Public Accounts Committee on May 2nd, 2013

[John Williamson, Conservative, New Brunswick Southwest, NB]

Thank you, Mr. Chair.

And thank you, Auditor General and your team, for being here today.

I'm going to focus a little bit on chapter 3, which deals with the CRA, the Canada Revenue Agency. I thought it contained a lot of tax debt and tax information that had a lot of interesting details. I'll get to my question.

Although the growth in tax debt has received some attention, your report also notes that CRA collection of those amounts has increased at the same time. In fact, your report notes that CRA recovered $40 billion in tax debt last year.

Can you expand on the growth in CRA's tax debt collections, please?

[Michael Ferguson]

Mr. Chair, we did identify that the amount of tax debt collected by the same number of collectors went from $21.5 billion in 2006—the last time we looked at this—to $40 billion in 2012. That was for the same number of full-time equivalent staff. So there has been a significant increase in the efficiency of the tax collection activity.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Just as a side question, how has CRA's tax base changed? Obviously, you have the size of the economy, which is going to impact revenue growth. But I'm curious, with the harmonization of tax and the CRA's doing more now in this area, if the volumes are growing at the same time.

[Michael Ferguson]

Mr. Chair, we noted in paragraph 3.9 that between the last time we did this audit and the current audit, the Canada Revenue Agency in 2009 began administering the Ontario corporate tax. In 2010 they began collecting harmonized sales tax for British Columbia and Ontario. So between the two audits there certainly was a difference in the base taxes that the Canada Revenue Agency was managing.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Would you say that in times of economic distress or difficulty, the job of the tax collector is more difficult?

[Michael Ferguson]

Mr. Chair, I'm not sure I would say that the job of a tax collector is ever particularly easy.

[John Williamson, Conservative, New Brunswick Southwest, NB]

That's not quite what I asked, but I take your point.

[Michael Ferguson]

But certainly, with the amount of taxes they are trying to collect, this is a significant task.

[John Williamson, Conservative, New Brunswick Southwest, NB]

I'll move on. Thank you.

A major concern raised in the 2006 report was the CRA's lack of information and research on the tax debt. In this most recent report, you note that “The Agency has significantly more comprehensive and complete management information than we reported in 2006”.

Can you expand on how CRA has improved the quality and availability of research and information on its tax debts?

[Michael Ferguson]

Mr. Chair, I think, for example, in paragraph 3.53, we do say the following:

In addition, the Agency conducted research in a variety of areas, such as

- how the debt arose and the associated debtor characteristics...;

- what specific research was conducted on industries that were perceived to be high risk; and

- what impact the economic indicators had on new tax debt.

So there were research activities that happened. The organization does have more information to understand the makeup of the tax debt. However, in terms of the makeup of the tax debt, for example, they really didn't have very much in 2006. So while they have improved, there is still room for them to make more improvements.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Right. I'm sure it's at the foot of the report.

What is the agency's response to your recommendations?

[Michael Ferguson]

Mr. Chair, my recollection is that the agency agreed with all of our recommendations.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Okay.

Chair, do I have time for one more?

[The Chair, NDP, David Christopherson]

You do.

[John Williamson, Conservative, New Brunswick Southwest, NB]

All right.

Your report mentioned that following the 2006 report, the CRA created a new national approach to tax debt collection. Let me quote again from your report:

This new national approach to managing the inventory of accounts allows for a more efficient use of staff and earlier attention to accounts.

You also noted:

The Agency has improved how it distributes accounts to collectors.

Can you please expand on how this new national approach has improved collections on behalf of Canadian taxpayers?

[Michael Ferguson]

We cite the example that now, if there's a tax debt that needs to be collected, it does not require face-to-face intervention.

For example, if there's a taxpayer in Toronto whom a tax debt needs to be collected from, it doesn't require face-to-face intervention, but, if there's not somebody available in Toronto to work the file, the file could be worked by somebody in a different part of the country. This means that there are not the same bottlenecks that used to exist; the files can be spread out and worked from anywhere in the country.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Thank you.

[The Chair, NDP, David Christopherson]

You're welcome. Thank you.

Moving along, Mr. Byrne, you have the floor again, sir.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Picking up on my question about chapter 8, you indicated to us, Mr. Ferguson, that there was a risk that the $3.1 billion was not spent properly and within the statutory and policy guidelines.

Would it be valuable for the government to be able to provide to Parliament some assurance that it was spent within statutory and policy guidelines, in order to erase that risk?

[Michael Ferguson]

Mr. Chair, I need to make sure again that this issue is understood.

The spending within the departments would have undergone normal control procedures in those departments. There are internal controls in departments about spending, and the department would go through all of those normal processes.

We didn't identify anything that would cause us to say that we felt anything was going on outside of those processes. However, what we were identifying was that there were specific budget amounts for these initiatives, there was reporting, and there was this difference. And we don't know what the reason for the difference is. We've also identified, I guess in that chapter, that because this goes back 10 years it may be difficult to recreate all of the history.

So I guess, Mr. Chair, it's simply a statement of fact about what we found and where things are at this point in time.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Okay, thank you, Mr. Ferguson.

I'll slow down a little bit, because I want to get this question in. I was rushing earlier.

Regarding the search and rescue mission information management system, you indicated that a renewed system would not be available likely until 2015 or 2016, and that the critical search and rescue management information system was at the breaking point. You indicated that a replacement for the system began about five months ago but wouldn't be ready until 2015 or 2016.

I'm concerned that the government may be wanting to put up a smokescreen with today's announcement, so I won't ask you whether you believe that the search and rescue asset management system provides the same function as the search and rescue mission management system. But I'll ask you this.

Based on your previous findings, is it reasonable that within five months they were able to not only identify what needed to be put in place for the search and rescue mission management system, but construct it and then put it into effect—in five months? Is that probable? Is it possible?

[Michael Ferguson]

Mr. Chair, the only information I can go on is what we were told, which was that implementation of a new, integrated system is not expected in 2015-16. That's what we were told at the time of the audit. I can't speak to what may have been said outside of this.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

That's understood.

It seems to me, though, Mr. Ferguson—and I appreciate your position, because you can only speak to this committee about exactly what you audited, not what was announced today—that in terms of a reasonable person's assessing it, this does seem to be the government offering a bit of a smokescreen.

It seems to me that the search and rescue mission management information system is a vital piece of technology, which crashed in 2008. You identified that system in your audit. Do you have any knowledge or information that the crash and subsequent destabilization of the search and rescue mission management software system may have led to an adverse or unfortunate result from 2009 until the time of the conclusion of your audit? Did the failure or the lack of functioning of that system contribute to an unfortunate result or a less than desirable result in a search and rescue management mission?

[Michael Ferguson]

Mr. Chair, we didn't link any of the risks related to the system to any specific incident, if I understand the question.

What I can say is that if the system is not operating, then the system has to resort to a manual system for plotting out the search routes and that type of thing. Of course, if it goes to a manual system, reacting will take more time. But we didn't identify the impact on any particular incident.

[The Chair, NDP, David Christopherson]

I'm sorry, time has expired, Mr. Byrne.

We are moving over to Mr. Van Kesteren.

You have the floor, sir.