Public Accounts Committee on Dec. 6th, 2022

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

In your opinion, does the Canada Revenue Agency have the capacity to do that research?

[Karen Hogan]

We didn't audit what resources the Canada Revenue Agency has. However, when it made the decision in early 2022 to limit pre-payment cheques, it knew that much more work would be required after payments were made.

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

With respect to vaccines, how do you explain that it took two years to properly manage the stockpiles? We lost 32 million doses of vaccine. The failure to manage vaccines lasted until the very end, just recently. How do you explain the fact that there was no mechanism over those two years to manage the inflow and outflow of vaccines, as well as orders and shipments to underdeveloped countries?

[Karen Hogan]

You're referring to a recommendation that my office made repeatedly following other health crises and that I reiterated most recently in 2021 when I audited preparedness for the 2019 pandemic.

We have often recommended that the federal government enter into a health information sharing agreement with the provinces and territories and develop the systems and technology needed to support such sharing.

What we found during our vaccine audit was that the government designed and implemented VaccineConnect software to better manage vaccines, but did not implement all of its functionalities. In our view, this reduced the government's ability to limit vaccine waste.

[The Chair, Conservative, John Williamson]

Thank you very much, Mr. Desilets. Your time is up.

At this point, I'm going to stick with the rotation, but with a more rapid two to three minutes, if that's okay with everyone.

I'm going to go to Mr. Genuis and Ms. Shanahan. Mr. Dong, I have you down as well.

Mr. Genuis, you have the floor for up to three minutes.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you, Mr. Chair.

Madam Auditor General, thank you for your work.

I want to drill down on a specific area of disagreement between you and the government. The government has said it is not interested in developing the kind of post-payment verification system you recommend. It's not interested in following up in every case. It has tried to give the impression that it's all very vulnerable, disadvantaged people who might be impacted if the government tried to recover the money that was given to those who were ineligible.

The reality is, from my reading of your report, that we don't know anything about the people who received money who are ineligible, in the sense that some of them could be very privileged, well-off people who in fact still cashed government cheques during the pandemic and didn't meet criteria.

What you're calling for is not necessarily that at a policy level we insist on recovering money from every single individual. What you're calling for is that the government do the post-payment work it promised to do, and then, once it has that information, that it then identify what the policy is going to be going forward.

Am I correct in understanding where the area of disagreement is here?

[Karen Hogan]

The Canada Revenue Agency disagreed with our recommendations to follow up on all individuals and businesses that had a high risk indicator of being ineligible for the payments, but you are correct in the approach. The first step is to identify who the individuals and businesses are that could be ineligible, and the next is then to make a decision about recovery.

As we indicated in our report, the Canada Revenue Agency said its approach when it comes to individuals is to be “people first” and compassionate, but you first have to identify who might have received amounts they are ineligible for, notify them, and then take the next step, which is recovery.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

It doesn't make sense to me at all that the government would say it's being compassionate by not bothering to find out who the people are who received money they were ineligible for.

You might argue it's compassionate if you do the follow-up work, identify that there are certain people who had understandable circumstances, and therefore decide, transparently, to make a decision around not requiring payback in that particular case, but in what world is it compassionate to say we're just not going to bother to do the work? That seems more like laziness on the part of the government than compassion.

Your recommendation, then, is not to direct the government on policy; it's to make a recommendation on process, which is that the government do the follow-up work and then be transparent about what it plans to do next.

Is that correct?

[Karen Hogan]

That's correct. It's not my job to comment on policy or legislation, but it's my job to hold the government to account to deliver its programs within the parameters that are there. My recommendations are in line with the existing legislation.

If the government chooses a different approach, which is entirely in its hands to decide, it should just be clear and transparent with Canadians.

[The Chair, Conservative, John Williamson]

Thank you very much.

Mrs. Shanahan, you have the floor for approximately three minutes.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Very good. Thank you, Chair.

Thank you, Ms. Hogan, for appearing before us today and at this morning's meeting as well. It was very helpful.

In understanding the principle that there are different approaches to attacking a problem—and, as you said, it was a very unusual situation and called for an unusual approach—there are still a variety of approaches that could have been taken. For example, instead of rolling out the benefit programs in the rapid fashion it did, with the attestation—the bare minimum of verification—another government or another set of ministers could have decided to do it differently. They could have decided to put in a lot of controls at the beginning.

What would that have meant for the effectiveness of what the government was trying to achieve?

[Karen Hogan]

That's a little difficult for me to estimate. I don't know if the objectives would have been the same. The objectives here were to get support to individuals and businesses quickly, to minimize the impact of COVID on those impacted by poverty and income inequality, and to support the economy as it rebounded. That quick rollout of support achieved that.

A different approach may have different objectives. All I can comment on is how these were designed and rolled out, and I found that it was effective. That unusual approach, to rely on attestations and quickly get money out, comes with the need to do more work than is typical on support programs, because there wasn't rigorous prepayment vetting.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

The good news is that the approach achieved the objectives up front. Now we're looking, basically, at the clean-up of doing the additional verification work.

There are different methods of doing that. Typically—and this is what's used in auditing—you don't audit every single transaction that a department does. You take a risk-based approach, if I'm correct, or a sampling approach, to look at where those problem areas could be, and then make a series of assumptions after that. We'll hear more, I'm sure, when we have a further study on this report from Revenue Canada. They have different methods, including this risk-based method.

Could you just talk about the difference between the two, and why you think that every single transaction should be examined?

[Karen Hogan]

I want to be clear. I didn't say that every single transaction to a Canadian or a business should be investigated. I believe those who have been identified as having high risk indicators of being ineligible for the payments they received should be investigated. There are many individuals and businesses that received support they were eligible for.

It is the bucket where we have these high risk indicators that requires more work.

With a risk-based approach, there are many ways to come at risk, but when you've done very little prepayment control, your approach should be different from your typical approach. What we're finding is the same level or so of post-payment work is planned. That's why we recommended that a much more rigorous approach to post-payment verification be adopted.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

I agree. Certainly, Canadians believe in fairness. People want to see that anyone who deliberately defrauded the system is justly investigated. Others, as we all had in our offices, we know were very confused. It was a very difficult time, and it may be a different situation.

Thank you for clarifying.

[The Chair, Conservative, John Williamson]

That is the time.

Ms. Sinclair‑Desgagné, you have two to three minutes.

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

Thank you, Mr. Chair.

Madam Auditor General, I'd like to ask you a question since I didn't get a chance to ask it this morning.

You say that data sharing across Canada could have improved the situation, but I get the impression that that's especially true with respect to vaccines. I'd like to hear your thoughts on that. It must be said that, although the federal government is responsible for the supply of vaccines, health care systems are a provincial responsibility. There are 10 health care systems in Canada, not just one, as you know.

I just want to understand what you mean when you say data sharing. I especially want to make sure that people who are watching today understand that we're not asking for a universal health care system in Canada managed by the federal government, for example.

[Karen Hogan]

Yes, it's not that at all.

When I talk about data sharing between the provinces and territories and the federal government, data is shared in several ways. In the case of vaccines, it's data on the safety, efficacy and quality of vaccines. This data was shared at a very high level, not in a detailed, case‑by‑case way. This type of data should be shared between third parties, foreign parties and vaccine companies. However, the government was not able to share this data effectively because it sought permission from the provinces and territories, and that took a long time.

That's why I say that having an agreement between all levels of government would improve how we manage a future health crisis.

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

So it wouldn't be about the federal government asking for certain data in exchange for vaccines, for example. We're not talking about that kind of cooperation at all, or rather one level of government being superior to another.

Thank you for clarifying that, Ms. Hogan.

[Karen Hogan]

The concern we have is that the Public Health Agency of Canada receives the data, but can't pass it on to Health Canada and the vaccine companies without the provinces' permission. So, to improve crisis management, I would recommend that an agreement be reached to determine the type of data that can be shared and the timeframe in which can be shared. If we're going to produce our own vaccines in Canada, this data will need to be shared to improve the effectiveness and quality of Canadian vaccines in the future.

[The Chair, Conservative, John Williamson]

Thank you very much.

Mr. Desjarlais, you have the floor for about three minutes.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair.

I want to return to the emergency wage subsidy.

Here's a quote from one of the local members of the Boilermakers in relation to this. It's from late last year:

However, we feel very strongly that tax dollars should not be given to employers who have locked out their workers. In the case of Cessco, we have no doubt that the [Canada emergency wage subsidy] money is being used to subsidize the use of replacement workers; and it has likely been used to offset the costs of lawyers and security firms, who have been working hard to prolong the lockout and starve the workers out. This is contrary to the vision and the goals of [the Canada emergency wage subsidy]. This money is supposed to be used to help workers, but in this case, it's being used to hurt them.

That was directly from a union member, who was feeling the cost of this policy in the workplace, over the pandemic.

You can see here that the words of the Auditor General are quite clear, in the sense that we do, in fact, need to look at this program and find some accountability for the folks who suffered. Canadians did suffer. Many folks were able to benefit from this program, but there were some folks who suffered. It's incumbent upon us to recognize those people, listen to them and make policy recommendations to ensure this doesn't happen again. That's why we're all here. I think that's an important goal we all share.

I agree with the Auditor General's call for a post-payment recovery strategy to deal with bad employers like Cessco. It's reasonable to suggest that these employers be held to account.

I noticed, in paragraph 10.101, that the ESDC and CRA response is only partial agreement. Can you explain what their response is, and how that response levels in accordance with your recommendation?

[Karen Hogan]

That's one of our recommendations to the government, to follow up with all individuals and businesses identified as having a risk of being ineligible for the payments they received. The partial agreement from the departments was because they do not intend to follow up with all individuals or businesses identified as potentially ineligible. They don't believe they have the resources to do all of that, and they intend to take a risk-based approach to post-payment verification.

As I stated earlier, their plans, so far, are not sufficient, in our view. Even if they don't want to follow up with all, we believe they should do more than they are currently planning to, because it is not rigorous enough to compensate for the lack of prepayment controls at the beginning.

[The Chair, Conservative, John Williamson]

That is the time, Mr. Desjarlais.

We'll now turn to Mr. Kram. You have the floor for three minutes.

Mr. Dong will be next.

[Michael Kram, Conservative, Regina—Wascana, SK]

Thank you, Mr. Chair.

Thank you to Ms. Hogan and Mr. Hayes for being here today. I'm sure it has been a long day, but we will keep on getting through it.

Page 6 of report 9 lists the seven advance purchase agreements signed by this government, and the dates for each agreement. It says the first advance purchase agreement was signed in July 2020, and the last was signed in January 2021.

I spent the afternoon on Google, looking up when the American government signed its advance purchase agreements. It started way sooner. The Americans signed their first agreement in March 2020—four months before we signed our first—and their final agreement in July 2020, six months before this government signed their final agreement. As a matter of fact, when this government was getting down to signing its first agreement, the Americans were finishing up on their last one.

Can the audit provide any insight into why this government was so much slower than the Americans when it came to signing these advance purchase agreements?