I call this meeting to order. I hope everybody is doing well and wasn't affected too much by the windstorm over the weekend in this area.
Welcome to meeting number eight of the House of Commons Standing Committee on Finance. Pursuant to the House of Commons order of reference adopted on December 2, 2021, the committee is meeting on Bill , an act to provide further support in response to COVID-19.
Today's meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. Members are attending in person in the room and remotely using the Zoom application. The proceedings will be made available via the House of Commons website. The webcast will always show the person speaking rather than the entirety of the committee.
Today's meeting is also taking place in a webinar format. Webinars are for public committee meetings and are available only to members, their staff and witnesses. Members enter immediately as active participants. All functionalities for active participants remain the same. The staff will be non-active participants and can, therefore, only view the meeting in gallery view.
I'd also like to take this opportunity to remind all participants at this meeting that taking screenshots or photos of your screen is not permitted.
Given the ongoing pandemic situation and in light of the recommendations from health authorities as well as the directive of the Board of Internal Economy on October 19, 2021, to remain healthy and safe, all those attending the meeting in person are to maintain a two-metre physical distancing and must wear a non-medical mask when circulating in the room. It is highly recommended that the mask be worn at all times, including when you are seated. You must maintain proper hand hygiene by using the hand sanitizer provided at the room entrance. As the chair, I will be enforcing these measures for the duration of the meeting, and I thank members in advance for their co-operation.
To ensure an orderly meeting, I would like to outline a few rules to follow. Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have a choice at the bottom of your screen of floor, English or French. If interpretation is lost, please inform me immediately, and we will ensure that interpretation is properly restored before resuming the proceedings. The “raise hand” feature at the bottom of the screen can be used at any time if you wish to speak or alert the chair.
For members participating in person, proceed as you usually would when the whole committee is meeting in person in the committee room. Keep in mind the Board of Internal Economy's guidelines for mask use and health protocols. Before speaking, please wait until I recognize you by name. If you are on the video conference, please click on the microphone icon to unmute yourself. For those who are in the room, your microphone will be controlled as it normally is by the proceedings and verification officer. When speaking, please speak slowly and clearly. When you're not speaking, your mike should be on mute. I remind everyone that all comments by members and witnesses should be addressed through the chair. With regard to a speaking list, the committee clerk and I will do the best we can to maintain a consolidated order of speaking for all members whether they're participating virtually or in person.
It is now my pleasure to welcome our minister. Minister Rodriguez is with us here today. He is accompanied by Isabelle Mondou, deputy minister of Canadian Heritage, and David Dendooven, assistant deputy minister of strategic policy, planning and corporate affairs.
Minister and officials, we thank you very much for making yourselves available to the finance committee.
Minister Rodriguez, you now have the floor for your opening remarks.
Good morning, committee members and colleagues.
First, congratulations on being elected and on being appointed to this important committee. I also want to thank you for inviting us to appear today to discuss our government's support for the cultural sector during the pandemic.
The hundreds of thousands of workers in the sector, including 158,000 professional artists, are vital to our economy and society. Our government has known this for a long time. We've always been there for them, and we'll always support our arts and culture sector and our heritage.
To understand the scope of all that has been accomplished, you must think back a bit to 2015. At that time, the cultural sector had just gone through a decade of budget cuts, and we said enough was enough. That's basically what we told Canadians. Under a Liberal government, our culture and our languages would be protected from now on. That's what we've done. As soon as we were elected in 2015, in the 2016 budget, we started to reverse the budget cuts.
One of the first things we did was to reinvest $675 million in CBC/Radio-Canada. That same year, we announced the largest increase in history to the budget of the Canada Council for the Arts. We also invested in Telefilm and the Canada Media Fund. I could go on and on, Mr. Chair, but long story short, we made the biggest reinvestment in our culture in the history of our country.
When Canada began to feel the full impacts of COVID-19 in March 2020, the culture and heritage sectors were among the first and hardest hit. Many in the creative industry found themselves with little or, quite often, zero income.
We immediately understood that we had to help the cultural sector quickly. Time was of the essence and there wasn't a moment to spare.
I would now like to take the time to thank all the employees of Canadian Heritage and its portfolio agencies. Despite the pandemic and its challenges, they were able to quickly respond to the urgency of the situation.
We responded right away with a $500-million emergency support fund for cultural, heritage and sports organizations. It was delivered in record time and protected many jobs. The results speak for themselves: 77% of people said it helped them stay in business, and 95% of them were satisfied with the speed of the program.
The Liberal team has always been an ally of the cultural sector. We said that we would reinvest, and we did. We said that we wouldn't leave anyone behind during the pandemic, and we kept our word. Now we're telling people that we'll be there to help them hang on until the economy fully recovers, because this hasn't happened yet. People in the cultural community across the country know that they can count on us.
It should be noted that, as a result of the plan implemented by my colleague, the , our recovery is very strong. However, the recovery isn't equal for everyone. Not everyone is benefiting from it in the same way. I'm thinking in particular of self‑employed workers in the cultural sector.
Even though most Canadians have acted responsibly by getting vaccinated and taking the necessary precautions, several sectors of the industry will need time to return to pre‑pandemic levels. There's still a gap.
That's why, in the 2021 budget, we made a historic investment of $1.93 billion to help the arts and culture sector join the recovery. I think that's important.
We've created several emergency assistance programs to support our creators, our festivals and our various institutions.
Mr. Chair, once again, I could go on and on, but I don't think you want that.
Let me focus on what's ahead of us.
On January 31 and February 1, we'll hold a summit on the recovery of the arts and culture sectors. During this summit, we'll focus on medium‑term and longer‑term solutions and priorities.
We're working with the Deputy Prime Minister on a key commitment in the Liberal plan presented to Canadians during the campaign.
We said that we would create a transitional program tailored to self‑employed and independent workers in the industry. That's what we'll do.
We're currently working with artist associations, guilds, unions and all sector organizations to create the program as quickly as possible.
They're telling us—and I think they also told the committee—that this step is extremely important and necessary. They want it done quickly, but more importantly, they want it done right. This is my top priority at this time.
I'm relieved to hear my colleagues talk about this issue. During the election campaign, the Liberals were the only ones who talked about transitional support for self‑employed workers in the sector. I must say that I was concerned.
Today, I'm pleased to know that my colleagues are asking the government to fulfill its own commitment. I can tell you that we'll do just that. This shows that we aren't alone. This is a good move for our workers and our culture.
I want to thank all my colleagues for their enthusiasm and support for our plans to help the cultural sector, our artists and our craftspeople.
In closing, I consider it important to take concrete steps and to act together.
In Bill , there are very important measures for our arts and culture sector. For the hardest-hit organizations and for the people in the cultural sector, these are essential measures to help them pay up to 75% of wages and rent. This includes live performances and exhibits, museums, heritage sites, cinemas, festivals and others. Bill C-2 also contains measures that will help these organizations hire more people.
Our creators need it. They need the support provided in this bill right now. I know my colleagues from all parties are serious about supporting workers in the cultural sector, and I'm counting on them to make sure that Bill moves forward without any further delay.
On behalf of all our workers, everyone involved in culture, I'd like to ask my colleagues to quickly pass Bill .
These people were there for us during the pandemic. They made us laugh, they sometimes made us cry, and they often made us think. We've been there for them too. Now it's time to take the next step together.
I will now take your questions.
Thank you so much, Mr. Chair.
I just want to warmly welcome you, Minister. I also want to welcome your officials and thank them from the bottom of our hearts for their extraordinary work over the last couple of years. We know how hard you've worked and we've been very appreciative of the supports you provided to the artists and to the cultural sector.
You mentioned, Minister, that we made a platform commitment around transitional support for the COVID program. I want to read it out for everyone, because I think it's important:
Implement a COVID-19 transitional support program to provide emergency relief to out-of-work artists, craftspeople, creators, and authors who are primarily self-employed or independent contractors.
I wanted to read that out because it's important for us to indicate that it was actually in our platform, that we've made a commitment to fulfill that and that we were the only ones to actually go out and do that.
Minister, I know you've indicated that you have started engaging with stakeholders on fulfilling this commitment. I've already had two round tables with my artists, and most of them are very grassroots. I wonder, Minister, if you could maybe talk a little more about what your process will be in engaging with the arts community regarding these ongoing emergency supports.
Thank you for joining us today, Minister Rodriguez. I also want to thank your esteemed colleagues. As my colleague said earlier, they do an excellent job at the Department of Canadian Heritage. We always greatly appreciate your efforts. We hear nothing but good things about you.
Minister Rodriguez, you spoke earlier about the programs that the government has implemented to assist the cultural sector since the start of the pandemic. Last year, at the Standing Committee on Canadian Heritage, we conducted a study to understand how the pandemic was affecting the cultural community in particular. The study found that the programs in place were helping the cultural community, but that the money wasn't getting to the self‑employed workers and the artists. In other words, the industry, production companies and theatres were receiving assistance, but the artists, self‑employed workers and technicians weren't obtaining any of the money and assistance that they needed.
As you know, the figures are quite alarming, and we're noticing this more and more. That's why we specifically asked for the continuation of assistance programs such as the Canada recovery benefit, or CRB, for the hardest‑hit sectors, including the cultural sector. Obviously, we saw that self‑employed workers in the cultural sector aren't covered by Bill . I have a question for you, Minister Rodriguez, but it could also be addressed to the deputy minister.
When did you find out that the cultural sector, artists and self‑employed cultural workers wouldn't be protected by Bill ?
Minister Rodriguez, welcome to the finance committee.
The first question I have is about the accountability measures in this legislation we're talking about in relation to the CERB benefits that have gone out already being about 80% more than originally budgeted by the government.
We have an extension here of seven months, allegedly $7.4 billion in extra spending, but that extension can actually be nine months. Let's call it nine and change of excess spending. That's more spending that we're going to be doing to address these matters without any accountability mechanisms built around them and, indeed, no definitions around some of the retrospective applications and how they're going to be applied here.
In addition, you have the extension of time this program is available until 2026, so an extra two years. That's allegedly seven months more of benefits, but two years more of applicability.
Can you see that one might question why there's a lack of accountability in the definitions in this legislation?
Thank you very much, Mr. Chair.
Thank you, Minister Rodriguez, for joining us today to answer our questions.
Before I ask my important question, I want to make a few comments about what my Conservative colleague just said.
I heard Mr. McLean lamenting once again at the committee that the government spent too much money in supporting Canadians, in support programs for Canadians. I can't help remind and underline, for all colleagues and for the people watching at home, a few things. One is that this pandemic has been unpredictable. The government has committed to be there for Canadians, to be there for businesses and to support them during a global pandemic, during a crisis. I think we've done what was required to have Canadians' backs.
The other thing is that I want to remind all colleagues that Mr. McLean and his colleagues voted for this funding. They voted for the funding that provided the support programs for Canadians. Once again, his question, just like last week's, suggests that the Conservatives believe—it doesn't suggest; it indicates clearly Conservatives believe—that the government spent too much to support Canadians and, had the Conservatives been in power, they would have not supported Canadians through this crisis.
That said, I'll now ask you my question, Minister Rodriguez.
What have you heard from the sector representatives and other organizations involved about the support programs in place since the start of the pandemic? Have these people contributed to the development of the programs?
Welcome, Minister. It's nice to meet you. Thank you for coming.
Just before I get into questions, I'd like to perhaps correct, or at least point out, a contradiction from my friend Mr. Baker. On the one hand, we're to believe that Conservatives agreed to support all these measures at one point and in fact voted for all of them, and on the other, we're to believe that we would have done nothing to support workers. In fact, if you look at our track record, in the great recession we ran the largest budget deficit the country had ever seen and then worked incredibly hard to bring the country's finances back to balance within five years.
In that sense, Minister, you mentioned people breaking the law and that they should be pursued. Does it concern you that there seems to have not really been a lot of verification activities as to whether people had broken the law? We had testimony last week that indicated there haven't been any post-payment verification audits on CERB, and very few on the wage subsidy. We're also not asking for any kinds of medical certificates or doctor's notes for sickness benefits.
As a minister in this government, are you concerned that we're not actually trying to identify where there have been challenges or incorrect payments made?
Good morning, Minister, and welcome to the committee. It's a pleasure to see you this morning.
I would also like to thank your colleagues from the Department of Canadian Heritage, who have indeed done an extraordinary job during this pandemic.
I wanted to quickly come back to what some of my colleagues from the Conservatives have mentioned. Minister, I don't want you to leave with the wrong impression here. We called FINTRAC as a witness. In their testimony, they concluded that in the standard that this government has developed over the years to ensure accountability when there is something suspicious about any of our programs, there are checks and balances in the system to red flag it and immediately move toward an investigation.
We heard that banks, very early on, identified some suspicious transactions that were, by and large, very small numbers of payments. Immediately, it went to FINTRAC, which launched an investigation. The collaboration between FINTRAC and the Canada Revenue Agency went very well.
Minister, I want you to understand that the witnesses said the system and standards in place for all of our programs are very good. This is supported by the Auditor General report that investigated those systems and concluded that, through the program we had in place, the money went to the right person and abuses were taken care of.
I will ask my questions in French, because, as you know, the arts and culture sector is very important in Canada from coast to coast, and particularly so in Quebec. This is also the case in my riding.
I am very pleased to hear that our programs really helped the sector during the pandemic.
Also, I am very interested in the summit you are going to organize. I'm also hearing concerns that the arts and culture sector needs to receive financial support quickly.
As you mentioned, Minister, Bill will go a long way to help organizations, businesses and employees in the sector, who will benefit from maintaining the employer-employee relationship. There is still a need to help the self-employed in the sector and I am very pleased to hear you say that help will be available to them.
I believe I understood that no new legislation will be required to provide assistance to these workers, as these programs are already in place.
Can you give us more details about this aid? Will it get to them more quickly as there is no need for a bill?
Ms. Chatel, thank you for the question.
To recap some of what I said earlier, the Liberal government has been there from the beginning. Since 2015, it has invested a lot of money in organizations like the CBC, the Canada Media Fund, Telefilm Canada, the Canada Council for the Arts and so on.
What did we do when the pandemic hit? As early as April, the government invested $500 million in emergency funds to maintain jobs and support business continuity. We realized that this sector needed an extra boost. Then on November 30, as part of the 2020 fall economic statement, the government announced an investment of $281 million. One of the purposes of this investment was to respond to the film and television industry's request for assurances, to ensure that they would be covered if something happened during filming. Subsequently, there was a record investment of $1.93 billion in the 2021 budget. These are huge sums.
We are now continuing to provide assistance through Bill . As you said, this bill affects cultural organizations, agencies and businesses. However, it lacks direct assistance to self-employed workers. We provide this assistance through Canadian Heritage and existing programs. So we don't need a bill because, as we promised in our platform, we will make an investment of about $50 million. In addition, we will continue to fulfil our election commitments, such as holding a summit in a month and a half, among other things. There is a continuity in all of this, which is to never forget our workers in the cultural sector.
I call this meeting back to order.
Welcome back, everybody. We have our second panel of witnesses with us today. All of our witnesses for the second panel are virtual.
From the Office of the Auditor General of Canada, Karen Hogan is with us.
Thank you, Ms. Hogan, for being able, in really short order, to make it here to our committee. We appreciate that.
She is accompanied by Philippe Le Goff, principal.
Representing the Canadian Labour Congress, we have Bea Bruske. She is the president.
Bea, I believe, is having some technical difficulties with her sound, so we will see if that works or not. If it doesn't work for the interpreters, it may not be possible to have Bea today.
No strangers to our committee are representatives of the Canada Revenue Agency. We heard from them just a couple of meetings ago. We have Frank Vermaeten, assistant commissioner of the assessment, benefit and service branch; Marc Lemieux, assistant commissioner, collections and verification branch; Cathy Hawara, assistant commissioner, compliance programs branch; and Janique Caron, chief financial officer and assistant commissioner, finance and administration branch.
Each of the organizations will have a five-minute opening statement.
We will start with the Auditor General, Ms. Hogan, for five minutes.
Mr. Chair, I wish to acknowledge that the lands on which we are gathered are part of the traditional unceded territory of the Anishinaabeg People.
Thank you for this opportunity to contribute to the committee's study of Bill .
I'm happy to discuss our audit reports, including the Canada Emergency Wage Subsidy and the Canada Emergency Response Benefit, which were tabled in the House of Commons on March 25. Joining me today is Philippe Le Goff, who was the principal responsible for the CEWS audit.
Our audit of the CEWS, or Canada Emergency Wage Subsidy program, focused on whether the Department of Finance Canada provided analysis on the program and whether the Canada Revenue Agency limited abuse by establishing appropriate controls in its administration of the program.
Overall, we found the department and the Canada Revenue Agency worked together within short timeframes to support the development and implementation of the Canada Emergency Wage Subsidy, CEWS.
The design and rollout of the subsidy highlighted pre-existing weaknesses in the Canada Revenue Agency's systems, approaches, and data. One of the weaknesses is related to the lack of up‑to‑date tax data, which meant that the agency did not have all the relevant information for assessing the applications before issuing payments. This revenue information would have allowed the agency to validate the reasonableness of the revenue drop that was declared by applicants.
To prioritize issuing payments quickly, the Canada Revenue Agency decided to not implement certain controls that it could have used to validate the reasonableness of subsidy applications. For example, the agency decided that it would not ask for employee social insurance numbers, although this information could have helped prevent the doubling up of applications for financial support.
The limitations of the agency's information technology systems affected its ability to perform some pre-payment validations, as did the absence of complete and up‑to‑date tax information. As a result, the agency will have to perform more post-payment verification work.
Let's now turn to our report on the Canada emergency response benefit. This audit focused on the analysis carried out by Employment and Social Development Canada and the Department of Finance in the design of the benefit. It also examined whether Employment and Social Development Canada and the Canada Revenue Agency designed mechanisms so that the benefit would support eligible workers who had suffered a loss of income for reasons related to the COVID-19 pandemic.
Working within a short time frame, Employment and Social Development Canada and the Department of Finance supported the design of the benefit to quickly deliver support to workers who had lost income because of COVID-19. The department and the agency made an early decision to focus on post-payment controls to simplify the process and expedite issuing benefit payments. The department and the agency introduced additional controls once the benefit was rolled out.
Based on our audit work on the original design of the two programs, both will need to rely heavily on post-payment verification, which will be time-consuming and costly. The post-payment work on these two programs was expected to be the subject of an audit by my office to begin in early 2022. However, we have been informed by the Canada Revenue Agency that it has deferred or delayed its work and that it is highly unlikely that a significant amount of post-payment work will be completed by 2023. Given that there will be little for us to audit, we have postponed our work.
This concludes my opening remarks. We would be pleased to answer any questions the committee may have.
Thank you very much, Chair.
I do have a question for you, Ms. Hogan, but before I ask it I need to respond to what was said just a moment ago by Mr. Poilievre.
I think it's important to note that the CRA has a number of measures in place to ensure that only those who are supposed to receive the supports, whether that be the CERB or the wage subsidy, receive them. Post-payment verification is one of those. My recollection—and I could be corrected by my colleagues—is that the officials who were here with us last week spoke to the timing of this and I think they told us that work was to begin in January.
I also want to mention that CRA officials have worked, I believe, incredibly hard during a very difficult time to get these programs out to Canadians during a global crisis, during a pandemic, and that these programs, by delivering that support, have saved businesses from bankruptcies, have protected jobs and have allowed some people to put food on the table that they wouldn't have been able to put on the table otherwise. To me, it's incredibly disrespectful for Mr. Poilievre to suggest that the CRA officials are not doing their jobs, that they're not working as hard as possible or that they're not able to do their jobs capably. That's what he was suggesting. I find that really disappointing and disrespectful.
With that said, Ms. Hogan, I want to thank you for taking the time to be with us here today. Again, I want to echo that we appreciate it, especially on short notice.
On November 25 of 2020, National Post published an article called “Tories ask CRA to pause audits of wage subsidy recipients during pandemic. Experts say that's a bad idea”.
That's an article, Chair, that I'll be tabling with this committee.
The article quotes two experts in fighting tax-related crimes. One of them, Toby Sanger of Canadians for Tax Fairness, says in the article the following: “CRA should be concerned and empathetic about the plight of small businesses, but to stop all audit programs or simply not proceed with them on a carte blanche basis? I wouldn’t agree with that”.
The other expert, Denis Meunier, the former head of CRA's criminal investigations division, said the following: “It is the CRA’s responsibility to do this pilot project. And I think it’s totally unacceptable and irresponsible for political parties to request that a particular sector not be audited. It makes no sense”.
My question to you, Ms. Hogan, is this: Do you agree with the opinions expressed by the experts here regarding the demand the Conservative Party made regarding stopping wage subsidy audits?
Thank you so much, Mr. Chair.
I want to thank the officials for being here today. Thank you so much for being here. It's really important, the work that you do.
I really appreciate your testimony, Ms. Hogan, as well as the officials who are here from the CRA. We hope that we can get the CLC here as well.
I think it's also important to remind ourselves that we are in a pandemic and that, with much of the emergency supports—all of the emergency supports—that were sent out, there had to be a balance between getting them out the door and making sure that we put enough measures in place to ensure they were getting where they were supposed to go.
Ms. Hogan, in your sixth report, specifically the report on CERB, you say the following: “Accepting risks in order to expedite payments to those in need is consistent with best practices promoted by the International Public Sector Fraud Forum and its Principles of Fraud Control in Emergency Management.”
Would you say that this principle could apply to the emergency supports that we sent out the door very quickly?
Thank you, Chair, and good afternoon, committee members.
My name is Bea Bruske, and I am the president of the Canadian Labour Congress.
The CLC is Canada's largest central labour body speaking on issues of national importance to all working people in Canada.
Since the early days of the COVID-19 outbreak, the Government of Canada committed to doing whatever it took, for as long as it took, to get Canadians through the pandemic. The government has consistently said that no matter how much longer the crisis lasts, and no matter where you live, they've got your back. Despite this, back in October, the government announced it would be terminating the Canada recovery benefit. It did so in the midst of the pandemic. It did so before the labour market had fully recovered, and it did so with no system of unemployment benefits in place for vulnerable workers who cannot access EI.
The pandemic is far from over. Today, the number of daily COVID-19 cases is 135,000 higher than when government announced that it was ending the CRB. Many Canadians continue to struggle with joblessness and underemployment. In November, there were 1.2 million Canadians who were officially out of work, and another 630,000 working people who wanted full-time work but couldn't find it.
Statistics Canada's labour underutilization rate captures the full range of people who are available and who want to work. In November, the labour underutilization rate was 12.4%. In other words, 12.4% of the potential labour force was either unemployed, not participating in the labour force but wanting work, or employed but receiving far fewer than their usual hours of work. When the government decided to end the CRB, the official jobless rate was still a full percentage point higher than in February 2020. Total hours worked were below prepandemic levels.
One labour market indicator had recovered to the prepandemic levels, and of course that was the labour force participation. In other words, in our mind, there is little evidence of people staying at home on CRB benefits rather than taking part in working or looking for employment. Many CRB recipients were in fact working while they were receiving those benefits, as the CRB permitted them to do. They relied on those benefits to cope with insufficient hours of work and with reduced earnings. In the period just before the government's decision to terminate the CRB, 970,000 Canadians received it, and in the final eligibility period, there were still over 600,000 CRB recipients. The number continues to climb as workers retroactively claim those CRB benefits.
Let's be clear. The Canada recovery lockdown benefit is not a substitute for the Canada recovery benefit, which workers continue to need.
The restrictive benefit may never be used, or used very sparingly. Last Tuesday we heard this committee, and this committee heard from government officials who were unable to identify a single instance, between the announcement of the benefit on October 21 and now, where the lockdown benefit would apply. We still haven't heard how much the lockdown benefit is expected to cost, possibly because the actual cost will be negligible, or perhaps even zero.
It's doubtful the lockdown benefit would help families in places like Alberta, where the government has dragged its feet on putting lockdowns in place, despite the widespread risk of COVID. As a regional benefit, the lockdown benefit is not designed to respond to workplace outbreaks like the ones we've seen at Cargill, at Amazon and at Canada Post.
Honourable members, the decision to terminate the CRB, pulling the rug out from under struggling workers, self-employed workers in the hard-hit hospitality and tourism.... They've relied very heavily on the CRB. In contrast, the measures in part 1 of Bill , extending the emergency wage subsidy and emergency rent subsidy to the tourism and hospitality sectors, will do very little for those workers.
We recommend urgently restoring the CRB benefits for workers who cannot access employment insurance. We also recommend several amendments to improve the lockdown benefit, which I'd be pleased to detail for you if there's an opportunity.
Thank you so much.