Public Accounts Committee on April 22nd, 2021

[Karen Hogan]

My office has access to information included in documents that are protected by cabinet secrecy. As a result, we had access to all those documents during the Canada emergency wage subsidy audit.

We're limited with regard to the details that we can include in the report to provide you with information on all the issues considered. However, based on the information we saw, the analysis was sound and complete, if that can reassure you.

Then we made a recommendation that the Department of Finance publish an economic analysis of the wage subsidy to allow informed debate on the matter in the House and Parliament.

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

I understand, Ms. Hogan. You saw the figures. However, I think the members of the committee and Parliament would like to see those figures as well. You're an officer of Parliament, not of the government. I understand that very clearly. Whatever the case may be, how can you explain why you have access to information that isn't available to parliamentarians, who are elected by Canadians?

[Karen Hogan]

The only justification I can offer is that I'm required to comply with the government directive on compliance with the level of protection granted to the information, and it's the author of that information who decides. In this instance, the information appeared in secret documents and documents under cabinet secrecy. You should ask the Department of Finance why it so designated those documents.

I can only follow that directive and abide by the level of protection granted that information.

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

Ms. Hogan, I have full confidence in your integrity, probity and ability. My intention isn't to put you on the spot today. However, I'm astonished at the finance department's lack of transparency. I'd even say it raises serious doubt in my mind.

For your part, do you have full moral assurance that you saw all the figures you asked to see? And if I may say so, do you have any reservations or reasons to believe that the department might have tried to withhold certain information?

[Karen Hogan]

I have to admit that we're never entirely assured of that in any of our audits.

However, senior finance department officials assured us and provided declarations to the effect that we had received all necessary documents and information. That's a measure to which all audited entities must submit so that we auditors can provide you with accurate information. Senior officials thus undertake to provide us with all the information we need to determine our findings.

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

Thank you, Ms. Hogan.

I'd like to understand something. You state in the conclusion to your report that the Department of Finance performed a partial analysis. As you mentioned a few moments ago, you recommend that the finance department conduct a more thorough analysis of the wage subsidy. Although that measure has been beneficial, it's still a more than $100 billion program. In your view, the controls should be reviewed.

Did you note anything in particular in that regard? Did anyone receive the wage subsidy without meeting program criteria?

[Karen Hogan]

We noted that the finance department performed a partial analysis at the start of the program because it had been developed so quickly but that the analysis after the public consultations was sound and complete.

As for eligibility, I think the situation is the same for all programs. We can all agree that some people probably received payments by mistake and that others made inaccurate or false statements and shouldn't have received payments. That's why the comprehensive audits are very important and why my office will be auditing them. I think that's essential for a program that was introduced quickly to meet the immediate needs of businesses and Canadians.

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

In other words, Ms. Hogan, your office will be taking another look at the program once it has the information. For the moment, you're asking the finance department to conduct a full analysis of the program to ensure it was effective. Will that be satisfactory? You'll have all the information during your next audit, and you'll be able to see whether unjustified payments were made.

[The Chair, Conservative, Kelly Block]

Thank you. I'm so sorry, but we are over time, unless you have a very quick answer for Mr. Blanchette-Joncas.

[Karen Hogan]

I might just say that we'll be focusing on the comprehensive audits. I encourage the department to publish a complete analysis so Parliament can conduct a proper debate on the subject.

[The Chair, Conservative, Kelly Block]

Thank you very much.

We will now go to Mr. Green for six minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you.

I deeply appreciate the interventions of my friend Maxime from the Bloc, which laid out all the information that was withheld and the secrecy in the way this analysis was made. I'll go back just to reiterate for the people who are tuning in.

You have stated in paragraph 7.8 that the Department of Finance performed a partial analysis of the initial design of the subsidy program, but then you said it later provided a sound and complete analysis to inform the adjustments to the subsidy. We heard Mr. Sabia talk about the rapid way in which they had to respond, yet you've laid out that you were unable to provide Parliament with details of these analyses because they were in secret, and cabinet documents must be kept in strict confidence.

The challenge that we have before us as a committee undertaking this audit is that we have to have, I think, reasonable access to information to know exactly what it is that is before us.

I'm going to frame just a little bit further that in paragraph 7.9 you stated through the Auditor General that there were prepayment controls that were implemented to ensure that payments were appropriate. You used an example that the agency did not have up-to-date earnings or tax data or sub-annual data or any kind of starting points throughout the year and that you did not have all the information you needed to validate the reasonableness of the applications before payments were issued.

I'm going to put this question through you, Madam Chair, to the Department of Finance, to Mr. Sabia, whom I missed in the last session of our audit on the CERB. I brought up some important questions in relation to the push-and-pull economics of what we were providing to people to stay home safely versus what the labour market demanded.

Did your department have discussions about mandating that any businesses receiving the wage subsidy would not be allowed to engage in stock buybacks, pay dividends or pay CEO wage bonuses?

I'm not asking you to reveal any kind of secret cabinet stuff. I just want to know if you had discussions about that in your analysis. You don't even have to give me the results. I just want to know, Mr. Sabia, whether you considered it.

[Michael Sabia]

Madam Chair, I'm going to give Mr. Green a two-part answer. I'm going to make a couple of comments and then I'm going to ask my colleague, Andrew Marsland—

[Matthew Green, NDP, Hamilton Centre, ON]

Sir, my time is ticking. I really just need you to answer the question I've asked.

[Michael Sabia]

I would say that a focus of this whole program has been maximizing the scope and reach of the program. Therefore, there was at the time, I think, very much a focus on keeping this as simple and broad as possible, because the objective was to help as many Canadians as possible, which I think the program is succeeding in doing, and to help as many Canadian businesses, particularly smaller businesses, and particularly in some heavily—

[Matthew Green, NDP, Hamilton Centre, ON]

Through you, Madam Chair, sir, those are talking points. I need to know whether you had discussions about stock buybacks, dividends and CEO bonuses. If so, did you make a recommendation to cabinet? You don't have to tell me what the recommendation was, but I need to give you an example. This program provided $120 million in public money to Imperial Oil and then let them pay out $324 million in dividends to their rich shareholders. I need to know, in terms of your reasonableness for the applications, whether you provided cabinet with recommendations on the dividends and the bonuses.

[Michael Sabia]

Mr. Green, you know very well that this kind of work, those kinds of discussions and that advice to ministers and to an elected government.... The way our system works is that to keep that advice robust and open, those are cabinet confidences. I think you understand very well—

[Matthew Green, NDP, Hamilton Centre, ON]

Through you, Madam Chair, how do you use the terms “robust” and “open”? We're in the public accounts committee dealing with an audit and we don't have basic information on the analysis by the government on how this came to be.

I'll give you an example. We're talking about Main Street versus Bay Street here. I have a whole community of businesses on Locke Street in my community whose 2019 revenues were dramatically reduced, and due to all these infrastructure programs they can't adequately show their losses and they didn't qualify for anything. One in five businesses in my city are not renewing their business licence. That is the reality and the of the small businesses that are trying to weather this storm.

I need to know whether the Department of Finance had, in its analysis, any thought around the way in which the major corporations of this country absolutely, in my opinion, bilked taxpayers on this program.

Once again, was a recommendation made that included an analysis in keeping with.... You don't have to tell me what the recommendation was, but did your department at least consider that corporations like Imperial Oil could take $120 million and pay out $300 million-plus dollars in dividends?

[Michael Sabia]

Through you, Madam Chair, Mr. Green, again, you understand the rules under which our system works and the provision of advice. Therefore, to respect those rules and indeed the law with respect to confidences of the Queen's Privy Council, those are not details we can enter into. If you have an issue with that—which you seem to, and which is fair on your part—then I think asking us that question is obviously....

We always operate in a way that respects those rules and respects the law. If that law or those rules need to change, then that's an issue, I think, sir, for you to take up with the government of the day.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Sabia. We are well over time.

I will now go into our second round of questioning, starting with Mr. Lawrence for five minutes.

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

Thank you very much.

I'd like to continue my discussion with you, Mr. Hamilton. I want to get down to the details of the analysis that was done to not collect the social insurance number. I assume an analysis was done, and I'd ask you to share that with the committee if that's possible. What would have been the cost and the time required to include the social insurance number in the gathering of information for the CEWS?

[Bob Hamilton]

Madam Chair, I'll take an initial run at that. I don't have the cost estimate in front of me.

It is fair to say that as we delivered the program, as I said earlier, there was a balance between how we could get the money out more quickly versus getting as much information as we possibly could for that initial verification. To ask employers to be able to provide the SIN was determined by us to disturb that equilibrium. It would have taken too long to get it out.

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

I appreciate that, Mr. Hamilton. I understand. We've had this conversation before, so I do appreciate that you're trying to answer the question, but I'm looking for the numbers for the sake of time. Would you commit to providing our committee with the analysis that was undertaken to not gather the SIN?

[Bob Hamilton]

Let me just finish the response I had, which is to emphasize again that just because we don't collect information up front doesn't mean we can never go back and find out whether something inappropriate happened. We have that back end. I wanted to make that point.

I'll give my colleagues an opportunity if they have information they'd like to provide on the spot, but otherwise we'd be happy to provide you with what we can in writing after this.

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

Yes, thank you, Mr. Hamilton. I'm not trying to be difficult here. My purpose behind these questions, just up front, is to have an analysis done: Was this the right decision or was this the wrong decision?

I realize the time constraints that you were under, but my question on how much it would have cost to get the SIN numbers and how much time delay there would have been, versus what the auditing costs will be now. What is the expense? You've mentioned it a bit. What specifically will be the cost? Was having the SIN part of the reason we went to a now abandoned effort to have some very expensive audits for our business owners in September?

I really just want to know the financials and the time so that we can make a decision going forward on whether this was a good decision. Are you currently using and gathering the social insurance numbers?