Public Accounts Committee on Dec. 2nd, 2024

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

Thank you.

Thank you for coming here and for your hard work on delivering these reports. Of course, that's extended to your entire team.

My first question is with regard to CEBA. I note here that the audit seeks to determine whether Finance Canada, Global Affairs Canada, Export Development Canada and the CRA are involved with respect to their roles and responsibilities. It doesn't seem immediately obvious to me why Global Affairs Canada and Export Development Canada are involved. What is their role? What's their importance with respect to CEBA?

[Karen Hogan]

The Canada emergency business account was a COVID program that the government asked Export Development Canada, a Crown corporation, to deliver on its behalf. That was done because Export Development Canada manages the Canada Account on behalf of the Government of Canada. It was a way to quickly get funds from the government to financial institutions so that money could get out to almost 900,000 businesses across the country.

Because EDC was involved, that mechanism required its home base department, Global Affairs, to provide it with direction. The Department of Finance was involved because they were the policy lead who designed the CEBA program and made recommendations and analysis on what the program should look like. Those two departments were providing direction on what the program looked like, but EDC was expected to deliver on a day-to-day basis. The Canada Revenue Agency came in because it provided some much-needed information on verifying the eligibility of businesses—for example, how much their salaries were and whether they met the eligibility criteria there.

Many parties were involved in delivering this program.

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

Yes. I was just surprised to see GAC there.

Was there any precedence for a program needing to get money out so quickly? Has that ever happened before?

[Karen Hogan]

As I mentioned when we did our first audits on the COVID relief programs—the wage subsidy or the Canada emergency release benefits—it was unprecedented in Canada to see so much income support or income replacement and then supports to businesses to support Canadians through the pandemic. The government followed best international practices when it comes to emergencies. They got money out quickly by relying on attestation, with very few prepayment controls on programs, with the expectation that there be post-payment work.

That's why I'm very concerned that Export Development Canada has only partially agreed with our recommendation on following up and recovering funds. It mirrors the same response from the Canada Revenue Agency back in 2022 when it came to the emergency wage subsidy program. I'm concerned that there is a resistance to want to follow up on recovering funds. If the government doesn't want to do that, they should just be transparent with Canadian taxpayers.

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

How did Canada fare compared with other jurisdictions with similar programs internationally?

[Karen Hogan]

We didn't look at whether there was a loan program like this in other countries or jurisdictions internationally during the pandemic. I think this was just one of the supports Canada provided to small businesses. Remember, they could ask for rent relief. They could apply for the wage subsidy. They could also receive this emergency loan.

We didn't look at whether or not that bucket of goods was mirrored in other countries.

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

Okay.

I think the CSJ program is a great program for youth. Certainly, in my riding of Scarborough—Agincourt the youth have really benefited, not only in receiving income but also in gaining some valuable work experience.

You've mentioned several times today the need for greater data collection. I'm wondering if you could expand on that. I know that you were answering Ms. Roberts' question on that as well. What type of data would ESDC need to collect to confirm that this program creates jobs?

[Karen Hogan]

It would highlight two areas where better information was needed by Employment and Social Development Canada to show that the program was meeting two of its key objectives. One was giving job opportunities to under-represented youth—“target groups” is how it identified them—but also whether or not it was creating jobs. The Canada summer jobs program is marketed as a job creation program, but Employment and Social Development Canada was only gathering information on the number of positions funded, instead of the number created.

We did a survey of employers to find out whether or not they would have hired a youth regardless of receiving the funding. What was reported back was that 38% of businesses, while they did not receive Canada summer jobs subsidies, still hired a youth. I would expect ESDC to gather that kind of information to know whether or not it needs to do better outreach or alter the program to actually create jobs, but then also to focus on those facing barriers.

[The Chair, Conservative, John Williamson]

Indeed.

That's all your time.

Thank you very much.

Ms. Sinclair‑Desgagné, the floor is yours for two and a half minutes.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Let's talk again about the Canada Emergency Business Account, the CEBA, as far as businesses are concerned. In the end, it's Quebeckers and Canadians who have benefited from this program. Still, there was a great deal of confusion among businesses, who wanted to know how the program was managed and what the eligibility criteria were. According to CBC/Radio-Canada, 50,000 companies were deemed ineligible and not necessarily given an explanation. What's more, some of them found out very late in the process.

A survey by the Canadian Federation of Independent Business revealed that a third of the companies deemed ineligible were notified that they had to repay the full $60,000 already received, and that they were ineligible for the grant, a few weeks before the January 18, 2024, or March 28, 2024, deadline for repayment, depending on whether they had refinancing or not.

Once again, this created a great deal of confusion on the business side. The Canadian Federation of Independent Business, or CFIB, received 19,000 calls about the CEBA.

There was a call centre that taxpayers were paying for, but it was an organization representing independent businesses that was getting a huge number of calls, because obviously there was confusion. Some judged the service to be average, if not mediocre.

My question concerns the right of companies to know who holds their data. Many companies will be surprised to learn that their data is held by a third party, namely Accenture.

I don't know if you have any comments on this. I know your audit doesn't allow you to go and check this out or go and talk to the companies themselves, but do you have an opinion on this?

[Karen Hogan]

We did find that it took about a year to notify companies deemed ineligible. Some decisions, such as the approach to take and who would be responsible for collection, took a long time. There were a lot of questions and uncertainty. This is due to the lack of a clear role between the two departments and EDC and the responsibilities they were to assume.

The financial institutions have this data because the companies have taken out a loan with them. As for eligibility, only the Canada Revenue Agency had access to payroll information at the outset, and it was they who confirmed to the third party whether a company was eligible or not.

As for the second component, expenses that cannot be deferred, the organization knew that it was providing information to a third party to demonstrate that it was eligible. With the exception of financial institutions, I don't think a lot of the companies' information is in the hands of a third party right now.

[The Chair, Conservative, John Williamson]

Thank you very much.

Next is Mr. Cannings for two and a half minutes, please.

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

Thank you.

I'm going to turn to the Canada summer jobs program.

In your last comments about it just now, you mentioned that one of the things you looked at was, “Would you have hired a student anyway, without this funding?” Here on the cover of your report on that, you have the picture of a tree planter. Tree planters, from my understanding of that industry, get paid by piecework. They get paid per tree planted. The company gets paid as a contract by the number of trees planted. They have a contract for that.

It always seems to me that, within the Canada summer jobs program, when silviculture companies apply, it's like free money because they are going to get money per tree planted. The amount of money they get for a Canada summer jobs position is probably well below what a normal tree planter would get. Yet, I have forestry companies apply for 40 jobs, and the Canada summer jobs program gives them 40 jobs. I have to go in there and try to adjust that to make sure other students get it—students who wouldn't be hired by different organizations.

I'm wondering how we can change that. I know that was one of your concerns.

[Karen Hogan]

You're highlighting how this program is designed in a unique way, in that elected officials can make recommendations on which businesses can receive the subsidy. The subsidy, on average, has been a little over $4,000 per youth in the last few years of the program. There are national priorities for the program, which are meant to encourage those who face barriers to access the labour market—for example, individuals with disabilities, or indigenous individuals. However, there are also the local priorities that every elected official gets to influence.

Our recommendation was about aligning those a bit better so you can demonstrate that the program is meeting its main objectives. One of those is gathering information about job creation. Right now, ESDC just reports on the number of jobs funded, instead of the number of jobs created. How do we know whether the program is achieving its objectives without measuring exactly that?

[The Chair, Conservative, John Williamson]

You can have a very brief follow-up on the same topic, if you need a follow-up.

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

To follow up on the number of jobs created, the Canada summer jobs program always takes an application for a 16-week job and turns it into an 8-week job, so university students need not apply when a lot of groups want university students.

Do you have any comments?

[Karen Hogan]

Again, I think this comes down to a policy choice on what is being funded. The job simply needs to be for a minimum of six weeks.

The rest are questions that you should put to Employment and Social Development Canada. Hopefully, the committee will bring them here and we can talk about this important program.

[The Chair, Conservative, John Williamson]

Thank you very much.

Mr. Vis, you have the floor for five minutes. I understand you might be sharing it. I'll let you determine when that is.

Thank you.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you.

Page 12 of the report outlines that there was no administrative oversight. Page 16 clearly outlines that there was sole-source contracting. Throughout, the report outlines that this was awarded to Accenture to the tune of $342 million. On page 19 of the report, you question whether there's any “value for money” in the way these programs were administered. On page 20, you outline how “EDC did not assess the reasonableness of contract[s]”. It did not verify invoices. On page 24, you talk about a lack of ministerial oversight. On page 18, you take the bold step of stating that a Crown corporation was in “a conflict of interest” over a program it administered on behalf of the Government of Canada. That's not stated every day by the Auditor General.

How did EDC get around these checks and balances? That's my first question.

My second question relates to the response on page 45, where EDC states, in contravention of your recommendation, that “EDC is responsible for providing oversight of the administrative expenses of the CEBA program.”

What recommendation would you give to this committee and Parliament if EDC does not follow its own rules and guidelines with respect to the conflict of interest laws of Canada?

[Karen Hogan]

There's a lot in your question. I think I will sum it up by saying that what you're highlighting is what I call an "accountability void".

When a program is given to a Crown corporation—recognizing that a Crown corporation is supposed to remain at arm's length from the Government of Canada—it means that the departments providing direction need to exercise better oversight. That's where the Department of Finance and Global Affairs, in my mind, failed in their responsibility.

When you have an accountability void, where roles and responsibilities aren't clear, the outcome, for me, is that no one is keeping an eye on the costs. There were poor management decisions about contracts that didn't go challenged, but also no spending limits. That's why we concluded that, while the program met its objectives of getting funding quickly to businesses, the value for money was compromised by the extremely poor contract management by Export Development Canada, and by lack of oversight by the two departments that should have been providing it.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

It was clear in your report that the EDC and, likely, Finance Canada and Global Affairs Canada too, had a chance to make things right after the initial contracts were awarded, yet they chose to buckle down and stick with Accenture.

It almost seemed like EDC was doing everything in its power to award a multinational corporation more power and oversight to set the terms and conditions for hundreds of millions of taxpayer dollars. How do we stop this from happening again?

[Karen Hogan]

I think that at the beginning of this program, Export Development Canada made the government aware that they didn't have the capacity, the expertise or the tools to run this program. They asked for some oversight. They informed the Department of Finance and Global Affairs that they were going to be turning to a third party to rely on to deliver this.

What I would have expected would be better monitoring once that sort of expectation was made available by Export Development Canada. Once they said, “we want some oversight”, more should have been put in place. When it comes to the contract, all parties involved realized after a while that they should turn to competitive contracts, instead of non-competitive ones—

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

The problem is that they didn't.

[Karen Hogan]

—and not managing that conflict of interest, in my mind, was unacceptable by EDC.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Yes. We'll stop there.

Thank you.