Public Accounts Committee on Jan. 26th, 2023

[The Chair, Conservative, John Williamson]

Thank you very much. That is the time.

Go ahead, Ms. Sinclair‑Desgagné. You have two and a half minutes.

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

Thank you, Mr. Chair.

Madam Auditor General, can you very briefly confirm or deny the main findings of your report? It's important to reiterate that at this point.

You mentioned that potentially $27 billion in benefits were overpaid to individuals who were not eligible and that this should be verified. You also mentioned that with the resources available to CRA, at the current rate, it may not be able to recover the amounts that were overpaid, potentially because of a lack of rigour and data.

Have I understood the main findings of your report?

[Karen Hogan]

In the interest of time, I'll say yes. You've clearly understood the gaps that we found.

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

Thank you very much.

Mr. Hamilton, you say that things aren't so bad, that everything is going well, that we still have a lot of time and that we're still at the beginning of the process. I'm sorry, but you're completely contradicting the Auditor General's findings. We have to put things in context. We're talking about a lack of rigour at the CRA. It's bigger than what you seem to be describing today.

[Bob Hamilton]

I don't think there's a lack of rigour. The program is very rigorous in terms of the wage subsidy. As Ms. Hawara said, it's a process that focuses on high-risk applications, but it's not a lack of rigour. There has been a lot of rigour.

For some programs, such as the emergency wage subsidy and the Canada emergency response benefit, there is a time constraint, but we at CRA believe that we will be able to continue the audits after three or four years, if necessary. So it's not a constraint.

As I said, it may be difficult to recover some amounts, but there's no statute of limitations in this area.

[The Chair, Conservative, John Williamson]

Thank you, Mr. Hamilton.

Mr. Desjarlais, you have the floor for two and a half minutes, please.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair.

I'd like to begin with a quote: When CEWS was first introduced, the urgent priority of the government was to assist the economy in an extremely volatile period at the onset of COVID-19 where both the future of many businesses and that of the Canadians they employed were in question.

That was from this morning's statement by Commissioner Hamilton of the CRA.

The Canadian emergency wage subsidy has, in fact, been used by companies to attack workers in the middle of a labour dispute. This was most evident in my community here in Edmonton, where a large corporation known as Cessco, a manufacturing company, received the wage subsidy while also locking out their 40-year, long-time employees, who are boilermakers fighting for a fair contract.

Because of how poorly this program was designed, Cessco's management was able to use the Canadian emergency wage subsidy to hire replacements, scab workers, at the expense of the company's 40-year-plus employees, locking them out.

My question is for the Auditor General. Do you think there was “value for money” in allowing the Canadian emergency wage subsidy to subsidize replacement labour to undermine locked-out workers at Cessco who were exercising their right for a fair deal?

[Karen Hogan]

Unfortunately, I can't comment on what the wage subsidy was used for by businesses. The way the wage subsidy program was designed didn't discriminate against a business based on its size or its industry. Every employer was eligible if they saw a revenue decline.

It is really through postpayment work that the government can verify that the wage subsidy was truly used to subsidize the wages of workers and that it truly went to businesses that were eligible.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Now for the Commissioner of the CRA, do you believe that, in your risk assessment, this is an important factor to consider when looking at some of the abuses of funds that I believe have taken place to force workers out of their workplace? In your very own words, this was designed to help workers and the people who were employed. Do you think this is a good way to do that?

[Bob Hamilton]

Thank you, Mr. Chair.

While I can't comment on the specific case you've raised, what I would say is that if we look at that case, we would have to see what the legislation passed by Parliament says. Does it restrict that kind of thing or does it not? Our role as administrator is to make sure we implement it in a way that's consistent with the legislation.

Without commenting on the specific case you've raised, that would be our approach to looking at an issue and deciding whether it was something that we could do something about or should do something about, or whether it's something that is really just the legislation unfolding the way it—

[The Chair, Conservative, John Williamson]

Thank you very much.

Mr. Desjarlais, you'll have one more opportunity for two and a half minutes.

I'll turn now to Mr. Chambers.

You have the floor for five minutes, please.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

Ms. Hogan, how rare is it that the department does not fully accept an Auditor General's finding?

[Karen Hogan]

Just on paper, most departments usually say “agree”—

[Voices]

Oh, oh!

[Karen Hogan]

In reality, I don't know—

[Adam Chambers, Conservative, Simcoe North, ON]

I know there's a back-and-forth. There's a draft report and a discussion—

[Karen Hogan]

There's absolutely a back-and-forth, and we agree that the recommendation is one that can be implemented and so on and so forth.

The concern here is that.... We don't take issue with the risk-based approach that the department has made. It's really the amount of work and the extent of work that we don't believe is sufficient in order to meet that fairness threshold of treating every taxpayer—whether they be an individual or a business—fairly. If you've identified the potential 100,000 businesses that are not complying, to look at only a fraction of those is not treating every taxpayer fairly.

The first step is to identify payments to ineligible recipients. Then the decision can be made to go after collection or not collection.... There could be all kinds of choices made for compassionate reasons and so on, but I'd just encourage the government to be a lot more transparent in what they're doing, and I think they need to do more work.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you.

Given there's a bit of a delta or some discussion about the amount, are you planning to follow up with the CRA at the end of their postpayment verification to see whether you're satisfied with the work and the methodology they use?

[Karen Hogan]

The work we plan on doing in the coming years, I think, will depend on the results of some of their postpayment work, because that is the only way to truly know whether businesses or individuals are ineligible.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you.

Commissioner Hamilton, given there's a discussion and some discrepancies, will the CRA commit to producing for this committee the results of its postpayment verification work in terms of how much you've identified, ineligible recipients and what you believe to be the error rate? Is that work that you'll produce for this committee?

[Bob Hamilton]

Mr. Chair, yes, we would.

We've been pretty transparent thus far with our progress reports—early days—but I think we would continue that pattern of reporting back on this area, for now but also, frankly, for the future, because if this or something similar ever happened again, it would be nice for people to be able to learn from what we've gone through, and I wouldn't over-exaggerate or partially disagree. We always learn something when the Auditor General comes in and pushes it to maybe a different place, and maybe the Auditor General learns something. I don't know. I don't want to speak for them.

It's not black and white. There's a question of degree, and I think we are doing some things a little more aggressively as a result of the Auditor General's report, but I'm comfortable with where we are.

[Adam Chambers, Conservative, Simcoe North, ON]

That's fair enough.

I have a final question, Ms. Hogan. On the amount of $27 billion or $32 billion, however you'd like to cut it, would you say that's the minimum amount that you feel the highest confidence in that ought to be investigated?

[Karen Hogan]

I think it's important to distinguish the amounts. There is $4.6 billion that was overpayments to individuals. Distinguishing it from the $27.4 billion requires further investigation.

In our work, we always try to take the most favourable approach to a taxpayer. For example, with an individual, if they had earned $5,000 over two years, we said, well, you were eligible, when it's really only over one year. We always give the benefit of the doubt, which is why we landed on at least $27.4 billion that requires investigation. There are individuals and businesses in there that are eligible for this, but you don't know until you've done the work to identify.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much.

Mr. Chair, in my remaining minute, I'd like to do a little math. Of the wage subsidy in the CEWS, $32 billion has been identified as potentially having gone to ineligible recipients. That doesn't include money that went to eligible recipients whom many would deem unworthy. There was $6 billion to $7 billion paid to publicly traded corporations that continued to pay dividends to shareholders. There was about $10 billion paid to students to not work when the economy opened up in the summer of 2021. If you add those amounts together, then we're talking about almost $50 billion, somewhere between $40 billion and $50 billion of the largest benefits that went to Canadians for COVID. That could be anywhere between 20% to 25%. That's why this is an important discussion to have. That's why I think Canadians deserve follow-up information from the Canada Revenue Agency.

I thank the Auditor General for her work and her office's report on this. I thank the CRA for attending today and look forward to a future discussion on this.

Thank you.

[The Chair, Conservative, John Williamson]

Thank you, Mr. Chambers.

You'll actually have another round, if you stop talking.

I'm going to turn it over to Ms. Bradford.