Public Accounts Committee on April 22nd, 2021

[Bob Hamilton]

Madam Chair, I'd say two things in response.

We will obviously be doing a pretty thorough “lessons learned” exercise out of this. If we went back, could we have done something different? Would it be helpful in the future, as I said, both for any future pandemic but also in a normal auditing process? There will be those efforts.

What we have now is that on the T4 slips you have to indicate the time period in which you earned money, and that will give us an opportunity to link together the individual with the company or the enterprise that claimed the CERB. We do have an ability to look at that. We decided not to do it up front, as we've discussed, but we do have that ability now, and we will be factoring in all that we can learn about how we made those decisions and the trade-offs we made as we look at the lessons learned at the end of this year.

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

One of the things that sort of troubled me in the Auditor General's report in one line is that “the agency did not re-evaluate its position over time”. Have you re-evaluated that to include the social insurance number?

The other question is, how much money has going “post” versus “pre” cost the treasury?

[Bob Hamilton]

Madam Chair, there are two questions there.

I think the first one is whether we are re-evaluating and thinking of using the SIN numbers. We are not contemplating that. We got the program launched the way it was. We feel that we have enough back-end comfort that we don't need to re-evaluate that decision at this time. It doesn't mean that in a future situation we might not make a different decision. I don't want to prejudge that, but we are not at the moment thinking of introducing, say, a SIN requirement in the current program.

The second part was on the cost of the audit. I think the gist of your question was on how much more it costs the government to catch it at the back end than at the front end.

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

That's correct.

[Bob Hamilton]

I don't have a figure on that. I mean, directionally, I can say that we are better off if we catch something at the front end. That's a more efficient process for us, but it also does entail some costs, and in this circumstance of delivering this program, it wasn't just about costs. It wasn't primarily about costs. It was practicality, and it was—

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Hamilton. I'm sorry. We are tending to go over a bit here today.

I will now move on to Mr. Blois for five minutes.

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

Thank you, Madam Chair.

I'd like to thank all our witnesses, and particularly for your hard work during this pandemic. I think for me it really hit home during the OAG report when we talked about the wage subsidy being one of the biggest undertakings in history for the Government of Canada. I think that speaks to the size and scale of what we've been encountering these last few months. Thank you for that.

Mr. Sabia, thank you and others for your work in finance on the budget that was just tabled this week.

I have some quick comments. When I saw paragraph 7.33 in the report, it certainly was relevant. It was walking me back through the different points in time during this pandemic in terms of the $1,000 cap that was originally in place for the CERB and some of the disincentives. It was nice to see our government respond and be able to change some of these programs. I've heard that through the testimony so far today.

I want to go right to Ms. Hogan first on paragraph 7.37. You mentioned that 28% of the applicants under the CEWS program had not filed in 2019. Can you clarify, as quickly as you can, whether they had not filed at the time they received the benefit or at the time you had audited?

[Karen Hogan]

For a quick response, I'm going to ask either Philippe or Mathieu to answer that for you.

[Philippe Le Goff]

Madam Chair, at the time of the application, the applicants had not filed.

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

Right. It's not they hadn't filed at all in 2019; it's that the tax year had just finished, and at the time they initially applied, they had not yet filed.

Mr. Hamilton, how normal is it that sometimes there is delay with corporate financing, in terms of filing reports to the CRA? Is 28% a normal amount generally?

[Bob Hamilton]

Madam Chair, I would note two points on that. One is that if we're talking about GST/HST filings, there will be a certain percentage of those entities that wouldn't have to have filed by then. In other words, they're on an annual basis. Some registrants file monthly; some file quarterly, and some file annually, so there would be a percentage of that number. It was not a problem per se, to put it that way; it was just the way the system works. We didn't have that information.

Having said that, there's also another portion, which are non-filers, more generally, and people who don't file their returns on time. That's a small portion in total, but it's an important part. We have a regular non-filer program for delinquent filers that looks at those—

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

Mr. Hamilton, thank you. I appreciate that.

What I'm hearing is that there are different times and this is not a crazy unusual number in terms of what we see in the report.

I want to take you, Mr. Hamilton, to exhibit 7.1.

I guess I'll go to Ms. Hogan first. My apologies.

You noted in the report that there were not as many applications that were disapproved or many of them were auto-approved. When I look at the number, the number that I think is extremely important is the actual initial value of the applications in the millions of dollars. Almost 40% of that number had some type of manual review, which I think in the circumstances is quite strong.

Can you comment on that in terms of whether or not overall it seems that, yes, a lot of the smaller applications maybe were auto-approved, but there was quite a bit of manual oversight? Is that fair to say?

[Karen Hogan]

The exhibit you're referring to definitely highlights that many of them were subject to a manual review.

The automated reviews were just checking addresses, making sure direct deposit information hadn't really changed and looking at reasonableness of payroll. There were a large number that were then subject to some sort of maybe verbal update or verification or some other information that was collected. Again, there were very minimal checks, and hence few were actually rejected in the beginning, which emphasizes the back-end work.

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

Mr. Hamilton, in response to that—and I have about 45 seconds left—your department is not used to this type of programming and taking on this type of scale and scope of what CRA was being asked to do, right?

Can you speak to how you responded to that and how that probably impacted your ability to verify and have this vetted, because you were trying to get money out the door. Also, with your ability to do some of those audits in the summer of 2020, I have to assume you guys were very stretched as a department, given that this was not your normal protocol.

[Bob Hamilton]

Definitely this was an extraordinary time to be undertaking this new program and sorting out all these trade-offs that we had.

I think it's important to know that we have experience here, so some of the upfront verifications that we did were quite effective. We operate on risk basis. We assess the risk and we go after the things that we think are high risk. Some of the low-risk ones perhaps go through, and we catch up with them at the back end.

Yes, it was an exceptional time, but we tried to use the resources of the agency and our risk assessment to focus on the areas where we thought the upfront verification would be most helpful.

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

Thank you, Madam Chair.

[The Chair, Conservative, Kelly Block]

Thank you very much.

We will now go to our next round of questioning for two and a half minutes, starting with Mr. Blanchette-Joncas.

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

Thank you, Madam Chair.

My question is for Mr. Sabia.

Good afternoon, Mr. Sabia. Welcome to the committee once again. I sympathize with you given your heavy workload in recent weeks as you prepared the budget. Your professional record comforts me in the knowledge that you're holding down the fort. That's entirely to your credit, and I congratulate you for it.

You recently told this committee that you were going to work hard to increase transparency so we could have access to the department's administrative and decision-making processes and to other information we need to do our job. That, of course, stems from a concern for transparency toward parliamentarians and thus toward taxpayers.

Can you tell us why the information the Auditor General had access to couldn't be fully analyzed by parliamentarians?

[Michael Sabia]

Thank you for those comments, Mr. Blanchette-Joncas. I think I essentially answered that same question a few moments ago.

We fully disclosed to the Auditor General all the analyses and work that our people at the Department of Finance performed both while this program was being developed and in the course of collaborative efforts and consultations outside the department. She has therefore seen all our analyses.

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

Mr. Sabia, I'd like to know why the Auditor General can have access to them but not members of Parliament.

[Michael Sabia]

I understand your question, Mr. Blanchette-Joncas. However, we can't change the rules or the law. As I said earlier in response to a question, one of the aims of those rules is to protect the government's right of access to advice from the public service and to encourage the government to solicit such advice. We don't have the necessary latitude to give you access to that information. The same is true of the Auditor General.

[The Chair, Conservative, Kelly Block]

Thank you, Mr. Sabia.

We will now go to Mr. Green for two and a half minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you.

You heard in my earlier comments that one in five business licences is not being renewed. In my city, many small businesses, including the ones along Locke Street, saw their 2019 revenues dramatically reduced because of a nearly year-long municipal infrastructure project that was completely out of their control, with the replacement of sewers and drain lines and the repaving of roads and sidewalks. It significantly stretched businesses financially. When COVID hit in 2020, these businesses were unable to demonstrate the required drop in year-to-year revenues to qualify for support programs such as the wage subsidy.

Was any consideration given to providing extended eligibility to businesses whose 2019 revenues were artificially low because of factors beyond their control?

This is for Mr. Sabia. It's an analysis question for the Department of Finance.

[The Chair, Conservative, Kelly Block]

Mr. Sabia, you are muted.

[Matthew Green, NDP, Hamilton Centre, ON]

Madam Chair, just to make sure I don't run out of time, can we make sure that's accounted for?