Public Accounts Committee on Feb. 2nd, 2023

[Bob Hamilton]

Thank you for the question.

It certainly depends on the type of extra prepayment step you put in. Some are more severe than others. There was no doubt that the more we put friction in the system or asked for extra checks, it was going to delay things. It would often be a manual exercise that we would have to do within the CRA. The more we can automate things, the better. Manual exercises delay.

I would say, for example, that through the period—we talked about fraud earlier—we did notice that there were instances when we were suspicious of fraud, so we held and blocked payment while we did the check. In some cases, maybe we forced some people to call us—

[The Chair, Conservative, John Williamson]

Excuse me for interrupting, Mr. Hamilton. We're having a little trouble with the sound.

I'm going to have the clerk make a request.

[The Clerk of the Committee, Mr. Cédric Taquet]

Could you lower the sound on your earpiece? It seems to be creating an echo with the microphone.

Thank you.

[The Chair, Conservative, John Williamson]

There was a little feedback.

Thank you.

[Bob Hamilton]

I was just talking about the fraud circumstance where we had to block some activity or force people to call us. It meant that people couldn't get their payment for three or four days. Instead of getting it in three or four days, they would get it in eight to 10 days, or maybe not at all. We noticed that people didn't like that, obviously, and were waiting for it at a time when they really wanted money.

That's the kind of balance we always had to go through during that period. How do you make sure that you get the money out as quickly and efficiently as possible but at the same time protect the integrity? As you start adding additional checks into it, checks in the sense of verification, it increases the time. It just depends, though. If you'd gone further and had even more verification, obviously the time would have extended. At that moment in time, there was really a premium on trying to get things out the door.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

How many families or individuals were impacted in that fraud blockage? Was it a great number?

[Bob Hamilton]

I'm sorry. I just didn't catch the last part.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

What was the number of families who had to wait a while?

[Bob Hamilton]

I see that Marc has the number.

[Marc Lemieux]

Progressively, we blocked up to 700,000 individual applicants.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Mr. Tremblay, in your opening statement you mentioned that ESDC had sent about “55,000 fact-finding letters to potentially ineligible recipients”.

Funds were recovered from 32,609 people who received these letters, which, according to my calculation, means that about 60% of people who received the letters ended up paying back money. That sounds like a really good response rate, especially since the recipients were only potentially ineligible.

Can you elaborate more about this process?

[Jean-François Tremblay]

Yes, of course I can.

As I mentioned, we also sent 1.8 million letters to people who received the lump-sum payment and should not have received it. There's already close to 1.2 million of them who started reimbursement or have reimbursed. That's actually a positive.

In this case, the way we've done it is that we looked at all of them, as I mentioned at the beginning, with the data analysis. We ended up with a pool of more than 550,000 people where you could see that there were differences between the eligibility criteria and the amount of money they got. This is the pool of people we're looking at.

I'll give you an example. They had to have made $5,000 in revenue. We may have people who didn't make $5,000 in revenue, but got maybe one payment. Do you go after people like that? You're going to have to assess how much time you're going to spend on this. That's the kind of analysis we have done. The 55,000 are the first ones where we have kind of a good reason to believe there's money there that should be reimbursed.

Yes, we're starting to have a response that is actually quite positive. We'll see if it's going to continue like that with all of them. Our objective is really to focus on the ones where we think there are actually reasons to believe.... It could be in good faith, but it's a significant gap from the—

[The Chair, Conservative, John Williamson]

Thank you very much.

We will now hear from Ms. Sinclair-Desgagné.

Ms. Sinclair-Desgagné, you have the floor for just two and a half minutes.

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

Thank you, Mr. Chair.

I'll try to be as brief as possible. Something has really been bothering me since the last exchange. Mr. Hamilton made it clear that there was no lack of will to recover the money. And yet some serious backlogs came about and we'll probably never recover several billion dollars in overpayments.

But of course, there is the context issue. The Canada Emergency Response Benefit was created because the employment insurance system was hopeless.

We are fortunate to have with us today Jean-François Tremblay, Deputy Minister of Employment and Social Development Canada, who can explain where we stand on the reform of employment insurance requested by all the opposition parties, and which is essential if workers are to finally have a proper system. If we find ourselves in a recession, which is something being forecast by all economists—and I too am an economist—will we have in place the employment insurance system Quebeckers and Canadians deserve?

Mr. Tremblay, have you learned anything from this pandemic? Is a proper system and a true reform something we can expect?

[Jean-François Tremblay]

Have we learned any lessons from this crisis? We've known for years that we need to work on access to employment insurance and to modernize the system. We learned from our consultations that people wanted a simplified system.

During the pandemic, we introduced temporary measures to streamline the system. In some instances, these proved to be fairly effective at speeding things up. Consultations were held on reforming employment insurance. The government will have to decide when it wants to do this. I can't give you any further details right now.

I would nonetheless suggest that you consult the reports we published about the consultations and the commitments made to the stakeholders. I'm sure that you've already done that.

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

Yes.

We may not be talking about the same consultations. However, I see that in 2020, the Department of Employment and Social Development gave $18 million to Deloitte, $26 million to Accenture Canada Inc. and $40 million to PwC.

There were quite a few consultations in the private sector. However, there doesn't appear to have been any positive impact on the results. That makes things somewhat problematic.

I believe my time is up, Mr. Chair.

[The Chair, Conservative, John Williamson]

There's enough time for a short answer, but it's as you wish. I see that we have an expert here.

Thank you very much.

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

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you, Mr. Chair.

I want to pick up where I left off previously in relation to capacity at CRA. You mentioned that you're at full capacity and that you have the power and ability to investigate every single one of these claims, but of course Canadians are still seeing issues in relation to what they feel should be owed to them, which is the massive corporate tax avoidance dollars that should be going to our public systems.

In regard to that, I think it's important to know and to qualify your statement, Mr. Commissioner, when you say that. You know, money is, of course, one of those resources that the government has been able to increase for the CRA's operations and capacity, but the question still remains of whether it's enough, particularly if we're thinking about the existing tax avoidance at the levels that it's at.

It would be helpful for me and I think for Canadians across the country to know exactly what you're doing in relation to that tax avoidance and to understand whether or not it's growing or diminishing with your strategies in relation to the numbers I cited between 2014-18.

What do the numbers look like for 2018-20 in terms of corporate tax avoidance?

[Bob Hamilton]

Thank you, Mr. Chair, for the question.

I don't have that figure that you requested right in front of me. I should say that, when we do our tax gap analysis, it's always a few years behind, because it takes a while to get all the data assembled for that, but I would say that we've made quite a bit of progress. I would say that for two reasons, and I hinted at this in my earlier response.

First, we have received a lot of additional resources over the last number of years specifically to improve our auditing of offshore activity and tax avoidance and evasion. We put those resources to good use hiring more auditors and improving our technology, because part of this is also getting the technology that we need to put the pieces together for some of these international schemes. The money we have received has been helpful.

To your point, could we do more with more money? Sure, but I guess, in the sense of trying to strike a balance with all the different things that need to get done with the government's money, I feel comfortable that we are well resourced in this area. When I look at my colleagues around the world, I think that we're in the ballpark.

The second thing that I would say, and I've referenced it, is that we can't do this alone, because what we find in all of the countries is that you can close off something, but it just shows up at another place. We need to be able to have mechanisms to share information on multinationals and high net-worth individuals. We've been really improving in that space over the last number of years as a group of, say, OECD countries and a bit broader.

Indeed, recently you've seen the OECD put out some pretty aggressive prospects for changing the global tax system, a corporate minimum tax that would apply to all countries that have signed on and a way of taxing the

[The Chair, Conservative, John Williamson]

Thank you. I'm going to stop—

[Bob Hamilton]

Those are the kinds of initiatives that will help us.

[The Chair, Conservative, John Williamson]

I appreciate it.

Mr. Perkins, thank you for joining us today. You have the floor for five minutes, please.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Mr. Chair.

Thank you, witnesses.

I'm going to give you a minute and do a little preamble. I'm going to talk to you about the fish harvester benefit. While it's not possible, apparently, in your testimony today to get every nickel of misused, abused or prisoner CERB money back, you're going very aggressively at hard-working fishermen. The reason fishermen had a special program during COVID is that, generally, they don't qualify for employment insurance. They don't qualify for employment insurance because almost 99% of fishermen get paid, since the days of Moby Dick and before in whaling, on a percentage share of the catch. They do not get paid a wage. They'll go out, and they'll have days and weeks where they won't have any income, and weeks where they'll have a lot of income. Their records of employment—which Service Canada and everybody has and you guys have—show that.

The original application form on the Government of Canada's website—which is no longer up; it got altered about six months into the program—had four categories for fishermen to check in the process. It had self-employed commercial fisher; self-employed commercial freshwater harvester; indigenous fish harvester designated as equivalent to an enterprise head under a communal commercial fishing licence; and a shareperson, a crew member who earns a share of the revenue. You are eligible if you are shareperson, which 99% of fishermen are, and we're talking about people in the lobster fishery who lost a considerable amount of income as world markets dried up like other industries. Even though they went out fishing, there was no income because there was no market for the product, and that's why the special program was made.

I have quotes from many of my constituents who are having this aggressively clawed back by the CRA and who don't understand why, when their incomes were down anywhere from 13% to 75%, the CRA—which says on the form that if you are a shareperson, you're eligible for this benefit—is clawing it back.

[Cliff C. Groen, Business Lead, Benefits Delivery Modernization, Department of Employment and Social Development]

Thank you, Mr. Chair. I'd be pleased to answer the question to the extent that I can.

The fish harvester benefit was jointly delivered by Service Canada and the Department of Fisheries and Oceans. Yes, with regard to recovery activities, the CRA does have roles related to the recovery of most government-related overpayments, but it was jointly delivered by Service Canada and the Department of Fisheries and Oceans.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I understand that, but I have limited time. I don't want to hear that circle again. I raised this in the House six months ago when the Minister of Fisheries said that she just designed the program, so don't talk to her. I asked the revenue minister's office, and I have a letter back from the Minister of Revenue's office—you guys probably signed off on it—that says, more or less, “Don't talk to us. We just collect the taxes. Talk to Service Canada,” like you just said. When we sent a letter to the minister of Service Canada, she said, “Don't talk to us. We just administer it. Go back to Fisheries, which set up the program.”

We're all caught in a catch-22 where everybody says, “Don't ask me why this is happening. I just work here.” I don't want to hear the excuse that says that somebody else is responsible for the program. You set up a program that said they were eligible and their incomes were down 75%. You're clawing it back from these folks, but prisoners, dead people and kids who stayed at home and lived with their parents get to keep their CERB. Explain to me why.