HRPD Committee Report

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Committee Report

PART 1 - BACKGROUND

Parliamentary Scrutiny

Last autumn, two parliamentary committees undertook studies that explored various aspects of the administration and policy context of the Social Insurance Number. In late November 1998, the Standing Committee on Human Resources Development and the Status of Persons with Disabilities began a study into the SIN. Subsequently, the House of Commons Standing Committee on Public Accounts reviewed the work of the Auditor General, held hearings on the management of the SIN in Canada and tabled a report in the House of Commons on 4 February 1999. Our own work has led us to reinforce the Auditor General's conclusion: There is a place for a parliamentary perspective on the current SIN system in Canada and an important role for parliamentarians in setting a direction for the future of the SIN system in Canada.

The report of this Committee does not repeat the findings of the Auditor General. We acknowledge the thorough and detailed work done by his office whose team of auditors exposed a number of weaknesses with the way that the SIN and card system in Canada is currently administered. The Auditor General's report also frames a series of important recommendations that set out remedies for the shortcomings of the system, as it presently exists. This Committee concurs with the findings of the AG and we support the content and the spirit of his recommendations.

We recognize, however, that the Auditor General plays a role quite distinct from that of parliamentarians and parliamentary committees. He is charged with examining the operations and efficiency of government programs as they exist; he is not mandated to comment on policy directions for government programs, nor to make policy-related recommendations. Neither does he participate in political debates and decisions; that is for us as elected representatives. The Auditor General himself told us that:

It is time to review the current roles, objectives and uses of the Social Insurance Number.

The government should determine what it wants to do with the SIN, and should study other possible options at the same time. I also believe it's essential that Parliament play a major role in debating these issues and in finding a satisfactory solution.1

In the course of reporting on our deliberations, we want also to acknowledge the work done by our parliamentary colleagues on the Public Accounts Committee. Not surprisingly, their report echoed many of the Auditor General's recommendations and alluded to some of the broader policy- issues that lay before Parliament and indeed before Canadians. The Twentieth Report of the Public Accounts Committee states that:

While the audit [conducted by the Auditor General] uncovered many shortcomings in the administration of the SIN program, these issues are really subordinate to the resolution of the central question concerning the goals and objectives of the Social Insurance Number... Resolution of the SIN mandate is essentially a political issue and will require a decision from the Parliament of Canada.2

Apart from our endorsement of this conclusion, we are in considerable agreement with the specific recommendations of the Public Accounts Committee. Our own build upon some of these.

But as the Committee with a mandate to examine and report on issues related to the Department of Human Resources Development, the custodian of the SIN, we have also seen fit to add more "flesh" to the bones of what our colleagues recommended. Moreover, our Committee conducted more extensive hearings and heard from a wider range of interests within and without government. We have used this work as an opportunity to explore, in a preliminary fashion, some of the broader policy-issues.

Nonetheless, while we moved forward, we came to realize that we have not had the time to conduct as in-depth a study of the overarching policy issues of privacy protection and data matching - central to the future of the SIN in Canada - as was undertaken by the former House of Commons Standing Committee on Human Rights and the Status of Persons with Disabilities. That Committee spent the better part of a year preparing its report, Privacy: Where Do We Draw The Line?, tabled in April 1997. The report, a path-breaking study, identified, explored and analyzed a set of complex issues with remarkable creativity and clarity. That Committee showed a very high level of unanimity in endorsing a comprehensive set of recommendations, based on a call for a Canadian Charter of Privacy Rights.

Unfortunately, the dissolution of Parliament in 1997 eliminated the requirement for the government to prepare a comprehensive response to Privacy: Where Do We Draw The Line? which the Human Rights Committee requested. Consequently, the issues and recommendations have remained formally unanswered by the government. Our Committee feels that the depth and breadth of the privacy report frames many of the broad public-policy issues that are part of the debate over the future of the SIN in Canada. Such painstaking and important work should not be overlooked by the government when it prepares a response that addresses our work and our recommendations.

The members of this Committee also acknowledge that Human Resources Development Canada (HRDC) has moved to address many of the issues regarding social insurance numbers raised by the Auditor General. We are confident that the Department has sought to mount a strategy to deal with the immediate administrative concerns around the SIN. However, where we feel it appropriate, we have asked HRDC to adjust its efforts in order to address our concerns. As a way of ensuring accountability, we have also identified time frames and reporting requirements for HRDC. In our view, these adjustments reflect the seriousness of the issues outlined in our report and underscore the extent to which we intend to monitor developments on this file in the immediate future.

This report, therefore, weaves together existing work on measures to reform the SIN system in Canada in the near future and, as well, sets out and frames some of the overarching considerations that should inform the larger debate about future directions.

Our Workplan

We set out on our study with the aim of operating efficiently and neither duplicating nor replicating others' work. The Committee proceeded by holding a series of briefings and round tables that brought together the various governmental and non-governmental bodies with an involvement or interest in the current and future administration of the social insurance numbers, and placing these discussions in the broader policy-context.

Obviously, the Auditor General served as a catalyst for our interest in the issue and he provided us with a detailed briefing about his investigation and conclusions. Then, we invited the various federal bodies with a mandate, or an interest, related to the administration of the Social Insurance Number system and its broader context. This included senior officials from the Department of Human Resources Development, as the "home" of the Social Insurance Number. In addition, the Treasury Board, responsible for the overall guidelines and directives for the use of the Social Insurance Number by federal departments and agencies as well as the Department of Justice, legal counsel and advisor to all federal-government users of the Social Insurance Number, sent representatives. The Privacy Commissioner of Canada, an officer of Parliament like the Auditor General, attended this meeting to provide us with his insights into the use of the Social Insurance Number and the nature of the reforms he thought advisable.

In light of the widespread use of the SIN by other jurisdictions of government and by the private sector, we then held two round tables with as many of the interests as we could gather together. We heard from the privacy commissioners of Ontario and British Columbia, a municipal administrator from the City of Toronto responsible for corporate access and privacy, the Advanced Card Technology Association, the Consumers' Association of Canada, the Canadian Bankers' Association, Action réseau consommateur, Revenue Canada, and Income Security Programs (Human Resources Development Canada). We received several briefs including those from Equifax and written submissions from the Privacy Commissioner of Ontario and the Privacy Commissioner of Canada.

At the end of our study, we invited the Department of Human Resources Development back to engage in a dialogue with us about what we had heard and how it might be applied.

As our work proceeded, we grew increasingly concerned about the threat to personal privacy that exists in the current Social Insurance Number system. We also wanted to explore the implications for personal privacy of proposed changes. We, therefore, concluded by hearing from security experts who provided us with practical examples about the threats to privacy that currently exist and those that could be eliminated by reforming the system.

Plus ça change

When the SIN system was originally introduced in 1964, much of the debate revolved around the use of the number. Was it just a common file number for several federal government income/entitlement programs or was it a first step on the way to the introduction of a universal identifier for Canadians? The government of the day affirmed that the SIN was not intended to become any form of universal identifier. It was to remain simply a file number to record contributions and entitlements for the Canada/Quebec Pension Plans, Old Age Security and Unemployment Insurance.

Over time, however, the SIN's use has expanded both inside and outside government. First the Income Tax Act authorized use of the SIN as an identification number for tax purposes. Later the Act was amended to require the SIN for the purchase and cashing of Canada Savings Bonds. As a result, financial institutions began collecting the SIN of customers for tax reporting. Canadians are now required to have a SIN for their children, if they wish to register them for the newly introduced Registered Education Savings Plan. Today, more than 20 Statutes and Regulations and 7 programs cover authorized use of the SIN 3 (See Appendix B).

The expanded use of the SIN inside government soon paved the way to broader use of the Social Insurance Number in the private sector. Before long, credit bureaus began to use the SIN to run credit checks on potential borrowers. Provincial social programs began using the SIN in the administration of benefits. Employers large and small used it as part of their tracking and accounting system for employee benefits. Mistakenly, the private sector began to look upon the SIN as a piece of identification and property owners asked for it on apartment rental applications, video stores required it as security for movie rentals, universities and colleges requested it on their application forms and pizza places even used it as a customer number for their delivery system. Apart from inappropriate use of the number, its uncontrolled use leaves Canadians vulnerable to serious breaches of their personal privacy that range from data-matching carried out without their knowledge and authorization, to identity theft.

Federal Responsibilities for the SIN

Within the federal government, a number of players have various roles and responsibilities with respect to the SIN. As we have noted, HRDC is the "custodian" of the SIN with responsibility for the issuance of cards, investigating suspected abuse and adjusting regulations if necessary. HRDC also manages the Social Insurance Register (SIR), a record of the personal information that individuals provide when they apply for a card, in a data bank that contains all of the SIN currently in use in Canada. Policy and guidelines that cover the collection and use of the SIN by federal departments and agencies, including data-matching, falls within the purview of the Treasury Board. The Department of Justice supports other departments with respect to legal advice for SIN-related questions that arise from the Privacy Act, and it also responds to questions from the general public or inquiries regarding the public and private sectors' use of the SIN. The Privacy Commissioner has independent oversight responsibilities arising out of the Privacy Act and deals with individuals' complaints about use of the SIN when these relate to infringement of personal privacy. An officer of Parliament like the Auditor General, the Privacy Commissioner reports directly to Parliament.

Auditor General's Report: Scope and Findings

The Auditor General's office undertook an audit of the SIN system in Canada. The audit's objective focused on assessing the "management and control of the SIN to determine if it is efficient and effective and has an appropriate basis in legislation." 4 In order to meet this objective, the audit encompassed the following tasks:

An examination of the role and use of the SIN in managing social programs and revenue collection;
An examination of the application process;
An examination of the management of the Social Insurance Register (SIR);
An examination of the procedures for the investigation of fraud and abuse;
Extensive analyses of the SIN databases;
Discussions with privacy experts and other organizations with interests in the SIN;
Interviews of officials at HRDC and other federal departments and agencies with responsibilities for the SIN as well as relevant agencies at the provincial level.

The Auditor General's study revealed a number of important problems with the current administration and control of the SIN system in Canada. These problems include:

The widespread use of the SIN across government departments and programs at the federal and provincial levels of government as well as at the municipal level;
The extent to which such widespread use contributes to the potential for fraud and abuse of government programs with potentially high financial costs to taxpayers;
The perception that the SIN is a national identifier and not simply a file number as was its original intent;
The extensive use and misuse of the SIN in the private sector (except in Quebec) which increases the potential for fraud, abuse and privacy infringements;
Significant gaps in the data integrity of the Social Insurance Register;
Unacceptably low levels of effort dedicated to the investigation of SIN fraud and abuse;
Minimal penalties for such abuse and fraud;
A proliferation of temporary SIN cards with no expiry date;
Problems with the application process including insufficient proof-of-identity procedures;
The need to re-examine the legal and policy framework for managing the SIN, including the issues of unauthorized data matching and privacy protection.

An Approach to Reform

Our work has led us to conclude that the issues identified by the Auditor General fall into two distinct categories which should be dealt with separately by the government in responding to this and to the other reports. The first of these is the short-term "fixing" of the current system. We are convinced that action on this front should be undertaken as soon as possible. At the same time, we are aware that there are another set of broader public-policy issues that need to be addressed. These concern the question of whether the SIN system needs to be overhauled and/or replaced by a common client identifier. While debate on these latter issues must begin now, we know that a resolution will take longer and require more information and study. We therefore recommend that:

1. In modifying the Social Insurance Number (SIN) system, the Government of Canada should ensure that it proceeds on two tracks simultaneously:

A. Immediately take steps to correct abuses of the management and control of the current SIN system as reflected in the recommendations in Part 2 of this report; and

B. Address the longer term, broader public-policy issues related to the future of the SIN system, including the issues of privacy and data-matching.

Our colleagues on the Public Accounts Committee underscored the need to move quickly on the first set of issues and their recommendations echoed much of what the Auditor General's report identified as the immediate imperative to deal with pressing problems and to find workable solutions for the current system. As we also indicated, Human Resources Development Canada, the Department with the lead on management and control of the SIN system, has developed a comprehensive workplan (see Appendix C) to respond to the Auditor General's concerns with the current system. Our recommendations in Part 2 amplify and expand on this work.

With respect to the broader public-policy context, our hearings served to demonstrate both the scope and the complexity of the issues. Part 3 of this report highlights some of these concerns. Rather than make many definitive recommendations in this area, we have framed our report to help identify the kinds of questions that we believe are central to a parliamentary debate on the future of the SIN in Canada.

1 Evidence, Meeting No. 43, 4 November 1998, p. 2.

2 Twentieth Report of the Standing Committee on Public Accounts, Chapter 16 of the September 1998 Report of the Auditor General of Canada (The Management of the Social Insurance Number), 4 February 1999, p. 7.

3 Auditor General's Report, Chapter 16, p. 16-8.

4 Auditor General's Report, Chapter 16, p. 16-9.