Public Accounts Committee on April 15th, 2021

[The Chair, Conservative, Kelly Block]

Good morning, everyone. I will call the meeting to order.

Welcome to meeting number 25 of the Standing Committee on Public Accounts. The committee is meeting in public today and is being televised. Pursuant to Standing Order 108(3)(g), the committee is meeting today to study Report 6, Canada Emergency Response Benefit, of the 2021 Reports 6 to 9 of the Auditor General of Canada.

Today's meeting is taking place in a hybrid format pursuant to the House order of January 25, 2021. Therefore, members may be attending in person in the room or attending remotely by using the Zoom application.

Before I go any further, Madam Clerk, I would just confirm that all members are joining virtually.

[The Clerk of the Committee, Ms. Angela Crandall]

That is correct.

[The Chair, Conservative, Kelly Block]

Thank you.

I also want to note that we are meeting 45 minutes past the start time. The clerk and I have discussed whether or not the meeting could be extended. I did not want to assume that your schedules would allow that to happen.

First, Madam Clerk, can you confirm if we are able to extend the meeting with the technicians?

[The Clerk]

Yes, we are.

[The Chair, Conservative, Kelly Block]

Okay.

I would like to have an indication from our members as to whether or not they are able and/or willing to stay for the full two hours of the meeting.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Madam Chair, thank you very much for asking. Normally I would say yes without hesitation, but I do have a couple of meetings with constituents that I had booked at that time. I will see if I can move them off, but let's just assume that I can't.

[The Chair, Conservative, Kelly Block]

Okay. Thank you very much, Mr. Fergus.

[Kody Blois, Liberal, Kings—Hants, NS]

Madam Chair, along similar lines, I have about a 15-minute gap before I get back into meetings before we have question period. Unlike Mr. Fergus, I know that those can't be rescheduled, so I would have about a 15-minute window.

Assuming there are no votes, if there were members—a coalition of the willing—who could meet, I don't know how that protocol would work.

That's my schedule. Thank you.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Blois.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Madam Chair, you know that I take my role on the Standing Committee on Public Accounts very seriously. I'll make sure that I reschedule my appointments and extend the meeting, because I think that we need to get caught up. There are some outstanding reports. We shouldn't let things drag on any longer.

[The Chair, Conservative, Kelly Block]

Thank you very much.

Go ahead, Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

If we could maintain the questions to their limits, to their specified times, I have no problem with staying the extra 45 minutes or 30 minutes. I'll rearrange what I need to rearrange.

[The Chair, Conservative, Kelly Block]

Colleagues, thank you very much. I know that votes sometimes do have an impact on committees and our ability to meet within the time frame that is set.

I will start the meeting and go through a couple more rules.

For those participating virtually, obviously interpretation services are available for this meeting. You have the choice, at the bottom of your screen, of either “Floor”, “English” or “French”. Before speaking, click on the microphone icon to activate your own mike. When you are done speaking, please put your mike on mute to minimize any interference. When speaking, please speak slowly and clearly. Unless there are exceptional circumstances, the use of headsets with a boom microphone is mandatory for everyone participating remotely.

Again, if there are any technical challenges, please advise me and we will do our best to resolve them. We may need to suspend in that case.

I'd now like to welcome our witnesses. Joining us today from the Office of the Auditor General are Karen Hogan, Auditor General of Canada; Jo Ann Schwartz, principal; Steven Mariani, director; and Robyn Roy, director.

From the Canada Revenue Agency, we have Bob Hamilton, commissioner of revenue and chief executive officer; Maxime Guénette, assistant commissioner and chief privacy officer, public affairs branch; Marc Lemieux, assistant commissioner, collections and verification branch; and Frank Vermaeten, assistant commissioner for assessment, benefit and service branch.

From the Department of Employment and Social Development, we have Graham Flack, deputy minister, employment and social development; Lori MacDonald, senior associate deputy minister, Employment and Social Development and chief operating officer for Service Canada; Cliff C. Groen, senior assistant deputy minister, benefits and integrated services branch, Service Canada; and Elisha Ram, associate assistant deputy minister, skills and employment branch.

Finally, from the Department of Finance, we have Michael J. Sabia, deputy minister; and Michelle Kovacevic, assistant deputy minister, federal-provincial relations and social policy branch.

For your information, colleagues, I have been advised that Deputy Minister Sabia will only be able to attend the meeting for the first hour because of the preparations for the tabling of the budget next Monday.

With that, welcome to all of you. I will turn the floor over to Ms. Hogan for five minutes.

[Karen Hogan, Auditor General of Canada, Office of the Auditor General]

Madam Chair, thank you for this opportunity to discuss our audit report on the Canada emergency response benefit. The report was tabled in the House of Commons on March 25. Joining me today is Jo Ann Schwartz, who was the principal responsible for this audit, as well as Robyn Roy and Steven Mariani, who were the directors on the audit.

The audit focused on two aspects of the Canada emergency response benefit. The first was whether Employment and Social Development Canada and the Department of Finance Canada provided analysis to support the initial design of the benefit and subsequent adjustments.

The second was whether Employment and Social Development Canada and the Canada Revenue Agency designed controls so that the benefit would support eligible workers who lost income because of the COVID-19 pandemic, including limiting abuse of the benefit. Overall, we found that the organizations quickly designed, rolled out, and adjusted the benefit to support workers who lost income because of the pandemic.

Employment and Social Development Canada and the Department of Finance Canada considered key areas in the initial design of the benefit. They subsequently performed analysis to inform changes to the benefit and respond to the evolving pandemic situation. To expedite issuing benefit payments, Employment and Social Development Canada and the Canada Revenue Agency adjusted their usual approach to prepayment controls and decided to focus on post-payment controls. Both organizations understood the risks involved with this approach. They decided to rely on the attestations of applicants to assess eligibility for the benefit. They also relied on some automated prepayment controls that were possible through their existing information technology systems.

Accepting risks in order to expedite payments to those in need is consistent with international best practices. Since the ability to implement prepayment controls is limited in an emergency, post-payment verification becomes very important and must be planned for and carried out to uphold the stewardship of public funds.

To identify ineligible applicants, the department and the agency introduced additional controls after the Canada emergency response benefit was launched. One such control, introduced about one week after the emergency benefit was launched, was to stop applicants from receiving payments from both the department and the agency. Before this control was introduced, a number of individuals applied for and received payments from both organizations. According to the department and the agency, these double payments amounted to approximately $500 million. In our view, it will be critical for the organizations to conduct rigorous post-payment verification work.

The department and the agency have developed post-payment verification plans. Most of this work should start in the 2021-22 fiscal year. The implementation of the organizations' post-payment verification work will be the subject of a future audit.

In our report, we made two recommendations. The recommendations focus on the post-payment verification work and on conducting a formal assessment of the delivery of the benefit to inform future initiatives. Employment and Social Development Canada and the Canada Revenue Agency agreed with both recommendations.

This concludes my opening remarks. We would be pleased to answer any questions that the committee may have.

[The Chair, Conservative, Kelly Block]

Thank you very much.

I will now go to Mr. Bob Hamilton.

[Bob Hamilton, Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency]

Thank you, Madam Chair.

I'm very pleased to be here to discuss the Canada Revenue Agency's action plan stemming from the recommendations in report 6 of the Office of the Auditor General.

You've already mentioned that I'm joined by three members, so I won't repeat that.

In report 6 on the Canada emergency response benefit, the Auditor General noted that despite challenging circumstances, the CRA and ESDC quickly designed and launched an emergency benefit to support workers who lost income as a result of the COVID-19 pandemic. The agency is proud of this accomplishment, and I am proud of all of our employees and what they did. When the government called upon us, we met this challenge and delivered this important benefit to eligible workers as quickly as possible.

The OAG also acknowledged that once the benefit was launched, both we and ESDC introduced additional prepayment controls to limit potential abuse of the benefit. Within that context, the Auditor General made two recommendations to the agency, which the agency accepted.

First, the Auditor General recommended that both organizations should finalize and implement their plans for the CERB post-payment verification work. Second, the Auditor General of Canada recommended that both organizations conduct a formal assessment of the delivery of the CERB in order to apply the findings to the design and delivery of future government emergency response and recovery benefits.

The agency has agreed with both recommendations and has advanced a detailed action plan with timelines to implement them.

With respect to the first recommendation, the agency's verification work will be largely supported by information that will become available during the 2020 tax filing season, which is under way now. This will help avoid unnecessary reviews of recipients who may in fact have been eligible to receive a benefit payment or who may have already voluntarily repaid monies owing.

The agency will finalize and implement its post-verification plan in collaboration with ESDC. This strategy will consider the economic landscape and the ongoing state of the COVID-19 pandemic in order to administer responsible and appropriate compliance measures while maintaining the fairness and integrity of the CERB program and ensuring the sound stewardship of public funds.

As we indicated in our response, beginning in August 2021, the agency will leverage 2020 tax filing data to do risk assessment of the CERB recipient population in order to select and prioritize cases for post-payment reviews.

With respect to the second recommendation, the agency will conduct a formal assessment of the delivery of the CERB. This will allow us to identify best practices and lessons learned and to determine if functionality and processes can be leveraged in a future urgency or crisis.

The findings from this exercise will be available by December 31 of this year, and these findings will support the design and delivery of future government emergency response and recovery programs.

In light of all these measures included in the agency's action plan, I am pleased to report that the agency is acting on the recommendations arising from the report.

In closing, I want to recognize explicitly the CRA employees who were given the daunting task of developing programs to quickly distribute emergency financial aid to millions of Canadians. I might add that in the midst of last year's filing season and a pandemic that we were also part of here at the agency, their rapid response has helped Canadians put food on the table through the Canada emergency response benefit. This was no small feat, and I offer them my sincere thanks.

Thank you, Madam Chair. I'm happy to answer any questions the members have.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Hamilton.

We will now go to Mr. Graham Flack for five minutes.

[Graham Flack, Deputy Minister, Employment and Social Development, Department of Employment and Social Development]

Madam Chair, thank you for inviting me to speak to the committee today.

I want to begin by taking a moment to acknowledge the truly remarkable efforts of the Employment and Social Development Canada and Canada Revenue Agency staff in designing and implementing the Canada emergency response benefit, or CERB, in a matter of weeks.

The CERB has helped over eight million workers and their families stay afloat. The quick and decisive action taken to provide income assistance to millions of Canadians affected by the closures and public health restrictions has helped mitigate the worst of the economic impact.

Early on, the two departments created a simple and straightforward application process, where verifications would be done after payment. As benefits were paid out, adjustments were made to support even more Canadians and to support our economic recovery. These adjustments included significant measures to prevent fraud, along with expanding eligibility so that workers could earn up to $1,000 per month and still be eligible for the CERB.

We took an unprecedented approach to provide support quickly in an unparalleled emergency.

On top of having to adapt to their new telework reality, many ESDC and CRA employees were home-schooling their kids, supporting family members and providing care to loved ones who may have been affected by COVID-19. Despite all of this, they worked tirelessly to make sure Canadians would get the support they needed as fast as possible.

I have never been as proud to be a public servant as I was when watching the remarkable efforts of these people during an extraordinary period under compressed timelines. They truly demonstrate what the Canadian public service is all about: service, integrity, stewardship and excellence.

The Auditor General's report acknowledges the work done by Canadian public servants and recognizes this remarkable approach that they undertook.

The report made two recommendations for ESDC, both of which the department welcomes and accepts. The first is to finalize and implement plans for CERB post-payment verification. Throughout the delivery of the CERB, ESDC and CRA were actively detecting, preventing and disrupting fraudulent activity. On our side of the house, 30,000 potential fraudulent applications were prevented, forgoing $42 million in payments that would have otherwise been issued.

We have developed a four-year post-payment verification plan, and initiated it, to ensure that those who received the benefit were eligible. As you may know, in the fall economic statement, both departments were provided with additional resources to support this work. This boost in funding will help us to take action to detect and investigate cases of fraud related to the benefit.

The second recommendation concerns lessons learned from the situation. To that end, we'll conduct a formal assessment of the CERB. This will help the Government of Canada design and implement future emergency support and recovery programs. We'll begin this work together with the Canada Revenue Agency, or CRA, in summer 2021.

I'd be happy to take your questions.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Flack.

We will now move to our last presenter, Mr. Sabia, for five minutes.

[Michael Sabia, Deputy Minister, Department of Finance]

Thank you, Madam Chair.

Thank you for the invitation to participate in today's meeting with Graham Flack, Bob Hamilton and, of course, Michelle Kovacevic, my colleague at the Department of Finance.

Let me begin by welcoming the Auditor General's report. As Ms. Hogan noted in her report, the Canada emergency response benefit was rolled out in a matter of weeks and adjusted in real time to respond to a sudden and unpredictable crisis. This approach and the lessons learned will be a valuable model for future emergencies.

As you know, the CERB was introduced just after the various parts of Canada went into lockdown for the first time, to support Canadians who suddenly found themselves unable to work through no fault of their own.

I certainly credit our colleagues at Employment and Social Development Canada and the Canada Revenue Agency, who remarkably and very rapidly designed and administered a benefit that provided income support to millions of Canadians affected by the public health restrictions that we're still, in many cases, experiencing. This certainly helped to buffer the worst economic impacts of this health crisis.

Today the CERB has helped more than 8 million—

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Madam Chair, I have a point of order.

[The Chair, Conservative, Kelly Block]

Go ahead

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I want to bring something to your attention. I'm having trouble hearing the witness. He isn't wearing a headset. I want to remind you that the committee passed a motion to ensure that the connection with the witnesses would be tested before our meetings. We also know that the headset is mandatory.

Could the witness wear the headset? We can't hear him very well.

[Michael Sabia]

Madam Chair, I apologize.

For reasons that I can't explain, we've been trying for some time to connect to the committee's activities this morning. Obviously, we're having technical difficulties. In fact, my current connection is through a cell phone. I'm far from an expert and I can't explain why we're having these technical difficulties. However, we're working to resolve the issue. Unfortunately, at this time, we can't do things any other way. I apologize.

[The Chair, Conservative, Kelly Block]

Thank you very much for that, Mr. Sabia.

I know that our clerk did reach out to you, both on Monday and Tuesday, with the hope of getting your technical difficulties resolved for future meetings.

Thank you. You may proceed.