Public Accounts Committee on Dec. 2nd, 2024

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you, all, for being here. It's been a very interesting morning.

I'm going to follow up on some of the things that Ms. Sinclair-Desgagné was talking about with regard to the CEBA loan program.

It seems, first of all, that we have an unusual situation where the federal government handed this off to a Crown corporation to implement instead of some federal department, which could have contracted this out directly. It seems that there would have been more oversight if that had been the case.

Then EDC said it didn't have the capacity either, so it contracted out to Accenture. Then it asked Accenture to write the contract, basically, because we apparently didn't have time to write a proper contract. It seems to be a cascading series of responsibility being handing off. I think that's been covered, and will be covered in the future as well.

We have over $8 billion that still has to be recovered, or is outstanding, I guess you could say. I think you mentioned that $100 million of that is written off completely, and there's something like $1 billion that is very questionable.

I remember my time as the small business critic, when I'd be talking to the Canadian Federation of Independent Business. It wanted a one-year extension for the CEBA loan repayment. There was a one-year extension. Then it asked for a second one because companies still were recovering. That wasn't granted. However, even with that extension, you say that there was no clear plan for how this money was going to be recovered.

It seems now that one of the real problems with Accenture is that, with the proprietary information and with the banks dealing with most of these loans, it's very difficult for the federal government to figure out how those loans are doing, how many are coming in and what the whole situation is. I just want to see if you could expand on that.

[Karen Hogan]

I think your main question focuses on the long-term recovery and continued management of the loans.

Again, I think this is where this program is unique compared with other COVID programs. At the beginning, everyone knew this was temporary support. It is a loan program, which meant that repayments were needed.

The delay in decisions by the Department of Finance as to who would be managing that ongoing maintenance and recovery of potential defaulted loans resulted in a continued reliance by EDC on Accenture. They decided not to do a competitive process, when that was their intention in some cases.

I would have expected that because a Crown that does not normally manage a large number of small loans—EDC is about supporting exports and manages a small number of large loans—had indicated they were missing the capacity, skills and tools missing to do this, there would have been better oversight by federal departments, namely, that the Department of Finance and Global Affairs would have provided more guidance.

In fact, Export Development Canada asked for oversight committees. They were put into place, but four years later, we see that this accountability void resulted in confusion as to who was supposed to be doing what. Finance thought it was oversight. Global Affairs thought it was just advice. In the end, someone had to be responsible for collections.

You're right: A lot of information rests either with financial institutions and needs to be brought back into the federal public service.... That's why I'm concerned that the most recent contracts are missing some of that. This is known, and it's time to plan now to avoid further reliance on a vendor that, till now...the government is bound to Accenture until about 2028.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

How much time do I have? Two minutes? Okay.

[The Chair, Conservative, John Williamson]

It's more like 90 seconds. Pardon me.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I'm going to switch to the report on seniors. Basically, the main take-away from this report is that the government doesn't seem to know how much and what kind of support seniors need, let alone if we are meeting that. We have a situation, for instance, where the OAS, which is tied to the cost of living, went up when inflation went up, and it went up so much that the GIS payments were clawed back. The poorest seniors were actually getting less. It just made no sense in that regard.

I'm wondering if you could comment on those kinds of situations and maybe expand on the concern that you still don't know whether seniors are facing the same cost of living increases as the rest of Canadians, and whether we should be focusing more on that and developing programs that make sure that the poorest of seniors can get by.

[Karen Hogan]

The federal government made a commitment to better understand the needs of seniors when they created a new minister for seniors.

What we found was that Employment and Social Development Canada, which supports that minister, isn't using information that's out there to better understand the needs of seniors to determine whether federal programs are filling the gap or if they need to be adjusted.

We did look at one of the significant programs that ESDC administers, which is the old age security program, and you're right that there are parts to it. There are the basic old age security payment and the guaranteed income supplement that sits above that for even lower-income seniors.

While we see a lot of analysis about the guaranteed income supplement—we see it being adjusted during the pandemic to reflect that COVID relief might have been given to some seniors—there's very little analysis of the basic old age security payment that most seniors are receiving.

An important factor is that it's adjusted every year for inflation based on the consumer price index, but the analysis done by the government was very weak about whether or not seniors are experiencing a different rate of inflation than what's reflected in the consumer price index, because it represents the average household. We think a better analysis needs to be done to understand if this income support program, which is one of the largest programs of the federal government, is actually meeting the financial needs of seniors.

[The Chair, Conservative, John Williamson]

Thank you very much. That is the time.

We are beginning our second round, which will consist of six members for various times, although members might choose to split their time.

Mr. Berthold, you may begin. You have five minutes.

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

Thank you very much, Mr. Chair.

Ms. Hogan, I'm going to proceed quickly, because I have a lot of questions to ask.

Which department should have been monitoring Export Development Canada?

[Karen Hogan]

That's not an easy question to answer.

Two departments are involved on the policy side. There is the Department of Finance, but Global Affairs Canada is the department responsible for Export Development Canada.

Those are the two departments that should have agreed on their respective responsibilities.

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

So you're telling me that Minister Mélanie Joly of Global Affairs Canada and Minister Chrystia Freeland of the Department of Finance are both washing their hands of responsibility for overseeing Export Development Canada, or EDC.

Yet, in your report, you made some serious accusations about EDC, including that it was a conflict of interest that the Crown corporation had not managed in the last contract it gave to Accenture.

Isn't this a worrying recurring situation? We saw, in the case of Sustainable Development Technology Canada's green fund, or SDTC, that the government had a tendency to give agencies billions of dollars to manage in order, ultimately, to avoid being responsible.

We see it again, in this case. The two departments are washing their hands of the matter and deferring to Export Development Canada, which does not acknowledge its share of responsibility.

Don't you find it worrisome for taxpayers to see departments like Ms. Joly's and Ms. Freeland's washing their hands of responsibility in such cases?

[Karen Hogan]

I want to clarify one thing.

I don't believe it's Minister Joly who is responsible for Global Affairs Canada in this case. I'll ask someone to find the minister in question for your committee.

In fact, this is one of the problems that arises when a program is given to a Crown corporation. The Crown corporation should be independent of the government. Because of this, certainly better oversight was required by both departments.

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

You admit that it's still a lack of accountability, when money is entrusted.... A lot of money, close to $3.5 billion, was given to ineligible companies. A $313 million contract was awarded to a company, without a competitive bidding process.

I'm going to ask you one last question, Ms. Hogan, because I want to share my time with my colleague Ms. Roberts.

Is it true that a large portion of this $313 million was paid to workers outside Canada?

[Karen Hogan]

You're talking about...

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

I'm talking about Accenture.

[Karen Hogan]

All right.

There are several contracts. Export Development Canada has confirmed that the workers' call centre is in Canada. Sometimes information is stored outside of Canada, but it's call information, not company information.

As for the more recent contract that was submitted to develop a software system, I believe it's individuals outside of Canada who are designing the system, but it doesn't contain any information. It's just software design.

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

Thank you, Ms. Hogan.

I yield the rest of my speaking time to my colleague.

[The Chair, Conservative, John Williamson]

Mrs. Roberts, you have about two minutes. The floor is yours.

[Anna Roberts, Conservative, King—Vaughan, ON]

Thank you very much.

My question is on your report number 11 and the New Horizons for Seniors program to support seniors, which was brought in under the previous Harper government.

Can you tell me how many seniors actually received support?

[Karen Hogan]

I cannot tell you that, because Employment and Social Development Canada could not tell me either.

What they relied on was information included in the applications. Because this is a grant program, the heavy lifting is done at the front end where you determine eligibility. Eligibility was based on the number of seniors who were expected to benefit from the grants being received. The reality could be different for so many reasons. However, that information wasn't gathered to be able to demonstrate....

[Anna Roberts, Conservative, King—Vaughan, ON]

I'm drawn to the example of finding number 11.51 in the report regarding a $23,000 door that was never installed, and the funds were never requested back.

Based on this information, do you feel this program has left itself open to fraud?

[Karen Hogan]

I think the paragraph you're highlighting is an example of our seeing poor management of contract files.

The report received back from the grant recipient indicated that the door had not yet been installed. We raised that with Employment and Social Development Canada, saying, “Why would you close the file? Why wouldn't you follow up?” It's mismanagement of files. I would expect they would do better.

We had them follow up. I think they recognize that they're going above and beyond in the grant program by asking for follow-up. However, when you receive information that makes you question the use of funds, you need to follow up. I expect they will solidify and beef up some of their follow-up.

[Anna Roberts, Conservative, King—Vaughan, ON]

None of the data collected to assess the delivery of funds through the New Horizons for Seniors program was used to ensure accountability that funds were used for the purpose of benefiting seniors. Your recommendations are noted in your report.

What mechanisms are in place to ensure that accountability is maintained so that we avoid the fraud that's been going on?

[Karen Hogan]

I think that's a difficult one, because it is a grant program. Again, all the heavy lifting is done at the front end, making sure that recipients have provided an eligible project and are eligible.

I do have to give kudos to ESDC for asking for reports back. They wanted to build a global picture about New Horizons to see whether it was supporting seniors. They've just fallen short on collecting the right information to demonstrate that.

[Anna Roberts, Conservative, King—Vaughan, ON]

But this—

[The Chair, Conservative, John Williamson]

Ms. Roberts, that is the time, I'm afraid. I apologize for that, but I have to keep things moving along here.

Ms. Yip, you have the floor, please, for five minutes.