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Monique Gomel
View Monique Gomel Profile
Monique Gomel
2021-06-22 12:06
Hello, and thank you for inviting me to speak to the committee today.
My name is Monique Gomel, and I am the interim chair of Destination Canada’s board of directors. I am joined by Marsha Walden, president and CEO of Destination Canada.
I would like to acknowledge that I am joining you from Vancouver, the traditional territories of the Coast Salish peoples: the Squamish, Tsleil-Waututh and Musqueam nations.
I was appointed interim chair in March of this year. However, I've been vice‑chair of the board of directors since 2017. I'm also a senior vice president at Rocky Mountaineer, where I oversee global marketing, communications, data and insights, and sales operations.
Today I would like to give you a brief overview of my role as interim chair, the state of the tourism sector in Canada and Destination Canada's near- and longer-term plans.
First, as interim chair of the board, I work collaboratively with a team of eight directors with tourism experience from small business owners to renowned entrepreneurs to former executives from multinational corporations.
The government has appointed some of Canada's best and brightest tourism business leaders to help provide strategic advice to the executive team and the president and CEO of Destination Canada. Directors are actively involved in long-term strategic planning, prioritization of objectives, financial oversight and risk management. The board assures itself that appropriate systems of governance, leadership and stewardship are in place while empowering the executive team to manage the organization.
Before I provide an overview of the state of the sector as a whole, I would like to share my perspective as an operator. In my role as senior vice president of Rocky Mountaineer, a Canadian luxury rail company, I'm seeing firsthand the devastation of the COVID‑19 pandemic on our business. We weren't able to operate in 2020, and we've delayed the start of our 2021 season.
The impact of the pandemic on tourism is greater than that experienced after 9/11, SARS and the 2008 crisis combined. Women, youth, immigrants and indigenous workers, who make up the engine of the visitor economy, have been the hardest hit by the impact of COVID-19 due to reduced operations, business closures and job losses.
We are forecasting that the sector [Technical difficulty—Editor] until 2024.
At this point in my presentation, I would like to acknowledge that the speed and scale of the government's response to the pandemic has never before been seen in times of peace.
The government has provided over $15 billion in federal government investments to support tourism in the past year. This includes important programs like the Canada emergency wage subsidy program and the highly affected sectors credit availability program. There was also robust support for Canada's tourism sector in budget 2021, which, I will note, still needs to pass the House and Senate, including an additional $100 million to Destination Canada for marketing.
While government subsidy programs are helpful for survival, recovery can only happen when revenues return.
The good news is that, although the sector is struggling now, we're seeing strong signals of future demand. Our latest research shows upward trends in feelings of safety about travel and a greater willingness of communities to welcome visitors.
With these signs of hope, Destination Canada is focusing its strategy to help revive market revenue in the near term and support a thriving and resilient industry that delivers net benefits to communities in the long term.
A key part of our plan to revive revenue is a multiphased domestic campaign that reflects the evolution of health restrictions. Recent research from Destination Canada finds that, if Canadians shift two-thirds of their typical spending on international travel towards domestic tourism this year, it will make up for the estimated $19-billion shortfall in international visitation. It will also support 150,000 jobs and help accelerate recovery by a full year. Simply put, we need Canadians to keep their holiday dollars in Canada this year to speed up our sector's recovery.
In its early stages, our campaign aims to increase Canadians' understanding of the importance of travel to their communities, inspire confidence and a desire to travel domestically, and finally to reignite the welcoming spirit of Canadians from coast to coast.
While our industry is first and foremost concerned with protecting the health of our employees and guests, we are eager to welcome travellers again. When the time is right, we will start introducing more aggressive calls to action and encourage Canadians to book their travel. We are also key in our international markets, ensuring that Canada stays top of mind for business and leisure travel alike when it is safe to do so. The efforts are now intensifying.
In order to help our industry ready itself to reopen and compete in a ferocious marketplace, we are hearing three main areas of concern.
They are seeking clarity around reopening milestones—
View Kelly Block Profile
CPC (SK)
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.
Bob Hamilton
View Bob Hamilton Profile
Bob Hamilton
2021-06-08 11:07
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—
Bob Hamilton
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Bob Hamilton
2021-06-08 11:08
I'll start where I left off. It's getting close to the end.
Upon adoption of this motion, the CRA immediately set to work to meet the committee's expectations. I acknowledge the efforts of numerous employees across the agency, representing both a significant and a necessary time investment to perform this work within the stipulated deadline. Their effort underscores the seriousness with which the agency takes its duty to be both transparent and accountable to Parliament and to Canadians.
Thank you again. We welcome any questions you might have today.
Michael Sabia
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Michael Sabia
2021-06-08 11:09
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.
View Philip Lawrence Profile
CPC (ON)
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?
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2021-06-08 11:17
Madam Chair, what I would say is that this is an internal document that we produced based on a number of assumptions. Our own internal analytics folks would have made a number of assumptions to produce that analysis. That is an estimate to help guide the level of effort that was necessary. It's not a projection but perhaps an outer limit that we used for planning purposes to allocate resources. It's based on assumptions, and only time will tell whether those assumptions will be proved to be correct.
View Philip Lawrence Profile
CPC (ON)
That's actually my next question. I'm wondering if time has started to tell, as it were, as a majority of Canadians have now filed their tax returns. How much in tax revenue did you actually collect on the CERB benefits, if you have those numbers? If not, I assume that's a number you could access for us.
Ted Gallivan
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Ted Gallivan
2021-06-08 11:18
That's correct. Returns still continue to be processed and reassessed, so it would be a number that we could provide through the clerk of the committee to the members.
View Philip Lawrence Profile
CPC (ON)
Perfect.
Further to that, you said that there was $1 billion considered at risk of default. I'm wondering if you gentlemen would be kind enough to unpack what that means. Does that mean that Canadians are just not paying their taxes, or what was the risk that you highlighted there?
Bob Hamilton
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Bob Hamilton
2021-06-08 11:19
That would be fine, Ted, if you wanted to take that question.
I think the general point that will apply to questions in this domain is that, as Ted said, these are not estimates but rather indications that we set up at the beginning to guide our activities. We are still in the process of receiving tax returns. More data is coming in all the time.
With that backdrop, Ted, go ahead.
Ted Gallivan
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Ted Gallivan
2021-06-08 11:19
This information that we would have provided to the OAG again reflects again our planning. We would have looked at the historic behaviour of people at these income ratios in terms of their ability or propensity to pay, and run it through analysis.
In other words, as we gained experience with who was claiming these benefits and what the amounts were, we back-tested that against historical data to see what the profiles of those kinds of taxpayers were. That led us to a $1-billion number. Again, this led us to consider whether we would need 50 people on this, or 5,000 people. That was the purpose of that kind of analysis.
View Philip Lawrence Profile
CPC (ON)
I'm sorry. I didn't quite follow that last comment. It intrigues me a bit that you needed 50 people or 5,000. Do you mean in collecting the taxation?
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2021-06-08 11:20
That's correct. It would have been relevant for our accounts receivable folks to have a heads-up around how much debt they would have to collect and how much debt would have been uncollectible. What we were trying to do with these early estimates was decide how much of a workforce we needed to assign to the different parts of administering the CERB.
View Philip Lawrence Profile
CPC (ON)
Okay.
As per the earlier question, I'd like to know what the actual amount defaulted was, even if you have a partial number. I realize that you may not have it with you today, but perhaps we could get that within three or four weeks, or whatever the standard is for our committee. I'm sure the chair could direct us. It's just to get that number on where we are right now. I understand that not everyone has their tax filing in.
Would that be appropriate?
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2021-06-08 11:21
If I could clarify through the chair, at this point we would probably have the accounts receivable, the gross amount. Usually it takes several years until we start to do writeoffs or writedowns, but we can absolutely get you the numbers as they stand today.
View Philip Lawrence Profile
CPC (ON)
Thank you. I appreciate that.
Then, because I'm a Luddite and still using paper here, if I flip the page, I have on page 278 a large portion of redacted documents underneath “Findings”.
Some of the redactions clearly make sense. There are names and there are technological services that you can sort of read into, and I understand why the minister would not give this away, but this redaction doesn't make any sense to me prima facie, and I'm wondering if you can provide me with some information to reassure me that this is a reasonable redaction here.
View Kody Blois Profile
Lib. (NS)
View Kody Blois Profile
2021-06-08 11:22
Thank you, Madam Chair, and thank you to our witnesses for appearing before our committee again. You've been very generous with your time. Obviously we have a role as parliamentarians to hold the government to account, but to Mr. Sabia and Mr. Gallivan and others, we know you're busy trying to drive government programming today as well.
Perhaps I'll just continue with Mr. Gallivan, because he was answering some of the questions from Mr. Lawrence. Mr. Lawrence was talking about some of the early projections or numbers relating to the CEWS program and some of the concerns around the uncertainty that existed.
Is it fair to say that the numbers that were being quoted on those pages were from the early midst of the pandemic, when there was a lot of uncertainty about the extent of the economic harm that could have been caused to the economy and also about what this was going to represent for small businesses across the country?
Ted Gallivan
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Ted Gallivan
2021-06-08 11:23
That's correct. That document was dated August 2020. I think we were still before the second wave, still unsure of how long the programs might last, and I think also still trapped in the twin pressures of sustaining Canadians and the Canadian economy and making quick payments, and then exercising our role and my role as head of compliance at the CRA to make sure there was no leakage in the system. We were kind of balancing the two. It was an August 2020 report that was being quoted.
View Kody Blois Profile
Lib. (NS)
View Kody Blois Profile
2021-06-08 11:24
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.
Michael Sabia
View Michael Sabia Profile
Michael Sabia
2021-06-08 11:25
Yes, that's correct. This has been a major initiative of the government. I think that by the time all is said and done with this program, its total contribution to the Canadian economy and to protecting Canadian jobs will be something in the order of $100 billion to $110 billion. It's a very substantial contribution.
As a result of that, we are very supportive of the recommendation from the Auditor General that we do a thorough analysis of the program, and that is our intention. Our intention is to publish that analysis in a report that we prepare, the report on federal tax expenditures in 2022, which will give us time to have the program wind down. As you say, hopefully it will be winding down on schedule, consistent with continuing rollout of the vaccination program as we put this pandemic behind us. That will give us some time to assess the program, and we will publish a complete economic analysis of the wage subsidy program at that time.
View Kody Blois Profile
Lib. (NS)
View Kody Blois Profile
2021-06-08 11:27
Thank you, 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.
Bob Hamilton
View Bob Hamilton Profile
Bob Hamilton
2021-06-08 11:28
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.
View Julie Vignola Profile
BQ (QC)
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?
Bob Hamilton
View Bob Hamilton Profile
Bob Hamilton
2021-06-08 11:30
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.
View Julie Vignola Profile
BQ (QC)
Thank you.
Report 7 states that 28% of the subsidy applicants were annual non-filers, and 15% were monthly and quarterly non-filers. Are those numbers comparable to non-pandemic years?
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2021-06-08 11:32
The answer is no, Madam Chair. The numbers went up. They were already higher than we would have liked. The reason is that we extended the deadline for filing returns because of the pandemic.
Coming back to your first question, I want to point out that we also used payroll deduction information to validate applications. Since the wage subsidy was tied to payroll, source deduction information really helped us eliminate the risk prepayment.
Given that we had extended the deadline for filing GST/HST returns because of the pandemic, we had to be consistent and proceed on the basis that we would not have them.
View Julie Vignola Profile
BQ (QC)
I see. Thank you.
Do you have an idea of what it will cost to recover overpayments?
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2021-06-08 11:33
I'm reluctant to answer because it covers a number of categories.
Yes, we have an idea of the marginal cost of program administration, legitimate errors and aggressive planning. A single figure covers a variety of errors or discrepancies.
That makes it difficult to break down the extra costs arising from dual applications alone. That said, we certainly have estimates of the additional costs incurred as a result of administering the program.
View Julie Vignola Profile
BQ (QC)
What do your estimates say? What will it cost to recover the overpayments?
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2021-06-08 11:34
To help you better understand the estimates, I would prefer to provide a cost breakdown, because different numbers reflect errors and payment recovery.
View Julie Vignola Profile
BQ (QC)
Thank you for providing that.
My fellow member brought up the risks stemming from Canada's COVID‑19 economic response plan and your tax risk exposure estimate of $20 billion, including $1 billion at risk of default.
Why did you not set up a direct collection system? After all, such a system is already in place for the employment insurance program.
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2021-06-08 11:35
Given the sheer volume of applications, an unprecedented number, the agency had to set up an emergency program to support the existing program, which could not handle the volume.
View Matthew Green Profile
NDP (ON)
Thank you very much.
Through you, Madam Chair, to Mr. Sabia, according to the OAG report on Finance Canada, the department “performed a partial analysis of the initial Canada Emergency Wage Subsidy program because the department had only a few days and did not have the full information required to provide a formal analysis.”
Did Finance Canada propose this program and its main parameters to the government, or vice versa?
Michael Sabia
View Michael Sabia Profile
Michael Sabia
2021-06-08 11:36
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—
View Matthew Green Profile
NDP (ON)
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?
Andrew Marsland
View Andrew Marsland Profile
Andrew Marsland
2021-06-08 11:39
Madam Chair, perhaps I can take this one.
I believe this document is a comparison at a point in time of the wage subsidies in place in various jurisdictions. As I think the committee will recall, there was a predecessor to the Canada emergency wage subsidy, the temporary wage subsidy, which provided a 10% subsidy—
View Matthew Green Profile
NDP (ON)
Is it safe to say about the initial recommendation, then, based on the testimony we've heard today—the initial recommendation being a recommendation from both the government and the public service—that the initial analysis identified that this wage subsidy ought to go to companies with less than $15 million in taxable capital in the preceding year, and then at some point in time a decision was made to expand the program?
If that's fair to say, based on the testimony, my question is this: Who made the direction to expand the program to include companies like Air Canada, Imperial Oil and other megacorporations that took wage subsidies and then paid out astronomical payments to shareholders and in CEO bonuses?
Andrew Marsland
View Andrew Marsland Profile
Andrew Marsland
2021-06-08 11:40
Madam Chair, perhaps I can respond to that.
As I said, in the very initial phases of the pandemic, there was a 10% wage subsidy in place applying to small business. As the situation significantly increased, the wage subsidy was expanded into what is now the Canada emergency wage subsidy, which provided significantly more generous subsidies of 75%, up to a certain limit, across the economy. It was more an evolution of programming as the situation developed a year ago—
View Matthew Green Profile
NDP (ON)
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?
View Philip Lawrence Profile
CPC (ON)
Thank you very much.
Mr. Hamilton, we'll just go back to where we were. I will remind you that on page 278 there, underneath "Findings", there's a paragraph that's completely redacted. If you can't provide me with what's in that paragraph, I'm hopeful that you can provide me with some of the reasons it was redacted.
Maxime Guénette
View Maxime Guénette Profile
Maxime Guénette
2021-06-08 11:43
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.
View Philip Lawrence Profile
CPC (ON)
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?
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2021-06-08 11:45
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.
View Philip Lawrence Profile
CPC (ON)
With respect to the CEWS, there was an audit, or at least a pilot of an audit. We actually had an opposition motion against bringing that forward, because it was quite taxing on our small business owners during the pandemic. However, I saw that quite a few of your projections were reliant on those CEWS pilots coming on for post-validation.
What is the plan now? Will we be going forward with a similar audit that, as you said, had pages and pages and was extremely cumbersome for small business owners during a pandemic? What is the solution, now that it appears you've abandoned that pilot?
Bob Hamilton
View Bob Hamilton Profile
Bob Hamilton
2021-06-08 11:47
Madam Chair, I think Ted would be able to provide a better answer, but he may come back to it.
I think the pilot did give us some very useful information. We actually think it was an innovation that we will use to try to get more information to help future audits. I wouldn't say that we've abandoned it; I think we're using the information. It is in our action plan to use that information to inform future audits and where we might focus from a risk-based perspective, so we are far from abandoning it.
To your point on burden, we did try to tailor it to something that a business could do within the context of a pandemic. Probably our initial attempt with some auditors was not as sensitive as it could have been, but we fixed that fairly quickly.
View Greg Fergus Profile
Lib. (QC)
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?
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2021-06-08 11:51
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.
View Greg Fergus Profile
Lib. (QC)
I would think your estimate, which is based on past experience, takes into account the possibility of six-year repayment plans.
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2021-06-08 11:52
Yes, absolutely. We have a variety of payment arrangement options, as indicated in the document you referred to. We work with taxpayers so they can spread the payments out over a number of years. It can take four, five or six years to clear the debt owed to the government.
View Greg Fergus Profile
Lib. (QC)
According to last year's data and given the circumstances, would you say the percentage of debt to be written off rose, fell or stayed the same?
Is it still 5%?
I know it's not an easy question, but I am genuinely curious.
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2021-06-08 11:53
At this point, it would be speculation if I were to answer, but we can look to other debts to get an idea: $1 billion in business debt, $1 billion in personal income tax debt and $1 billion in GST/HST debt. Then we can determine whether recovery is worthwhile.
The opportunity cost comes into play. We will take a look at the emergency programs alongside all the other programs we administer and make choices from there. We determine the opportunity cost on the basis of the resources required, since we already have billions of dollars in accounts receivable annually.
Come the fall, the real challenge for us will be making choices.
View Julie Vignola Profile
BQ (QC)
Thank you.
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.
Maxime Guénette
View Maxime Guénette Profile
Maxime Guénette
2021-06-08 11:55
Madam Chair, I'm not sure whether the member is referring to Department of Finance documents or CRA documents.
View Julie Vignola Profile
BQ (QC)
The first document in the electronic binder. I believe it's from the Department of Finance. It's 52 pages long.
I can come back to it afterwards.
View Kelly Block Profile
CPC (SK)
Can any witness identify who would be responsible for the document that Ms. Vignola has highlighted?
Maxime Guénette
View Maxime Guénette Profile
Maxime Guénette
2021-06-08 11:56
Do you mind repeating which page it was?
View Julie Vignola Profile
BQ (QC)
It's somewhere between pages 37 and 44, in the first chunk of documents. Give me a few moments, and I'll tell you the exact page.
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