Specific COVID-19 Benefits

Opening Statement before the Standing Committee on Public Accounts

Specific COVID-19 Benefits

(Report 10—2022 Reports of the Auditor General of Canada)

26 January 2023

Karen Hogan, Fellow Chartered Professional AccountantFCPA
Auditor General of Canada

Mr. Chair, thank you for this opportunity to discuss our report on specific COVID‑19 benefits, which was tabled in the House of Commons on December 6th, 2022. I would like to acknowledge that this hearing is taking place on the traditional unceded territory of the Algonquin Anishinaabe people. Joining me today are Mélanie Cabana and Josée Surprenant, who were responsible for the audit.

This audit focused on whether Employment and Social Development Canada and the Canada Revenue Agency managed COVID‑19 benefits efficiently and effectively, including whether the COVID‑19 programs achieved their objectives and provided value for money outcomes. We also looked at whether benefit payments were accurate, whether they were paid to those who were eligible to receive them, and whether the procedures to recover overpayments and payments made to ineligible recipients were timely.

Overall, the department and the agency effectively delivered COVID‑19 programs to provide quick financial relief to individuals and employers. This helped prevent an increase in poverty and income inequalities and helped the economy bounce back.

To issue payments quickly, the government decided to limit pre‑payment controls by relying on information provided by applicants. In doing so, it recognized that post-payment verification work would be needed.

We looked at 6 programs and found that overpayments of $4.6 billion were made to ineligible individuals. We also estimated that at least $27.4 billion of payments to individuals and employers should be investigated further because we identified risks that they may not have been eligible for the benefits that they received. However, the number of post-payment verifications that the department and the agency have planned are insufficient. They do not plan to verify payments made to all recipients identified as potentially ineligible.

At the committee’s request, we will focus on the Canada Emergency Wage Subsidy today. We found that the program delivered support to employers in sectors most impacted by the pandemic. However, we could not assess the impact of the program, including whether objectives were met, because employers were required to provide only limited self-declared information in their applications.

To carry out our audit work, we used goods and services taxGST/harmonized sales taxHST returns because it was the best information that was available. The agency did not have monthly revenue data for businesses, even though this information is critical based on eligibility criteria for the benefit. By analyzing the GST/HST returns filed with the Canada Revenue Agency in 2020 and 2021, we estimated that $15.5 billion in benefits were paid to recipients of the Canada Emergency Wage Subsidy who might not have been eligible to receive them. We concluded that all of those payments should be investigated further.

I am concerned about the limited progress in post-payment verification work for all the programs we looked at, including the Canada Emergency Wage Subsidy. The government knew that significant post-payment work would be needed the moment the decision was made to limit pre-payment controls. However, neither resources nor plans have been sufficiently adjusted to reflect the unprecedented circumstances brought on by the pandemic.

The federal government has spent billions of dollars and does not know whether that money always went to eligible recipients. In the interest of being fair to all taxpayers, the government must carry out rigorous verification work. If it chooses a different approach, then it must be clear and transparent with Canadians.

Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have. Thank you.