Public Accounts Committee on May 4th, 2021

[The Chair, Conservative, Kelly Block]

I call this meeting to order.

Welcome to meeting number 29 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 4—Canada Child Benefit—Canada Revenue Agency”, of the 2021 reports 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, and therefore members may be attending in person in the room or remotely by using the Zoom application.

I have a few reminders for you.

Interpretation services are available for this meeting. You have the choice at the bottom of your screen of “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.

Should any technical challenges arise, please advise the chair. Please note that we may need to suspend for a few minutes, as we want to ensure that all members are able to participate fully.

Now I'd like to welcome the witnesses who have joined us today.

From the Office of the Auditor General are Martin Dompierre, Assistant Auditor General; Philippe Le Goff, principal; and Lucie Després, director. From the Canada Revenue Agency, we have Bob Hamilton, commissioner of revenue and chief executive officer; Marc Lemieux, assistant commissioner, collections and verification branch; Frank Vermaeten, assistant commissioner, assessment, benefit and service branch; and Heather Daniels, director general, benefit programs directorate, assessment, benefit and service branch.

With that, welcome, all.

I will turn the floor over to Mr. Dompierre for five minutes.

[Martin Dompierre, Assistant Auditor General, Office of the Auditor General]

Madam Chair, thank you for this opportunity to discuss our report on the Canada child benefit, which was tabled in Parliament on February 25, 2021.

Joining me today are Philippe Le Goff, who was the principal responsible for the audit, and Lucie Després, who led the audit team.

The Canada child benefit provides a non-taxable monthly payment to eligible families, based on their net family income. In the 2019-2020 fiscal year, the program allocated $24.5 billion to parents in Canada who were responsible for 5.9 million children under the age of 18. The Canada child benefit is a key public policy tool for reducing inequalities and poverty among low-income families.

Overall, we found that the Canada Revenue Agency ensured that the payments to millions of eligible families were accurate and timely. The agency had effective systems and processes to assess the eligibility of recipients.

However, we found opportunities to improve the program's efficiency and prevent its misuse. For example, requiring proof of birth at the time of application for children under the age of 11 months who were born in Canada would help agency staff verify a family's eligibility.

We also found that the agency sometimes lacked the latest information when it determined applicants' eligibility for the program and when it calculated payments. For example, in some of the samples we analyzed, we found that the agency was not always informed of changes, such as when a recipient left Canada. Payments continued until the agency received updated account information or until a parent ceased filing a Canadian income tax return.

Our audit also examined the one-time payment made to support more families at the beginning of the pandemic in May 2020. We found that the modified formula extended the benefit to an additional 265,000 families. The one-time payments were found to be accurate.

Finally, we found that the female presumption concept presented a challenge for the administration of the program, especially because of the diversity of families in Canada today. According to the program's conditions, benefit payments go to the parent who is the primary caregiver. By law, the primary caregiver is presumed to be the female parent. We found that in some cases the parent who in reality had primary responsibility for the care of the child did not receive the payment initially. In our view, the administration of the program would gain in efficiency by enhancing its procedures and communications to mitigate the confusion and sensitivities caused by this concept.

The Canada Revenue Agency agreed with both of our recommendations.

Madam Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.

Thank you for your attention.

[The Chair, Conservative, Kelly Block]

Thank you very much.

Now we will go to Mr. Hamilton for five minutes.

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

Thank you, Madam Chair.

I'm pleased to have the opportunity to appear before you today to talk about the Canada Revenue Agency's action plan on “Report 4—Canada Child Benefit—Canada Revenue Agency” of the 2021 reports of the Auditor General of Canada.

I'm accompanied by three colleagues, whom you've already introduced.

In report 4, the Auditor General of Canada noted that the CRA managed the Canada child benefit program in a way that ensured accurate and timely payments to millions of eligible families.

The Office of the Auditor General, or the OAG, also found that the CRA could improve the administration of the Canada child benefit, or CCB, program by better managing the information used to assess eligibility for the program.

Within that context, the Auditor General of Canada made two recommendations to the CRA, which we accepted.

First, the AG made recommendations to improve the administration of the CCB program. They included updating the list of documents used to assess eligibility, requiring proof of birth for all applicants and greater collaboration with other government departments to ensure eligibility of applicants.

Second, the Auditor General recommended that although the female presumption concept is a legislative requirement under the Income Tax Act, the CRA should enhance its procedures and communications to mitigate any confusion associated with this concept.

The CRA has agreed with both recommendations, and has advanced a detailed action plan—which has been shared with the committee—that includes associated timelines in order to implement the recommendations.

I am pleased to report that the CRA is acting on both recommendations.

With respect to the first recommendation, the CRA conducted a thorough review of its online documents, training materials and other procedures to ensure that Canadians are better informed about the documents required to apply for this benefit, and we will require all training materials to be updated by the end of June of this year.

Additionally, by the end of July of next year, in order to conduct a comprehensive review and meet annual spring publishing deadlines, the CRA will ensure that two key documents, the RC66 Canada child benefits application and the program and eligibility guide called “Form T4114, Canada child benefit and related provincial and territorial programs”, as well as Canada.ca web pages, are updated to reflect these changes.

The CRA will conduct a review to be completed by the end of December of this year to determine the benefits and risks of the recommendation to provide proof of birth for all CCB applications.

Finally, by the end of July 2021, the CRA will consult with Immigration, Refugees and Citizenship Canada in order to determine the feasibility of receiving citizen information of CCB applicants.

With respect to the second recommendation, by the end of December 2021, the CRA will complete a review of its materials and update the aforementioned two key documents, as well as various canada.ca web pages in order to ensure applicants understand who the CRA considers to be the primary caregiver of a child, what is required for an applicant to prove they are the primary caregiver, and that only one payment per household can be issued.

In closing, I just want to highlight the importance of the CCB. In the 2019-20 fiscal year, as Mr. Dompierre mentioned, this important program allocated $24.5 billion to 3.3 million families in Canada and 5.9 million children.

Thank you, Madam Chair. I'm now happy to answer any questions the committee has.

[The Chair, Conservative, Kelly Block]

Thank you very much. I appreciate both of your statements.

We will now move into our first round of questioning, which is a six-minute round.

We'll start with Mr. Tochor for six minutes.

[Corey Tochor, Conservative, Saskatoon—University, SK]

Thank you, Madam Chair.

Thank you to our witnesses today. Thank you for doing the important work during these trying times during a pandemic to make sure the taxpayers' dollars are spent wisely. Any improvements on the system are much appreciated by everyone.

First off, you touched on the fact that 265,000 new families were receiving payments with the top-up. I have a question along those lines. It's a two-part question. I'm not sure who to ask first.

Has there been increased usage because people's incomes have been down due to COVID-19? Is that the reason there have been over a quarter million new families receiving benefits?

[Martin Dompierre]

I could go, Madam Chair.

Is the chair there, please?

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

We seem to have lost the chair. Perhaps the vice-chair, Mr. Longfield, could assist for the moment.

[Lloyd Longfield, Liberal, Guelph, ON]

I will assist.

Mr. Tochor, was that was directed to Mr. Hamilton?

[Corey Tochor, Conservative, Saskatoon—University, SK]

It's for whoever would like to answer it.

I would like my full six minutes added.

[Bob Hamilton]

I'm happy to take a stab at that, although Mr. Dompierre indicated that he wanted to also, so he may come in after me.

Yes, there was a special top-up to the CCB as a result of the pandemic. I think the first part of your question, and maybe the second part as well, was why we saw an increase in the number of families that were eligible for it.

That is really an arithmetic issue. The amount was raised $300, but the income thresholds at which it is clawed back did not change. As a result, as the maximum amount was ground down to reflect higher incomes, there was a group of 264,000 people who normally wouldn't have received the CCB but did receive it because of the enhanced value.

I'm not aware of any statistics relating to the incomes during the pandemic and whether that caused any effect. Perhaps one of my colleagues is aware, but I would have to get back to the committee on that one.

[Corey Tochor, Conservative, Saskatoon—University, SK]

I have a follow-up question. What is the maximum that one family could earn because of bringing down that ceiling? What would be the maximum that a family would earn before receiving that payment?

[Bob Hamilton]

Maybe I will turn it to my colleague, Mr. Vermaeten, to give you the specifics of what it was as a result of that enhanced level. I don't have that number at my fingertips.

[Frank Vermaeten, Assistant Commissioner, Assessment, Benefit and Service Branch, Canada Revenue Agency]

I'm sorry; I don't have that statistic at my fingertips. People with quite a bit higher income could get a small amount of the CCB as a result of this.

With respect to your question on whether the lower incomes of COVID affect CCB entitlements, the answer is generally no. Currently the amounts of CCB that people are getting are based on their 2019 incomes. Starting in July, it's going to be based on their 2020 income. It will be in 2020, when we have processed those returns and that flows into CCB payments, that people will see the higher CCB amounts.

[Corey Tochor, Conservative, Saskatoon—University, SK]

I appreciate that. Perhaps you could get back to me on what the ceiling was. I believe it was upwards of $300,000 that people could be receiving a payment, but if you could confirm the maximum amount they could earn and still qualify for the program, I'd much appreciate it.

On the train of thought with regard to the increase in people receiving payments, you made reference to the anti-fraudulence efforts you were studying there. Do we know how many people who applied for benefits were rejected, either as a percentage or the total number of families?

[Bob Hamilton]

As a general comment, we're still doing our analysis of how much people might have received—this would apply to all benefits—that they weren't eligible for, whether because of fraud or something else. We will only really have a good estimate of that once we get all of the 2020 income tax data in. The filing deadline has just passed. That process will be completed. At this stage, we don't have estimates of that amount.

With respect to the CCB, the subject of this meeting, again, I'm not aware that there would be a very big number of people who might have received payments who were ineligible for them, because it is an existing program. It's not a new program.

We will have more information on ineligible payments as we get through processing the 2020 tax returns.

[Corey Tochor, Conservative, Saskatoon—University, SK]

If you could get back to me on that number, and also on the efforts to collect on the fraudulent claims of people who have been caught receiving payments, that would be much appreciated.

Is there any common theme in the fraudulent cases, as in geographically, or is there any analysis done on typical behaviours that increase fraud with CCB?

[The Chair, Conservative, Kelly Block]

Please make it a very short answer.

[Bob Hamilton]

If we're talking about the CCB program, I'm not aware of any analysis of common themes, etc., but I will confirm that with one of my colleagues. If possible, I suppose we could come back to the committee afterwards with numbers. For this program, I would be surprised if it was a very big number.

[Corey Tochor, Conservative, Saskatoon—University, SK]

Thank you very much, guys.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Tochor and Mr. Hamilton.

We will now go to Ms. Yip for six minutes.

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

Good morning. It's great to see everyone here to discuss a more positive report that found the CCB eligibility was well managed and that, more importantly, benefit payments were accurate and timely. Thank you.

My first question is for you, Mr. Dompierre.

The Auditor General found that the CRA has effective systems and processes in place to assess the eligibility of Canada child benefit recipients. Could you please elaborate on the nature of these processes and how they make the CCB program more effective?

[Martin Dompierre]

As indicated, the CRA has effective systems and processes to assess eligibility. When we, for example, visited the tax centres, we saw first-level agents in action who were collecting the information and entering the information into the system in order to ensure that the applications were meeting the eligibility criteria. We also saw, as part of the sample we reviewed, that the agency had also a process in place to make sure that the amount of the payments made was meeting the requirement in the context of the net income tax and the revenue of the family.

We saw a number of controls put in place by the agency in order to ensure that eligibility was met and that payments were made in an accurate way. We did see some opportunities to improve some of the process to make the program better and to ensure that the program integrity was respected.

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

You mentioned that some of the agents took more liberty to verify information, which led to better authentication. Do we have any tracking to see how much improvement resulted from that?

[Martin Dompierre]

As you indicated, when we visited the tax centres where these benefits were being administered, we saw that in some cases agents took the initiative to further validate the information that was being provided as part of the application. This was not done systematically for all of the benefits that were administered. We did not see any specific issues in that step. We felt that this additional step was definitely adding to the process and supporting the agents as they were doing their review of the applications.