Human Resources Committee on Feb. 23rd, 2021

[The Chair, Liberal, Sean Casey]

I call this meeting to order.

Welcome to meeting number 18 of the House of Commons Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities.

Today’s meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021. The proceedings will be made available via the House of Commons website. The webcast will always show the person speaking rather than the entirety of the committee.

Pursuant to Standing Order 108(2) and the motion adopted by this committee on Wednesday, October 28, 2020, the committee will resume its study of the review of the employment insurance program.

I welcome our witnesses, who will begin our discussion with five minutes of opening remarks, followed by questions.

We have with us today, from the Canada Revenue Agency, Annette Butikofer, who is the assistant commissioner and chief information officer; and Frank Vermaeten, assistant commissioner. From Statistics Canada are Josée Bégin, director general, labour market, education and socio-economic well-being; and Vincent Dale, director of the centre for labour market information.

For the benefit of our witnesses, I have a few additional comments. Interpretation in this video conference will work very much like that of a regular committee meeting. You have the choice, at the bottom of your screen, of floor, English or French. When speaking, please speak slowly and clearly. When you're not speaking, your mike should be on mute.

We'll start with Mr. Vermaeten, for five minutes, please.

You have the floor, sir. Welcome to the committee.

[Frank Vermaeten, Assistant Commissioner, Assessment, Benefit and Service Branch, Canada Revenue Agency]

Thank you very much and good afternoon, everyone.

Thank you for the invitation to appear before the committee today as you continue your review of the employment insurance program.

With me is my colleague, Annette Butikofer, who's assistant commissioner and chief information officer of the information technology branch at the Canada Revenue Agency. In my brief remarks, I'd like to provide the committee with a short description of the CRA's responsibility with regard to delivering benefits to Canadians.

First and foremost, the CRA seeks to ensure that Canadians obtain benefit payments in a timely manner and have avenues of redress when they disagree with a decision on their benefit eligibility. The CRA administers the Canada child benefit, the goods and services tax, the harmonized sales tax credit, the children's special allowances program, the disability tax credit, the Canada workers benefit and provincial and territorial programs.

Indeed, the CRA uses its federal tax delivery infrastructure to administer 181 services, ongoing benefits and one-time payment programs on behalf of the provinces and territories. These income-tested benefits and other services contribute directly to the economic and social well-being of Canadians by supporting families and children.

I should note that while the CRA is the administrator of many other benefits, the CRA has no direct involvement in the administration of the EI program or the EI system.

As the committee may know, the CRA's role in delivering benefits evolved as the COVID-19 pandemic hit, at the peak of the 2019 tax season. The CRA shifted gears to focus on the administration and issuance of emergency benefits to Canadians impacted by the pandemic. The Canada emergency response benefit was launched in April 2020 and was jointly administered by the CRA and Service Canada. Given the speed required to deliver the CERB payments to Canadians—within some three weeks—and the initial 16-week duration, the CRA leveraged pre-existing information technology services to ensure that payments would be issued on a timely basis.

As of February 14, 2021, the CRA had processed 22,652,229 CERB applications, representing $45.3 billion paid to Canadians. The CERB was followed by the Canada emergency student benefit, or CESB, in 2020, which leveraged the program and system design of CERB. Through the course of administering the CESB, the CRA has processed 2,140,226 applications, representing $2.94 billion paid to Canadians.

As part of the transition from CERB, since the fall of 2020, the CRA now administers three new COVID benefits: the Canada recovery benefit, the Canada recovery caregiver benefit and the Canada recovery sickness benefit.

As of February 13, 2021, the CRA had processed and paid out to Canadians, for the CRB or recovery benefit, 9,864,423 applications, representing $9.86 billion. For the CRCB—the caregiver benefit—we paid out 2,840,045 applications, representing $1.42 billion, and for the CRSB there have been 675,473 applications, representing $337.74 million.

In addition, the CRA also administers the Canada emergency wage subsidy and the Canada emergency rent subsidy programs, which were launched to assist businesses during the pandemic. As of February 14, 2021, 2,619,890 wage subsidy applications had been approved, with a $65.56-billion value of subsidies approved. As of February 7, 2021, 347,480 rent subsidy applications had been approved, with $1.29 billion in payments of subsidies approved.

In conclusion, while the CRA has no direct involvement in the administration of the EI program or systems, as those are the responsibility of ESDC, the CRA plays an important role in delivering many other benefits on which Canadians rely.

Thank you again for the invitation to appear, Mr. Chair. Ms. Butikofer and I would be happy to answer any questions the committee may have.

[The Chair, Liberal, Sean Casey]

Thank you very much.

Next, we're going to hear from Statistics Canada.

Ms. Bégin, you have the floor for five minutes. Welcome.

[Josée Bégin, Director General, Labour Market, Education and Socio-Economic Well-Being, Statistics Canada]

Thank you, Mr. Chair.

Thank you, members of the committee. Thank you for inviting Statistics Canada to speak today as part of the study on employment insurance.

Statistics Canada has many data sources, such as the Labour Force Survey, or LFS, and employment insurance, or EI, statistics, that are used to paint a more complete portrait of labour market-related events. Many of the indicators I will cite today are drawn from these sources. Each data source has its benefits and drawbacks, for example, in terms of coverage, sample size and how quickly data are published.

The pandemic has caused unprecedented job losses in Canada. Total employment fell by more than three million during the worst of the crisis in March and April. Within three months, the unemployment rate almost tripled, reaching 13.7% in May. Although the labour market has improved since then, most labour market indicators have not yet returned to pre-pandemic levels. Their recovery has been slowed by the public health measures in place.

In January 2021, the unemployment rate stood at 9.4%, compared with 5.7% in February 2020. The number of long-term unemployed workers, in other words, people who have been looking for work or on temporary layoff for 27 weeks or more, remained at a record high of 512,000.

New experimental data show that COVID-19 has significantly impacted groups designated as visible minorities. In January, the unemployment rate of Black Canadians was 5.3 percentage points higher than a year earlier, versus an increase of 3.7 percentage points for Canadians who did not identify as indigenous or did not belong to a group designated as a visible minority. This more precarious labour market situation for population groups designated as visible minorities is partly due to the higher concentration of these workers in some of the sectors most affected by the COVID-19 economic crisis, such as accommodation and food services.

Looking at age groups, youth employment in January 2021 was the furthest, -14%, from the pre-pandemic levels of February 2020, when compared with other demographic groups, particularly employment among young women, -17%.

Last December, 1.3 million Canadians were receiving regular EI benefits, almost triple the number from February 2020, which was 446,000.

The results of the LFS show that 1.8 million people were unemployed in December, including 1.5 million who were looking for work and 300,000 who had a connection to a job, either because they had been laid off temporarily or because they had arrangements to start a new job in the near future.

There is always a proportion of unemployed who are not eligible for EI benefits. Some unemployed people have not contributed to the program because they have not worked in the past 12 months or because their job was not insured. Others contributed to the program, but they do not meet the eligibility criteria.

In December, 13% of all regular EI beneficiaries were eligible as a result of temporary changes made to the eligibility rules in September 2020. This proportion was higher in Quebec and in the Atlantic provinces than in the other provinces.

The December LFS results revealed that the industries where employment remained furthest from pre-pandemic levels included accommodation and food services, information, culture and recreation, and what is known as other services, including personal services and laundry services. The challenges facing these industries are reflected in the profile of regular EI beneficiaries. For example, in December, more than one in four regular EI beneficiaries had last worked in one of these three sectors.

The uneven impact of COVID-19 across industries, combined with relaxation of the rules for accessing the EI program, has also driven the proportion of women who receive regular benefits upward, which rose from 37% in February to 48% in December.

My colleague Vincent and I would be happy to answer any of your questions.

This concludes my presentation, Mr. Chair. I hope this overview of the Canadian labour market will be useful to the committee.

[The Chair, Liberal, Sean Casey]

Thank you, Ms. Bégin.

We will now move into questions, starting with Mr. Lawrence, of the Conservative Party. Please go ahead, Mr. Lawrence. You have six minutes.

Mr. Lawrence, welcome to the committee.

You have the floor.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

My questions will all be with respect to the CRA. I'm very much looking forward to Statistics Canada, too, but I'll just direct my questions to the CRA for my portion.

I want to start out with the rent subsidy. Initially, that was administered by CMHC, and according to nearly everyone's appraisal, it failed there. It was eventually transferred over to the CRA.

I'm wondering if you could comment as to why the CRA was not initially given that portfolio, as it seems as though they're doing a much better job than CMHC did.

[Frank Vermaeten]

I really can't comment on that. We weren't involved in that decision, in terms of who would undertake what program.

We were approached to do the wage subsidy. That was a large undertaking with respect to delivering something for businesses.

I'm speculating here entirely, but it's quite possible that had they approached us on—

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I'm sorry, but I will cut you off. I apologize. I'm not a rude person. I just want to get everything in that I can.

[Frank Vermaeten]

It's not a problem.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I believe it was around November when you started administering the rent subsidy. Did anything change materially between November and March, other than perhaps, as you mentioned, your workflow from the other pandemic relief benefits?

[Frank Vermaeten]

There's nothing I can think of, in the context of the question you're asking.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Then it would be fair to assume that you would have been quite capable of administering that program.

[Frank Vermaeten]

As I said, it would have been a challenge to launch both the wage subsidy and the rent subsidy at the same time. It was a huge undertaking to do the wage subsidy. In fact, the rent subsidy was very much based on the architecture of the wage subsidy, so it was replicating something rather than starting from scratch.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

It's fair to say that it might have been challenging, but it might have been possible. Given the colossal failure that the rent subsidy was for CMHC, perhaps, in retrospect, that would have been a better decision.

[Frank Vermaeten]

I can't speculate on that.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you very much. You've said everything I need.

I would like to jump now to the administering of the CERB claims. Could you give us an idea about what the rate of decline is for the CERB and/or the CRB? How many applications are declined for substantive or technical...if you have that degree of information?

[Frank Vermaeten]

I'd like to get clarification on the question. Would you like to know how the volumes have declined over time?

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

No, I'm sorry. I mean the rate of decline, if I apply and my application is not accepted.

[Frank Vermaeten]

It's difficult to say. It changes.

When we launched the CERB, we declined a very small number of the applications. When the program was up and running, there weren't as many upfront validations and we didn't have 2019 income at that time. Then we moved to the CRB and the new measures. We put in place more upfront validation. We're able to look at 2019 income. We're able to look at a broader range of things.

I don't have a precise number, but my guess would be a little bit under 5%. I can certainly get that for you.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Perfect. I was just going to ask that. It would be great if you could get that to the committee. Thank you.

One of the reasons, I believe, that CRBs were declined—it was an issue for a lot of Canadians from coast to coast to coast—was that people were applying for EI, but were not eligible. Then they were attempting to apply for the CRB, but they were declined due to a technical error because the software between the EI system and the CRA system would not work. Has that been resolved now?

[Frank Vermaeten]

I would say that is a rare occurrence relative to the total number of people applying.

Generally speaking, if you've applied for EI and you're still EI eligible, the legislation, in fact, says you're not eligible for the CRB. You need to first go to EI. In the vast majority of cases, the system works exactly as it should.

There are rare situations, for example, when somebody is—

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

With respect—and I don't mean to be rude but I have limited time—I have had literally hundreds of people. That might not seem a huge number, but to the family I delivered food to, that was a big deal.

Is that issue resolved?

[Frank Vermaeten]

We set up a new system. When individuals in those rare situations run into that problem, it can be resolved. Is it 100% resolved? No, people will need to call when they're in that rare situation. As you said it's hundreds—

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I'm sorry. I want to grab this next question.

[Frank Vermaeten]

Absolutely.