I call this meeting to order.
Good morning, everyone. Welcome to meeting number 37 of the Standing Committee on Public Accounts. The committee is meeting in public today and is being televised.
Pursuant to Standing Order 108(3)(g), the committee is meeting today to study “Report 7, Canada Emergency Wage Subsidy”, of the 2021 reports 6 to 9 of the Auditor General of Canada.
Today's meeting is taking place in a hybrid format pursuant to the House order of January 25, 2021. Therefore, members may be attending in person in the room or remotely by using the Zoom application.
Though I know we are all familiar with how our meetings work, I do need to remind members and witnesses of a few rules that we must follow.
Interpretation services are available for this meeting. You have the choice, at the bottom of your screen, of either “Floor”, “English” or “French”.
Before speaking, click on the microphone icon to activate your own mike. When you are finished speaking, please put your mike on mute to minimize any interference. When speaking, please speak slowly and clearly. Unless there are exceptional circumstances, the use of headsets with a boom microphone is mandatory for everyone participating remotely.
Should any technical challenges arise, please advise the chair, and note that we might then need to suspend for a few minutes as we want to ensure that all members are able to participate fully.
Now I'd like to welcome our witnesses.
Joining us today from the Office of the Auditor General are Andrew Hayes, deputy auditor general, and Philippe Le Goff, principal.
From the Canada Revenue Agency, we have Bob Hamilton, commissioner of revenue and chief executive officer; Ted Gallivan, assistant commissioner, compliance programs branch; and Maxime Guénette, assistant commissioner and chief privacy officer, public affairs branch.
From the Department of Finance, we have Michael Sabia, deputy minister; Andrew Marsland, senior assistant deputy minister, tax policy branch; Isabelle Jacques, assistant deputy minister, law branch; and Maude Lavoie, director general, business income tax division, tax policy branch.
I have been informed that Mr. Hayes won't be making an opening statement, so, Mr. Hamilton, you have five minutes, and then I'll go to Mr. Sabia for five minutes.
Thank you, Madam Chair.
I am happy to be with you once again, to discuss “Report 7—Canada Emergency Wage Subsidy”, released in spring 2021 by the Office of the Auditor General of Canada, or OAG.
With me today are Ted Gallivan and Maxime Guénette, whom you already introduced.
My focus today is on the response of the Canada Revenue Agency, or CRA, to the motion adopted during meeting 27 of the Standing Committee on Public Accounts related to its study on report 7.
The motion requested that both the Department of Finance and the CRA provide the committee with:
all studies, data and analysis used for the implementation of the Canada Emergency Wage Subsidy, that these documents be provided to the committee with redactions for Cabinet confidence and personal information, and that these documents be provided to the committee no later than May 27, 2021.
Upon adoption of this motion—
Thank you, Madam Chair and members of the committee, for your invitation today.
I am pleased to be here along with some of my colleagues from the Department of Finance: Andrew Marsland, whom you all know from previous meetings; Isabelle Jacques, our chief counsel; and Maude Lavoie, the director general of business income tax in the department.
We're here today, obviously, in relation to the committee's request for studies, data and analysis used for the implementation of the Canada emergency wage subsidy.
Through this initiative, more than 5.3 million Canadian employees have had their jobs supported. Since its introduction, the program has been improved to make it accessible to a broader range of employers by including those with a revenue decline of less than 30% and providing a gradually decreasing subsidy to all qualifying employers.
Most recently, budget 2021 proposed to extend the program, so that it would continue supporting Canadians until September 2021. This would be accompanied by a gradual decrease in the wage subsidy rate, beginning in July, to ensure an orderly phase-out of the program as vaccinations are completed and the economy reopens.
The department's provision of the documents requested by the committee clearly—and obviously, I think—reflects our recognition of the importance of the role of the public accounts committee in providing oversight to government programs and initiatives.
In providing you with these documents, we have been guided by the committee's request, and I quote, “that these documents be provided to the committee with redactions for Cabinet confidence and personal information”.
The department's approach also respects our legal obligations and duties as public servants, while of course respecting the principles of the Access to Information Act.
I should say that it has been and continues to be quite a substantial exercise to review the hundreds—indeed, thousands—of pages that are relevant here. Andrew's team has worked and continues to work flat out. On that basis, we do intend to provide you with a final set of documents, essentially highly detailed spreadsheets—en français, les feuilles de calcul—by the end of this week.
In doing this work on behalf of the committee, we have retrieved all the studies, the data and the analysis provided to the Auditor General in its audit of the analysis and implementation we undertook in the Department of Finance and the Canada Revenue Agency related to the wage subsidy. I want to emphasize that all of these documents have been provided to the Auditor General in a manner consistent with the Auditor General's right to access cabinet confidences and secret documents. This has, we believe, and evidently, enabled the Auditor General to fully assess the department's performance, as is her role as an officer of Parliament mandated to perform this important work on behalf of parliamentarians.
Let me just reiterate that of course we are pleased to note the Auditor General's conclusion that the department worked within very short time frames to provide decision-makers with information to assist them in developing the wage subsidy and that it subsequently provided sound and complete analysis to inform adjustments to program.
In the department’s initial work in designing the wage subsidy, it collaborated intensively with the CRA to assess how the program could be implemented quickly. I wasn't there, of course, but clearly, officials conducted this analysis with unprecedented speed. The imperative at that time was to get help to our workers and businesses when they needed it. As I have previously conveyed to the committee, I firmly believe this was the right priority.
Following the initial launch of the program, the government also proposed subsequent adjustments to the subsidy that were informed by the department’s sound and complete analysis, as concluded by the Office of the Auditor General, as well as input from businesses and other employers.
As you can see from the quantity of material provided to the committee, this analysis was extensive in its scope.
As I said a moment ago, this analysis supported important improvements to the program. The department's agility and that of Revenue Canada in moving this program into place quickly have played a very important role in helping to stabilize the Canadian economy through what has been obviously a very difficult period.
I very briefly want to again give credit to the public servants in both the Department of Finance and the Canada Revenue Agency for their efforts in making this a reality, and making it a reality quickly.
To finish up, at the finance department we remain obviously very focused on supporting Canadians and Canadian businesses through the COVID-19 pandemic. At the same time, as the vaccination process continues to move forward, we are also increasingly very focused on what comes next on the step-by-step opening of our economy, the return to work for many Canadians and a full economic recovery.
With that, Madam Chair, I and my colleagues would be very pleased to respond to any questions you or your colleagues may have.
Thank you very much. Thank you for your time today. I appreciate the witnesses' testimony there so far.
My questions will start with Mr. Hamilton.
For your benefit, Mr. Hamilton, I'm going to be referring to pages starting at page 276 in the documents, as I have them, and going to page 280.
On page 277, it says that there was about $77 billion of CERB payments and there was a total potential exposure of tax risk of up to $20 billion. I understand that to be the amount of money the CRA would suspect that they would collect against these CERB benefits. Is that correct, Mr. Hamilton?
Okay. That's helpful in terms of the date.
I think all parliamentarians can appreciate the nuance of not knowing every month how the health response was going to pan out across the country and how that would really dictate some of the viability of those small businesses and their ability to pay back the money that the government was trying to provide to bridge businesses through to the other side of this pandemic. Based on the vaccine rollout and the way we're moving forward, that will be relatively soon, hopefully.
Obviously we're talking about the report from the Auditor General about the wage subsidy, so I had the ability to go back. Of course, as parliamentarians, we only get a short time to ask questions—five or six minutes per round—so I want to revisit some of the elements that were in that report. One of the recommendations was recommendation 7.35, which talked about a full auditing and accounting of these programs.
Again, as Mr. Sabia mentioned in his remarks, these programs are still ongoing, at least until September. I understand that there's a legislative authority to extend them if necessary. Hopefully, that won't be the case. Can you speak to the full accounting? I presume that work may already be started, but it's going to be largely finished once the actual program winds up in September, presumably.
Maybe that's a question for Mr. Sabia.
I'll move to Mr. Hamilton.
I don't have the blues right in front of me, but one thing that caught my interest last time was that a lot of committee members were talking about social insurance numbers and whether that was something we could tie in to make sure there was an accounting. I know the government systems are complex. Even department to department, there is not always perfect harmony between the systems that we operate. Certainly, I know that the government is working to be able to bridge those gaps.
Can you speak about the nuances and what your perspective was and what you remember back during this time in late March, early April, when things were really changing day by day? Every time that we put a particular nuance on a program, I presume it could slow the program in its response even by a day or two, depending on the nature of said nuance, as we try to make sure we have that accounting in place.
At the time, we did think about whether it would be prudent to ask employers to provide employees' social insurance numbers so that we could match them up with CERB recipients. There were basically three reasons that we thought we could not do that, and you've referenced at least one of them.
The IT build to do that was going to be significant, so we would have had to delay the implementation of the CEWS, the wage subsidy. That was one factor: how long the delay would be at a time when people were anxious to receive money to keep employees on strength.
The second was the burden that it would place on the businesses to be able to generate that information for us and send it to us in a way that was useful in a timely manner. At that time, there was a consideration of how much of a burden we wanted to place on the businesses in order for them to be eligible for this relief.
I think the third factor that was in our minds was that we knew we would have a capacity, even if we couldn't do the match right up front, to come back later. We've always said that a part of our integrity plan on this issue was to do whatever verification we could up front in the context of what was feasible, but knowing that we'd have an opportunity to come back after the fact and compare the information to make sure that the right people got the money.
Thank you, Madam Chair.
Ladies and gentlemen, thank you for being here today.
Approximately 28% of employers who applied for the subsidy in 2020, equivalent to roughly 62,000 applicants, did not file a GST/HST return for 2019.
For 2020, 15% of recipients who had to file a GST/HST return between January and June 2020 were non-filers.
If the CRA did not have all the information required to verify that the business needed the subsidy, shouldn't the agency have just waited until it had the information to issue the payments, instead of trying to recover overpayments afterwards?
Madam Chair, I will answer first, and then, I will ask Mr. Gallivan to provide additional information.
There is no doubt that we did not have all the necessary information at the beginning. As you mentioned, some employers had still not filed their GST/HST returns. However, we had to start delivering the program and have a process in place to confirm the business's eligibility.
There are reasons why a business would not have filed its GST/HST return. Some employers submit the forms annually, and others do it on a monthly basis.
Overall, we agree with the Auditor General's recommendation that the agency should examine its processes and ensure it adopts a more efficient approach. If any improvements are needed, we will make them. That is part of our action plan.
Madam Chair, I will pass this on to my colleague Andrew Marsland, who was there. He lived through this period, and of course I did not.
Just very briefly, however, these things are always a combination of effort between the government and the public service. I think that was very much the case here. There was clearly a need to address the issue of maintaining the employment connection between employers and their employees. We've seen in the rebound of the Canadian economy the value of having maintained that relationship, which has greatly reduced the period of time for bringing people back to work, as the economy has at least partially reopened to date.
From our point of view, from a macroeconomic point of view, this program is certainly delivering on what was expected at the time. I think from both a government point of view and a public service point of view, there was a need to provide something that would protect that relationship.
If I can, I'd be more than happy to—
No, that's quite all right.
Through you, Madam Chair, to Mr. Sabia, the first page of 151 documents that were provided to us with data on the Canada emergency wage subsidy talks about “eligible employers”. The second bullet point caught my eye: “Canadian-controlled private corporations, including co-operative corporations, with less than $15 million in taxable capital in the preceding taxation year”.
Mr. Sabia, can you help explain that to me? It sounds like companies such as Air Canada, Imperial Oil and many of the other megacorporations that took wage subsidies and then paid out astronomical CEO bonuses and dividends to shareholders wouldn't necessarily fit that description. Would you care to comment?
Madam Chair, thank you. I'll accept that answer.
What I want to do now is point to page 9 of the Department of Finance's dataset, which is under the GBA+ departmental summary. In it, we see a note that there were indirect beneficiaries, that both genders and demographic groups are expected to benefit indirectly from the proposal. The department, of course, identified higher-income people. Then, in the explanation, despite all the redactions, this one is clear: “Owners of eligible entities could benefit from the wage subsidy via an improvement of their bottom line. While no information is available on the shareholders and owners of entities affected by the proposal, since it has broad application”, it says, “aggregate data", and then it goes into a breakdown.
Is it safe to say that page 9 of the Department of Finance dataset identified early that shareholders would be benefactors of this subsidy? Again, what analysis was put in place to recognize that a program that was ultimately designed for workers would end up being siphoned off to shareholders, who add no labour value to the economic recovery as it relates to the wage subsidies?
Thanks, Commissioner. Thanks, Madam Chair.
There are two sections of the Access to Information Act that were invoked, the principles of which were invoked for redactions in the package that you see.
In the case of the particular paragraph that is being referenced, it would be paragraph 16(1)(c) that applies. This is information whose disclosure could jeopardize our ability to enforce the law, essentially, so the information that you would see redacted, without getting into the details of what's behind that particular paragraph, is information that would telegraph perhaps a bit too much to the general public about the ways in which we'll conduct our audits or the areas where we would focus more of our attention.
The way that these redactions were applied, of course, was by access to information folks within my team with delegated authority. Even though this is not an access to information request, these are the principles that we use, and when we make recommendations, we would check in also with the experts—in this case, in Mr. Gallivan's shop—to validate that the risk of injury is what we understand it to be.
In this case, maybe Mr. Gallivan would have something to add to that.
No, I think that's fine. My time is short here, and I do appreciate that answer.
With respect, I understand that there is an obligation, obviously, to enforce and collect, but there's also an equally important obligation to be transparent and report that back to our taxpayers.
On that same page, page 278, another thing that I found of interest was that it said that three million CERB recipients, or almost 40%, had an employer who received the CEWS, and they put the risk of double-dipping high in the report.
I would love to hear, if not now, if that concern was validated by the findings. How is it possible that an employer could be getting CEWS while an employee is getting CERB?
The most common scenario—you have to put your mind back to the pandemic period—would have been employees who were laid off before the wage subsidy program was announced. Then, when the wage subsidy program was announced, they were brought back retroactively. That was a deliberate design feature of the wage subsidy program to kind of maintain employment.
A very early example of how you could be—legitimately, through no fault of your own—in double receipt would have been if, when you were laid off; you claimed CERB, and then your employer subsequently claimed the wage subsidy and brought you back onto strength retroactively and gave you your normal paycheque. That would be an example.
We're still working through how many of the various scenarios have manifested themselves, so I think it's too early to comment on how many different scenarios there are and what the total dollar value is of the double claims. It's not possible to tell, without a detailed examination of somebody's T4 history, which sources of income came from which employer. Time will tell.
Thank you, Madam Chair.
I want to follow up on a question Mr. Lawrence asked. I think Mr. Gallivan would be the best person to answer.
Mr. Gallivan, you should know that my question concerns pages 000277 to 000280. I want to give you a heads‑up, so you can prepare.
I, too, would like to thank the CRA and Department of Finance officials for their tremendous work. Their effort should be recognized. The Auditor General pointed that out as well.
Last year, in the midst of a public health emergency, you managed to create two programs from scratch in difficult conditions. Frankly, I tip my hat to you and your colleagues.
Mr. Gallivan, I want to start with page 000277. It states that, 10 months ago, the government was at risk of not recovering $1 billion. In your answer to Mr. Lawrence, you said that was well before CERB had been extended.
Can you give us an update on how much is at risk of default, now that CERB has been extended?
Thank you, Madam Chair.
The question has been asked. I want to point out that I will be talking about risk categories.
Since then, the $20 billion has still not been repaid. The money is taxable, so it comes down to the math.
There are various categories. As I mentioned, a number of people who were paid twice, through their employer and through the program, have set aside money. Hundreds of thousands of Canadians have already repaid the money they owed, but we are concerned about low-income individuals; that group was actually the focus of a parliamentary debate. It's an area of major concern. Those who were not eligible for CERB because they had not earned at least $5,000 in employment income will have a very hard time repaying the money they owe.
Right now, we are putting the people who owe money into categories based on their repayment ability and we are coming up with ways to address each of those categories.
As I said, the government is owed $20 billion, and our estimate, based on past experience, is that 5% will never be recovered.
I noticed in one of the documents you provided, somewhere between pages 37 and 44, that the validation measures were developed with a view to balancing integrity and timely payments. However, the information on the number of available employees and the percentage of claims submitted was redacted.
Why was that percentage redacted? After all, it it is possible to calculate the number using the information on page 1 of the documents you provided.
Why were the figures related to businesses also redacted? There again, it is possible to calculate them using the information on page 1 or the Auditor General's report.
Madam Chair, perhaps I can try to answer the member's question.
The coverage level is something we worry about at the CRA. If you look at our annual report to Parliament and do the calculation, you see that our coverage level for small- and medium-sized businesses is quite low, below 5%. However, we don't like providing that calculation because we don't want people to know that our coverage level is very low.
Given how low the audit coverage level is, the information is redacted so that people do not realize that the likelihood of them being audited is extremely low. We don't want a situation where they decide to take a chance, on the basis of that information, and not file a return or adopt an aggressive approach.
Even though it is possible to figure out some rates, we worry that disclosing the figures might encourage people not to file.
My question is to Mr. Gallivan, and of course Mr. Hamilton is welcome to comment as well.
I want to build on what my esteemed colleague Mr. Fergus said when he was asking about the 5% default rate, because I was struck by something, and I thank him for his excellent questioning.
Is that 5% default rate based on just everyone, from the highest economic standpoint to the lowest, and not reflective of there being a pandemic? I have a suspicion that this number will be maybe double or even triple that, due to the pandemic and due to these benefits oftentimes being paid to some of the people dealing with the largest economic challenges.
Can you comment on that? Maybe you're going to tell me I'm way off, but I suspect that I'll be validated.
Perfect. Thank you very much.
On that as well, I'll tell you—and this is just anecdotal, and anecdotal evidence is never as strong as empirical—I've had a number of people come into my constituency office who didn't hit that $5,000 threshold. They got caught up in the CERB thing. To be candid, I don't think your department did a very good job of communicating who could and who didn't. I don't say that from my perspective; that's my constituent speaking.
He didn't make the $5,000. He got caught up. He applied and he got it for a year and more. This particular individual I'm talking about hasn't ever made over $5,000 in his life, and I don't see any way that he's ever going to pay it back. Quite frankly, the compassionate human being in me tells me that I don't really want to be forcing him to pay it back.
Can you comment on individuals like that and how CRA will treat people like that?
Perhaps, Madam Chair, I'll take a first cut at that.
You're right. Something that we consider as we look at people who owe money is what their situation is and what the situation is relative to the pandemic that's around us.
What we've tried to emphasize for all of our compliance collections people is that we need to be empathetic. Yes, to the extent that people got benefits they weren't eligible for, we need to take action, but we need to take that action with sensitivity, and what we call at the agency “people first”. Let's understand the situation. Let's make sure there is good communication.
You referenced at the beginning some confusion over whether the income threshold was gross or net. The government has acknowledged that. We at the CRA have said that our communication was not perfect in the early days, and so there have been actions taken with regard to that. More broadly, there would be people, for one reason or another, who mistakenly got benefits to which they weren't entitled, and we are trying to work our way through all of that as we get all the tax information.
People can be assured that as an organization we're trying to be as empathetic as we can to the person's situation vis-à-vis the pandemic or the economic consequences they suffered.
Okay. I'll use the one minute to address Mr. Sabia.
I understand that you had the budget and the pandemic, and there's no shortage of work. I want to acknowledge that before making these comments.
Having these documents come in late has really pushed back our work as a committee. We will likely have to schedule another meeting to review these documents. We could have gotten this all done.
This is part of a pattern. I've received incorrect responses on basic questions, such as whether there's GST charged on the carbon tax, which is something a first-year accounting student knows, but in your department, your assistant deputy couldn't tell me the right answer.
I would push upon you, Mr. Sabia, that we need better from you, my friend.
Yes, and I'll leave a bit of space if Mr. Gallivan wants to add.
That program is an ongoing program that looks at delinquent filers to understand why they didn't file and tries to work with them to get them to file. It has had a fairly sizable return, so we have no thought of discontinuing that program. It will continue beyond the pandemic.
In fact, part of our response to the Auditor General's report is to look at that program to see if we're doing it as efficiently as possible and if there is room within our risk assessment to do it in a better way. Sometimes you can get high returns initially when you start something like that, but of course those returns diminish as you take care of some of the easy cases and move on to the more difficult ones.
However, we are in the process of making sure that the program is as effective as it can be going forward.
Mr. Hamilton, I want to actually give you a compliment.
The person-first strategy is fantastic. I hope you take that seriously, because there are many people struggling out there. There are very few Canadians who don't want to pay their taxes, but there are perhaps many Canadians who can't pay their taxes, so I do appreciate that comment.
My first question is for the Deputy Auditor General, Mr. Hayes.
Regarding all the documents the AG reviewed, other than the package that Mr. Sabia says we're still waiting on, and that you saw, have we received them? Have you reviewed the two packages?
If you have any comments, that would be great.
No, that's fine, Mr. Hayes. That's great. I appreciate it. Thank you for your responses.
Mr. Hamilton, I'll go back to you, if I could. I'm on page 279. I could be at this committee for hours and hours, and I'm only on three pages here, but I suspect, Mr. Hamilton, you wouldn't enjoy it as much.
I see here on the top of page 279, and I'll quote, “Nudge CERB recipient taxpayers by informing them how much tax they could be owed on their benefits.”
I have two questions with that. One thing that I observed early on and throughout is that the taxability of the CERB benefit was not very well published. In fact, initially the government said it wasn't. Then it was. To this day, I don't think the government does a great job of communicating what source withholdings are in general and with respect to the CERB.
Can you tell me about the communications programs you did to tell people what they would owe on their taxes?
Thank you, Madam Chair.
You're doing a great job of chairing in person while we're all virtual. Some day, hopefully soon, we'll be back in the same room together to follow our body language and know who is over time and not over time. Thank you for coordinating the discussion.
Also, thank you to the officials who are here.
I want to take us back in time. I was looking at a communication string that I had with one of our local businesses in Guelph with about 100 employees. The business contacted me on March 19, 2020, to say that they had some concerns about what they were going to do with their staff. Were they going to have to lay off or not lay off, and were there government programs that might be coming? We went back and forth between March 19 and March 27.
In one of the communications on March 25, the owner said that they were going to go ahead and do the layoffs because it looked like government programs might be put in place. It was a big risk for them to let their staff go. They had a lot of engineering staff who would have been hard to replace.
On March 27 they said that they had their application in. On April 2 he said it was looking good. By April 21 he sent me a note to say that CEWS was in place and that they were starting to bring back some of their staff and that it looked like their business was going to get through it. There were some issues around rent recovery, and we were working on other issues. That was one of many—and I am going to say hundreds—calls that we have received as members of Parliament.
The made his presentations at 11:15 every morning, and we knew that. We had conference calls every night from 5:30 until 7 o'clock to talk about what was working and what wasn't. On this call that I had with this business, they weren't qualifying initially; we changed the program, and they were able to qualify going forward.
Could you give us a snapshot on what things were like on your side of the telephone? When we were trying to handle these calls coming from our constituents, how were you able to develop programs virtually overnight?
Mr. Sabia, maybe we could start with you. I know you were new to the department, but maybe you could reflect on your department.
I think it's difficult to describe the circumstances. I think many people were going through a difficult time at that point.
I suspect that one of the challenges always faced by businesses and governments in circumstances like that is really a lack of foresight. You can't really predict whether this is going to be a one-month, a three-month, a one-year or indeed a 16-month situation.
You're obviously dealing with imperfect information and you're trying to understand what the implications are, both from a public health perspective and from an economic perspective. In the public policy context, as you always are, you're trying to predict the reaction of economic actors to interventions, and so on.
Really, it's understanding the capacity of the system and working very closely across government to understand the art of the possible and understand what the effects of interventions will be and how successful they will be. It's really just trying to understand the context and the tools at hand and the capacity at hand to respond.
Madam Chair, I could probably go on for a couple of hours about that experience, but I will just hit a couple of the highlights and pick up on what Andrew said.
Obviously it was a time of imperfect information, and for us there was a confluence of events. It was tax-filing season, as you've indicated. We were having to send people to work remotely, virtually all of the agency, while we were keeping some people in the offices to process tax forms, because the information was flowing in. We focused on making sure we had as tight a connection as we could with people like Michael and Andrew, at finance or elsewhere, who develop the policies, so that we could put something in place that was administrable. That was one feature.
The second was talking to businesses, as you were doing, as we designed the website for the CEWS. How could we get information to people so it would be as clear as possible in that uncertain environment? We set up a calculator. We did a lot of consultation with CFIB and other businesses to ask what they needed from us to access this program.
We left the policy side to finance, but in terms of implementing it, I think stakeholder feedback was quite important for us in terms of trying to design something that could actually be accessed.
I want to turn to exhibit 7.1 in the Auditor General's report. The table indicates how many applications were submitted, how many were automatically approved, how many were manually reviewed and so forth. Clearly, a single employer may have submitted more than one application.
The total number of applications was 1.7 million. That's huge. Kudos to you for administering them all. According to the table, just 6,201 applications were manually disallowed or cancelled, equivalent to $210 million.
Would the amount have been higher had more applications been reviewed manually? Was that the maximum number of applications you were able to review manually?
I'll talk about the administrative side first.
We did a manual audit of all applications from businesses that had a history of fraud or criminality and did a thorough review.
With respect to eligibility criteria, the nature of some businesses, their history or the fact that they had changed ownership prevented us from providing the subsidy. Our mandate is not to question the history of businesses, but we did verify that the businesses had employees, and therefore were businesses. When that was the case, we would release the subsidy to them.
By law and eligibility criteria, we are not able to use subjective values to review applicants' backgrounds and deny applications. However, we did conduct extensive audits on these businesses to ensure that they were indeed eligible for the subsidy.
Thank you very much, Madam Chair.
I'd like to begin by thanking the witnesses for being with us today.
I know that having to put programs in place quickly during a pandemic has its own set of concerns and risks. As we read through the documents you sent us, we could see which risks had been raised and which had been proven to be real over the weeks and months.
My question is for Mr. Hamilton.
I was surprised to see that, in several places in the documents, there was reference to reputational risks to the Canada Revenu Agency.
Can you explain to me the extent to which these risks were considered among the major potential impacts? Why was so much attention paid to them?
Good afternoon, everyone.
First off, welcome to the commissioner and DM Sabia. It's always a pleasure.
I think this is going to be our last meeting that's not going to be in camera. The next three are in camera.
I want to ask something sort of big picture, because a lot of my colleagues have asked questions with regard to granular details.
We put programs in place and we put in guardrails. Obviously, during the middle of a pandemic, a once-in-100-years event, we had to put in place a program that had the objective of maintaining an employer-employee attachment. At one time, 5.5 million Canadian workers maintained an attachment to their employers, so that objective was achieved. On the CERB, we assisted almost nine million Canadians at one point, so that objective was also achieved.
As my first question, how important was it to strike that balance with regard to the guardrails?
The second component of my question is on digitization. I'm a big believer in digitization, let's call it, on the governmental level. What lessons can we learn—and this also applies to CRA—that we can take away as we move forward? The CRA has an implementation arm; the legislation comes from the Department of Finance. What can we take away to digitize government services and provide them more efficiently and more effectively and at a lower cost to Canadians?
If I can turn to Mr. Hamilton and then Mr. Sabia, I'll leave it to you folks to divide that time up.
I'll say a few words, and then I'm sure my colleague Michael will have a few things to say.
Obviously, one of the things the pandemic has made us all realize is the importance of digitization for now and for the future.
I say that knowing that the agency actually had made a lot of progress before the pandemic. Over 90% of individual tax returns are now filed electronically, so in some sense I think the agency has been in the vanguard of trying to make our operations more electronic and more digitized. Nevertheless, we saw pockets of the organization where we relied on paper extensively. Developing new programs in a pandemic can sometimes perpetuate that.
We actually have a strong initiative right now to try to find those areas where paper persists and try to digitize them as fast as possible, because it is certain that in the future we're going to need more rather than less. That's the future of the agency. We've seen the benefits already of actions that the agency has taken to become more digitized. It just makes us more resilient and more flexible, and it provides better service to Canadians as well. It's a real focus for us.
I'll turn it over to Michael if he wants to add something.
First let me pick up on Bob's comment with respect to digitization.
I think there is a consensus across the government about the importance of pressing ahead and indeed accelerating what the government's doing on digitization. There is a substantial amount of investment in the recent budget for precisely that purpose and to assist the Canada Revenue Agency in what they're doing so that Canadians can interact with the Canada Revenue Agency on a more efficient and purely digital basis.
More broadly than that, the goal is to create a set of systems whereby individual Canadians can interact with their government much more efficiently on an online basis. Those investments extend, yes, to Revenue Canada, but also very much to a number of other departments that have day-to-day interaction with individual Canadians. For instance, employment insurance is another area where significant investments are absolutely needed to ensure that the program is up to date and ready for the challenges of the digital economy that we find ourselves in.
That continues to be a priority and something that we're going to continue to fund in subsequent budgets.
I will just move to this issue about guardrails and the design of the program. I can say this from a distance, because I wasn't there at the time.
When you think back to March and April of 2020 and the kind of economic damage that the pandemic was doing to Canadian businesses and individual Canadians, there was urgency to get a program out there that would have a big and immediate impact. The situation was just that urgent.
If you take a couple of steps back, I think that's one of the reasons you're seeing the Canadian economy now able to react with the kind of energy that it has as we progress through the vaccine and as the energy and the spring of the Canadian economy begins to expand. Hopefully, we'll get a lot more of that through the summertime and into the early fall as the economy fully opens.
This program has played a critical role in greatly shortening the amount of time from when an employer picks up and begins to expand business until their employees are there. One of the things that the government wanted—and I think they were right—was to cut that time to the absolute minimum.
Thank you, Madam Chair.
I think all of the witnesses present here today understand the urgency with which I'm calling for greater transparency and accountability for all those who received money from taxpayers' public coffers for their operations.
In fact, I want to commend my friend Ms. Vignola for pressing on that issue. I would agree that all parties should be open and transparent about what they received, as should all companies.
I have one question, and I don't even know exactly where it lands. Under these current scenarios.... Actually, it's not even a question. It's probably a comment, because I don't think anybody could answer it fairly anyway.
Following up on Ms. Vignola's line of reasoning, it is very probable that many members of the House of Commons received dividends off the backs of the Canada emergency wage subsidy.
Anybody who invested in Imperial Oil and some of these other companies likely received dividends. I want to note the way in which this transfer of wealth happened. Many members of the House of Commons, likely and probably, through their investments, received dividends. That's something that could be the topic of future studies or exploration, if at all possible.
I'll conclude my remarks, before giving my time back, to state that while the intentions were good at the outset, the controls put in place that allowed major corporations to take advantage of this program, I believe, were a risk. I also believe the program ought to have had greater instruments of control to ensure that workers weren't laid off permanently and to ensure that the money wasn't siphoned off to CEO bonuses and shareholder dividends.