep abreast of issues. Of course, we try to be disciplined and read the Auditor General's report, because it governs us and our conduct and lets us know whether things are functioning properly.

When you came before the committee last year, you said that you were doing an audit of something that I thought the Auditor General had already audited. I thought that the firm was probably going to audit something else. As you said earlier, PriceWaterhouseCoopers audited, I believe, two aspects that the Auditor General had already noted: what progress had been made and whether the steps taken were adequate.

Chapter 6 of this year's Auditor General's report contains a table with the AG's recommendations and the progress made in each area. It was good to see that progress had been achieved in some areas, but some of the other areas were also audited by PricewaterhouseCoopers.

Why was an outside firm asked to audit the same things as the Auditor General, and even the results were the same? That is why I am trying to understand.

[Peter Simeoni]

Mr. Chair, I gather I wasn't clear in my previous answer. There were two reasons. One was the difference in reporting. The Auditor General would be reporting in February. Pricewaterhouse had results for us in August of last year. That gave us a six-month headstart on dealing with significant issues we had to work on.

I also said in my previous answer on this that this is something I plan on doing again, not necessarily with Pricewaterhouse, but have someone come in and take a look at our progress and our action plan and provide us with an alternative view. We're the ones who are in the social insurance number business, and we benefit a lot from bringing experts in to help us understand how we're doing. I really don't see the issue in having Pricewaterhouse give us a view of what it is we needed to do and keep working on and have the Auditor General come in later on and confirm similar findings.

We also consulted with the Office of the Auditor General on the design of the work itself. They looked at the terms of reference, and we had hoped that they would factor that into their report.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

You have just given me an additional piece of information that I did not have, which is that you are also looking for guidance on how to do things now. From what you are saying, if I look at the PWC's report, that is where I should find something that is new. That helps. It gives us something to go on.

Moreover, the Auditor General's report was very specific, given the work that had been done in the department. She suggested setting objectives to ensure that social insurance Registry was reliable, complete and accurate. The department had not yet used those criteria in its objectives.

What progress have you made in that area? What is being done right now? Are there timeframes? If so, what are they?

[Peter Simeoni]

Mr. Chair, I'll repeat part of the answer I gave to one of the other members. We are right in the midst of the study that is going to identify what fields in the social insurance register are the key ones for the purposes of program administration and what level of error is significant, and then we'll need to estimate where the SIR is at itself and set some goals for doing that. We hope to be able to report what those goals are by this fall and where we stand in relation to them.