Public Accounts Committee on June 8th, 2021

[Ted Gallivan]

At this point, it would be speculation if I were to answer, but we can look to other debts to get an idea: $1 billion in business debt, $1 billion in personal income tax debt and $1 billion in GST/HST debt. Then we can determine whether recovery is worthwhile.

The opportunity cost comes into play. We will take a look at the emergency programs alongside all the other programs we administer and make choices from there. We determine the opportunity cost on the basis of the resources required, since we already have billions of dollars in accounts receivable annually.

Come the fall, the real challenge for us will be making choices.

[The Chair, Conservative, Kelly Block]

Thank you very much.

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

Thank you.

Thank you, Madam Chair.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Fergus.

We will now go to our two-and-a-half-minute round—a very short round—starting with Ms. Vignola for two and a half minutes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

I noticed in one of the documents you provided, somewhere between pages 37 and 44, that the validation measures were developed with a view to balancing integrity and timely payments. However, the information on the number of available employees and the percentage of claims submitted was redacted.

Why was that percentage redacted? After all, it it is possible to calculate the number using the information on page 1 of the documents you provided.

Why were the figures related to businesses also redacted? There again, it is possible to calculate them using the information on page 1 or the Auditor General's report.

[Maxime Guénette]

Madam Chair, I'm not sure whether the member is referring to Department of Finance documents or CRA documents.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

The first document in the electronic binder. I believe it's from the Department of Finance. It's 52 pages long.

I can come back to it afterwards.

[The Chair, Conservative, Kelly Block]

Can any witness identify who would be responsible for the document that Ms. Vignola has highlighted?

[Maxime Guénette]

Do you mind repeating which page it was?

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

It's somewhere between pages 37 and 44, in the first chunk of documents. Give me a few moments, and I'll tell you the exact page.

[Ted Gallivan]

Madam Chair, perhaps I can try to answer the member's question.

The coverage level is something we worry about at the CRA. If you look at our annual report to Parliament and do the calculation, you see that our coverage level for small- and medium-sized businesses is quite low, below 5%. However, we don't like providing that calculation because we don't want people to know that our coverage level is very low.

Given how low the audit coverage level is, the information is redacted so that people do not realize that the likelihood of them being audited is extremely low. We don't want a situation where they decide to take a chance, on the basis of that information, and not file a return or adopt an aggressive approach.

Even though it is possible to figure out some rates, we worry that disclosing the figures might encourage people not to file.

[The Chair, Conservative, Kelly Block]

Thank you very much.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Fine, but anyone with any cunning at all is going to figure it out.

Thank you.

[The Chair, Conservative, Kelly Block]

Ms. Vignola, I did stop the clock and started it again.

I will now move on to Mr. Green for two and a half minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you.

On page 40 of the datasets that have been disclosed to us, there's a section on compliance risks and strategies, with a subheading “Deterrence”, which says that “messages from the Minister of Finance stated that there would be severe penalties for those who take advantage of the CEWS and that the CRA would be enabled/equipped to identify and address cases of abuse.”

Madam Chair, through you to Mr. Sabia, would he not agree that companies that received the wage subsidy and then went out to pay astronomical bonuses and dividends to their CEOs and shareholders were taking advantage of the CEWS? What can be done to address these cases of abuse?

[Michael Sabia]

Madam Chair, I will turn that question to my colleague Andrew Marsland.

[Andrew Marsland]

In response to the question, I think the reference is to the penalty that was included in the original legislation. There was a penalty provided under the CEWS for businesses that artificially manipulated their revenues to qualify for a subsidy.

As—

[Matthew Green, NDP, Hamilton Centre, ON]

From the point of clarity, if I'm to understand that correctly, companies that were sitting on significant holdings in cash and liquidity and then paid dividends were qualified and perhaps would not be considered as taking advantage of this program.

Just to cut to the chase, I reference the recommendation at paragraph 7.35: “The Department of Finance...should complete and publish an economic evaluation” of the wage subsidy program.

Madam Chair, through you to Mr. Sabia, given my comments and given the attention on companies such as Air Canada, Imperial Oil and others, as part of the risks and evaluation of the program when it's done to date, will the evaluation include the way in which companies took taxpayer dollars meant for workers and siphoned that money off to shareholders?

[Michael Sabia]

Madam Chair, through you, we will undertake a thorough analysis of the program, particularly against its fundamental objective, as I've said before, of maintaining the working relationship, the employment relationship, between an individual and their employer, which continues to be the objective of this program.

[Matthew Green, NDP, Hamilton Centre, ON]

Mr. Sabia, will you be dealing with CEO bonuses and dividends that were paid out on the CEWS, yes or no?

[Michael Sabia]

Madam Chair, through you, I think we'll undertake a thorough analysis of the program in all its aspects.

[The Chair, Conservative, Kelly Block]

Thank you very much.

We will now go to our five-minute rounds, starting with Mr. Lawrence.

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

My question is to Mr. Gallivan, and of course Mr. Hamilton is welcome to comment as well.

I want to build on what my esteemed colleague Mr. Fergus said when he was asking about the 5% default rate, because I was struck by something, and I thank him for his excellent questioning.

Is that 5% default rate based on just everyone, from the highest economic standpoint to the lowest, and not reflective of there being a pandemic? I have a suspicion that this number will be maybe double or even triple that, due to the pandemic and due to these benefits oftentimes being paid to some of the people dealing with the largest economic challenges.

Can you comment on that? Maybe you're going to tell me I'm way off, but I suspect that I'll be validated.

[Ted Gallivan]

I would say our colleagues were developing that estimate for a purpose, which was dialing in the level of risk and the level of effort that would be required. It would be speculation on my part, but I would speculate that they would have stratified to at least a T1 population and made T2 corporate income tax and sales tax different programs.

At the very least, it would have been customized to individual taxpayers and the historic rate around individual taxpayers, but it probably would have been too soon for us to account for the economic consequences of the pandemic, which are playing out in front of us right now.

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

Perfect. Thank you very much.

On that as well, I'll tell you—and this is just anecdotal, and anecdotal evidence is never as strong as empirical—I've had a number of people come into my constituency office who didn't hit that $5,000 threshold. They got caught up in the CERB thing. To be candid, I don't think your department did a very good job of communicating who could and who didn't. I don't say that from my perspective; that's my constituent speaking.

He didn't make the $5,000. He got caught up. He applied and he got it for a year and more. This particular individual I'm talking about hasn't ever made over $5,000 in his life, and I don't see any way that he's ever going to pay it back. Quite frankly, the compassionate human being in me tells me that I don't really want to be forcing him to pay it back.

Can you comment on individuals like that and how CRA will treat people like that?