PACC Committee Report

Pursuant to Standing order 108(3)(e), the Standing Committee on Public Accounts has the honour to present its

The Standing Committee on Public Accounts has considered Chapter 16 of the September 1998 Report of the Auditor General of Canada (The Management of the Social Insurance Number) and the Committee has agreed to report the following:

Introduced in 1964, the Social Insurance Number or SIN was originally intended as a file number for Unemployment Insurance (UI), Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) clients. However, over the years, the SIN has become the gateway to a multitude of federal and provincial programs. The SIN is used to identify and gather information on taxpayers and social program recipients, to verify entitlement to certain types of pensions and benefits, and to match and exchange data among programs.

The roles and responsibilities with regard to the SIN are shared among various federal departments and agencies. Human Resources Development Canada issues SINs, maintains the Social Insurance Register (SIR) and investigates suspected abuse. The Treasury Board is responsible for the policy and guidelines that govern the collection and use of data related to the SIN. The Office of the Privacy Commissioner investigates complaints about the SIN. The Department of Justice responds to general enquiries from the public on the private sector’s use of the SIN.

Because of its uniqueness and universality, the SIN lends itself to data matching, comparison and exchange between and among jurisdictions in such a way that it has become in practice a de facto universal identifier. Today, over 20 federal statutes, regulations and programs authorise the use of the SIN. Its use has also expanded into provincial social programs and into the private sector.

The unintended expansion of uses of the SIN throughout the public and private sectors across Canada has raised concerns regarding its integrity, security and overall management. Given the importance of the Social Insurance Number to the social and economic welfare of Canadians, the Committee decided to examine Chapter 16 of the Auditor General’s September 1998 Report. Accordingly, on 19 November 1998 the Committee met with Mr. L. Denis Desautels (Auditor General of Canada) and Mr. David Rattray (Assistant Auditor General). Representing Revenue Canada were Mr. David W. Miller (Assistant Deputy Minister, Assessment and Collections Branch) and Ms. Kathy Turner (Director General, Benefits Programs Directorate, Assessment and Collections Branch). Mr. Hy Braiter (Senior Assistant Deputy Minister, Service Delivery Network), Mr. Bob Nichols (Director, Insurance Program Services) and Mr. Jacques Bourdages (Associate Director, National Services, Bathurst) represented the Department of Human Resources Development Canada.

In his opening statements, the Auditor General informed the Committee about certain shortcomings in the management of the Social Insurance Number. These weaknesses were found to be detrimental to the proper management of social programs. These weaknesses could lead to errors, abuse and fraud and, collectively, the impact could be sizeable. The Auditor General pressed for the need for corrective action in order to protect public funds and taxpayers.

The Auditor General also stated the Department of Human Resources Development accepted the audit’s recommendations and that the Department has already taken actions to improve the integrity and security of the Social Insurance Registry (SIR) and is co-operating with the provinces to improve the administration of the SIN (1535).

But many of the questions raised far exceed management and administration issues of the SIN. The Auditor General stated that now was the time for the federal government to review the roles, objectives and uses of the Social Insurance Number. The government should determine what it wants to do with the Social Insurance Number, and at the same time study other possible options (1540).

In this regard, the witness for HRDC, Mr. Hy Braiter, agreed with the Auditor General’s position that discussions and consultations are required to determine whether Canada needs a national identifier system instead of the current SIN, a system initially intended as a personal account number (1545). Mr. Braiter informed the Committee that HRDC has already begun discussions on this matter with lead departments and agencies such as the Treasury Board, the Department of Justice, Revenue Canada and the Office of the Privacy Commissioner, but, ultimately, the final direction and decision must come from Parliament (1550).

Certain Committee Members inquired that, since the SIN has become a de facto national identity card, maybe it was time to update the administration and management of the SIN card system to match its current use. The Auditor General responded that a case could be made to examine the possibility of replacing or converting the SIN into a single national identifier, that many countries have considered the possibility of introducing a single identifier, but, to date, none has yet fully implemented such an identification system. The Auditor General indicated that the main difficulty associated with a single identifier system was the protection of private information (1620).

Other Committee Members preferred the option of restricting the use of the SIN because of privacy concerns related to the use of a single national identifier. A single national identifier system would require the accumulation of substantial amounts of private information about financial, health and other personal data and the risk of unauthorised access would become a real possibility with very serious repercussions (1635). The Committee was even invited to support a Private Member’s bill to ban unauthorised use of the Social Insurance Number in the private sector (1605).

The Committee further inquired whether it was possible to design a national identifier system that would have all the administrative and managerial advantages of a single identifier and yet be able to address the privacy issues. The Auditor General stated that technological solutions may be available that would permit a system similar to something like a national identifier but be capable of segregating data to protect information from unauthorised intrusion (1645).

The witness from Human Resources Development, Mr. Hy Braiter, believed that such a system was technically feasible. Smart card technology together with biometric identification could combine both the administrative efficiencies of a single identifier and, at the same time, provide relative protection of private information, but the witness hastened to add that no system was completely foolproof and anti-intrusion features can be rendered ineffective. Mr. Braiter concluded his remarks by stating that this is more a policy issue than a technological issue. Political direction from the Government of Canada is required to determine whether we move towards a single national identifier or return the present SIN system to one nearer its original design and intent (1650).

This leads the Committee to recommend the following:

The Committee also expressed concerns about weaknesses found in the administrative processes and data integrity of the SIN. The audit uncovered examples of data reliability problems in the Social Insurance Register (SIR), of minimal efforts dedicated to investigation of SIN fraud, of "temporary" SINs without expiry dates, and the unregulated use of SIN in the private sector. The witness for Human Resources Development, Mr. Hy Braiter, acknowledged the seriousness of the issues raised in the audit and informed the Committee that HRDC has already taken various corrective actions to deal with the outstanding issues identified in the audit. Many of the actions taken are in the form of increased data matching and sharing between departments and jurisdictions to better ensure data integrity and security of the SIR.

Mr. Braiter also informed the Committee that the Department has established five working groups to deal with the Auditor General’s recommendations (1550). The first working group is studying the accuracy and completeness of the personal information contained on the SIR. The second group is looking at proof of identity requirements for SIN applications. The third group is looking into ways to prevent SIN offences and abuses. The fourth group is investigating ways to improve SIN investigations and, finally, the fifth group is looking at security features on the SIN card itself (1555).

The Committee was interested with the activities of the five working groups and requested HRDC to provide the action plans and timetables for each working group. Mr Braiter agreed to the request (1700). Thus the Committee recommends the following:

An issue of particular concern to the Committee was the observations in the audit of the minimal effort dedicated to investigations of SIN fraud and that the existing performance indicators discouraged SIN investigations. Mr. Braiter told the Committee that compared to the return on Employment Insurance or CPP investigations, SIN investigations offered a much lower return and thus Department officials had less incentive to investigate SIN fraud (1655). Also, the court system is reluctant to take on cases of SIN fraud because the penalties and sanctions are so low that it isn’t worth the time and effort to prosecute the perpetrators of SIN fraud. Mr. Braiter told the Committee that HRDC is considering applying administrative penalties similar to those applied in cases of Employment Insurance abuse (1625). Considering the above, the Committee recommends the following:

The Committee observed that there was no mention of the Social Insurance Number program in the Department’s Annual Performance Report. Mr Braiter agreed that this was an issue that needs to be addressed and assured the Committee that the inclusion of the SIN program in the accountability documents is a departmental priority. This prompts the Committee to recommend:

A well-managed Social Insurance Number program (SIN) is essential to the economic and social welfare of all Canadians. While the audit 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. From a simple file account number to a de facto national personal identifier, the actual use of the SIN has far exceeded its original purpose. Resolution of the SIN mandate is essentially a political issue and will require a decision from the Parliament of Canada. Once a decision is rendered, the administrative issues identified by the audit can then be satisfactorily resolved.

In his closing comments to the Committee, the Auditor General of Canada remarked that the corrective initiatives proposed by the representatives of Human Resources Development Canada seem to cover all the administrative issues raised in the audit (1710). He suggested that HRDC submit to the Committee the action plan timetables so that they can be used as benchmarks in order to monitor the progress of the action plans. The Committee duly noted this and also noted the seriousness manifested by all departments present to resolve all the outstanding issues relating to the management of the SIN. The Committee intends to closely monitor the future developments regarding the Social Insurance Number program.

Pursuant to Standing Order 109, the Committee requests that the Government table a comprehensive response to this Report.

A copy of the relevant Minutes of Proceedings (Meetings Nos. 45 and 50) is tabled.

Respectfully submitted,

JOHN WILLIAMS