Public Accounts Committee on Dec. 6th, 2022

[Peter Fragiskatos, Liberal, London North Centre, ON]

Yes, and I look forward to officials from the CRA coming and explaining to the committee the work they are carrying out right now in regard to what you just mentioned.

Finally, because time is limited, at the outset you talked about international best practices. Can you expand on that a bit?

[Karen Hogan]

That was something we looked at in the two audits we did in 2021, when we looked at the design and rollout of the Canada emergency response benefit and the Canada emergency wage subsidy. At that time, the government and I looked at the international best practices in times of an emergency that support the limitation of prepayment controls, which you would normally see in a support program, in order to get money out quickly. That's what's done in emergency times.

Those international best practices also cite the need for comprehensive and rigorous post-payment work.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Absolutely—

[The Chair, Conservative, John Williamson]

Thank you. I'm afraid that is your time, Mr. Fragiskatos, but we will certainly come back to you, if you like.

With the committee's indulgence, I'm going to turn to Mr. Desjarlais next, to give our friends from the Bloc a few more minutes.

Mr. Desilets, you will get your turn right after Mr. Desjarlais.

Mr. Desjarlais, you have the floor for six minutes.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair.

I want to thank the Auditor General for her report, which I think is very timely when Canadians are feeling the pinch of this affordability crisis and many folks are feeling very little hope. We also had a very similar experience during COVID, when a lot of folks were losing hope. They were losing their will, in some ways, to understand how the pandemic interrupted their lives and how it's continuing to interrupt their lives.

None of us here were fans of the pandemic. That is a fact. The reaction of our national Parliament in making sure we ended poverty or at least reduced poverty with strong measures was something the New Democrats fought for.

Something we didn't fight for was in relation to the Canadian emergency wage subsidy. There are some loopholes within that subsidy, which we called for the closing of early on, that resulted in disproportionate effects on workers. We've seen the use of the Canadian emergency wage subsidy to break unions and lock out workers in my province of Alberta. This is very real.

We don't have to look very far in Edmonton, my city. There's a large corporation called CESSCO, which, as early as June 28, 2020, decided to lock out its workers and apply for the Canada emergency wage subsidy. The Canada emergency wage subsidy then went to subsidize the wages of scab labour, replacement labour, while the union was forced to be locked out.

It took the power of the union out from under it and forced replacement labour into the group. That replacement labour is still there today. Boilermakers in my city of Edmonton are locked out again, still. This is a critical issue that we need to address in a real and responsible way.

When I look at these numbers, they're quite damning: $4.6 billion in ineligible employer expenses. Was that the number you mentioned, Ms. Hogan? Can you confirm the total amount of ineligible funds paid to employers under the Canada emergency wage subsidy?

[Karen Hogan]

We estimated that $15.5 billion paid to employers require further follow-up. That amount is included in the $27.4 billion that require additional follow-up by the government.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you for that.

Of the $15.5 billion, I know you won't be able to comment now in terms of the fact that CESSCO, for example, is ineligible.

Could you enlighten us, the committee members—maybe Mr. Hayes as the principal might know better—in terms of the qualifications that make those companies ineligible?

[Karen Hogan]

Your comments actually point to one of the concerns we raised and a member raised in a question earlier. We were unable to determine the effectiveness of the program, whether or not one of the objectives—that of maintaining the employer-employee relationship—was met, because there was very little information gathered.

I could not comment further on the situation you've described. It points to the reason post-payment work needs to be done in order to ensure that the wage subsidy was used as intended, and that the businesses that applied for it actually had a decline in revenue that made them eligible.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

There were instances in which a company did not give a subsidy to its employees but used the Canada emergency wage subsidy to offset the cost of their labour and to offset the ability of unions to negotiate proper and fair contracts, because companies were incentivized not to make those arrangements if they qualified for the Canada emergency wage subsidy.

There's an incentive there that I think the Auditor General is pointing to that has to be addressed when we're talking about how we investigate these companies moving forward and how we get them to pay this amount back that they were never entitled to.

How can we do that in a way that is responsible without looking at the issues that we're seeing in terms of very poor Canadians? My fear is that we go so far as to empower a claw-back—let's call it that—so great that it disproportionately harms those who are right on that margin of poverty who accepted it.

There's a balance that has to be struck here between what you just mentioned, between the requirement to ensure that Canadians get that return from companies and other folks who made ineligible applications and received funding, and the reality that companies and Canadians are facing a tough time still. Some of them weren't able to recover.

What would you say in terms of advice on being able to distinguish between those two groups? How did you distinguish between them in the audit?

[Karen Hogan]

A different approach is likely needed for businesses and individuals. That is one the Canada Revenue Agency will have to decide on. There's different information needed, and a post-payment verification audit for a business will be much more lengthy. We even pointed that out in the audit. Some of them took almost a year to complete. There's a lot more work and time needed to follow up with businesses than to follow up with individuals.

My recommendations are based on the current legislative framework. If the government wants to take a different approach, that is one it can do and one it should be clear about. I would say that it needs to take the first step of identifying whether there are payments to ineligible organizations and businesses, and then making the decision about collection. If collection wants to be one with an individual focus, one of empathy or one where amounts are forgiven, then the government should just be clear and transparent with everyone about its intentions and processes.

[The Chair, Conservative, John Williamson]

That is the time, Mr. Desjarlais. Thank you.

Mr. Desilets, you have the floor for six minutes.

[Luc Desilets, Bloc, Rivière-des-Mille-Îles, QC]

Thank you, Mr. Chair.

Good afternoon, everyone. I apologize, I arrived a bit late.

I'm pleased to see you again, Ms. Hogan.

I don't know if you were made aware of what happened earlier during Question Period in the House. What's your reaction to the comments that were made?

[Karen Hogan]

Earlier, a member shared the comments that were made during Question Period. I had not watched it.

My response to those comments is that we are confident in our audit and our findings. We always use a very thorough approach when conducting our audits. We relied on the information available from the Canada Avenue Agency. There was very little information, but we did the best we could with the data that was available. No one individual influences our work. We decide what we do. We would never issue a report if we were not completely sure of our findings.

[Luc Desilets, Bloc, Rivière-des-Mille-Îles, QC]

I have absolutely no doubt about that, Madam Auditor General. I just wanted to get your opinion. The minister's are still significant because they call into question the integrity of the Office of the Auditor General, an institution for everyone. We're having trouble understanding the minister's comments.

The work was not sloppy at all. You had the same timelines as you would normally have and everything was done in a compliant manner.

[Karen Hogan]

The audit on specific COVID‑19 benefits was included in Bill C‑2. In accordance with the bill, we had one year to complete the work. We have ensured that we have the resources to complete the work. We are filing a report today, a few weeks before the deadline in the bill.

[Luc Desilets, Bloc, Rivière-des-Mille-Îles, QC]

Rest assured that the Bloc Québécois will continue to pursue this matter. Obviously, attacking an institution like that is neither respectable nor acceptable in a democracy like ours.

Your report states that $27 billion was overpaid. The answer may have been given earlier, but I'd like to know if the government can recover that money.

[Karen Hogan]

I'd like to make some clarifications. We made two findings regarding the money paid out.

First, $4.6 billion in total were overpaid to ineligible recipients.

Second, we estimated that payments totalling at least $27.4 billion made to individuals and employers should be further examined. It's in this regard that we made recommendations to the Canada Revenue Agency to help it make its plan more comprehensive and move its work forward, given the timeframe for notifying individuals and businesses that are required to remit money to the government.

[Luc Desilets, Bloc, Rivière-des-Mille-Îles, QC]

Do you believe that the government has the structures needed in place so that some of this money can be recovered?

[Karen Hogan]

That is very difficult to determine. Because I don't know the situation with individuals and businesses, I'm unable to estimate the amount that could be recovered.

[Luc Desilets, Bloc, Rivière-des-Mille-Îles, QC]

Of the 2 million people who received payments when they should not have, are we able to determine what proportion is from Canada and what proportion would be from abroad?

[Karen Hogan]

I'm not sure what figures you're talking about.

[Luc Desilets, Bloc, Rivière-des-Mille-Îles, QC]

Apparently, 2 million people received overpayments.

[Karen Hogan]

You want to talk about those who are outside the country.

[Luc Desilets, Bloc, Rivière-des-Mille-Îles, QC]

Were they all outside the country?

[Karen Hogan]

No. We put this in the pool of amounts received that the government should be tracking.

We reviewed information that the Canada Revenue Agency had. When an individual files their tax return, they are required to provide their home address, as well as their preferred mailing address. In the cases we have identified here, both addresses were not in Canada. However, it's possible that the situation is different and that the information is incorrect. For this reason, we recommended that the government follow up to confirm whether these individuals were actually in Canada and eligible for these benefits.