Public Accounts Committee on Dec. 4th, 2024

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

Thank you, Mr. Chair.

I want to thank the members of the Office of the Auditor General for coming to appear before the committee in person.

My first question is for the officials from Export Development Canada. I would like a clear answer. If possible, I would also like the related documents forwarded to the committee.

In paragraph 8.29 of the report, it says: “In addition, EDC told us that it did not have the expertise or infrastructure to deliver a program of this scope [...]”

This is quite significant. Have you mentioned it to the Department of Finance or to Global Affairs Canada?

[Mairead Lavery]

At the time the program was being considered, in March 2020, we indicated that we typically give 300 loans per year. While we didn't know the extent of the program at that time—that it would reach 900,000 loans—it was certainly of a magnitude that was very different to what EDC does in its day-to-day business. We indicated that it would be very challenging and that we would need to use third party support to deliver.

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

Thank you, Ms. Lavery.

Was that by email or verbally? How did you come to that important realization that you did not have the expertise or infrastructure to deliver such a program?

If possible, could you forward those emails or notes to the committee?

[Mairead Lavery]

To answer the question, I need to go back to March 2020, when all of us were dealing with the pandemic and had just moved all of our staff to remote work. Everyone was dealing with matters in a very quick way. This was a process whereby there were daily calls, not only between the Department of Finance and EDC, but also with financial institutions to try to develop this program.

The Department of Finance was working on policy, as well as participating in weekly and daily calls as to how this program could be constructed. Many of the discussions were verbal, as there was an effort to set up this program on a timely basis.

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

I see.

I would tend to think however that for a program involving 900,000 businesses, if you felt that you had neither the expertise nor the ability to offer such small loans to so many businesses, you would have put that in writing. I have to agree though that it is not in any way EDC's business model.

I'm referring to the principle of covering yourself, something public servants are very familiar with. I will not mention the three letters associated with that principle.

We would ask you kindly to look for that information and provide us with the related documents. We would like to see what happened, right from the beginning.

Let us turn now to the 19 contracts awarded to Accenture.

You appeared before the Standing Committee on Public Accounts this past February. At the time, I asked you about Accenture. The English-language press reported that you relied on a single company to deliver work valued at hundreds of millions of dollars, without a competitive process.

You said then that there were 31 contracts, with a total value of $208 million.

Why did you say that? Now we are talking about 19 contracts with a value of $313 million. How could you forget $105 million in the process?

[Mairead Lavery]

Thank you. I will pass the question to Mr. Moore.

[Scott Moore]

The $208 million reference was actually $209 million. It's the actual spend as opposed to the contract value. I apologize if that was confusing at the time of the February committee. The actual spend, as you see here, is indeed $209 million with Accenture; the number of contracts at the time was probably just a mistake. I apologize for that.

You have the actual numbers here. In terms of the overall contract value, it is indeed $313 million, and the spend is indeed $209 million.

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

Thank you very much.

Mr. Moore, let's turn to the call centre, which you have talked about in glowing terms.

The call centre received three contracts for a total of $27 million. You said it received about 450,000 calls, as I remember.

That seems strange because the newspapers reported at the time that MPs were receiving tons of phone calls at their offices. In addition, the Canadian Federation of Independent Business stated that it received tens of thousands of calls related to the CEBA because business people had no one else to turn to.

How can it be that, on the one hand, you said you received a high volume of calls while, on the other, business people could not get through?

People had to call, dozens of times, a number that was not working or they simply could not get through.

There are two possibilities: either the tens of thousands of businesses that contacted us are not telling the truth, even though they always say the same thing, or your version does not represent what really happened.

Did anyone check the number and the quality of the calls reported to you?

[Mairead Lavery]

Perhaps I will take that question, just to describe the call centre process and how that actually worked.

When we first established the call centre, it was in response to an increasing number of calls from potential loanholders—in fact, all the applicants to the process. The number of calls far exceeded what we anticipated at that stage, and that necessitated our continuing to add resources to the call centre to be able to respond to it. We were monitoring a statistic which was [Technical difficulty—Editor]. We actually had to stop taking calls directly, because, to your point, people were not able to get through directly on the line. We moved to a callback model, and we were monitoring the number of calls in that queue. People did receive a call. It was not when they called in, because they were called back. Their call was returned.

At the peak of the activity in the call centre, over 22,000 businesses were in the queue for a callback. It was a very significant effort and at a very stressful time for these businesses. We had instances where businesses were calling in and suggesting that their only path forward was in fact a suicide option. We had businesses that were certainly looking at bankruptcy and were really struggling, so we put more resources to continue trying to address the needs of those businesses and worked very closely with organizations like CFIB, who were hearing that from their members.

[The Chair, Conservative, John Williamson]

Do you have another question, Ms. Sinclair-Desgagné?

Okay. I see you do not.

Mr. Cannings, you have the floor for six minutes, please.

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

Thank you.

Thank you to all the witnesses for being here again today.

Thank you, Ms. Hogan.

I know that we've now questioned you twice—once on Monday, and now you're here again—so thank you for that.

I'm going to ask you a question off the top that I know I asked on Monday, but just for the purposes of this study, I'd like to get it on the record. One of your mandates is to make sure we're getting value for money when we use taxpayers' money in Canada. Here, we have a program where it seemed that it worked very well in getting the money out the door and helping these businesses. I think most of your criticism has come from how we're trying to recover that money. Also, then, there are some issues around contracts, which I'll get to.

One thing I was hearing from businesses—and we just heard from Ms. Lavery about the panic and the desperation in a lot of these businesses—is that they needed more time to repay these loans. Initially, I think, the deadline was the end of 2022. There was an extension made to 2023, but even then I was getting a lot of concern.

Did you look at anything that would model the benefits to Canada, to the government, of adding another year's extension to make sure that we didn't bankrupt thousands of businesses and that we'd be able to recover that money? Did you look at that at all or were you just looking at the mechanics, the audit of the books, as we see?

[Karen Hogan]

I agree with your summary that what was done was done well. It was very quick to get billions of dollars of loans to almost 900,000 businesses. It's the how it was done where better efficiency could have been achieved to have better value for money.

To your question, did we look to determine if extensions would have made a difference? No, we didn't. It's a policy question as to when the loans were going to have to be repaid.

We did try to figure out, though, as we did in some of the other COVID relief programs, if this was tied to anything to show that it matched health restrictions and so on, but this program was of such a broad, general nature. It wasn't linked to health measures. It wasn't to focus in on an industry. It was a really broad application to help support small businesses.

However, small businesses also had the ability to access rent relief and wage subsidies in addition to the Canada emergency business account, so it was impossible for us to separate whether one program would have made a difference. It was probably a combination.

It's likely that the businesses that needed it the most are the businesses that had to refinance in the end. It is possible as well that many businesses that applied for the loan didn't need it and were able to quickly repay it in order to take advantage of the forgiveness. However, how to measure whether they needed it or not is a very difficult thing when you think about what was going on in 2020.

It was too difficult for us. The government hadn't done it, and it was difficult for us to separate how the CEBA program made or broke the success of a small business coming through the pandemic.

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

I'm going to turn to Ms. Lavery.

You talked about how the government came to you. You said to Finance that this wasn't your normal way of operating and that you worked with big loans to a few people.

I'm wondering if at any time you said this to them: “Why don't you just go to Accenture? That's what we would do. That would take out the middleman.” We would have much greater oversight here today if the government had actually done that rather than going through EDC, which is a Crown corporation and has a different relationship to Parliament, here at least.

I'm wondering if at any time you said this: “Why are you involving us? We don't have the capacity. We're going to have to get Accenture to do it all.”

[Mairead Lavery]

There are two elements to this program. One is the disbursements to the financial institutions that actually distributed the loans to the 900,000 businesses; then there's all the administration associated with disbursing the loans to the banks and onward to the companies, as well as then processing the applications and building systems of record to ensure we would be able to collect those loans.

The Department of Finance deemed that the vehicle they were going to use to do the distribution to the financial institutions was through Canada Account, and EDC is the administrator of Canada Account, which in the past has been for single transactions that usually fall within areas that EDC has the skills and resources to deliver upon. I believe that's why the Department of Finance chose EDC, which then needed to be supported with the administration thereafter.

[The Chair, Conservative, John Williamson]

Thank you very much. That is the time.

You have a few seconds left, Mr. Cannings, but I'll add them to another slot which is a little shorter for you.

We're beginning our second round, which will consist of six members for various times.

Mr. McCauley, you're leading us off for five minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thank you, Chair.

For our witnesses with EDC, first of all, let me express my disappointment with all of you that on such an important meeting, not one of you could bother to show up in person.

Ms. Lavery, who did you push back to at Finance to state that you did not have the capacity at EDC to administer this program?

[Mairead Lavery]

I would like Mr. Winterhalt to describe the government processes—

[Kelly McCauley, Conservative, Edmonton West, AB]

I'm not asking for that.

Who did you push back against at Finance to say that you did not have the capacity to administer the program?

[Mairead Lavery]

This is a program that was built in a manner that involved a number of departments, as well as external—

[Kelly McCauley, Conservative, Edmonton West, AB]

You expressed to Finance that you did not have the capacity to administer the program.

Is that correct?

[Mairead Lavery]

We discussed the operational risks that would be associated with EDC and what we would need to do to deliver this program, including the use of third party resources.

[Kelly McCauley, Conservative, Edmonton West, AB]

Who did you discuss that with at Finance, please? I've asked four times now.

[Mairead Lavery]

That was with Finance officials.

[Kelly McCauley, Conservative, Edmonton West, AB]

I didn't ask which department it was.

Who was it, exactly, at Finance, please? Was it the deputy minister, the ADM or the minister?

[Mairead Lavery]

This was with Finance officials below the deputy minister level. There were numerous officials from the Department of Finance at that point in time.