Public Accounts Committee on Dec. 10th, 2018

[Pat Kelly]

Obviously, there's just so much in this report when it comes to the questions and answers that Canadians need, but I want to ask Mr. Hamilton to address something he said in his opening remarks.

You described improvement at the agency's call centre following the previous AG report in 2017. This is a concern that has come up from people who have spent more time at public accounts than I have—people like Mr. Christopherson, who have been here for years and years and have seen issues come up over time.

You cited some statistics on improvement to the call centre, yet the internal audits at the CRA failed to detect the problems at the call centre. In fact, it reported the opposite—that it had been functioning perhaps not perfectly well but at a 85% or 90% call answer rate. It took the Auditor General's report to actually establish that there was a horrific problem going on in the call centre.

The troubling part is perhaps the internal audit. Can you explain how we can take confidence that internally you are accurately measuring the improvement so that we don't end up in a situation two years, five years, or however many years down the road with another Auditor General's report that in fact there are still the same problems that were already flagged in the past?

[Bob Hamilton]

Yes, you and I have the same objective there. I'd like to be seen...and to deliver on improvements that were flagged in the AG's report.

As to why you would have confidence, I guess I would say a couple of things. We are measuring things very much in line with the way the Auditor General came in and measured how many calls were getting answered or not, etc. We have adopted a methodology. As to whether it's perfect or not, I think it's understandable. I think it's pretty good. I think it's consistent with what the AG said.

We're definitely not changing the type of measurement we're doing. What we're seeing in terms of results, with about three-quarters of the calls being answered in the T1 filing season, is a marked improvement from the 37% we saw in 2015. We're using a consistent measurement and we're being more transparent. We're putting these numbers out there for people to look at. Now, they will go up and down from one week to the next, but overall we've seen some improvement.

This is with the old technology. If you recall from when we were talking about it before—

[Pat Kelly]

Yes.

[Bob Hamilton]

—this is very old technology we're using, and we're looking forward to the day when we would have new technology—

[Pat Kelly]

Thank you. What I heard was that you changed your methodology to be more in line with the Auditor General. That was the answer. That's great—

[Bob Hamilton]

I would just say—

[The Chair, Conservative, Kevin Sorenson]

Be very quick, because his time is limited.

[Bob Hamilton]

I know.

I'll let you continue.

[Pat Kelly]

In response to the recommendation the Auditor General made following the aggregated tracking of the use of budgetary financing, your agency says “Agreed” here. However, it doesn't actually sound like you agree. This talks about how the Treasury Board and the Department of Finance were already “satisfied” with your reporting methodology.

The point on this section, on pages 16 and 17 of the report, is that the Auditor General, if I understood correctly—and also from his remarks when the report was tabled—said there's no way to even track the efficacy of extra funds that the agency has received. That's troubling.

Can you address the issue around new funding and tracking what new funding has been able to accomplish? Most of the new funding hasn't actually been expended yet, or it hasn't been delivered yet. It's mostly coming in subsequent years.

[Bob Hamilton]

There are a couple of questions there. I'll leave one for Ted to elaborate on.

We do agree with the Auditor General's recommendation. In fact, we had started some work on this ourselves, but this has given us extra impetus to move it forward quickly.

We do believe we provide the Department of Finance and Treasury Board with proper statistics. They're good. As Ted said, they take those as being revenue earned by audit and factor it into their fiscal projections about what might come forward.

I think we're fine from that perspective, but we do agree with the AG when they say it's incomplete and that there's something that happens after that. We are looking for a better way to explain this to people in a way that's not confusing but is transparent.

On that, point taken. We're looking for something.... I actually think it's an important exercise not only to tell Canadians but for us to understand better what's happening and how we can improve.

On the tracking, we have spent a significant amount of the new money that has been given to us for increased compliance. There's always a debate about how one takes that incremental amount and separates it from the rest. We believe we have a good methodology, but we're certainly open to looking at it in more detail. On that methodology, I'll let Ted give a very brief elaboration.

[Ted Gallivan]

Quickly, the expectation was that for the billion dollars, we would yield $5 billion. In the first two fiscal years, the lift was $2.6 billion, so we saw clearly that the value was going to be achieved.

Our concern was that when we were tagging individual files, we were worried that.... If we had six multinationals to audit, we would pick two that looked the most likely and give them to the revenue generation group and give four to the not-incremental funding group. Then you have this distorted behaviour with people trying to meet a revenue generation target, but the base goes down.

We could have found ourselves in a situation in which, on the billion for $5 billion, we would have exceeded, but our base funding that delivers year in and year out would have gone down. Then we would be in the awkward position of trying to explain to you how it is that we got extra money for rev-gen and we're saying we're exceeding on that, but our base program year over year is going down.

What we worked out with Finance and Treasury Board is that if we get 5% extra dollars, then 5% of our incremental results can be attributed to that. That's what we worked out with Finance and Treasury Board. We tried to actually make it simple and be more transparent to this committee and other stakeholders.

[Pat Kelly]

Mr. Berthelette, are you satisfied with that explanation and that answer?

Also, can you address and explain the difference between “found” and “collected”? Finding taxes is one thing, and collecting, as we see in this report, is something different as well.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Kelly.

Answer very quickly, please, Mr. Dompierre.

[Martin Dompierre]

Mr. Chair, the information provided—Mr. Hamilton also made a reference to that—is that they agree with the recommendation specifically and will look to find other ways or other measures to accurately measure the money that's being collected through the new dollars that are budgeted.

[Pat Kelly]

On “collected” as opposed to “found”, he said $5 billion was found.

[Martin Dompierre]

I would say it's found. It's an estimate of what they anticipate specifically, Mr. Chair, to collect or identify as part of their compliance activity. It's found; I'm not sure exactly....

They will find that additional revenue. I think it's part of their own process to define specifically their own targets.

[The Chair, Conservative, Kevin Sorenson]

Thank you. We can come back to that if we have to.

Now we will go to Mr. Arya.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Mr. Chair.

Mr. Hamilton, yesterday night at 9:23 my office received an email from one of my constituents that said the family's in bankruptcy.

The two children, Lucas, 10, and Chloe, 9, were diagnosed with autism in the spring of 2017. They made their first call to CRA in July 2017 for the disability tax credit and the child disability. They were told it would be processed. Consistently throughout this story the call centre agents performed quite well compared to the last time when we discussed the performance of the call centre agents; that is not the issue here.

She contacted CRA, and CRA said it needed confirmation from the trustee, and the trustee did make a request to CRA for the retroactive payment in January 2018. In February the mother contacted CRA again to find out the status of the refund. The agent told her the refund should be sent by April 2018.

At the beginning of May 2018 nothing else had arrived. She called CRA again. She was told that reassessments and refunds were being processed and would be sent by June 2018. In June 2018, nothing happened. She called again. The agent at CRA told her that a cheque had been made at the beginning of June for around $12,000. This is a family that is in bankruptcy, with two children diagnosed with autism. In June a $12,000 cheque had been made. Nothing happened.

Again she contacted CRA to confirm. The cheque was sitting in the accounting department. She was told that by the end of July 2018 she would get it. At the end of July 2018 she contacted CRA once again. She was informed it was still with the accounting department, as they're just busy, and it should definitely arrive by September 2018.

In September 2018 the money did not come. She called CRA again. The agent was confused as to why it was still sitting with the accounting department, and she was told to call back in three to four weeks if she hadn't heard anything.

At the beginning of October 2018 she called CRA again. This time the CRA agent informed her it was still being held, and that the trustee needed to send a request, which had already been sent in January 2018.

In early November 2018 she called CRA again. The agent had no answers and said she would send a message again to the accounting department and advised that she would send them a message to prompt them to release the funds.

She called CRA again last week and was told by this agent that everything was completed and a cheque should be issued soon. Now she's being told that if she doesn't receive anything by December 28, 2018, she should call back.

The cheque has been with the accounting department since 2018.

As the member of Parliament for Nepean, I do receive quite a number of requests from constituents. Some of them I don't worry about much. Last year I had a constituent whose income was in the range of $300,000 plus. He had a refund of about $30,000 or $40,000 or more. I didn't bother much if there was a bit of delay, but this is one of the first emails I read this morning, and it has been paining me still. After this committee meeting, the first thing I'm going to do is call my staff and ask if you guys were able to process it.

Why this? There is no review. There is no audit. There is no objection. There is no appeal. Why is the cheque still with the accounting department? It should go to a family that is in bankruptcy and whose children are diagnosed with autism.

[Bob Hamilton]

While I can't obviously comment on any specific taxpayer, you've told a troubling story, and I would like the opportunity to check into what, as you've described, seems like a very inappropriate delay. I don't have any answers for you here today and I couldn't discuss them in detail because of taxpayer confidentiality. Thank you for raising it. I will definitely take it back and find out what I can.

[The Chair, Conservative, Kevin Sorenson]

I will give you a little extra time, but you have to summarize fairly quickly. It's a five-minute round.

[Chandra Arya, Liberal, Nepean, ON]

I'm done with this. I have other questions, but I'm done.

[The Chair, Conservative, Kevin Sorenson]

We will come back, then.

Go ahead, Mr. Nuttall, please.

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

Thank you, Mr. Chair.

Thank you to representatives from the CRA for coming today.

Mr. Hamilton, you have probably one of the hardest jobs around. By reason of what you represent, there are not too many Canadians who love the CRA, but that is what it is. It's a necessary thing to have, and you hopefully use all the tools you can and do the best job you can on behalf of all the taxpayers, with the taxpayers.

I think the issue that we constantly face with CRA is one of legitimacy, credibility and faith. If you are tasked with essentially—I'm going to use the word “auditing” for my own structure here—auditing every single Canadian when the time is right to determine whether they are following the rules intentionally or unintentionally, but you're unable to follow the rules intentionally or unintentionally yourself, it leaves a very difficult position for you as an entity, and certainly for Canadians to have faith in the process.

It's funny. As you go through the audit, you go, yes, this is pretty much what I hear. I get that there's variability between regions, but I think we see those variances even within our own ridings. It's very difficult as a member of Parliament, or for our staff, to give advice to individuals, because it's a constantly moving target.

How do you restore that faith? I don't want the bureaucratic answer, right? The bureaucratic answer is that we're going to do better next time; we're going to put the necessary changes in place that we've already talked to the Auditor General about.

There is such a deficit when it comes to faith in the CRA. Some of that's going to be there implicitly, but there's a lot of it that has been caused by this variance or the bad experiences that have taken place, and the inability for the CRA to be able govern itself without need of outside governance to ensure that the job is done right.

[Bob Hamilton]

Thank you, Mr. Chair.

I don't know if I would say that it's the hardest job, but it's a job that has many rewards and many challenges.

One of the most important things I can do, that we as an organization can do, is to give people trust and confidence in us. Because we run a self-assessment system, it's extremely important for me to not only to generate money that is owed and expected, but that people feel that everybody is paying their fair share, that we are auditing and enforcing appropriately, and explaining ourselves and being as consistent as possible.

This report has certainly shown that we have to improve in the area of consistency. However, we've already started to do a number of things to try to restore that faith and trust, because it's an absolutely critical part of what we do.

We have increased our efforts on the offshore area. There has been additional money. We're also trying to make sure that we're being as clear in communicating what we do as well as possible. We have a service agenda, which is asking our auditors to not only collect money but to also think about the relationship they have with taxpayers—to be educating them, talking to them, and that there are early interventions to try to get long-term compliance. We're seeing some benefits in that.

Each time an issue gets raised with us, we're trying to change that service culture within the CRA to give people more confidence in us.

It is true that when we look over time in our public opinion research, we see that not everybody thinks we're doing a perfect job, so we have miles left to go. However, I don't think we are just sitting around and saying the future is going to be bright; we are saying that we are taking some actions right now. Some of them have borne fruit, and we expect to take more in response to either issues that we uncover, or that the Auditor General or somebody else uncovers.

I do know, in terms of the tough part of the job, that it's an agency that touches a lot of Canadians' lives. We have a lot of people who work at the CRA, and it's going to be a never-ending task to make sure that we operate with the highest level of integrity to give Canadians the trust and confidence they need.

I take it very seriously.

[The Chair, Conservative, Kevin Sorenson]

We're out of time, unfortunately, Mr. Nuttall.

We'll go to Mr. Arya.