THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Wednesday, April 26, 2023
The Standing Senate Committee on National Finance met with videoconference this day at 6:45 p.m. [ET] for the consideration of the Main Estimates for the fiscal year ending March 31, 2024.
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: Honourable senators and witnesses, I want to share with you some information because there is a procedure. Senators will need to go vote. I’ll tell you what the procedure will be. With your leniency, you will let us go vote.
With that said, honourable senators and witnesses, good evening. Before I begin, I want to reassure all members that the National Finance Committee is authorized to meet tonight, even though the Senate is in session, for the purpose of considering the Main Estimates for the fiscal year ending March 31, 2024. That authority was given by the Senate of Canada through an order of reference to us on March 7, 2023.
[Translation]
I have just been informed that there will be a vote in the Senate. We have changed rooms to allow the senators to get to the chamber as quickly as possible.
[English]
Therefore, is there an agreement that we will recess five minutes before the vote and resume the meeting immediately after we vote? Are there any questions on how to proceed, senators? If not, there is agreement that we will suspend at 7 p.m., and the vote will be at 7:06. We will suspend the committee to go vote in the chamber and then return immediately after.
Is there agreement on that, honourable senators?
Hon. Senators: Agreed.
The Chair: Okay, thank you.
Also, I wish to welcome all the senators as well as the viewers across Canada who are watching us on sencanada.ca.
[Translation]
I am Percy Mockler, senator from New Brunswick and chair of the Standing Senate Committee on National Finance. I would now ask my colleagues to introduce themselves, beginning on my left.
Senator Loffreda: Welcome to our guests. Senator Tony Loffreda from Montreal, Quebec.
[English]
Senator Yussuff: Hassan Yussuff, Ontario.
[Translation]
Senator Galvez: Rosa Galvez, independent senator for Quebec.
Senator Dupuis: Renée Dupuis, independent senator from the Laurentides division in Quebec.
[English]
Senator Pate: Kim Pate, from the unceded, unsurrendered territory of the Algonquin Anishinaabeg.
Senator Smith: Larry Smith, Quebec.
[Translation]
Senator Audette: Good afternoon, everyone [Indigenous language spoken]. Michèle Audette from Nitassinan, Quebec.
[English]
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
[Translation]
Senator Dagenais: Jean-Guy Dagenais from Quebec.
The Chair: Thank you, honourable senators.
[English]
This evening, we will resume our study on the Main Estimates for the fiscal year ending March 31, 2024.
I’d like to thank all witnesses for accepting our invitation so that you can speak to the budget for the current fiscal year. I am told that one senior official from each department will offer opening remarks and will then be supported by his or her colleagues during questions from senators.
Our witnesses are as follows: from Public Services and Procurement Canada, Wojciech (Wojo) Zielonka, Chief Financial Officer, Finance and Administration Branch; and Alain Lagacé, Director General, Budget, Cost and Investment Management; from the Public Health Agency of Canada, Martin Krumins, Vice President and Chief Financial Officer, Chief Financial Officer and Corporate Management Branch — thank you for being here, sir — and from the Canada Revenue Agency, Hugo Pagé, Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch.
[Translation]
Welcome everyone, and thank you for accepting our invitation to appear before the Standing Senate Committee on National Finance.
[English]
Before we begin, I’d like to ask all the other witnesses whom I did not name to please introduce themselves should they be called upon to answer questions from senators.
[Translation]
We will now hear the opening remarks.
Mr. Zielonka, you have the floor.
[English]
Wojciech (Wojo) Zielonka, Chief Financial Officer, Public Services and Procurement Canada: Thank you very much. Good evening. I greatly appreciate the opportunity to appear before you tonight to discuss Public Services and Procurement Canada’s, or PSPC’s, Main Estimates for fiscal year 2023-24. Joining me today is Alain Lagacé, Director General, Budget, Cost and Investment Management within the Finance Branch.
Honourable senators, as this committee well knows, the department has a wide-ranging mandate. We support the whole of government as it serves Canadians, from steering government procurement, to managing government buildings, to being the pay and pension administrator for the public service and more. In order to support our activities, PSPC is requesting a net amount of $4.3 billion through the Main Estimates. This is a decrease of $304 million from the previous year’s Main Estimates.
Of the amount we are seeking, more than $3.4 billion will be spent on property and infrastructure activities, including the rehabilitation of the Parliamentary Precinct. Of that $3.4 billion, almost half is comprised of capital expenditures. That funding is to maintain federal infrastructure, such as buildings and bridges, for the benefit of all Canadians.
We are also seeking $318.7 million in payments and accounting initiatives, which include pay administration operations; $156.5 million for government-wide support programs, which includes the Translation Bureau; $165.9 million for the purchase of goods and services; $4.2 million for the Procurement Ombudsman; and $279.7 million for internal services, which include but are not limited to, human resources, communications, information technology and legal services.
The amount we’re seeking also includes $130 million in statutory authority for contributions to the employee benefit plans.
Funding received through the Main Estimates will allow PSPC to deliver on its many important priorities, including supporting the Government of Canada’s pay administration program. Public servants deserve to be paid accurately and on time. PSPC is dedicated to achieving pay stabilization and eliminating the backlog of pay issues once and for all.
I’d like to note that the amount allocated to pay administration is one of the contributing items for the decrease in the Main Estimates in comparison to the previous year. This is due to the sunsetting of 2022-23 funding. However, as announced in Budget 2023, PSPC will be seeking additional funding for pay administration in the 2023-24 Supplementary Estimates (A).
[Translation]
Of course, our many procurement initiatives remain among top priorities. Public Services and Procurement Canada, or PSPC, manages approximately $24 billion in procurement annually and, as such, provides goods and services to departments across the Government of Canada. As part of that work, PSPC continues to advance key defence procurement initiatives and continues to work with its partners to implement Canada’s National Shipbuilding Strategy.
PSPC is also advancing greening government initiatives for federal property and infrastructure. These include leveraging the use of clean energy and low-carbon products, as well as integrating energy reduction, waste reduction and greenhouse gas reduction into all real property projects.
In addition, PSPC continues the modernization of the workplace for all public servants returning to the office in order to meet their needs, while lowering operating costs. We are advancing the rehabilitation of the historic Parliamentary Precinct, which also includes the redevelopment of Block 2, the city block in Ottawa bounded by Metcalfe, Wellington, O’Connor and Sparks streets.
These are only a few of our priorities. We are pleased to answer any questions you may have on the 2023-24 Main Estimates.
Thank you very much.
The Chair: Thank you, Mr. Zielonka.
[English]
I will now recognize Mr. Martin Krumins from the Public Health Agency of Canada for your comments before the vote, please.
Martin Krumins, Vice President and Chief Financial Officer, Public Health Agency of Canada: Honourable senators, before I begin, I would like to acknowledge that I’m speaking here today from the traditional, unceded territory of the Algonquin Anishinaabe people, and I’m grateful to have the opportunity to be present in their territory.
It’s a pleasure to appear before the committee to discuss and present you the Main Estimates for 2023-24 on behalf of the Public Health Agency of Canada. To continue playing an active role to safeguard and improve the health and well-being of Canadians, the agency is seeking approval for $4.2 billion in these Main Estimates. These estimates represent a decrease of $4.3 billion compared to 2022-23. This is mostly due to the expiry and reduction of temporarily budgetary authorities for COVID-19 initiatives, such as therapeutics, border and travel measures, and vaccines.
I would now like to walk you through some of the key elements of these Main Estimates. Of the total $4.2 billion, the agency will be receiving $3.58 billion in time-limited funding. The remaining $755 million is permanent ongoing funding. The bulk of these estimates will support the procurement of COVID-19 vaccines and vaccine deployment. This funding will support the ongoing management of the COVID-19 bilateral advance purchase agreements, which will ensure access to boosters, pediatrics and next-generation vaccines for every Canadian.
The agency is also seeking $309.2 million in funding to support the procurement of additional mpox, previously known as monkeypox, vaccines and the equipment needed to meet vaccine storage and distribution requirements. The agency continuously reviews and monitors its stockpile of vaccines and pharmaceuticals to assess its capacity to respond to emergency events requiring medications, vaccines and other supplies.
Funding in the amount of $127 million is being sought for the procurement of domestic influenza vaccines. Canada’s long-standing pandemic influenza preparedness strategy is predicated on access to domestically produced vaccines. The Government of Canada is taking action to ensure a continued, sufficient supply of influenza vaccines so Canadians have timely access to key protection against the threat of an influenza pandemic.
The COVID-19 pandemic has left a serious negative impact on the mental health of Canadians, with concerns about the virus itself, compounded by impacts on work and routines, financial stress, social isolation, grief and bereavement, and reduced access to services and supports.
The Chair: Thank you. Mr. Krumins, we have to suspend. We will not ask you to start at the beginning, but you will continue where you just stopped when we return.
Honourable senators, we will suspend to go vote.
(The committee suspended.)
(The committee resumed.)
The Chair: Honourable senators, we will now resume. Mr. Krumins, the floor is still yours.
Mr. Krumins: I appreciate that. Thank you, chair.
With respect to mental health, the agency is seeking $22 million for distress centres and $59 million to support new ways of delivering programming and reaching populations in need of support for mental wellness. This funding will help stabilize distress centres in the pandemic recovery phase, as well as reach diverse populations whose mental health has been disproportionately affected by the pandemic.
New funding of $147.8 million is also being requested in order to help build capacity to respond to public health emergencies. The funding will go toward preparedness, monitoring of emerging threats, supporting biosafety and biosecurity, as well as working with partners throughout the country to improve emergency management systems to detect and act on public health threats. The funding will support surveillance and research activities in response to significantly heightened, yet unfunded demand for new information on the wider health impacts on the COVID-19 pandemic.
In addition to these larger items, it’s important to note that the agency’s Main Estimates will also continue to provide funding to other equally important initiatives, such as the Indigenous Early Learning and Childcare initiative, the national dementia strategy, the Centre for Aging + Brain Health Innovation, the Framework for Diabetes in Canada and to address gender-based violence, to name a few. The $4.2 billion being sought in these Main Estimates will allow the agency to continue to adjust its response to the COVID-19 pandemic while maintaining its focus on public health priorities that continue to affect the daily lives of Canadians.
Thank you again for this opportunity to speak about the work of the Public Health Agency of Canada. My colleagues and I will be pleased to answer any questions you may have. Thank you.
[Translation]
The Chair: We will now hear from Hugo Pagé from the Canada Revenue Agency. You have the floor.
Hugo Pagé, Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency: Thank you, Mr. Chair.
[English]
Good evening and thank you for the opportunity to appear before the committee to present the Canada Revenue Agency’s Main Estimates for 2023-24 and to answer any questions that you may have on the associated funding.
As you are aware, the CRA is responsible for the administration of federal and certain provincial and territorial tax programs, as well as the delivery of a number of benefit payment programs. Each year, the agency collects hundreds of billions of dollars of tax revenue for the Government of Canada and distributes timely and accurate benefit payments to millions of Canadians.
In recent years, the COVID-19 pandemic has required the CRA to rapidly respond to significant challenges and pivot its operations to deliver new emergency relief measures on behalf of the Government of Canada, in addition to maintaining its essential tax and benefit services for Canadians.
In order to fulfill its mandate in 2023-24, the CRA is seeking a total of $14.9 billion through these Main Estimates. Of this amount, $4.5 billion requires approval by Parliament, whereas the remaining $10.4 billion represents statutory forecasts that are already approved under separate legislation.
These 2023-24 Main Estimates represent a net increase of $2.4 billion when compared with the 2022-23 Main Estimates. Of this amount, $1.9 billion is related to statutory forecasts for fuel charges proceeds to be returned to the province or territory of origin primarily through the climate action incentive payments. The balance of some $425 million represents an increase of 8% from the 2022-23 Main Estimates.
A large component of this increase, $224 million, is associated with funding to combat tax evasion and tax avoidance, primarily for initiatives announced in the 2022 federal budget. The funding will be used to expand audits of larger entities and non-residents engaged in aggressive tax planning. It will also be used to increase the investigation and prosecution of those engaged in criminal tax evasion as well as expand educational outreach.
An additional $98 million is to address the shortfall in contact centre funding given the ongoing impacts from the pandemic and security-related risks. Although COVID-19 benefits funding will phase out, increased security measures will remain, as the risk of fraud continues to increase. The temporary funding will help alleviate short-term pressures, allowing contact centre agents to be extended beyond the filing season, ensuring Canadians receive the support they need.
[Translation]
Other increases to the agency’s budget include: $74 million to support the continued administrative and enforcement associated with the delivery of the federal carbon pollution pricing system. It will also be used for the ongoing administration of climate action incentive payments; $47 million for measures related to making housing more affordable. The majority of the funding will be used to implement and administer the tax-free first home savings account, which aims to help Canadians save for the purchase of their first home; $30 million to implement modifications to systems, as well as make necessary publication and procedural changes for the administration of the tax on unproductive use of Canadian housing by foreign non-resident owners; finally, $23 million for the ongoing administration of cannabis taxation program. The funding will allow the program to continue to license new entrants and conduct compliance activities on existing licensed entities in the cannabis industry.
Other items, totalling some $30 million, include funding to strengthen tax collection, the administration of the luxury tax and measures related to international tax reform.
These increases are partially offset by a $74-million reduction in funding for the administration of pandemic measures, as well as a $27-million decrease in the CRA’s statutory forecast of cost recovery revenues for initiatives administered on behalf of the provinces and other government departments, with the majority of this decrease attributable to the administration of COVID-19 measures on behalf of Employment and Social Development Canada.
In closing, the CRA is committed to helping Canadians meet their tax obligations by providing a secure, client-centric service experience. The resources being requested through these estimates will allow the agency to continue to deliver on its mandate by ensuring Canadians have ready access to the information they need about taxes or benefits and by making it easier for the vast majority of taxpayers who want to pay their taxes, and more difficult for the small minority who do not.
Mr. Chair, at this time, we will be pleased to respond to any questions you may have.
[English]
The Chair: Before we proceed, I’d like to share with you that you will have a maximum of five minutes each in the first round and three minutes in the second round.
Senator Marshall: My first question is for Mr. Pagé. You mentioned in your opening remarks tax evasion and the extra money that’s in the budget for, I guess, people doing some work in that regard.
We do a lot of discussion, this group of us, about the tax gap and the overseas tax evasion and the underground economy. I’ve read your strategy. But it always seems like, when you read the documents in your report, even with the minister’s remarks and the commissioner’s remarks in the report and your strategy for the underground economy, it seems like the Canada Revenue Agency is always focused on studying and there doesn’t seem to be a lot of effort into actually doing the work and collecting the taxes. Maybe you are doing so, but it’s not being conveyed to people like me, who just get the impression it’s always like a continuation of a study.
I don’t know if you’re aware or not, but Senator Downe has a bill in the Senate now, Bill S-258, and it’s called fairness for all Canadians. It requires certain information to be reported by the minister and also to provide the Parliamentary Budget Officer with information because he’s been having difficulty getting information. He said he could measure the tax gap but he’s not getting the information from you.
Why aren’t there more enforcement and collection? The tax gap is huge, I think $40 billion. Why isn’t more effort being taken into collecting that information and also reporting to Canadians and parliamentarians that you’re having some success in that area, if indeed you are? Can you just explain that?
Also, why not provide the Parliamentary Budget Officer with the information if it doesn’t identify personal information? That’s a lot of questions, but if you could just take a stab and give us some reassurance that you are doing some actual work in this regard and that you’re going to report it. Thank you.
Mr. Pagé: Thank you for the questions. Maybe I’ll start talking a little bit about some of the funding that we receive, and then I will turn it over to my colleague Cathy Hawara to talk more about the program.
A lot of our funding has been received through several budgets in previous years, most notably in Budget 2022, we received $1.2 billion. With this funding, there have been several activities that have been undertaken. We’re extending the number of audits of medium-sized economic entities. We’re expanding the non-resident audit program, so there are multiple activities taking place so we can improve our results.
I should also mention that, as part of the budget, there are commitments made in terms of returns on investments. Those returns are being tracked and reported to the Treasury Board Secretariat, also known as TBS. Maybe on that, I’ll turn it over to my colleague to tell you a little more about the program.
Cathy Hawara, Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency: Good evening, Mr. Chair, and thank you for the question. My name is Cathy Hawara, Assistant Commissioner, Compliance Programs Branch.
Certainly, I am involved very much in the underground economy and all of our audit programs at the agency. The question about reporting back on our results is an important one, one we think a lot about at the agency because we know that by being more transparent in terms of our activities and our level of activity in this space, we will increase the trust and confidence of Canadians in the agency with respect to fairness of the tax system. There is some information that is available through our website where we report detailed information about our results, including results that touch on the underground economy, our criminal investigations, our offshore audit activity, et cetera. We can certainly provide that information or the link to that information to the committee, given the interest.
Senator Marshall: I’ve looked at your website and I’m reading a lot of your reports. You provide some information, but what’s there doesn’t leave us aware of exactly what you’re collecting and what you’re doing. You’re not conveying to Canadians and to parliamentarians that you’re being successful in going after — in collecting taxes that are owed to you and not reported. It’s not coming across to Canadians. This is why Senator Downe has put forward the bill. This is why Canadians and parliamentarians are having a problem.
I was wondering, because there seems to be so limited information on the tax gap, what you’re collecting and what the impact is, I know the Canada Revenue Agency is also responsible for disbursing a lot of benefits, like the Canada child benefit. I sometimes wonder if your focus is on paying out money as opposed to collecting the money. It seems like the emphasis is always on spending money and getting the money out there, but there doesn’t seem to be a lot of effort into collecting the money.
The impression that’s being left, and I think it’s the responsibility of the Canada Revenue Agency to address the issue, people who are paying their taxes or complying with the tax act, they are aware of a lot of people who aren’t complying. It seems like the Canada Revenue Agency is turning a blind eye. They are not these people.
I have read your Underground Economy Strategy, and when I read it, I just put it aside. You are going to educate people. Well, that is not the issue. What about the enforcement?
I want to make the point that the Canada Revenue Agency, for the collection of taxes that are owed to you that you are not really chasing — you have a — it is a credibility problem with the Canada Revenue Agency, and it is frustrating the honest taxpayer. How are you going to address it? That is the question.
Ms. Hawara: Thank you for the question.
We are limited in some of the information that we can provide publicly in terms of our compliance actions. However, we recognize the importance of reporting on our activities at an aggregate level. Every opportunity that we have, we seize it.
With respect to the Underground Economy Strategy which the senator referred to, our third pillar is addressing the underground economy, and we have a comprehensive set of actions that we are taking across the agency, through our underground economy teams and through other audit programs that we have, to address specific risks.
This is absolutely a focus of the agency. We try to seize every opportunity to communicate the results of our work, including through the page that I referenced earlier.
Senator Marshall: Thank you.
Senator Smith: I would like to address the Canada Revenue Agency with a different question.
The emergence of digital service options throughout our economy has been identified as a key risk to CRA’s operations. Canadians expect digital and more modern service delivery from the agency, and that is your job, to meet these challenges.
The question: Could you provide us with updates on measures that the agency has taken to modernize its program and service delivery, and is there any funding earmarked for this initiative in the Main Estimates?
Mr. Pagé: I will respond to this. The agency does put a lot of attention and focus on digital services. We actually have a branch that is focused on transforming the agency and helping us move in that direction.
Included in the Main Estimates, we do have funding. This funding is allocated throughout the various programs. I do not necessarily have the specific numbers. I would be happy to provide that to you if you want, separately.
Some of the investments that we are making are exactly to address some of the comments that you have made around making the services more accessible through the online offering and making sure that the agency can provide safe access to these services as well. As you know, security is also the top of mind for the agency, and we have been investing heavily in that.
Senator Smith: Do you have any basic measurement systems that you are trying to collect data about on this particular issue, in terms of the digital capabilities that the CRA has? Are there measurable things that you can share with us that you have actually accomplished in setting this up, the program? Is there anything there?
Mr. Pagé: Well, there are numerous services online that we have offered. For individual taxpayers, there are more services that are now available so that they can submit their tax return electronically and do so in a way that is secure.
Some examples, if you have recently filed your return online, you would have seen that you can use third-party identification, things like that. We are really paying attention to what other organizations are doing. We are also comparing our jurisdiction with other jurisdictions and really leveraging what they are doing and what has been most beneficial to them so that we can explore putting in place examples like that.
If you want a more comprehensive list, I am happy to provide that.
Senator Smith: That would be great if you could.
While the country and, indeed, the world continues to move toward a digital economy, there remains population groups who are left out for a variety of reasons, such as lack of available internet, lack of available technology or, in many cases, a lack of digital space.
How is the CRA ensuring that people who do not have adequate access or know-how to access the services provided by your agency are not being left out?
If you take a look at Canada, this question is probably aimed more at the remote areas than the heavily populated areas. Do you have any feedback?
Mr. Pagé: Yes. The agency recognizes that electronic filing or using electronic tools is not for everyone.
There have been efforts that have been put forward to make sure that the hard-to-reach populations are being informed about the CRA programs.
We have put systems in place that allow people to file their tax returns automatically by going online and using the forms that we already have at our disposal. We have also invested in outreach, and we are looking at some of the issues and challenges that are being faced by First Nations and other communities to ensure that we can address some of those challenges in our process.
Senator Smith: Do you have statistics on that in terms of strengths and weaknesses in some of the more remote areas so that you could have a measurement to say, “Okay, this is what we have in terms of percentage of success or completion; this is what we need to do”? What are the steps that you need to do to ensure that these people and the populations in these types of areas will be serviced properly?
Mr. Pagé: I will ask my colleague.
Gillian Pranke, Assistant Commissioner, Assessment, Benefit and Service Branch, Canada Revenue Agency: Good evening, and thank you for the question, Mr. Chair.
The Canada Revenue Agency has been very active with respect to service that it is looking to provide individuals who are not necessarily digitally enabled, as my colleague Mr. Pagé has mentioned.
We have established service centres in the North working with Service Canada. We have three northern service centres where we provide services to individuals on the ground. We have expanded our outreach services across the country in order to be able to go into communities and help educate individuals and help them file their taxes.
We have over 3,100 community organizations that we work with across the country, from coast to coast, where community organizations are helping individuals file their tax returns, and over $10 million has been invested in this program over the past three years.
Just to give you a sense as far as the level of assistance being provided, in a pre-pandemic world, over 1 million tax returns were filed for individuals who had modest or low income levels. Those volumes decreased, as you can imagine, during the pandemic, as some of these clinics closed their doors.
We pivoted, and we have been able to provide clinics — even in this post-pandemic world, we continue to provide on-site, in-person service, but we also provide assistance where individuals can get help virtually. So individuals do not need to get out of their homes if they have mobility impairments, and they can work with the CVITP clinic and get support over the telephone.
Those are some of the things that we have done. I am happy to go into greater detail or provide you with more information. We have a lot of details as far as how we are helping citizens across the country.
Senator Smith: That would be great. Especially in northern and more remote areas.
The Chair: Before you vacate the chair, Madam Pranke, would you please introduce yourself for the record.
Ms. Pranke: Gillian Pranke, Assistant Commissioner, Assessment, Benefit and Service Branch, Canada Revenue Agency.
[Translation]
Senator Audette: Thank you to everyone who gave presentations. I will approach this from a different angle, because we know that, in 2021 — there was Royal Assent, of course — Canada passed the United Nations Declaration on the Rights of Indigenous Peoples Act. It’s very clear in the Prime Minister’s mandate letters that he encourages ministers to apply this new legislation.
In your work, knowing that we’re talking about mental health problems, suicide, lack of housing and problematic access to drinking water in Indigenous communities, and knowing the problems or obstacles that exist when we talk about continuing to modernize procurement practices…. It’s difficult for First Nations, Métis and Inuit to compete with large Canadian companies.
Can you share with us your thoughts on what you’re proposing in this budget to move forward on economic reconciliation and reconciliation in terms of the well-being of Indigenous peoples?
Maxime Guénette, Assistant Commissioner, Service, Innovation and Integration Branch, Canada Revenue Agency: I’m Maxime Guénette, Assistant Commissioner of the Service, Innovation and Integration Branch. At the agency, my branch is responsible for Indigenous affairs. So, part of what my branch does is a lot of research concerning Indigenous peoples.
Public opinion research among Indigenous peoples has recently been completed. The report has just been made public on the Library and Archives Canada website. We could send you the link. This work supports Ms. Pranke’s work in terms of better supporting Indigenous peoples on the ground. Here is an example.
In the context of the Indigenous strategy we’re developing within the agency, we’re trying to make our partnership and consultation initiatives with Indigenous peoples more systemic when it comes to the implementation of our activities on the ground. That’s part of your question, which was fairly broad. Are there colleagues from other departments who would like to add anything to my answer?
[English]
Mr. Krumins: Thank you for your question. From a health mandate perspective, there are many important considerations, and the Public Health Agency feels that one of them is making sure that Indigenous and northern communities have proper access to health services.
I would invite my colleague Dr. Njoo, the Deputy Chief Public Health Officer, to speak about infectious disease and making sure that we have healthy populations.
If there is time after that, I would invite my colleague Michael Collins to speak about some of equity programming we have that targets Indigenous populations for their health promotion activities.
Dr. Howard Njoo, Deputy Chief Public Health Officer, Public Health Agency of Canada: Thank you, Martin, and good evening everyone.
Speaking from a public health perspective, we have known for a long time, obviously, that Indigenous peoples, unfortunately, suffer disproportionately from a whole range of conditions, be they infectious diseases, mental health or non-communicable chronic conditions.
So it is baked into our DNA — to use the pun — in terms of how we actually manage that. We work very closely with Indigenous Services Canada. Even during COVID-19, as an example, we made special efforts to actually look to them as a vulnerable population in terms of access to vaccines, looking at innovative ways to provide therapeutics and making sure they are also at our governance tables. For example, everyone has heard of the Special Advisory Committee on COVID-19. We made sure that there was also Indigenous representation. That is something we think is very important in all of our efforts in outreach and information sessions.
We have reached out to Indigenous organizations, obviously, working closely with our federal partners, to make sure that they are recognized and not discriminated against or stigmatized but that their unique issues are taken into account.
The fact that many of them live in remote and isolated communities was also taken into account by making sure of delivery of vaccines, access to therapeutics and so on. All of that was taken into account.
Moving forward, as we go back to the pre-COVID construct in terms of our committees or federal-provincial-territorial, or FPT, collaborations, we’re also looking at making it more concrete compared to before in terms of what we now call “FPTI.” In terms of governance in the public health, world we’re moving toward more of an FPTI governance structure. Their voices are obviously part of the discussions and solutions moving forward to address their concerns. Thank you.
Senator Loffreda: Thank you again to all our panellists for being here this evening.
My question is for the Canada Revenue Agency. You are requesting $14.9 billion for the 2023-24 Main Estimates, as you mentioned.
I want to continue addressing the tax gap of $40 billion, and, for Canadians watching us, that is the measure of potential tax revenue loss resulting from non-compliance.
In the objective of the minister’s first overall tax gap report, you were expected to reduce the tax gap some 42% to 48% — I have the report in front of me here — and that is close to $20 billion. Federal tax revenue refers to tax revenue for 2018-19 at the time being $272 billion, so the tax gap being close to 15%.
What steps have you taken to increase capacity in detecting and pursuing tax evasion cases? Also, what are the main obstacles in tackling tax evasion?
Ms. Hawara: Thank you for the question. The Main Estimates that are before the committee currently include a number of measures that we are proposing to take to address aggressive tax avoidance and tax evasion. I will cite one example in particular. We are requesting approximately $25 million to expand our capacity for our criminal investigations program, and an associated $2.7 million for the Public Prosecution Service of Canada.
We are responsible for investigating the most serious cases of tax evasion. Our objective at this point is to increase our capacity to do so, to be able to take on more referrals from colleagues from around the agency and from our law enforcement partners and, in turn, be able to refer more complex, high-value tax evasion cases to our colleagues in the Public Prosecution Service of Canada. This is one example of what we are doing.
In terms of some of the obstacles that we find, certainly we are finding that the schemes and structures being developed are becoming more complex. Where there is an offshore component, obviously, the whole point is about secrecy and hiding assets offshore, and therefore the challenge is to identify those structures and find the assets and the transactions that are being hidden.
Another challenge is that taxpayers are becoming more litigious. As we are tackling more complex and high-value cases, we are finding that taxpayers are, in turn, reacting by making greater access to the courts and trying to delay our access to information and evidence in the context of our tax evasion investigation.
Those would be some of the examples.
More broadly, though, I would say that things have changed in the environment for us at the Canada Revenue Agency. Our collaborations with our partners, domestically and internationally, are as strong as they have ever been.
We have tremendous access to data, much more than we had in the past, if you think of electronic funds transfers that we now get automatically from financial institutions, or if you think of the common reporting standard, which allows a number of jurisdictions across the world to exchange information about financial accounts so that we can better detect assets that may be offshore and determine whether there is a risk of non-compliance in that regard. Thank you.
Senator Loffreda: Going back to one part of my question, the minister had initially reported that you wanted to reduce the tax gap by almost 50%. Has there been any progress on that? If not, why?
Would you have an objective going forward saying: “Here is the tax gap currently. It still sits at $40 billion. That is substantial given the tax revenues we are collecting?”
Ms. Hawara: We do think the tax gap is an important metric of overall compliance and the overall health of the tax system, certainly.
We are deploying as many resources and tools as we can through our audit programs on the civil side and through our criminal investigations’ team on the criminal side.
I cannot speak to that particular statistic, but certainly our overall objective — and we report on the fiscal impact of our compliance activities on an annual basis — is to identify the highest risk and deploy our audit and enforcement resources to that risk.
Senator Loffreda: What is the main obstacle to bringing that number down? Why isn’t it coming down?
Ms. Hawara: Globally, we see the economy continues to grow. There will always be a certain measure of growth from that perspective of the compliance risk.
I am not sure that there is a particular obstacle specifically for that. There are obstacles in terms of how we manage our audit programs and the kinds of interactions that we have with the taxpayers.
I would go back to the challenges I mentioned earlier, in terms of the litigiousness and the increased complexity that we are finding in the cases that we are investigating.
[Translation]
Senator Dagenais: My question is for Mr. Pagé, and it has to do with the luxury tax in the private aircraft sector. I did a simple calculation on a new Challenger, which isn’t the most expensive Bombardier aircraft. The tax is expected to bring in $2.7 million per aircraft. On the sale of 10 aircraft of that type, we’re talking about $27 million in taxes — expected taxes. If Bombardier loses the sale of 10 aircraft — according to my information, they’ve lost a bit more than that — you won’t be able to collect the $27 million, and the government will lose more than $1.2 million in GST per aircraft not sold. That’s a loss of $2.5 million in QST in Quebec. If you multiply that by 10, that’s a lot of money lost.
Could you give me a current picture of the aviation situation? Since this tax went into effect on September 1, 2022, have you made any adjustments to your revenue projections? Is it still worthwhile to impose such a tax on private aircraft?
Mr. Pagé: Thank you for your question. In terms of the luxury tax, the agency is responsible for administering the tax, not developing it or measuring its success. The Department of Finance, which is responsible for establishing the tax measures we are required to administer, would be better able to answer your question.
Senator Dagenais: I’ll set that question aside for the Department of Finance. My next question is for Mr. Lagacé.
Mr. Lagacé, apart from a few officials who appeared, there is some unanimity among politicians and observers about the need to review the efficiency of Public Services and Procurement Canada, particularly when we look at what has been done over the past seven years for the Department of Defence and our armed forces.
Could you give us some information on concrete actions or gestures that could be measured from our perspective, that were decided and put in place last year to make your department more efficient? Can you justify the fact that the current government isn’t following the lead of Great Britain, where one minister is dedicated exclusively to the country’s military procurement? It might be easier for the administration.
Mr. Zielonka: Thank you for that question. Perhaps I can answer it.
[English]
On the whole, our role in procurement is to support the different departments and their needs. One of the challenges we have, especially on the defence side, is often the lead times in terms of developing the specifications for procurement takes a very long time, and that is something that often sits with the client department.
On our side, we have done a lot in the last few years in terms of modernizing our procurement processes. For example, we have implemented a new system that is called the electronic procurement solution, which is taking a lot of different systems within our department — legacy systems in many cases that did not necessarily speak to one another, that were highly manual in terms of interfaces — and we have implemented a new system that has highly automated a lot of these tasks.
This also has an outside-facing element that also allows entities who want to do business with the federal government to be able to do that much more efficiently because they are now able to register, they are able to do a lot of these solicitations electronically, therefore, cutting the time.
The system also allows us to standardize a lot of the procurement documents. Instead of having to do everything in a manual fashion and everything being offered non-standard, it does help us standardize contract clauses and so on as part of bid procurement.
[Translation]
This effort is important for simplifying the process and finding a way to develop a much more efficient procurement management system. That is an important example.
[English]
It also has an impact around data collection. I would note that from the previous question from Senator Audette around Indigenous procurement, it goes broader than just Indigenous procurement because it also gives us a lot of data around who is actually participating in the procurement processes and who is not. We are actually able to start gathering data. There is a very important metric that has been put in place where we are targeting to reach 5% procurement from Indigenous populations, so that again, this system, is a key part of that.
We are also working with departments to try and identify procurement ahead of time and help them in those processes.
One of the challenges we have, especially on the military side, is that procurement is getting much more complex as the technology advances. You are no longer buying simple widgets. The systems integrate many different systems from many different manufacturers in different cases.
I will take for example the naval procurement.
[Translation]
Senator Dagenais: Thank you.
[English]
Senator Yussuff: Thank you, witnesses, for being here.
I have a question for each department, so you will not be surprised and to be a bit fair. Health Canada, let me start with you. Last year, we passed a bill to give a new dental benefit to disadvantaged people in the country.
I would like it if the department could give me some data regarding the uptake, given what was in the bill for budget allocations for this program.
More importantly, how are you promoting the program from a department perspective to ensure that it is reaching the people it was intended for in the first place?
Mr. Krumins: Thank you for the question, senator. That question would be more appropriately directed to Health Canada, which is a separate agency or department from the Public Health Agency of Canada. They have their responsibility for the dental care program and the roll-out of that. The Public Health Agency of Canada is not involved in that roll-out.
Senator Yussuff: We will direct that question to them when they come before us. To Revenue Canada, in the context of the underground economy, this is not a new phenomenon that we have been dealing with. It is a huge challenge. One of the bigger challenges in the context of trying to solve this is that there is a lot of undocumented work in the underground economy. They are employed by employers who evade the system. Until you fix that loophole, I do not see how you are going to fix the other loophole which is to get others to pay their taxes and those employers who are taking advantage.
Has the department developed any data to show the correlation between the people who are utilized to do the work — obviously no fault of their own because those employers are evading because you can threaten these workers, deportation, what have you — in the context of those employers who are not complying with the tax system in this country? Maybe you could shed some light on your approach as to how you are trying to tackle this.
Ms. Hawara: Thank you for the question. You are correct. It is one of the challenges, and it’s something we’re addressing. There are requirements to complete various information slips and send them to the Canada Revenue Agency, certainly with respect to employees. We have robust verification programs that allow us to tackle unreported employment income. Those would be the kinds of activities we pursue under the underground economy strategy.
The senator is absolutely correct. It is one of the things. We have program lines that focus specifically on employers and their compliance with their tax obligations.
Senator Yussuff: I would like to come back to my colleague’s question earlier. A while ago, the department said the gap was $40 billion. The data hasn’t changed in regard to what you submitted to us to review. The bigger question we’re going to ask is this: If we keep giving you money, and the problem is not getting better, why do we keep giving you more money? I think it’s a fundamental question taxpayers would like answered. Not to put you on the spot, but maybe the strategy we’re employing is not the right one. Maybe we need to look at a different political solution to the problem.
Ms. Hawara: It is an absolutely fair question. It’s one of the reasons we’re asking for significant funds in this set of main estimates.
I’ll point to another example. We’re asking for over $200 million to tackle medium-sized businesses. Traditionally, we have looked at them one legal entity at a time. What we have come to realize is that, in fact, one needs to look at the grouping — the economic grouping — to see how money is flowing within that grouping and determine whether appropriate taxes are being paid. We think this is one area where there is significant non-compliance. This will ultimately have a positive impact on the tax gap, but one must keep in mind that the tax gap is almost like an ultimate outcome-type indicator when we’re looking at the tax system as a whole, and our audit programs feed into that.
In my branch, we focus on the individual programs, making sure we’re identifying the highest-risk files. We have identified a bit of a gap in relation to these larger medium-sized businesses. They’re not the largest, but they’re not among the many small businesses in the country. We’ve identified the need to actually look at them as economic entities as opposed to individual legal entities. That’s one of the initiatives we are pursuing through funding received in Budget 2022, and that is included in the Main Estimates for this year.
Senator Yussuff: Thank you.
My friends at Public Services and Procurement Canada, as you know, the Phoenix pay system has been an absolute disaster. During the time since we announced we were fixing this system, we could have gone out and bought I don’t know how many more systems.
The challenge you have, of course, is that people’s lives have been impacted by the fact that the system hasn’t worked. I know there are efforts in the department to try to rectify this. Where are we at with regard to fixing the Phoenix pay system? How close are we to a solution? Many of the workers on the street, as you know right now, continue to be impacted by this issue. Of course, we have paid damages to those workers for the fact of the hardship we have caused them, yet I know the system hasn’t been fixed yet.
Maybe you can tell us where we’re at. How soon can we expect the system will be fixed?
Mr. Zielonka: Thank you for the question. In terms of the Phoenix pay system, the system itself works right now. The system is working the way it should. The challenge we have is with the backlog. When the system originally came online, it wasn’t ready. There were definitely a lot of challenges at that point in time, and a huge backlog was created.
A lot of the focus in the last few years has been to try to end that backlog, and that’s been an ongoing effort with my colleagues in the pay branch. They were making successful progress on that backlog, but then during the last year or so, as a result of the increase in the public service and also as COVID came down, we saw a lot more movement of public servants, all of which trigger transactions.
In the last year, we did see an increase in the number of transactions and backlog. What we’ve done about that is — as I mentioned in my opening remarks, we did see our mains go down because of the sunset of our existing funding, but in the budget, there was an announcement of new funding for PSPC. That increase in funding will allow us to increase the workforce to focus on continuing to eradicate that backlog over the next few years.
What I would like to emphasize is that the Phoenix system right now is working fully as intended. It’s a very good system. It’s based on a PeopleSoft system that is actually used by many organizations around the world in complex pay environments. The issue we originally had was with the implementation of the system, but those issues have largely been addressed.
Senator Pate: Thank you to all the witnesses for being here.
My questions are for the Canada Revenue Agency. I was struck by the term used in your opening comments: “criminal tax evasion.” I’m not sure what non-criminal tax evasion looks like. I don’t mean it to be cute. The reality is, when we look at fraud, we use all kinds of different languages for those who often are able to avoid criminal responsibility, whether, as you’ve mentioned, it’s because they can engage with litigation or they can hire accountants to help hide monies.
In my experience of working in this area, when we start doing fraud investigations — and we’ve heard a bit about this at this committee, even from the Auditor General — the focus is often on the individual, and the individual who often has the least, and not on the organizations, corporations or individuals who have the most.
I’m curious as to how you report on that, because I think it would be extremely useful for committees like ours to know what some of the issues you’re facing are. You’ve highlighted some of them in terms of litigation, like the fact that people will allege activities of the government when you’re trying to look at their criminal responsibility. It would be helpful to have more fulsome reporting.
That leads me to a question based on conversations we’ve had with the Parliamentary Budget Officer, who has described having difficulty receiving aggregate data from your department in a timely manner, partly because of the onerous restrictions that are attributed to privacy. There are many ways you can avoid the privacy issue in terms of providing aggregate data.
I’m curious as to what kinds of meetings you’ve had with the Parliamentary Budget Officer around that and what you’re seeing in terms of a way to rectify this issue so that the Parliamentary Budget Officer can report on the issues they’re trying to report on and better fulfill their mandate, while also assist you on issues like this matter.
I’ll have a supplementary question if there is time.
Ms. Hawara: Perhaps I’ll answer the first question related to criminal investigations. Then I’ll turn it over to my colleague Mr. Guénette, who can answer questions about the Parliamentary Budget Officer.
I agree — tax evasion is a crime. In the agency, we have civil audit programs, and we have a criminal investigations program. Tax evasion is absolutely criminal. We see it as that, and we investigate accordingly.
In terms of data, this is actually one of the programs in the agency where there is a greater ability to report publicly on our activities because, of course, if an investigation is accepted by the Public Prosecution Service of Canada and charges are laid, all of that is in the public domain. We pay particular attention to those cases. We have enforcement notifications case by case to make sure we’re drawing attention to the fact that either the charge has been laid or a conviction has been secured.
On the website that I mentioned earlier concerning our results, we have a number of line items in relation specifically to criminal investigations. We disclose the number of referrals we receive and the number of referrals we make to Public Prosecution Service of Canada, also known as the PPSC, lots of information about joint law enforcement operations and about the convictions. Can we do more? Maybe. If there is room within the confines of the Income Tax Act, we will try as best we can because we recognize the link between transparency and trust, and this is an area where we can say more.
I have just a quick word on challenges and litigiousness. One of the key issues we are observing is that when we are seeking to obtain evidence in the context of our criminal convictions, more and more we are faced with claims that the information is covered by solicitor-client privilege. That in itself entails a whole other judicial process that slows us down. Because we are tackling more complex cases and higher dollar value cases, the response is commensurate with that.
Mr. Guénette: Thank you. With respect to the senator’s question about the Parliamentary Budget Officer, we have conversations with the Parliamentary Budget Officer and his analysts on a regular basis. Over the past four years, we have fielded 23 requests for information. As he noted, I believe, in his recent appearance before this committee, we are bound by the Income Tax Act to protect taxpayer information. Now, that may apply in the context of requests for aggregate information when we’re dealing with low counts or issues of dominance. By that, I mean when we have small sample sizes where it may be possible, not necessarily in the data that we provide, but using third-party information to identify a particular taxpayer, whether it’s an individual or corporation.
I believe those are some of the challenges that the Parliamentary Budget Officer was referring to. We do our best in our interactions to understand the information that he’s looking for and to respond as quickly and as fulsomely as we can, but he is correct that in some cases we do have to suppress information, especially when it relates to dominance or low counts.
Senator Galvez: I have two questions. My first question is for PSPC, and the other is for the Canada Revenue Agency.
PSPC is tasked with implementing the government’s Greening Government Strategy, which is a directive aimed at transitioning the government to a net-zero circular economy through green procurement and practices and the adoption of green technology, products and services.
I would like to understand how your department is supporting the transition to a net-zero circular economy. Can you provide us with more information on the green procurement criteria, Mr. Zielonka? Have they been included in the department for goods and services that have high environmental impact?
Mr. Zielonka: Thank you for the question. I’ll give a couple of examples of areas where we have been very active in terms of the green economy. In our department, we have a number of areas, two in particular. There is the procurement area, and there is our function as the common provider for facilities for the government. On that one, I will spend maybe a minute or two.
We have been very focused around greening our properties as we do recapitalization of assets. When a building comes to end of life and in fixing that building, we’re focused on ensuring those buildings are brought up to a very high green standard. That’s one thing we have been doing.
Senator Galvez: Can you elaborate on what a high green standard is?
Mr. Zielonka: For example, we will look at buildings and bring them up to Leadership in Energy and Environmental Design’s, LEED’s, platinum standards, for example. It all depends on the type of assets and what can be done with them. In some cases we are limited, but we will do as much as we can with those assets.
We will look at other things. For example, here in the National Capital Region we are doing what is called ESAP, which is essentially a central plant that is envisioned to actually use green energy for the heating and cooling of our main buildings in the downtown core. That’s something that is moving away from fossil fuel types of heating. Where we can’t necessarily procure green energy directly, we look at green energy offset programs. We’re essentially doing those types of activities. That’s on our properties side.
On the procurement side, we are increasingly looking at, for example, green concrete and specifications of that in future procurement. When we specify procurement, we are looking at having as much of a long-term green element to that procurement. Those are the types of activities that we’re doing. It’s very much a focus for us going ahead.
What I’d also like to flag is that those activities do have a cost in the short term, but they have savings in the long term. They usually result in a much reduced operating cost in the long term, but that short-term cost may be quite significant. Sometimes those short-term costs may also increase as we try to stimulate a particular industry to come up with solutions for particular problems.
Other areas we’re very active in are, for example, on the fleet side. We’re expanding green vehicles across the government, and we’re trying to start bulk buys for all government departments. We’re also very active in installing charging stations across government buildings. There are a lot of activities we’re doing in a lot of our different programs in terms of trying to support a green economy and increasing our activities in that.
Senator Galvez: Thank you so much. My next question is for the Canada Revenue Agency. The question of tax evasion and the tax gap has been a recurring subject here in this committee. The last time I asked your department, I was told that the CRA was powerless to close these cases because courts weren’t siding with you when evasion was prosecuted.
I have a very specific question. Seven years has passed since the Panama Papers scandal — although I don’t like to mention the country because it’s the companies — not the country. There were 900 Canadian individuals, politicians, athletes, celebrities and mobsters. Out of all of them, I want to know how many of these cases have been criminally prosecuted and charged and that money has been recuperated.
I also want to add that some time ago your department requested money to improve this unit and have more capacity. What happened to that new capacity, and what is the result on this particular initiative?
Ms. Hawara: I do have a detailed update on the Panama Papers. In response to the question, that is correct, 900 Canadian individuals, corporations, trusts and individuals were identified in the course of our review of the Panama Papers.
In the end, 65% of the Canadians who were identified in the Panama Papers were found to be compliant. They had met their tax obligations, so it is important to remember that just because a Canadian individual or company has their name in a leak, it doesn’t necessarily mean that they have not met their tax obligations.
I can give updated statistics on our audit work. We have closed 280 audits in relation to the Panama Papers. We have assessed $77 million in taxes and penalties in relation to those 280 audits. This is as of December 2022. I don’t have more up-to-date statistics, unfortunately. We had 140 audits still under way. This is also information that we release publicly on our website, and we will continue to provide updates on our efforts in relation to all of the leaks.
In terms of criminal investigations, what I can confirm at this time is that we opened five criminal investigations in relation to taxpayers linked to the Panama Papers. Three investigations have been closed, and two are still ongoing.
[Translation]
Senator Dupuis: My question is for the witnesses from the Public Health Agency of Canada.
Mr. Krumins, there are two things I’d like to get clarification on. One is that you talked about the next generation of COVID vaccines. According to what we’ve been told, there is increasing resistance to vaccination, particularly among parents. What actions could you take in terms of education and general public awareness?
The second thing is that on the issue of mental health, you referred to two things I’d like to clarify. You talked about reaching out to populations that you feel suffered during the pandemic. Could you be more specific about what you intend to do in this area?
You also referred to gender-based violence. What do you plan to do about this, and with whom?
[English]
Mr. Krumins: Thank you for your question. I would invite my colleague, Stephen Bent, Vice President, COVID-19 Vaccine Rollout Task Force, to answer. He’s in a position to speak to the program that we have for immunization. It’s called the Immunization Partnership Fund, and it works with communities to promote awareness of vaccines.
For the second question regarding mental health, I’ll ask my colleague Michael Collins to join us at the table.
Stephen Bent, Vice President, COVID-19 Vaccine Rollout Task Force, Public Health Agency of Canada: Thank you very much for the question. In terms of vaccine confidence, there are a range of actions that we’re working on and working with partners on to encourage greater vaccine uptake, particularly for younger populations. I would start at the national level in the context of our communications to Canadians on COVID vaccines, as an example, but also, more broadly, in terms of routine immunizations. We’re continuing to use our communications programs to raise awareness and help parents have the information they need to make informed choices for their children.
We also have a range of partners that we work with as well. My colleague mentioned the Immunization Partnership Fund. It’s a grants and contributions funding program that we use to fund community-based organizations and some national organizations to cover a range of challenges. Obviously, there are barriers to access for certain populations, but in addition, in the context of vaccine confidence and vaccine hesitancy, we are working with national organizations such as the Canadian Paediatric Society to mobilize communications and outreach to parents and guardians.
I would also offer that the work that we undertake with our colleagues in the provinces and territories through the Special Advisory Committee on COVID-19, we work to identify opportunities to work together to raise, again, awareness and make sure there is clear information.
Lastly, I’d mention the National Advisory Committee on Immunization plays a really important role in providing advice in this space for practitioners and for Canadians, and we rely on leadership roles, such as the Chief Public Health Officer of Canada and the Deputy Chief Public Health Officer of Canada to communicate with Canadians as well.
[Translation]
Senator Dupuis: In your remarks, you spoke a lot about partnerships, particularly with medical organizations. Have you also developed partnerships with community groups, such as in Quebec, for example, with local community service centres?
Mr. Bent: Yes, absolutely. As part of our program, we put out calls for tenders to find partners who could help advance the objectives. This can be done through national agencies that work directly with the public through community programs.
Senator Dupuis: Do you have any documents that would give us a better idea of your partnerships? If so, would it be possible to forward them to the committee?
Mr. Bent: Absolutely. Our website contains a list of partners to which we have granted funds to advance this objective. We would be happy to forward it to the committee.
Senator Dupuis: Thank you.
[English]
Michael Collins, Vice President, Health Promotion and Chronic Disease Prevention, Public Health Agency of Canada: Maybe I’ll just jump in on that, because we don’t want to forget about your other question relating to family-based and gender-based violence.
By introduction, good evening, I’m Michael Collins. I’m the Vice President, Health Promotion and Chronic Disease Prevention Branch within the Public Health Agency of Canada. I’ll be brief.
Family-based violence and gender-based violence is something that is of paramount importance in terms of the program we do, recognizing that when you look at intimate partner violence, elder abuse and various types of child mistreatment that can total as much as 40% of violent crime that was reported in 2021. It’s a very high figure. It is not always top of news, but it is something that, sort of, permeates society.
Within the Public Health Agency of Canada, we have a couple of active programs in this particular space. One, we have $8.25 million year over year in terms of a federal strategy to prevent and address gender-based violence. This touches upon such practical things as, for example, preventing teen dating violence, child maltreatment and equipping professionals across the health system to recognize and respond to gender-based violence, because it’s not something that everyone in the health system is necessarily equipped to respond to.
The second and final piece that I would also mention is — I think it was through Budget 2021 — that we were provided with up to $10 million until next fiscal year and $6.5 million beyond to deliver and test interventions in family-based violence and gender-based violence, really all around promoting and advancing the concept of safe relationships.
It’s definitely on the social side of the spectrum, but those are just two examples of interventions that we have in the space that you raised.
Senator Marshall: My question is for Public Services and Procurement Canada.
The Procurement Ombudsman sends us his report every year. Does that have anything to do with your department? Do you take that report, because he always lists off the types of complaints that he gets? I’m wondering — and purchasing is a big issue, of course, at the federal government — what do you do with this report, his comments and his recommendations?
The other issue that I always — it didn’t confuse me — I guess the question is: Why is there a dollar limit on items that are subject to his review?
If you could answer those two questions, that would be very helpful.
Mr. Zielonka: Thank you for the question, senator. I’ll try to give an answer.
It may not be a complete answer, but the Procurement Ombudsperson is housed within our ministry but reports directly to our minister. There is a separation, and that separation is on purpose, to give the Procurement Ombudsman that independence.
In terms of the activities of the Procurement Ombudsman and his annual report, yes, we absolutely do review it. I’ve read it myself, and I know my colleagues in the procurement branch absolutely do, so it is something that we very much pay attention to, in terms of understanding the types of issues he and his team are seeing and how we can better respond to them and adjust our procurement practices to try to avoid those types of issues. We actually do meet with him and his team, as well, in terms of trying to resolve problems.
I am trying to think of the right word but in terms of trying to resolve issues, he plays an important role. He has been very helpful.
In terms of the dollar limit, we will have to get back to you in terms of what that is.
Senator Marshall: Yes. It seems that every year we get the report. It is very unusual. And the limits are so low. Then I wonder, where do the contracts for the higher dollar value, where do they appeal to? If you could get that, that would be very helpful when I read the report. Because it is a nice report.
Mr. Zielonka: I believe that the reason, as my colleague, Alain Lagacé, just mentioned that we do have the Canada International Trade Tribunal, or CITI. A lot of our procurement disputes — there are mechanisms for those organizations to follow.
Senator Marshall: Okay.
Mr. Zielonka: That is the typical mechanism we deal with. I believe that the procurement ombudsman is —
Senator Marshall: If you could get back to us on the dollar value —
Mr. Zielonka: We can get that information to the committee.
The Chair: We will bring to your attention the deadline that you have to respond in writing.
Thank you.
Senator Smith: Mr. Pagé, I have a statement and then three questions or two questions that I need you to get back to me with an answer, maybe three. The Auditor General December 2022 report on COVID-19 benefit programs identified a minimum, I would like to emphasize minimum because the actual figure could be much higher, $27 billion in overpayments or suspicious payments that needed further investigation. The report also found that the majority of these overpayments may not be recovered. First question: Can you provide the committee, I know that we are running out of time but if you do not have a chance to answer, can you provide the committee with an update on the percentage of payments deemed suspicious and overpayments that have been recovered, number one?
Number two, what has been the additional cost of recovering these funds, and has there been any funding in your Main Estimates earmarked for recovery of these overpayments?
Number three, does the agency have figures on the total amount of illegal payments that could not be recovered and for what reasons?
Mr. Pagé: Maybe I will start with the costs and I’ll let you worry about the recovery. In terms of funding, the agency received funding for the COVID programming, more specifically included in these Main Estimates we are looking at roughly $46.8 million. That includes all of the activities that we are doing with respect to the COVID-19 programs but at this point in time given that the programs are at the end and our focus is mostly on compliance, that number is roughly what we are putting forward in terms of compliance activities.
With respect to the results, I will let my colleague speak to that.
Ms. Hawara: Thank you. The Auditor General report looked at a series of COVID benefits. The majority of them were with respect to individuals. One was with respect to businesses or employers. The Canada Emergency Wage Subsidy. I can give you information about that. If you would like information about individual benefits, I could ask my colleague to come to the table as well.
Overall, on the business side, with respect to the Canada Emergency Wage Subsidy, we have a post-payment audit program that is currently under way. We are currently reviewing close to $16 billion of the $100 billion that has been paid under the subsidy program.
I am happy to report that overall levels of compliance by employers are quite high.
We are approving in the audits that we have completed to date, we are approving high levels of the subsidies that we have reviewed. We are denying or adjusting a very low amount.
The audit program is still under way so these numbers will continue to shift as we complete more audits.
Senator Smith: The chair is on me already.
What I need to have is how much, if you have two categories, corporate, people. How much have you recovered to this date? I need a number.
Number two, the additional cost of recovering the funds, you have some earmarked money coming in from the government for the recovery of the overpayments, right?
The third, the agency has figures on the total amount of eligible payments that could not be recovered. If you have the two categories, if you could bullet those answers for the two different categories of corporate versus people, that would be fantastic.
Ms. Hawara: I can give you information about audit results, my colleague can give you information about collections. You would like him to come to the table quickly?
Senator Smith: We have to have everyone else has a chance to have questions asked.
The Chair: May we ask you to put that in writing, please?
Ms. Hawara: Yes.
The Chair: Thank you, Senator Smith, you went beyond three minutes.
Senator Smith: I was so excited to be with this group of people.
[Translation]
Senator Audette: Thank you very much. I will try to be brief. I have questions on two topics: Public Services and Procurement Canada and COVID-19.
The mandate letter contains the figure of 5%. How can we get all federal departments and agencies to have economic ties with Indigenous businesses? Where are you with that? What are the challenges and barriers? Are there any studies? What help could you be given? I can help you; I’m here.
Second, success stories: the Innu nation, the Government of Quebec, the federal government, municipalities where vaccination clinics will be set up with Innu, Atikamekw, Anishinaabe and Quebec nurses… Will these stories remain in the collective memory of your organization so we can be trusted and Indigenous peoples can continue to be trusted to provide quality services without having to deal with the complexity of grant applications, for example? Thank you.
Alain Lagacé, Director General, Budget, Cost and Investment Management, Public Services and Procurement Canada: Thank you for the question. I’m Alain Lagacé, Director General, Budget, Cost and Investment Management at Public Services and Procurement Canada.
As you mentioned, it’s a government priority for Indigenous peoples to have access to federal government contracts. It’s also a priority for our department. For several years now, we have been trying to simplify procurement processes to ensure that people can apply for these contracts. A lot of work is done with Procurement Assistance Canada, which works hand in hand with various Indigenous entities, particularly Indigenous companies, to ensure that they can apply for federal contracts. Yes, the mandate is to achieve a 5% target. We’re working hard on that. It’s done in stages. The first government report will be released in spring 2024 and will show us where we are.
One thing we’re doing is try to make sure that the data collection is good for all departments. That’s one of our challenges, collecting data and making sure that it’s good, because we are very segmented. You asked where we are specifically with respect to contracts awarded to Indigenous entities or beneficiaries, and for the period from April 1, 2022, to December 31, 2022, our department awarded $106 million in contracts. That represents 3.16% of the value of contracts awarded by our department. We’re not at 5%, but we’re making progress. We’re of the opinion that, with help from other departments and through our work to modernize and simplify procurement processes, we will be able to achieve our government objective.
[English]
Senator Loffreda: My question is for the Canada Revenue Agency. And something positive, it is positive because Canada Revenue Agency began estimating the tax gap in 2016.
I was reading that Canada has become one of the leading countries that both estimates and publishes their tax gap. What we measure improves, right? I also read that we are giving advice to the international community on this matter. Hopefully, that tax gap number will decrease significantly in the future.
If we look at the years when it was measured leading up to 2018, the net tax gap is stable at 9% of federal tax revenue. Is that trend continuing? Do we set performance indicators? Do we set priorities?
I say that because through CRA’s compliance and collection efforts, the gross tax gap was reduced by an average of 39% to 45% for the tax years measured leading up to 2018. Most of this impact was due to a reduction in the payment gap.
If we look at the payment gap for reporting non-compliance, 80% of the gross tax gap is reporting non-compliance, of which 70% is underground, 30% is in offshore and 20% is payment non-compliance.
Do you set trends, priorities, objectives? What are you prioritizing within all of those numbers? Is it still the net tax gap if we look at it today? The last number I have is for 2018. Is it still stable at 9% of tax revenues?
Ms. Hawara: I will begin by offering a comment before turning to my colleague Mr. Guénette, who is responsible for leading the research on the tax gap in the agency.
On the comment from the senator about our role internationally, I want to advise the committee that this is, indeed, the case. We were just at a forum on tax administration in Paris two weeks ago, and the commissioners of a number of tax administrations from around the world were discussing performance measurement and, in particular, tax gap. There is increased interest around the world in the tax gap as a global measurement of performance and effectiveness of tax systems. Certainly, it’s something that we will continue to contribute to.
On your specific question, I will turn to my colleague. Thank you.
Senator Loffreda: Thank you. Kudos on that.
Mr. Guénette: The short answer to the senator’s question is we have not measured the tax gap beyond the year 2018. The data that was being referred to is for the overall tax gap published last year in June 2022, which covered the period 2014-15 to 2018-19. So we really cannot speak as to whether the tax gap has been reduced, because we have not yet undertaken an analysis of subsequent years. We are currently doing the analysis of how we would go about doing the next phase of tax gap reports.
The overall tax gap report that was published last year was the seventh report, and it looked at all of the components that the senator referred to.
It will be interesting to see. That is what countries that have been doing this a bit longer than Canada have, a bit of trend analysis that they can do year over year. We will certainly look forward to doing that.
Senator Loffreda: As I said, kudos to you. You are a leader in the world in measuring that.
I am curious. Why would we have the last numbers in 2018 at this point? Isn’t that a substantial strategy in collecting, in tax fairness or avoiding tax evasion? Are there issues? Do you need resources? Do you need more funding? What are the issues? We’re in 2023 now.
Mr. Guénette: Thank you for the question.
The Chair: Mr. Guénette, I would appreciate it if you put that answer in writing, please.
Mr. Guénette: Absolutely.
[Translation]
Senator Dagenais: I have a question for Mr. Lagacé and one for Mr. Pagé.
The pandemic fostered the discovery of working from home for many public employees. With fewer people in offices across the country, it is logical that there will be less office space required for public servants. At the same time, the federal government refuses to discuss the option of working from home with public servants who are currently on strike.
So, it’s hard to reconcile what the government is saying publicly and what you seem to want to do, particularly as the number of public servants has increased significantly since the pandemic.
Here’s my first question for Mr. Lagacé: Does your department actually plan to reduce office space? If so, to what extent and at what cost, for those leases that will be revised or cancelled?
My question for Mr. Pagé is this: What is the budget for the repatriation of the employees of your department who have been hired across Canada to work temporarily from home and who are expected to move to offices in Ottawa shortly?
Mr. Lagacé: Thank you for your question, senator.
As you mentioned, at Public Works and Government Services Canada, there’s a wide range of leases and buildings where the majority of public servants work. There are 1,500 leases and buildings owned by the Crown.
You are absolutely right that the pandemic is giving us the opportunity to review the capacity and the number of buildings and leases we need to ensure that public servants can do their jobs at home and in the office.
The mandate was given by the Treasury Board Secretariat, and public servants will have to work 40% to 60% of the time in their workplace. In our department, we are doing a lot of analysis right now to determine what that will mean in the future for our offices and our lease renewals.
Most of the leases we have are very long-term — when I say “very long-term,” I’m talking about 10 years sometimes. The analysis work is under way, and we obviously have an opportunity to review our portfolio of assets and leases. It would be anyone’s guess that there is indeed a need for less office space in the long term, if we continue with a model where people work half the time in the office and half the time at home.
We’re currently reviewing our office plan for the next 10 to 15 years. I can’t speculate right now on how much money could be recovered or saved. Investments will be required to modernize our offices and recapitalize our buildings. Over the long term, I think there could be savings for the Government of Canada as decisions are made on whether or not to renew certain leases or vacate certain government buildings, which has an impact not only on the cost of leases, but also on the cost of electricity, taxes and everything else. We see that coming in the more distant future, but the analysis is still ongoing.
The Chair: Senator Dagenais, for the question addressed to Mr. Pagé, may I ask him to give us his answer in writing?
Senator Dagenais: Yes, that will give him time to calculate how much money will be recovered.
The Chair: Mr. Pagé, can you get back to us with an answer in writing, please?
Mr. Pagé: Yes, absolutely.
[English]
Senator Pate: Again, thank you to the witnesses. My questions are also for the Canada Revenue Agency.
The government announced the pilot project that would start in 2024 that was in the Speech from the Throne in 2020 around automatic tax filing. We have seen some of the benefits of this during the pandemic in the limited way that there was ability to roll out benefits to folks. It is clearly in the early stages, but I am wondering if there are any details that you can provide to us about how you plan to develop this, and how you plan to, in particular, access those populations that do not file now, who are often challenged to have access because they don’t file, as well as because of their locations.
Also in Budget 2023, it was announced that the File My Return service would be expanded. Who is eligible for that, and how do you determine the criteria?
I realize that I am asking a number of questions. We may need to get this in writing.
I am interested in what the plans are. How do you notify people? How do you deal with the accessibility issues, whether it be internet or geographic? What has been the uptake on this program as well? If there is a questionnaire that is asked or a process, would it be possible for you to provide us with a copy of that? That would be very helpful. Thank you.
Ms. Pranke: Thank you for those questions.
The Canada Revenue Agency has been working for a number of years working to make the tax filing process simpler and reduce friction in the process for citizens writ large.
To start with the first program that was referenced, the “file my return program.” This is a program where individuals are actually contacted directly by the Canada Revenue Agency and invited to participate in the program; it is certainly by invitation. I don’t have the figures at my fingertips, but I’m happy to share those with you. I am going to resist the temptation to provide you with a figure off the top of my head, but the program has been around for a few years.
I will share with you that the takeup rate has been lower than we have expected.
As far as how we determine that population, it is based upon a number of factors. The income level is something that we look at. We look at individuals’ filing patterns: Are these individuals who have historically filed? Has there been a gap in their filing history? If so, for how many years?
Those are some of the considerations, but I would be happy to share the eligibility criteria with you.
One thing that we will be looking at is that “file my return,” as announced in the budget, certainly does factor into the future of working with Canadians to a system to assist them with their filing obligations. We will be looking at how to make the program more attractive. It is very quick to do, but we have found that a lot of individuals prefer to go to somebody to assist them. There is, clearly, some fear and a belief out there that individuals cannot do it on their own.
That is the “file my return initiative.”
We have just recently finished two pilot projects with the Province of Ontario and the Province of British Columbia, where we are working with the provincial social ministries. We are focusing specifically on individuals who are social benefit recipients but who are not filing a federal income tax return. The takeup rate is quite positive. We have seen about a 47% increase of individuals to whom we reached out proactively. We did not file on their behalf; we invited them to file and provided them with all the tools they require. But we had a 47% filing rate as a result of that experiment.
The Chair: Thank you, Ms. Pranke. If you would like to follow up and complete the answer in writing, we would appreciate it.
Ms. Pranke: I would be happy to do so.
Senator Yussuff: Thank you. My question is to Mr. Pagé.
It was my mistake earlier: It is the CRA that is responsible for the delivery of the dental benefit, as was outlined in the legislation. Let me come back to you.
Clearly, I would like to know what the uptake is — and you do not have to answer if you do not have that answer; just provide it in writing. What has been the uptake of the program since the legislation was passed — those who are accessing it?
There were estimates in the bill as to how many people would be eligible for this program. Could you give us a sense? Has there been an increase? There was an initial — people could access parts of the benefit earlier, the tax year being last year. Where are we with that?
Second, does the department has an outreach program to reach those people who could be taking up this benefit as a way to promote the opportunity for them to get access to it?
One complimentary message to the department: I noticed a lot of work going on with community organizations to raise awareness of the fact that they should be filing their taxes as a way to deal with some literacy issues. I want to encourage you to keep doing that, because it allows those disadvantaged individuals to get access to other programs if they are able to file their taxes. I know a lot of organizations that testify in terms of the dental benefit — about the importance of that work continuing — because the way to reach those individuals who, quite often, might not know benefits are available to them that could improve their lives in a small way.
Mr. Pagé: Thank you for the question.
In terms of the number of applications, we received 174,000 applications. That represents roughly 276,000 children.
In terms of payments — or application value — as of March 27, we were at about $152 million being distributed. Do you want to talk about the uptake?
Ms. Pranke: At the Canada Revenue Agency, we have been working very closely with our colleagues at Health Canada who are responsible for this program. So we are providing assistance for this interim two-year dental benefit program. They are primarily responsible for any kind of outreach and advertising with respect to encouraging individuals to leverage this program.
That said, I mentioned earlier that we work with over 3,100 community organizations across the country through our Community Volunteer Income Tax Program, and we make sure that individuals who are running those clinics are familiar with the program and they encourage individuals who are seeking their services — that they are aware of the program.
We have also leveraged our output, so when we are sending notices or information out to individuals who are in receipt of the Canada child benefit, for example, we include information about the Canada Dental Benefit. We are looking to leverage all of the channels we have to make the program known.
Senator Yussuff: Thank you. Just so you know, I was a sponsor of the bill, so I have a personal interest.
[Translation]
Senator Dupuis: My question is for Mr. Pagé from the Canada Revenue Agency.
You referred to an increase in litigation. You said that people are using litigation more. What data do you have that would tell us how much litigation costs on average and how much you get out of litigation, either in terms of convictions or in terms of money recovered? I assume you’ve done some calculations to say that for every dollar that the Canada Revenue Agency invests, they get so much back, either in convictions or in money. I would like you to submit that information to the clerk of the committee, if possible.
The Chair: I would ask that the witness respond in writing, please.
[English]
Honourable senators, this is the end of our meeting.
To the witnesses, you have been very professional, informative and enlightening. This shows the quality of our public servants — that you performed here tonight. As chair of the committee, thank you for a job well done.
Before I adjourn the meeting, I want to bring to your attention — I would like to take the opportunity to thank Dr. Howard — during the pandemic — for an outstanding leadership job for all Canadians.
To the witnesses, please submit your written responses to the clerk by the end of the day on Wednesday, May 10, 2023.
(The committee adjourned.)