Public Accounts Committee on Nov. 17th, 2020

[John Ossowski]

Thank you for the question, but I don't believe I said we were overworked. There are definitely huge volumes in the e-commerce mode and we've recognized for some time that we need to put systems in place to allow us to manage this more effectively. We've been working with our international partners to set the global standards for this. We've been developing our own unique capabilities on this in terms of new technologies to understand the data that we will be getting from systems such as CARM and working with our private sector partners to understand what they are seeing from their proprietary system.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Blanchette-Joncas.

We will now go to our last questioner, Mr. Green, for six minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you very much, Madam Chair.

I'm going to do something unorthodox. I'm going to break the fourth wall of politics and give a shout-out to my staff, in particular Tyler, who has done a great job on my briefing for today.

Paragraph 3.68 says:

Between 2014 and 2018, the Canada Border Services Agency conducted three compliance exercises that randomly sampled shipments in the Courier Low Value Shipment Program. In fall 2016, for example, the Agency analyzed a selection of three couriers’ shipments to determine compliance with the program. It found that the value was inaccurate in 22% of sampled shipments declared as being valued between $20 and $2,500. Although the Agency identified this as a concern, it did not take action. In our opinion, this significant non-compliance rate should have triggered a broad review of the program. In March 2019, at the end of the audit, Agency officials presented us with a basic e-commerce strategy that had been in development since 2016. The purpose of the strategy was to address out-of-date business processes and system capabilities, which contributed to revenue loss. As of 27 March 2019, the Agency had not formally approved this strategy or developed any implementation or business plans.

Why has it taken so long to take action and to formally approve your basic e-commerce strategy, when you identified concerns at least six years ago?

[John Ossowski]

I'd say that there are a lot of moving parts here. One was where the global community is moving. As I mentioned, the WCO, or the World Customs Organization, has been a key player here in terms of international standards, and that is something we were waiting for to make sure that our strategy was aligned with the standards, and that is right down to.... These are the data elements that you're all agreeing to provide each other. That's critical for us in terms of knowing what is going to be mandated for countries to make sure that people are providing to each other the appropriate data analytics. That's an important component.

[Matthew Green, NDP, Hamilton Centre, ON]

If I may, on that particular point, why did you not put interim strategies in place while you waited for the formal approval internationally or for these standards to be brought forward? Six years seems like a long time not to implement your own plan.

[John Ossowski]

The plan was being developed, but we never really stopped to do any verification. Certainly when we noticed any kind of compliance issue, we would work with the courier company to make sure that their systems were attracting appropriate data properly.

As the Auditor General noticed, even the form that we were using was not helpful in terms of providing the clarity that was needed, and the new CARM system will do that. There are a lot of other enabling pieces that had to come together for this strategy to come into effect, and we're well on track for that to happen.

[Matthew Green, NDP, Hamilton Centre, ON]

Now that you're on track, would you agree that 22% of undervaluing the sample shipments is an unacceptable number?

[John Ossowski]

That is unacceptable.

[Matthew Green, NDP, Hamilton Centre, ON]

Paragraph 3.69 is on the accuracy of the provincial sales tax that has not been validated:

We found that the Canada Border Services Agency could not determine whether it had collected the right amount of provincial sales taxes on behalf of British Columbia, Manitoba, Quebec, and Saskatchewan, as the Agency did not validate those numbers.

Had these provinces previously raised concerns to CBSA?

[John Ossowski]

The only province that raised any kind of concern with this was the Province of Quebec, and it was on the postal program. In 2018, Revenu Québec actually went in to work with us on the postal program to review the transactions on a pilot basis. After four months, they found no significant leakage, and the pilot was terminated.

I can say we're in much better shape than we were in previous years, because of renewed focus. No other province has made any complaints about tax leakage on this.

[Matthew Green, NDP, Hamilton Centre, ON]

They may after this committee meeting if they're watching.

What recourse would the provinces have on lost revenue?

[John Ossowski]

Unfortunately, I think once the transaction has happened, it's happened. I think that it would be hard to go back historically and dig up some of these pieces, because we might not necessarily have all of the data. Certainly on a go-forward basis, the CARM system that we're talking about will be a game-changer in terms of a self-serving environment for the courier companies and other importers to look at their full accounts at a transaction level, and that will provide a lot more assurance to the provinces that we have this appropriately managed.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you for that.

This question is for the Auditor General.

[The Chair, Conservative, Kelly Block]

Mr. Green, I am so sorry. I believe your time is up.

[Matthew Green, NDP, Hamilton Centre, ON]

How much time was I allotted?

[The Chair, Conservative, Kelly Block]

It was six minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

I was at four minutes and 49 seconds. I have a timer in front of me.

I do recognize that it's a quarter to one and that we do have committee business. I'll respect that mandate in the agenda, Madam Chair, and hope that we'll have a chance to continue these conversations.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Green. Perhaps, going forward, we'll have to sync our timers better.

It being past 12:45, I would like to thank our witnesses for joining us today. I would also like to thank all of our members for the very good questions that were asked of our witnesses.

I will now seek the will of the committee to move to committee business.

I see no dissension to doing that. We do have a number of standard study budgets that we must approve going forward.

I should let our witnesses know that they are free to leave the meeting now as we move into committee business.

Thank you.

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

Madam Chair, I would like to speak.

[The Chair, Conservative, Kelly Block]

Yes, Mr. Blanchette-Joncas.

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

I would like to introduce a motion without notice. As I said earlier, I would like to ask for unanimous consent to continue today's study of the report on the taxation of e-commerce. I had several other questions, as I imagine my colleagues did as well.

In this motion, I ask the committee to continue the study of this subject on today's agenda for at least two further meetings.

I am open to discussing logistics with my colleagues. I'm not saying this will necessarily be at the next scheduled meeting. However, I would at least like to schedule more time with witnesses so we can ask questions and further explore the content of this exhaustive report.

[The Chair, Conservative, Kelly Block]

Thank you very much.

As determined earlier, you certainly don't need unanimous consent to introduce your motion, given that it is on the topic of study.

I will open it up to other members if they would like to make an intervention on the motion at this time.

Mr. Blois.

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

Thank you, Madam Chair.

I did see Mr. Longfield with his hand up as well, but I'll quickly weigh in.

I'm not opposed to the idea of having more discussion on this particular point, because it is a very intriguing and important topic, frankly.

As Mr. Longfield alluded to in his earlier remarks, we have a subcommittee for a reason. I believe that at subcommittee we've already approved a report of where we will be going in the days ahead, including some of the reports that we want to get to beyond this particular one. I think that should be taken into context, and we should perhaps be asking these questions and hammering out those details in subcommittee. I trust our collective colleagues who sit on that subcommittee to make the best judgment for the benefit of all of us on this committee. That's the way we should be moving forward, in my humble opinion.

I'll defer to Mr. Longfield in terms of any comments he may want to add.

[The Chair, Conservative, Kelly Block]

Thank you very much.

I do have a speakers list that our clerk put together for me.

Mr. Berthold.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Thank you very much, Madam Chair.

First, I agree that we should extend our study of the report. What we're lacking today is the update.

Furthermore, the Auditor General said at the outset that she would like the various departments and agencies that were audited to provide us with updates indicating where they stand on their action plans. In preparation for that next meeting, we should ask witnesses to update their figures on implementation of the Auditor General's recommendations. However, I believe just one meeting would be enough.

As far as I know, we haven't yet received the public accounts and they haven't yet been tabled. We plan to hold two meetings on public accounts next week. We could open up a window of at least one hour so we could finish asking our questions on that subject and ask the various departments to prepare their presentations on the current status of the application of recommendations and implementation of their action plans, which we have not really had the time to consider today.