Evidence of meeting #47 for Public Accounts in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cra.
A video is available from Parliament.
5:35 p.m.
Auditor General, Office of the Auditor General
I'm not sure I can conclude on that because some of those cases were referred to law enforcement. Those activities have to continue to determine whether or not the parties in question can be found and whether amounts can be recovered, so it's impossible for me to tell you that it's hopeless.
It's really probably the department who can give you an update, or we'd have to wait for time to pass for law enforcement to conclude on the cases.
5:35 p.m.
Conservative
Michael Kram Conservative Regina—Wascana, SK
Okay.
Then maybe I will ask the witnesses from the CRA and ESDC. Could you describe some of your activities with law enforcement as we go after these 36,000 cases of identity theft and the $138.9 million?
5:35 p.m.
Assistant Deputy Minister, Integrity Services Branch, Service Canada, Department of Employment and Social Development
Thank you for the question.
I would say that, in anticipation of the emergency benefits being launched, we understood that fraudulent activities would be increasing, so we strengthened our anti-fraud controls and our measurements in regard to algorithms and other fraud-detection capabilities.
We prevented and issued stop payments for more than 30,000 cases, demonstrating about $42 million in savings. Some of the stop payments did not happen on a timely enough basis to be able to prevent money going out the door, but we prevented further money from going out the door. Because we saw that some of these fraudulent activities appeared to be potential fraud schemes—this is where you have the 13,000 cases that were referred to the RCMP for follow-up—that represents about $7.9 million.
We stay in constant contact with our colleagues during their official duties. We will be told when they are ready to tell us where they are at in their investigation process.
5:40 p.m.
Conservative
Michael Kram Conservative Regina—Wascana, SK
Just for thoroughness, the fourth bullet point on that is related to $60 million under criminal investigation with respect to the Canada emergency wage subsidy. Is the investigation of the fraud related to the wage subsidy following all the same processes as for all the other cases of fraud?
5:40 p.m.
Commissioner of Revenue, Canada Revenue Agency
Thank you for the question.
Yes, it would be essentially the same process whereby we identified fraud and stopped some cases. Where we weren't able to do it, we referred it to the authorities if we couldn't handle it ourselves.
I think it is miscast under the title of “Unrecoverable amounts”, because that chapter hasn't been written yet, though we are hopeful that we will be able to recover some if not all of that.
5:40 p.m.
Conservative
Michael Kram Conservative Regina—Wascana, SK
I would like to change gears now to go to page 18 of the report. I'll read another quick quote from the Auditor General:
In our opinion, the ability for low-income individuals to earn more on the Canada Recovery Benefit represented a disincentive to work, which impacted some labour markets at a crucial time when the need for employees was trending upwards.
I was wondering if ESDC has ever done a study or come up with an estimate regarding the loss to the Canadian economy due to this disincentive to work and instead to just collect pandemic benefits.
5:40 p.m.
Deputy Minister, Department of Employment and Social Development
We don't have a study at this time that would say that.
There has always been this possibility. We have always actually been kind of aware, and that's why we put the $1,000, you remember, in the EI-ERB to allow people to continue to work, because we wanted them to stay attached to the labour market. Later, of course, with CRB, we created a situation in which they could actually do even more, so that's what we've done.
What is very encouraging from an economic perspective is that, as soon as the public health measures were off, people were going back to work. That's what we have seen, including when we had measures to facilitate access to EI. We ended up with less than 5% in terms of unemployment, which gave the impression that actually people were happy to go back to work.
You have to remember that for a lot of workers this was not—
5:40 p.m.
Conservative
The Chair Conservative John Williamson
Thank you. I'm going to stop you there. That was a fine answer.
Very good indeed.
Ms. Yip, you have the floor for five minutes.
5:40 p.m.
Liberal
Jean Yip Liberal Scarborough—Agincourt, ON
Thank you. I'll be sharing my time with Mr. Fragiskatos.
My question is for Mr. Hamilton. It's in regard to the Auditor General's recommendation 10.114:
To increase the recovery of COVID-19 amounts owed and reduce the administrative burden, the [CRA] should....put system functionalities in place to apply refunds against COVID-19 amounts owed.
Can you explain what system functionalities will be in place and update the status of this recommendation?
Thank you.
5:40 p.m.
Commissioner of Revenue, Canada Revenue Agency
Certainly. Thank you for the question.
That's a feature we have in our systems to be able to offset amounts that are owed to the government against refunds or other payments that would go out, so that's a way of collecting.
We have that functionality in place now for almost all aspects, and there is one other piece that is coming up next week. We're hoping to have the update to the system to allow that, but maybe I would just ask Gillian to elaborate a little bit on that point, because it is quite an important part of our recovery efforts.
5:40 p.m.
Gillian Pranke Assistant Commissioner, Assessment, Benefit and Service Branch, Canada Revenue Agency
Mr. Chair, in normal systems, it's standard practice that there's an opportunity to apply refunds against amounts outstanding in the same revenue line. With the COVID benefits, as the commissioner stated, in October 2022 we had the ability to apply T1 refunds, individual refunds, to outstanding COVID debts. In February, we will have the ability in our benefit system to apply any benefit credits to outstanding COVID debts as well.
As the commissioner mentioned, this coming weekend, the treatment of debts or refunds towards COVID debts will look like any other program delivered by the Canada Revenue Agency, and we'll be able to apply those amounts to COVID debts outstanding.
5:45 p.m.
Liberal
Peter Fragiskatos Liberal London North Centre, ON
Thank you very much.
Time is limited, and I did want to go back to Mr. Tremblay.
Sir, you have a lot of experience in the public service. This question was asked of Mr. Hamilton, but I did want to get your thoughts on it. Suppose that a system of prepayment verification was put in place, along the lines of some of the ideas that have been raised here by friends across the table, so to speak. What would have been the result in terms of getting payments out to Canadian individuals, families and businesses? Obviously there would have been a delay, but can you talk about what the delay would have looked like, what we might have seen and the affect on the society at large?
5:45 p.m.
Deputy Minister, Department of Employment and Social Development
If we had received three million demands, in the EI process, as the EI system works with pre-measures, it would have been months and months of backlog. Let's be honest. The system would not have been able to respond quickly to such a demand. I can ask Cliff to speak about this because he has the longest experience on EI here.
5:45 p.m.
Business Lead, Benefits Delivery Modernization, Department of Employment and Social Development
Yes, and that was a critical factor in the design of the emergency response benefit.
In the middle of March, overnight, we saw an increase of hundreds of thousands of applications coming into the EI system, and we were in a situation where the EI system was about to crumble if it was not a different decision that was made because of the rules related to the EI program. If we hadn't implemented the emergency response benefit partnership between ESDC and CRA, millions of Canadians—it ended up being 8 million Canadians who received the CERB—would have been waiting well through 2020 and into 2021 before they would have been able to receive any type of payment.
5:45 p.m.
Liberal
Peter Fragiskatos Liberal London North Centre, ON
Those are a lot of constituents and a lot of businesses waiting across the country. Thank you very much for adding a bit more colour to what CRA put forward.
Mr. Hamilton, just very quickly, I have a final question. I think you put this forward last week. You did mention it again, but I think it's an important point. It speaks to this whole issue of the legislative timeline. Is CRA confident that it will meet its verification obligations under the legislative timeline?
February 2nd, 2023 / 5:45 p.m.
Commissioner of Revenue, Canada Revenue Agency
Thank you for the question.
Yes, we are very confident that we can. As I think the Auditor General pointed out, if there is a case of misrepresentation, that three-year time frame does not come into play. We're confident that we will be able to get the compliance work done that we need to do and not be impacted by those deadlines.
5:45 p.m.
Conservative
The Chair Conservative John Williamson
Thank you all very much. I appreciate everyone coming in today and for your indulgence. We went a little bit late, but it was a very good committee meeting.
The meeting is adjourned.