Public Accounts Committee on Jan. 26th, 2023

[Bob Hamilton]

Mr. Chair, I would say there's obviously an opportunity cost to everything—if you do more of one thing, you're going to have to do less of another—but I don't characterize this as an issue of resources from the CRA's perspective. We were given the resources to carry out a compliance program consistent with what you would see in international best practices.

Again, there's just a bit of confusion around the $15.5 billion. That's an estimate of what might potentially be out there, based on GST monthly data from the pandemic. I'm just not sure that it's worthwhile investigating all of those cases, because when we have looked at the GST monthly data, we have found that it's not a great indicator of whether or not someone's eligible for the CEWS. Obviously there's some overlap, but we don't find that it's a great indicator.

If we were to go down that route and probe into all of the cases that make up that $15.5 billion—and that number itself is an extrapolation of a small sample—that would take more effort and, in my view, based on what we've seen so far, it wouldn't be worth the effort. As I said, we have found some cases, particularly in the promoter space, of people misrepresenting or committing fraud, and we're going after those people, but for the vast majority of people we're finding it's more within the realm of what you might expect, particularly with some of the prepayment controls we had and some of the education we did to help people fill out their forms.

Yes, everything has an opportunity cost, but I think at this stage it wouldn't be worth it based on what we have seen so far.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

In terms of the adequacy of support or resources that are required for the CRA—and you mentioned the opportunity costs—are you being given adequate levels of funding to carry out these tasks and to continue to do the work of investigating existing corporate tax evasion?

[The Chair, Conservative, John Williamson]

Could we have a brief answer, please, Mr. Hamilton?

[Bob Hamilton]

Yes, I would say that we are. I would always say that with more resources you could do more, and you referenced the numbers for uncollected debt. There are always more things we could do if we had more resources, but in this context right here, I think we were resourced appropriately for the task. That may change as we see more things as we do our work, but I—

[The Chair, Conservative, John Williamson]

Thank you very much. We turn now to Mr. McCauley.

You have the floor for five minutes. Go ahead, please.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks, Mr. Chair.

Witnesses, thanks for being with us today. Ms. Hogan and team, welcome back.

Ms. Hogan, in your opening statement you noted your concern regarding CRA's limited progress on postpayment verification—despite the government's knowing the importance of it—because of the limited controls. You stated that plans and resources haven't been adjusted to reflect the importance.

Now, we've looked, and there was over a $100 billion in CEWS. Some of it went to very wealthy, very profitable foreign companies, foreign-controlled multinationals. Some went to Chinese state-owned companies and Chinese state-owned banks. As I mentioned, it's $100 billion. What more should the CRA be doing? You mentioned that there's limited progress on the verification. What should it be doing to protect taxpayers?

[Karen Hogan]

What we were looking for was, perhaps, an earlier start or more resources devoted to doing more work. For a typical program the government has—and I'll use, for example, the employment insurance program—there's very rigorous vetting of an application before an individual receives benefits, and there is still some postpayment work done, even after all of that rigorous prepayment verification.

In this instance, there were very limited prepayment controls, with the intention that rigorous postpayment work would be done. In our view, that should be more than you would typically do on a program. Here we identified with the monthly GST filers, who received 64% of the wage subsidy, that there were some risks that required further investigation. The only way you could find out whether or not a business was eligible would be to do that postpayment work, because there was no other information to verify eligibility.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Hamilton, considering what the AG has stated—and we've seen, in one report, $27 billion as well as the $15 billion—do you not think that is a large enough number to further investigate based on the GST numbers? I'm just aghast. We've all experienced CRA, and, let's be honest, Canadians don't view it as a service. As MPs, we've experienced CRA going after small businesses for tiny amounts. We've seen CRA go after regular Canadians.

This is potentially a huge amount of money. Who at the CRA is making the decision that we're willing to risk writing off $15 billion, $20 billion or $25 billion of taxpayers' money?

[Bob Hamilton]

Mr. Chair, first I would say that we are trying to change people's impressions to see the CRA as being a bit more service-oriented, but that's a journey.

On the issue of whether we should be worried about it, I think we are doing the work that's necessary to uncover where there are risks and where money went to ineligible people.

[Kelly McCauley, Conservative, Edmonton West, AB]

What if you're wrong?

[Bob Hamilton]

I maybe would ask my colleagues to expand on it, but we have filed a progress report with the committee. We're examining, as we go, what we see and what it tells us—through our business intelligence and other models—about where we need to look next and where we need to look after that. I think—

[Kelly McCauley, Conservative, Edmonton West, AB]

Let me just interrupt, Mr. Hamilton.

The CRA's position, then, is that it's comfortable dismissing, for lack of a more polite word, the AG's concerns about $15 billion or $20 billion of money that should be clawed back for taxpayers.

[Bob Hamilton]

Mr. Chair, I wouldn't interpret it that way at all. We're actually moving towards the same goal. We both want to have effective compliance to ensure that Canadians have a fair tax system or benefit system at their disposal.

Where we might differ is on how valuable that monthly GST data is and then going to the $15.5 billion with respect to determining our compliance efforts.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thank you, Mr. Hamilton.

Who decided to set it up as an attestation for the CEWS? Was that Finance? Who made the final decision? It could not have been a group decision. Someone would have had to make the decision. You mentioned earlier, I think, that you would have liked controls that were a bit stronger. Who made the final decision to set it up as it was?

[Bob Hamilton]

Well, I think it was the government's decision, and it was set out in the legislation that was put forward.

[Kelly McCauley, Conservative, Edmonton West, AB]

Did CRA put forward recommendations regarding a different way to set up stronger fencing around it to protect Canadian taxpayers?

[Bob Hamilton]

Mr. Chair, we would have identified—

[Kelly McCauley, Conservative, Edmonton West, AB]

I'm assuming CRA was part of the consultation, so did you recommend stronger fencing?

[The Chair, Conservative, John Williamson]

Mr. McCauley, the time is almost done, so why don't you allow an answer?

[Bob Hamilton]

Yes, we were definitely part of the conversations around that. I'm not going to talk about who said what and who didn't say what in that conversation, but the risks were—

[Kelly McCauley, Conservative, Edmonton West, AB]

I think it's important. Did the CRA recommend stronger—

[The Chair, Conservative, John Williamson]

Mr. McCauley, your time is done. You can come back. You will have another round.

I'd like to hear from Mr. Hamilton, and then I want to go to Ms. Yip.

Please finish up, sir.

[Bob Hamilton]

As you're sitting around that table, you would always expect the administrator to try to make it as tight as possible. You would expect that, but we're also all human beings, and we all understood the situation and the need to get the money out. We felt as though it was an appropriate balancing. Really, the key in this thing is balancing.

[The Chair, Conservative, John Williamson]

Thank you very much.

Pardon me. I misspoke. It's Mr. Dong who is next.

You have the floor for five minutes.

[Han Dong, Liberal, Don Valley North, ON]

Thank you very much, Mr. Chair, and happy new year. I want to say happy new year to the Auditor General and all the public servants from CRA.

I also want to share with you that during the new year, I held my new year levee. There were local small business people coming from Bayview Village and Fairview Mall in my district. They wanted me to extend a sincere thank you to CRA. Your various subsidy programs, including the emergency wage subsidy program, really helped them get through the pandemic. If not for those, they told me in their own words, they would have folded their businesses and probably moved on to work for somebody else instead of being employers creating jobs in my riding.

So thank you very much. I know you have to come in and answer a lot of tough questions at this committee, but I also wanted to take this opportunity to ask you to pass on this gratitude to folks in your department. Thank you.

My first question is for Ms. Cathy Hawara. Could you explain to the committee how or whether or not CRA experimented with the GST/HST revenue model? Did it work or did it not work? Would you explain that to us?