Public Accounts Committee on April 15th, 2021

[Michael Sabia]

Thank you.

I'd like to ask all the committee members to please accept the apologies of the Department of Finance. We're sorry.

Madam Chair, I'm pleased that the Auditor General has highlighted the Department of Finance's role in conducting a number of analyses to support both the initial design and subsequent adjustments of the CERB over time. During the design phase, the department looked at a number of different design options, parameters, structures and impacts on different groups, which is the kind of work that you would expect the Department of Finance to do, including taking into account the experience of other countries and, of course, the preliminary costs.

At the same time, as the benefit swung into motion, the department listened very carefully to feedback from Canadians and employers about proposed changes and ways of making it work better, which I think did improve it over time.

Madam Chair, while I wasn't here myself at the time, on behalf of the Department of Finance, I welcome the conclusion of the Auditor General's report. It states that the department worked within short time frames and under exceptional circumstances to assist in developing the Canada emergency response benefit, and subsequently provided a sound and complete analysis to inform adjustments to the program.

Before I finish up, I say this as someone who was not here at the time, but I would be remiss to not recognize the really exceptional efforts of our colleagues at the Canada Revenue Agency, at ESDC and certainly within the Department of Finance itself.

As Graham and Bob have both noted, a lot of this work was being done around kitchen tables and in spare bedrooms. I do think it's a demonstration of a really remarkable effort on the part of public servants in the federal government to be able to deliver something of this complexity and importance in that kind of a time frame when they were also dealing with child care, home-schooling and all the personal challenges that we all faced at the time.

With that, I'll stop and just say that Michelle and I will be happy to answer any of your questions.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Sabia.

Colleagues, we will now move to our first round of questioning, which is six minutes long.

Ms. Dancho is joining us today. Welcome. I will turn the floor over to you for six minutes.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Thank you, Madam Chair. It's an honour to be here today with everyone.

Thank you to the witnesses for providing your opening remarks.

Ms. Hogan, thank you for your report. I'm wondering if you can describe, in layman's terms, what a challenge function is and provide a bit more detail about the challenge function the Department of Finance performed on CERB.

[Karen Hogan]

I'll do my best. If I'm missing some details, I might ask a member of the audit team to add something. I'll also ask the deputy minister of finance to fill in the details if I miss out.

The Department of Finance's responsibility is really to do analysis and to provide advice. The department considers fiscal impacts on the government and so on. They provide that advice to the Minister of Finance. Employment and Social Development Canada was responsible in this case for the design and rollout of the program. The department also considered the advice and the challenge function that the Department of Finance gave them on the way it was designed, the threshold, how it was rolled out and subsequent changes that might have been needed to respond to the pandemic.

It is really done in collaboration, but the ultimate decisions about the program were left to Employment and Social Development Canada.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Thank you.

This was a surplus-of-$74-billion program, as you know. In normal circumstances, how long would a $74-billion program have been...? How long would it have taken to do that challenge function, in your estimation?

[Karen Hogan]

I don't know if I would link it to the dollar amount of a program, but typically what we've seen in the past is that designing and rolling out a program takes, at times, months, if not longer. What we saw here is that decisions were made sometimes within hours or overnight, so it's really a stark contrast to the typical approach that would have been used to design a program.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Yes.

You mentioned in your report as well that turnaround time for key steps was often a few hours or overnight. That's in section 6.26. My concern is that we know a half-billion-dollar mistake was made, which indicates to me that the challenge function was not adequate. How many days did you find it took Finance Canada to complete the challenge function for the CERB?

[Karen Hogan]

I'm not sure that we actually looked at the number of days it took them to provide the challenge function. Really, their role is to provide some advice and input into the design factors, and then to provide ongoing advice and challenge as data is collected to see the take-up of the program that happens. We really didn't measure how often they did that challenge and whether they did it over a certain number of days; it's certainly an ongoing thing.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

No, I appreciate that, and you were quite clear in your report that that speed was.... You expressed to them quite a bit of, I would say, praise for the speed of government, which we know is very critical to roll out the money for families who lost their jobs immediately or had to be home, as is outlined in the opening remarks. My concern is that I'm not hearing that anyone was really.... I'm not sure who is responsible for that half-billion-dollar mistake. Can you provide any insight on that? Where does the buck stop with regard to that mistake?

[Karen Hogan]

I guess the way I approach items like this is by not necessarily looking to identify who was at fault but looking to identify whether or not it could have been prevented and then what's going to happen after the fact. I think both departments that were responsible for the rollout—Employment and Social Development Canada and the Canada Revenue Agency—recognized rather quickly, about a week in, that individuals could, either in error or through confusion, apply to both programs, and then a control was put in place. You can appreciate that, there were very many applications in that first week, and that's why the dollar amount is so high—

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Certainly—

[Karen Hogan]

It could have been a missed opportunity, but now we should be looking at how it will be evaluated and corrected, if needed.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

I appreciate the speed at which this needed to be rolled out, but ultimately my role as the official opposition member of Parliament for ESDC is to outline the failures of government. This half-billion-dollar mistake was made, and I'm trying to figure out who is being held responsible for it. I'm not quite getting a clear answer from you on who you think is responsible for that error.

[Karen Hogan]

In the case of the Canada emergency response benefit, the department responsible for it is Employment and Social Development Canada. It recognized that, given the volume, it couldn't administer all of it, so it looked for the Canada Revenue Agency to support it in delivering that payment benefit in a timely way. I can offer that up to you, and then I guess you can ask the deputy ministers their thoughts.

[The Chair, Conservative, Kelly Block]

If I may....

I noted that Mr. Flack raised his hand.

Mr. Flack, would you like to comment?

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Madam Chair, before we go to Mr. Flack.... I'll just throw it to him, but with a comment, if you wouldn't mind, Madam Chair.

[The Chair, Conservative, Kelly Block]

Sure.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Thank you.

Mr. Flack, I did note in the Auditor General's report that the half-billion-dollar error was only mentioned once, in almost a throwaway line. I am concerned on behalf of taxpayers, and as it is my duty to hold the Liberal government to account for this program, that no one is being held accountable for this half-billion-dollar error. Can you provide information to the committee on who you believe is responsible for this? Where does the buck stop with regard to this error?

[Graham Flack]

I'm happy to take on that accountability myself. It wasn't an error. It was a known design criterion. We knew when we were launching the benefit that it was not possible, in the time that we had, to have real-time reconciliation between the two systems that were being held. In the case of the EI system, it's a 50-year-old computer system. The CRA was building a separate system. We knew in the design that it was not possible to have real-time reconciliation. We knew that we would need to reconcile the two payments, and a conscious decision—

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Did the minister approve that, then?

[The Chair, Conservative, Kelly Block]

Thank you. I'm sorry, but your time is up, Ms. Dancho.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Thank you, Madam Chair.

[The Chair, Conservative, Kelly Block]

We will move to Ms. Yip for six minutes.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Good afternoon. It's wonderful to see so many departments here today. It really does show how much work was involved with CERB and its ongoing importance during this pandemic. Thank you for all your hard work in quickly delivering the support for Canadians.

My first question is for Mr. Flack. This is regarding the emphasis on getting the income support to Canadians as quickly as possible.

If the department and agency had used typical prepayment controls that were similar to those in the pre-pandemic employment insurance program, how long would it have taken for Canadians to receive the benefits at the beginning and throughout the pandemic?

[Graham Flack]

Our initial estimate was that it could have been up to 18 months. That was subsequently revised down to about 12 months. That reflected the fact that over the course of the March to September period, we received five million claims on the EI side of the CERB. That would compare with about 1.3 million claims in a typical year.