Public Accounts Committee on Jan. 26th, 2023

[Bob Hamilton]

Mr. Chair, I don't have a view on that, about what's politically motivated or what isn't, but to your comment I would say that the reason there might still be a difference of opinion—and it might not even be just between the AG and ourselves; it could be between two other reasonable people—is that we're pretty early in the process. I think there's a lot of work that needs to get done and that we are doing, and probably down the road we'll see those differences reduced—

[Kelly McCauley, Conservative, Edmonton West, AB]

If we're early in the process, how many months will it be before we're well into the process? Is it six months? Is it one year before you feel comfortable that we'll have a much better idea?

[Bob Hamilton]

Mr. Chair, that's probably a better question for Cathy to answer, but we are into the process. Don't forget that we started in October 2020.

[Kelly McCauley, Conservative, Edmonton West, AB]

You've stated repeatedly that we're too early into the process.

[Bob Hamilton]

Yup.

[Kelly McCauley, Conservative, Edmonton West, AB]

When will we have a better idea? Will it be six months from now, one year from now, two years...? I just don't know. I'm not being.... I'm just trying to get a better idea, then.

[Bob Hamilton]

No, no. Fair enough.

We're into phase two now of our audit. We've done some and we're completing them. We know we're going to be in this until 2025. Cathy's probably going to kick me here, but I would say that by the end of the year we will have a much better sense of whether we're getting on top of most of it or whether we need to do some further work.

I don't know, Cathy, if that—

[Kelly McCauley, Conservative, Edmonton West, AB]

That's a fair answer. Ballpark is just fine for me.

How much time do I have, Mr. Chair?

[The Chair, Conservative, John Williamson]

You have one minute.

[Kelly McCauley, Conservative, Edmonton West, AB]

Okay.

AG Hogan, you say in paragraph 10.45 of your report that you cannot determine the number of employees who benefited from this program, whether employees remained working for the same company or whether those laid off were rehired. This is over 100 billion dollars’ worth of taxpayers’ money. How is it that we don't have this information? How do we not know this?

I recognize that at the very beginning of COVID, stuff had to be done immediately, but six months in, one year in, we still seem to be operating as if to say, well, let's just get money out the door as opposed to putting up, again, better fencing to protect taxpayers.

[Karen Hogan]

One of the requirements in the legislation when they asked us to do this audit was to conclude on whether or not the programs met their intended objectives. When it came to the wage subsidies, some of those objectives included helping the employer to retain their employees throughout the pandemic and to rehire the employees potentially laid off as businesses closed, but also seeing businesses be sustained throughout the pandemic. Because of the lack of information gathered about employees, such as not having SIN numbers, we were unable to conclude whether or not the same employees were working or remained.

We know from Statistics Canada information that while the number of businesses stayed the same or went up, they are different businesses in some industries. We were unable to conclude on whether the intended objectives of CEWS were met, because of the limited information gathered.

[The Chair, Conservative, John Williamson]

Thank you very much.

Mr. Fragiskatos, you have the floor for five minutes.

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

Thank you, Chair. In fact, I will be splitting my time with Ms. Bradford, who will go first.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you, Mr. Fragiskatos.

Very quickly, Commissioner Hamilton, in the audits you completed as of January 3, 94.2% of the amounts reviewed were allowed. The CRA denied or adjusted 5.8% of the dollar value of these claims. How does that compare with the usual compliance rates?

[Bob Hamilton]

Mr. Chair, again, I'll defer to my colleagues to elaborate and to make that comparison.

I would say that it's not very different from what we would have expected. In terms of our normal experiences, it's probably a bit higher, but I'll let Cathy or Marc take that.

[Cathy Hawara]

It's hard to compare this particular program with the other compliance programs that we run. We have such a wide variety of programs. The error or change or reassessment rate really depends on the nature of the taxpayer and the nature of the tax issues we're looking at. It's very hard to draw a comparison.

I have to say that this program was quite unique. It was one reason we wanted to start our audit so quickly and to better understand what the risks were. It was quite unusual for the CRA to be starting an audit before the end of a tax year and before a tax return had been filed. I think it's very difficult to draw comparisons with our regular audit programs.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you.

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

That didn't take any time at all; no problem.

This goes to Ms. Hawara as well. In the report, the Auditor General makes it clear that on its own, postpayment verification of the type that's being pursued by the CRA—leaving aside the specifics in terms of how it's going, the various mechanics, the policy design and this type of thing—is completely in line with international best practices that are in place and recognized on how verification ought to proceed in emergencies.

My question for you stems from the very detailed explanation that you've outlined here today, and that the commissioner has as well, as far as verification is concerned and how it's being carried out. To what extent is that approach in line with international best practices from an audit perspective?

[Cathy Hawara]

The findings in the report tied the need for postpayment compliance work, given the attestation-based approach that was taken. Certainly, that is our view as well. A postpayment compliance program is going to be needed, and that's what we're working on now.

We agree. This was the right approach to ensure the integrity of the program, both with prepayment controls, which we feel were appropriate in the case of the wage subsidy, and with the postpayment audit program that's currently under way.

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

What we've also had emphasized here today is that, unlike with the CERB, while attestation may have played a minimal role in the wage subsidy, this was not an attestation-based model. The policy design here was quite different, with verification built in from the beginning.

My question relates to the whole approach when it comes to verification, where things are going as far as the assessment of risk is concerned and how you take that into account.

I'm running out of time, but could you also take a moment to clarify a few things? It's a different topic, but with the dental benefit, for example, or the housing benefit, yes, there's an attestation-based approach, but there are verification processes built in to check. There are a number of things that people are asked beforehand. There's postverification that can take place. Could you touch on that as well?

There are two questions built into one.

[Bob Hamilton]

Mr. Chair, maybe I'll take the second question. You'll have to remind me of the first one, but the second question is on the dental and the housing benefit.

I would say there's more prepayment verification in the dental and the housing, partially because of what we've learned through the CERB. What we have with those programs is tax filings from people. If you recall in the CERB situation, it was a rolling amount. You earned a certain amount—$5,000 over 12 months—but we didn't have tax filing information at that time. This time we do. It's linked through the Canada child benefit, which is, again, information we have.

We have more information. It's a bit closer to the kind of regular program that we would run, but it is attestation-based.

[The Chair, Conservative, John Williamson]

Thank you very much. You'll have to come back for the first part of that question.

Ms. Sinclair‑Desgagné, you have two and a half minutes.

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

Thank you, Mr. Chair.

Since this is my last turn, I will let the Auditor General tell us why it's important that more rigorous work, based on better collected data and on 21st century computer systems, be put in place so that the CRA's fiscal responsibility to Quebeckers and Canadians is maintained. It's very important that Quebeckers and Canadians hear this form her.

Madam Auditor General, I would like to mention that I am giving you this time to speak so that it can't be said later that you were forced to give partial answers. Your work is very honourable, and I must maintain it. The Bloc Québécois supports you and thanks you for your work.

[Karen Hogan]

I'll answer your question in two parts.

First, I'd like to talk about two recommendations aimed at improving the country's approach to managing health crises like the ones we've just experienced, but also at improving the country's tax system, quite simply. We need real-time information on wages and business revenues. The Canada Revenue Agency is in full agreement with both of these recommendations, and as Mr. Hamilton mentioned, it is already well ahead of schedule in implementing them. So I encourage the country to continue this work. It will be long and difficult, but it will improve the management of a number of benefit programs, and not just those related to emergency situations.

In terms of the need for more rigorous post-payment audits, I would suggest that the government look not only at the amount of payments that have been made to ineligible businesses or taxpayers, but also at the error rate. As I mentioned, during the second phase of audits that the Canada Revenue Agency is currently doing, it found that about two out of three files were problematic. I think this indicates that much more work needs to be done, because the law requires that our tax system treat every taxpayer fairly. It's not enough to look at the figures, but we also have to make sure that every taxpayer has been treated fairly.

[The Chair, Conservative, John Williamson]

Thank you very much.

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