THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, October 18, 2022
The Standing Senate Committee on National Finance met with videoconference this day at 9:01 a.m. [ET] to consider the Main Estimates for the fiscal year ending March 31, 2023.
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: I wish to welcome all of the senators, as well as the viewers across the country who are watching us on sencanada.ca.
[English]
My name is Percy Mockler, senator from New Brunswick, and Chair of the Standing Senate Committee on National Finance. I would like to go around the table and ask my colleagues to introduce themselves.
Senator Pate: Kim Pate, Ontario, from the unceded and unsurrendered territory of the Algonquin Anishinaabe people.
Senator Gignac: Clément Gignac, Quebec.
Senator Loffreda: Tony Loffreda, Quebec.
Senator Duncan: Pat Duncan, Yukon.
Senator Bovey: Patricia Bovey, Manitoba.
Senator Boehm: Peter Boehm, Ontario.
Senator Smith: Larry Smith, Quebec.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
The Chair: Thank you, senators. This morning, honourable senators and fellow Canadians, we will resume our study on the Main Estimates for the fiscal year ending March 31, 2023, which was referred to this committee, Standing Senate Committee on National Finance, on March 3, 2022, by the Senate of Canada.
We have with us today, honourable senators, officials from Finance Canada, Canada Revenue Agency, and Treasury Board of Canada Secretariat.
[Translation]
Honourable senators, I understand that there has been some confusion within Treasury Board Canada as to why the committee wanted to hear from their senior official again. We acknowledge that we heard from the senior officials on April 5, 2022. The committee had other questions to ask. So we continue, on behalf of all Canadians, to focus on our four main principles of transparency, accountability, reliability and predictability, especially during our review of the Main Estimates that have been tabled by the Government of Canada.
[English]
With that said, I thank you all for being here. 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 the question period.
From the Department of Finance, Mr. Christopher Veilleux, Director General, Financial Management Directorate and Chief Financial Officer. From Canada Revenue Agency, Mr. Hugo Pagé, Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch. And from the Treasury Board of Canada Secretariat, we welcome Ms. Annie Boudreau, Assistant Secretary, Expenditure Management Sector.
Welcome to all of you and thank you for accepting our invitation to appear in front of the Standing Senate Committee on National Finance as we continue to study Main Estimates.
Before we begin, I’d like to ask all the other witnesses that I did not name to please introduce yourselves, should you participate in answering a question. We will now hear from Mr. Pagé, to be followed by Ms. Boudreau.
Hugo Pagé, Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency: Thank you for the opportunity to appear before the Committee to present the Canada Revenue Agency’s Main Estimates for 2022-23 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 governments of Canada, and distributes benefit payments to millions of Canadians.
The CRA also offers help and information to those who need it, and is working hard to reach Canadians who might not be receiving the tax credits or benefits to which they are entitled. This includes enhancing the Community Volunteer Income Tax Program grant that supports the efforts of community organizations running free tax clinics.
Over the course of the last two years, the COVID-19 pandemic has required the CRA to rapidly respond and pivot its operations to deliver new emergency relief measures in addition to maintaining its essential tax and benefit services for Canadians.
[Translation]
In order to fulfill its mandate in 2022-23, the agency sought a total of $12.5 billion through these Main Estimates. Of this amount, $4.1 billion required approval by Parliament, whereas the remaining $8.4 billion represents statutory forecasts already approved under separate legislation.
The 2022-23 Main Estimates represent a net increase of $1.7 billion when compared with last year’s Main Estimates. Of this amount, $1.2 billion is related to the statutory forecasts for fuel charge proceeds to be returned to the province or territory of origin, primarily through the Climate Action Incentive payments. The balance of some $500 million, represents an increase of 11% from the 2021-22 Main Estimates.
[English]
A large component of this increase, $185 million, is associated with funding to strengthen the CRA’s service delivery channels and administer the government’s programs in response to COVID-19. An additional $106 million is for adjustments to the CRA’s statutory forecast of cost recovery revenues for initiatives administered on behalf of the provinces and other government departments. The majority of this increase is attributable to the administration of COVID-19 measures on behalf of Employment and Social Development Canada.
Other increases to the agency’s budget include $173 million for measures to continue work on combatting tax evasion and tax avoidance. The funding will allow the CRA to extend existing programs targeting international tax evasion and aggressive tax avoidance.
[Translation]
An amount of $73 million to safeguard taxpayer information by performing the necessary enhancements to the CRA security program which will strengthen the protection of taxpayer information from both internal and external security threats; $54 million to strengthen tax litigation by bolstering resources required to issue sound defensible reassessments and successfully resolve tax disputes; and lastly, $34 million to strengthen tax collection by providing the CRA with additional resources to collect outstanding taxes in a timely way.
[English]
These increases are partially offset by decreases to the CRA’s budget of $108 million for items such as the sunsetting of initial funding for the administration of the federal carbon pollution pricing system and the taxation regime for cannabis. The funding required for the ongoing administration of these programs will be sought in a subsequent Supplementary Estimates.
It should be noted that the CRA’s 2022-23 Main Estimates do not reflect incremental resources from the announcements made by the Minister of Finance in the April 2022 Budget.
[Translation]
In closing, the resources requested through these estimates will allow the agency to deliver on its mandate by ensuring Canadians have ready access to the information they need about taxes or benefits, to continue to support Canadians and businesses facing hardship through the administration of emergency relief measures, and by seeking new ways to counter tax avoidance and tax evasion by wealthy individuals.
Mr. Chair, at this time, we will be pleased to respond to any questions you may have. Thank you.
[English]
The Chair: Thank you, Mr. Pagé.
I will recognize, from the Treasury Board of Canada Secretariat, Ms. Annie Boudreau.
Annie Boudreau, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: It is my pleasure to be back with the committee today to talk about the 2022-23 Main Estimates.
[Translation]
With me today is Monia Lahaie, Assistant Comptroller General, Financial Management Sector, Office of the Comptroller General.
Since I am in Ottawa, I’d like to point out that I’m joining you from the traditional unceded territory of the Algonquin Anishinaabe people.
[English]
I would like to start with a very brief refresher on the 2022-23 Main Estimates before taking your questions. The 2022-23 Main Estimates were tabled on March 1, 2022, and presented information on the total of $397.6 billion in planned budgetary spending for 126 organizations to deliver programs and services to Canadians.
As you know, the Main Estimates are only one in a series of documents tabled at regular intervals throughout the fiscal year as part of the annual financial cycle.
[Translation]
On March 2, the president of the Treasury Board tabled departmental plans detailing the organizations’ mandates, commitments and priorities for fiscal year 2022-23, which provide the baseline against which organizations will track and report on those years and their ultimate performance through departmental results reports.
The funding laid out in the Main Estimates was approved through the first two 2022-23 appropriation acts — the Interim Appropriation Act in March and the remainder of the main estimates, what we call “full supply,” which was approved in June, on the same day as the funding for the Supplementary Estimates (A).
To support these estimates and related appropriation bills considered by this committee, the president of the Treasury Board appeared on April 28 about the Main Estimates, and officials appeared on June 7 about the Supplementary Estimates (A).
After those two appearances, the Secretariat provided complementary information as per the committee’s request.
I hope that the appearances and the follow-up information have proven useful in your consideration of this year’s estimates.
Thank you very much, honourable senators. We will be pleased to answer your questions.
[English]
The Chair: I have been informed that we’re having some technical difficulties with Mr. Christopher Veilleux, who is the Director General, Financial Management Directorate and Chief Financial Officer, attending by video conference, but I know we have many senior public servants.
I was wondering if someone could advise us, since we cannot connect with Mr. Veilleux. Who would be the lead among the Assistant Deputy Ministers that have been provided who can receive the question and direct it to the proper public servant to answer?
Can I ask that to Ms. Alison McDermott? Do you hear me, Ms. McDermott?
Alison McDermott, Assistant Deputy Minister, Federal-Provincial Relations and Social Policy Branch, Department of Finance Canada: Yes, I hear you, and I’m happy to help direct the questions.
The Chair: Thank you. So you will be directing the questions from the senators.
Now we will proceed to questions, and I would like to remind senators that you will have a maximum of five minutes each for the first round and a maximum of three minutes each for the second round. Therefore, please ask your questions directly to the witnesses.
To the witnesses, please respond concisely. The clerk will inform me when the time is over by raising her hand.
Senator Marshall: I will start with the finance officials and see if there’s somebody there to answer my questions. If not, I’ll move to the Treasury Board.
I’m looking for some information on the debt and the cost of servicing the debt. My first question is: How close is the government to the new debt ceiling of $1.8 trillion, and is that figure publicly reported?
Ms. McDermott: I’m going to pass that to my colleague in the Financial Sector Policy Branch. Is that Marie-Josée Lambert or Isabelle? I am not sure who is here.
Excuse me, it is Julien Brazeau.
Julien Brazeau, Associate Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance Canada: Unfortunately, Financial Sector Policy Branch doesn’t hold numbers on the debt, so I don’t have that number with me. I can endeavour to get back to you.
Senator Marshall: Do you know, is that publicly reported? I always have to calculate it myself and come up with an estimate. The ceiling is $1.8 trillion.
Mr. Brazeau: I’m not sure. I’ll have to circle back.
Senator Marshall: I’m going to go to the Treasury Board.
Ms. Boudreau, when are we going to see the public accounts for last year? The year before we didn’t get them until Christmas, so we waited nine months. When will they be released this year?
Don’t tell me it will be in the fall, because the fall goes to December 22, and I’ve already been told that. I’m looking for a better date.
Ms. Boudreau: Good morning. Always happy to see you.
I will turn your question over to my colleague Monia Lahaie, and she will be in a position to tell you a little bit more.
Monia Lahaie, Assistant Comptroller General, Financial Management Sector, Office of the Comptroller, Treasury Board of Canada Secretariat: Thank you for the question.
We are in the process of finalizing the public accounts. We are in the process of printing. The printing takes place into four different formats: PDF format, HTML, paper, and the raw data for the Open data portal. It is a more typical year this year, so we are not in an election period, and we are finalizing that. It will be, as is typical in these instances, in the next two weeks, which is the usual period that we publish the public accounts.
Senator Marshall: That sounds good. What about the Departmental Results Reports, because we need those also when we review Supplementary Estimates (B)?
Ms. Lahaie: I’ll pass that over to Ms. Boudreau for this one.
Ms. Boudreau: Thank you. In fact, usually, like you said, they are tabled after the public accounts. Why is that? It’s because public account information is reported in those Departmental Results Reports, so they should follow shortly after the tabling of the public accounts.
Senator Marshall: Last year we waited until March, so we waited a full year.
Just to go back to those Departmental Results Reports, Treasury Board has an oversight function, and departments are responsible for setting their own targets. A lot of departments are very poor at meeting their expectations. Environment met 14% of their performance indicators. Indigenous Services met 17%. Does Treasury Board not go back to the departments and tell them to improve their performance?
Ms. Boudreau: Thank you for your comment, and you are right. If we go to the GC InfoBase information, we will see all the information by department.
What I would like to mention, though, is sometimes departments will have valid reasons to not be able to meet targets. In the past I’ve shared with you a couple of examples. If it’s okay, I would like to repeat them —
Senator Marshall: I’m thinking about my five minutes, because I have another question for you.
I notice some information on the Treasury Board website saying that work is currently under way to streamline the public accounts to focus on information that would be relevant. It says that you’re trying to reduce the public accounts by at least 250 pages. Now, when I read that I get really concerned because I always have problems accessing information, especially current information. I would like to make the point that I’m not supportive of you cutting back the public accounts. At least now I know where to go and get the information, but once you remove it from the public accounts, I guess it will be a real exercise to try to find out where it’s located.
I’m going to move to the Canada Revenue Agency. Bill C-30 is in the Senate right now, and I was looking at a document that’s produced by the Canada Revenue Agency about who benefits from the GST/HST credit. As I said in my speech last night, I was really surprised by the number of households that benefit from the rebate, especially the households that have no children. Over 10 million households with no children receive the rebate.
Is there any additional information on a further breakdown of that 10 million? I’m looking for some sort of profile on the recipients. The reason why I’m asking is because I saw something over in the House of Commons when they were debating Bill C-30, and students are also receiving the rebate. How do you target the people who need the assistance the most? I’m trying to match up that statement with the 10 million households that have no children. Is there a further breakdown of that 10 million?
Mr. Pagé: Thank you for the question. I will transfer this over to my colleague, Assistant Commissioner of Assessment, Benefit and Service Branch, Gillian Pranke.
Gillian Pranke, Assistant Commissioner, Assessment, Benefit and Service Branch, Canada Revenue Agency: Thank you very much for your question.
Just to clarify, we certainly have information with respect to the profile of individuals who are in receipt of the GST/HST credit, but I’d just like to understand more your question with respect to children and families.
We can certainly provide a breakdown as far as individuals who are recipients of this credit. That information is available. I don’t currently have it at my fingertips. I would like to specifically understand your question.
Senator Marshall: There are 10 million households that are going to benefit, and they have no children. I can see, for example, that there would be elderly people who would get the GST rebate. However, somebody mentioned that university students who work part time and live in million-dollar households and drive their parents’ Audi are also getting the rebate. I’m trying to understand exactly who gets the rebate.
The other point I want to make is that maybe people don’t want to say they’re getting the rebate, but people I speak to, who I thought would get the rebate, are saying they don’t get the rebate. I’m trying to get a handle on who these 10 million households are.
Ms. Pranke: Super. Thank you very much for that clarification. As far as general eligibility for GST/HST credit, individuals need to be 19 years of age. They need to have or have had a spouse or common-law partner or are a parent and live or lived with their child. There are some basic eligibility criteria, and it’s essential that individuals file a tax return in order to receive the GST. So when a tax return is filed, the Canada Revenue Agency will determine based on the information that has been filed whether or not an individual is eligible for the goods and services tax credit.
If you’re looking for a further breakdown as far as eligibility by age and so on, that is certainly something we can provide you.
Senator Marshall: I would be very much interested in that. Thank you very much. I’ll take you up on your offer. My time is up. Second round for finance, please.
[Translation]
Senator Gignac: Thank you to the witnesses for being available today. I will continue this discussion on Bill C-30, which is sponsored by our friend and colleague, the Honourable Senator Loffreda.
We understand the purpose of Bill C-30, which is primarily to help those most in need, who are feeling the effects of inflation. I believe that the question was put to Minister Freeland when she came to meet with us in the Senate, because a high percentage of Canadians don’t file income tax returns. This could include many Canadians on social assistance who don’t have to file an income tax return because those benefits are not taxable. However, they are the ones the government wants to help. Ms. Freeland said that efforts would be made by the Canada Revenue Agency.
Therefore, my question is for Mr. Pagé or his colleague. Can you tell us about the CRA’s efforts to encourage people to file a tax return, perhaps for the first time in their lives or very recently? In doing so, they would be eligible for the GST credits already in place and the additional amount to come, which in some cases could be $1,000.
My question is for the Canada Revenue Agency.
Mr. Pagé: Thank you for the question, Senator.
Before I turn the floor over to my colleague Ms. Pranke, I just wanted to reiterate to members of the Senate that service is a priority for the Canada Revenue Agency. We continue to put a lot of emphasis on service, including providing access for people so they can take advantage of those benefits you mentioned.
The agency has various initiatives in place and we’ve opened service centres in the northern territories. We also have a program to help volunteers who fill out tax returns; we support them financially so that they can reach as many people as possible. Finally, we’re improving our software tools so that people can go to our website, for example, and use features to help them prepare their tax returns.
With that, I will look to my colleague Ms. Pranke, who may have more information for you.
[English]
Ms. Pranke: Thank you very much for your question, senator.
The Canada Revenue Agency has undertaken many efforts over the years to assist citizens who might otherwise not file their taxes. I believe a colleague of mine will have some numbers in that regard as well. We work with partners across the country in provinces, territories and communities to reach out to individuals. We have employees across the country that go into communities and work with community associations to increase knowledge and awareness regarding tax and benefits. We have a Community Volunteer Income Tax Program that is run across the country and in partnership with Quebec, where we work with over 1,000 organizations to help individuals who have incomes in lower thresholds to file their tax returns.
These clinics continued throughout the pandemic, and we made efforts to make it much simpler for community organizations to provide support. Over 600,000 returns are filed through this partnership program across the country for individuals in low-income tax brackets.
We’ve also looked at the products and services available to make it easier for individuals to file returns. We also worked with software developers to ensure that software is free of charge to low-income filers, and we have also launched a program called “File my Return,” where individuals can file their return simply asking a few basic questions. These are some of the efforts that we’ve taken to assist individuals in becoming aware of what their credits and entitlements are. I will turn to my colleague Marc Lemieux, who has information on an initiative we’ve undertaken to further assist individuals in this regard.
[Translation]
Marc Lemieux, Assistant Commissioner, Collections and Verification Branch, Canada Revenue Agency: Good morning. I also wanted to let you know about another activity, an agency initiative.
[English]
We call it the non-filer benefit letter. Every year, we send a few hundred thousand letters to Canadians who we see are eligible for benefits but who are not claiming them. We reach out and encourage them to file a return so that they could access the benefits.
[Translation]
Each year, we also report our results to Parliament on the impact of these annual campaigns to encourage people to get their benefits.
Senator Gignac: Thank you for the answer. I think this is very important, because in the 10 or 20 years I’ve been following public finance, I’ve never seen such a large amount of money available for the less fortunate; however, they need to file their taxes by the end of the year to claim the benefit.
My second question is for the assistant secretary of the Treasury Board of Canada Secretariat. There’s been a lot of water under the bridge since the Main Estimates were tabled; can you give me an update on the collective agreement negotiations? There are 28 agreements with 17 bargaining agents. Can you please update us on that and explain how the Treasury Board of Canada Secretariat came up with the 1.7% per year it is offering? Not only is 1.7% much lower than what economists forecasted this past spring for inflation, it’s far below the 2% target. Can you provide an update, Ms. Boudreau?
Ms. Boudreau: Thank you for your question. We’ll have to get back to you with a written response, because the people dealing with collective bargaining agreements and negotiations are not with us this morning. We’ll be sure to send a written response, and the chair will let us know how much time we have to respond in both official languages. Thank you very much.
The Chair: Thank you. We will now begin the second round, honourable senators.
[English]
Senator Smith: I have a question for Canada Revenue Agency. Recent reporting suggests that audit times are increasing with an average time of 314 days to complete an audit of small- and medium-sized businesses in 2023. By contrast it took only 171 days between 2015-16. CRA noted the pandemic was a major driver of the slowdown, as more staff were assigned to essential services like the various COVID-benefit programs. What steps is the agency taking to ensure that audit times are being reduced and more resources are being shifted to this important service?
Mr. Pagé: Thank you for the question. This one I will turn to my colleague, Cathy Hawara.
Cathy Hawara, Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency: Thank you for the question, senator. Indeed, we did provide information to Parliament about our audit timelines. As you noted, they have increased in the last couple of years, and it is primarily because of the pandemic. We had to pause many of our lower-risk audits, which would have impacted primarily small- and medium-sized businesses. I want to reassure the committee and others watching that, certainly, our high-risk audit activity and investigations carried on during this time, but we recognized that businesses were significantly impacted during the pandemic, and it was possible and necessary to pause those activities.
This year is when we are fully resuming our audit activities. We are confident that we will see those audit timelines returned to a more normal timeline, as you noted. Five to six months is what we are aiming for. We are providing additional training to our auditors, making sure they have the support they need from the headquarters function, and we are tracking audit timelines quite closely.
It is important to note that we are still involved in the work related to COVID benefits, and we do have the resources we need to be able to carry out all of these functions. We are confident that as these programs resume in a more normal way, we will be able to return to our normal time lines.
Senator Smith: The reduction of resources and staff — obviously, the effect of COVID has been a major contributor. I’m just wondering, what particular steps have you taken to increase your head count? It’s great to say we’re going to get more training, but you might need more people. What are you doing to increase your capacity so that the actual results or work can take place?
Ms. Hawara: Thank you for the question. We are running a number of national selection processes. We recognize that staffing is absolutely critical, and like everyone else in the country, finding the right people who have the right skills and will be good additions to the team can be a challenge. We’re working with our regional partners across the country to run national selection processes. We are looking to work more closely with universities that offer programs that are well aligned with the needs that we’re going to need from an auditor’s perspective, but also in terms of data scientists. We are bringing in other skills to complement the work that our auditors are going to do.
So we have developed a strategic recruitment plan that we are actively delivering on now. We completely agree with the statement that the senator made. Making sure that we have the right people to do this work is absolutely critical. That strategic recruitment plan is well under way now.
Senator Smith: Thank you. To get back to whatever the definition of normal is in terms of measurements — and when I say measurements, I’m talking about your staff count and your head count so that you can actually track — you were at 314 days versus 171 days in 2015. Are you going to look at this incrementally or have you set up a target so that in 6, 9 or 12 months you will have certain accomplished targets or results? Is that in the play?
Ms. Hawara: That’s certainly part of the work that we are going be doing and the teams are actively monitoring the time frames as we speak. This is something that we work on, not just on a quarterly or yearly basis. This is something that we’re actively working on with our colleagues in the regions to make sure that they have the support that they need to bring those timelines down. Those are exactly the conversations we’re having now, and we’re tracking them on a monthly basis.
Senator Smith: Thank you so much.
Senator Boehm: Thank you for being with us today. I would like to ask a question of the Department of Finance. In the Main Estimates, they are asking for $911,436,000 in statutory authorities for payments to the International Development Association under the Bretton Woods and Related Agreements Act, compared to $423 million, et cetera, in the last round of the Main Estimates. So between last years and this year, that’s more than a $488 million difference.
In February, the Minister of Finance announced a loan of up to $500 million to the government of Ukraine under this mechanism, and in January, under the Sovereign Loans Program, a loan of up to $120 million. I wonder if anyone could take me through this and how it breaks down.
Also, in general, how is the entirety of the $911 million in payments through the international development association under the Bretton Woods and Related Agreements Act being allocated beyond Ukraine, presumably? Are payments under that mechanism and via the international financial institutions generally in line with our G7 and NATO allies? Is there a verification or accountability mechanism in place to see how it is allocated? Just to complete all these questions, has inflation been a factor in the allocation?
Patrick Halley, Assistant Deputy Minister, International Trade and Finance Branch, Department of Finance Canada: Thank you, senator. The main instrument of International Development Association of the World Bank for helping pay low-income countries to end poverty and achieve their sustainable development goals — and you are right to point out that we are providing $911.4 million in grant payments in 2022-23.
First, the contributions of the International Development Association are generally negotiated among donors on a three-year cycle. So the nineteenth replenishment — the nineteenth three-year cycle — began in July 2020. In recognition of the enormous needs of low-income countries, the twentieth replenishment was started a year earlier, in 2021-22. As such, in fiscal year 2022-23, there are two sets of payments, one related to the nineteenth replenishment and one in relation to the twentieth payments, which started a year earlier. The payment is increased by more than twofold because it is two payments in one year because of that negotiation. As you mentioned, the payments are divided into a grant component and a loan component.
I will try to tackle some of the other questions you had. The Sovereign Loan Program is a Global Affairs Canada program, so that won’t appear in our portion of the Main Estimates.
I believe the other question was with respect to verification and accountability of the International Development Association. That’s a World Bank institution, so the mechanisms for verification and accountability are those of the World Bank, but we are closely working with everybody involved in the International Development Association to ensure that verification and accountability frameworks are in place. I can provide more details in writing as well, if you would like.
Senator Boehm: Thank you. That’s good.
This question is for the Canada Revenue Agency. In a sense, it follows upon the question my colleague Senator Gignac asked. I want to ask about the recent report of the Auditor General of Canada entitled Access to Benefits for Hard-to-Reach Populations. According to that report, it appears that CRA and ESDC have increased their outreach and awareness activities to hard-to-reach people since 2018 but:
. . . have not done enough to help hard-to-reach populations connect with the benefits put in place to support low-income Canadians, including the Canada Child Benefit, the Canada Workers Benefit, the Guaranteed Income Supplement, and the Canada Learning Bond.
Given the Government of Canada’s longtime focus on poverty reduction, why were all the necessary steps not taken by CRA? I won’t ask you to answer for ESDC right from the start.
I am just back from a study visit to the Arctic on national security. It was clear to me that it is very difficult, given bandwidth issues and others — and linguistic differences — to really access a lot of the services. So a one-size-fits-all approach is not necessarily going to work.
Has the CRA found a significant gap in benefit awareness and uptake among people in remote, rural and Northern communities versus people in urban centres? What are you doing to reach out to those more vulnerable populations?
Mr. Pagé: Thank you for the question. I will turn again to Ms. Pranke for this.
Ms. Pranke: Thank you very much for the question, senator.
It is very important for the Canada Revenue Agency, with its people-first philosophy, to ensure that no Canadian is left behind, and that certainly includes citizens in the North.
Back in February 2019, the minister announced the opening of three Northern service centres. Those were opened in the Yukon, the Northwest Territories and Nunavut, so there is in-person service available to individuals in those three territories.
As you have mentioned, to ensure we can mitigate against challenges with respect to bandwidth, we’ve also established dedicated Northern telephone lines for residents in the North. There is one for regular income tax and benefit enquiries and one for business enquiries. These are dedicated lines staffed for citizens in the North who are looking for information from the Canada Revenue Agency.
As well, I can share with you some figures. Just to be fully transparent, they are figures that were available prior to the pandemic. So, prior to the pandemic, the Canada Revenue Agency worked very closely with our colleagues in ESDC. There were over 940 in-person community visits to Indigenous communities in the North to ensure that citizens were aware of benefits and credits available to them.
In your response specifically to the recent audit of individuals in the hard-to-reach communities by the Office of the Auditor General, we’ve accepted the recommendations that were identified. We certainly believe we can do more to support citizens. The area in which they were critical is around measurement. As I mentioned, we’ve conducted thousands of outreach activities.
One of the areas the Auditor General was looking for further information from both departments was being able to pinpoint or draw a direct correlation between outreach activities provided to various communities and a change in filing rates. I think you will appreciate that it’s quite challenging to do. We don’t ask people to provide personal information when they attend an information or outreach session, but we are looking to further improve our reporting measures.
Senator Loffreda: Thank you to all our panellists for being here this morning. My question is for the Canada Revenue Agency. I will continue on the same question that Senator Gignac and Senator Boehm have asked this morning.
Both here and in the chamber, we have addressed the issue of non-tax-filers on several occasions. It is an issue that needs further study.
I will be more specific on the question. Maybe I can elaborate first and then come to the question.
Senator Patterson raised an important point during our debate on Bill C-30, the legislation that proposes to temporarily double the GST tax credit. He mentioned that 28.5% of Nunavut residents don’t file tax returns, which is much higher than the national average, which is about 10% according to some of your own data. As such, as was mentioned by my colleagues, many will not benefit from the tax credit; you must file your taxes to be eligible. I’m sure many residents in Nunavut would greatly benefit from more money to pay for the high costs of food, shelter and energy.
You did specify what the agency is doing with community outreach and support for residents of Nunavut, but the first language for many of the residents in Nunavut is neither French nor English. How can we encourage those residents to file their taxes and, more important, file in their own language? I believe that has been done in the past. Will it be possible in the short term so they can file in their own language? I think that would correct the situation, and the numbers would be much lower.
Ms. Pranke: Thank you very much for the question.
I would like to just go back to the establishment of the Northern service centres. We endeavour to hire local residents who speak Indigenous languages to work at those Northern service centres. That’s our starting point. That’s very important to us.
When we conduct outreach, we work to ensure that the employees who are visiting the communities that I mentioned speak various Indigenous languages, including Inuktut. Currently, we have a number of products available at the present time. We have fact sheets for Indigenous peoples that talk about the benefits and credits, the importance of filing, how to file. It is currently available in Dene, Inuktuk, Stoney and — pardon my pronunciation — Tlicho. Those are products currently available, and we are working on 10 to 11 other languages. We expect those products to be available for this coming filing season.
We also have infographics available on the child benefits available for Indigenous peoples. So there is material being currently prepared.
I would also like to mention that the Minister of Revenue recently announced — I believe it was late last week — about a grant program being enhanced for community associations, and there has been an increased enhancement or supplement to clinics that operate in the North and provide services to Indigenous people. So we’re looking for that incentive to be launched to increase our efforts in ensuring that Indigenous peoples file their returns.
I would also like to point out, with respect to the proposed Goods and Services Tax Credit, or GSTC, top-up, although there is a requirement to file a 2021 taxpayer return in order for individuals to avail themselves of the benefit, there isn’t a limit on that. So if there are individuals in those communities who have not yet filed, they still have time to do so, and they will still benefit from the supplement in the event that Royal Assent is achieved or attained.
Senator Loffreda: Thank you for that answer. It is very insightful.
Regarding the Canada Revenue Agency, I will take a further deep dive, leaning a little more on the unpaid taxes, the tax debt. Beginning in 2021, the Government of Canada’s investments from Budget 2021 provided the CRA with $230 million to help reduce the overall growth of tax debt. You anticipate using these funds over a five-year period aiming to collect outstanding taxes and resolve $814 million in debt in 2022-23 alone.
In addition, you project to achieve this goal by implementing new methods and technologies as a means to disrupt non-compliant activities. Would you mind elaborating what methods and technologies would be used to manage the tax debt, the trend, if there is any? In analyzing and comparing your results to your targets, how efficient and effective have these new methods been?
[Translation]
Mr. Lemieux: Yes, we will primarily use the funding we receive to pay the salaries of local office collection officers. They will be strategically assigned across the country for use in tax services offices, debt management call centres and national verification and collection centres.
With respect to concrete steps toward using different technologies, we continue to improve workload segmentation to take collection action in a timely, appropriate and always progressive manner. We continue to assign the right accounts to the right officers at the right time to ensure that the accounts are processed as quickly as possible and to avoid complex collections. The sooner we engage people with debts to the agency, the more flexibility we can offer and the more ways we can find to accommodate their capacity to repay. We continue to invest in these activities. In addition, we continue to focus on cases that are a little older. We’re aware that we had to reduce collection efforts during the pandemic to relieve that burden on businesses and individuals.
We have therefore resumed operations and as things pick up, we will focus on newer matters, which will help us enhance operational performance. Of course, we continue to pursue staffing. As we said earlier with Ms. Hawara with respect to other activities, we have hiring strategies to ensure that we get the right people to do the job. So far, we’ve had indications that we’re going to meet our interim goals, as mentioned in the question. So, to date, we believe that we’ll be able to deliver on our commitments.
[English]
Senator Bovey: Thank you, witnesses. I will confess that I am a new member of this committee so some of my questions may be catch-up. I was really interested in the comments about the North. I have been up to the North a lot. These communities are so tiny and poor, and so far away from each other. I hope telephone lines and the papers that are being presented or developed really does reach the people and give them the confidence they need to file their income tax and get these funds. That is just a comment and I would be happy to have a comment back on it.
My question follows on the question of Senator Gignac. I know he was talking about labour negotiations. I want to ask the Treasury Board about people returning to work after the pandemic. It seems from what I have read and heard that every ministry has a different approach, and there are many employees who have indicated that they don’t really want to return to the office. They would like to continue to work remotely.
I’d like to know what the role and position of the Treasury Board are regarding directives for returning to office plans. Are those issues featuring in the discussions that are going on with labour negotiations?
Ms. Boudreau: Thank you very much for your question, senator. As I said at the beginning, we will have to come back to you with a written response to cover the two issues that you have raised; one, collective bargaining, and the other one, the return to the workplace. We will come back to you shortly with written answers to your questions. Thank you.
Senator Bovey: Okay. I hope those answers also come back very quickly, because I think the employment sector and every sector across the country right now are having trouble with retention of employees and with getting employees. I am hearing this on many fronts on various committees that I sit on in the Senate. I think these are pretty important issues.
Are you expecting any potential strikes?
Ms. Boudreau: Again, it’s a question that I would not be able to provide any information on. We are at the negotiation tables and, obviously, the information has to stay there. But like I was saying at the beginning, we will come back to you with a written answer. Thank you.
Senator Bovey: Mr. Chair, I wonder if I can ask for a timeline for those answers, please?
The Chair: Yes, for the benefit of the public servants, officials of the departments, we are asking you to provide the written answers no later than November 4, 2022. Is that agreed, Ms. Boudreau?
[Translation]
Ms. Boudreau: Absolutely, we will get back to you on November 4 with the written responses.
[English]
Senator Bovey: Those are my questions. Unless I can get a response to the understanding of the geography of the North, for trying to reach people who, even with the medical system, they don’t have a whole lot of confidence, shall we say, in long-distance comments from the south. We all know that they want policies made in the North, by the North and for the North. So I wonder if the plans of trying to encourage people to apply for and submit their income tax, have taken these sensitivities into consideration.
Mr. Pagé: Thank you. I’ll turn to Ms. Pranke again.
Ms. Pranke: Senator, thank you for the question.
I can assure you that the Canada Revenue Agency is absolutely fully committed to serving citizens in the North. I appreciate the comments. We’re aware of the challenges with respect to size and distance between communities, challenges with the overall environment. It’s certainly a barrier.
One thing that I didn’t mention earlier in my remarks, I would like to share with you that we’ve created a new tax form. We call it, “Let us help you get your benefits!” It is a tax form that was created in consultation with Northern citizens and band chiefs and it was established. We have been working in partnership with our colleagues at ESDC, and we have been rolling that out.
The idea here is to lighten the load, lessen any burden associated with filing taxes. It is something that was paused somewhat during the pandemic. We are quite anxious and eager to get back out to northern communities and to encourage the use of this form. We do believe that it will serve its purpose and help increase tax filing rates.
Senator Bovey: It would be very interesting if we could get a sense of the measurement and the kind of response you’re getting from this. I’ve worked with the North for many years in a variety of contexts. I think these measurements are really important.
Senator Pate: Thank you to the witnesses for joining us. I want to follow up on questions from a number of colleagues.
First of all, I want to say that I commend the Canada Revenue Agency for having the foresight a decade ago to start with the online process that helped ensure benefits could roll out during this pandemic in a way that many other programs were shown not to be fit for purpose.
In light of that, though, one of the things that has come up that my colleagues have raised is the issue of access to benefits, which is very important. I’d like to talk a bit more about adequacy and impact of the benefits.
As you likely know, the provinces and territories in many cases experienced a windfall because of the nature of the benefits and the fact that many people who access particularly the Canada Emergency Response Benefit who were the most dispossessed, the people who were on social assistance, disability assistance, many of those benefits were clawed back by provinces and territories. The provinces and territories took that money into their revenue stream.
The people, many of whom were no better off because of those resources, or were worse off because in addition to the clawbacks of their benefits they were often turfed off the welfare, social assistance or disability rolls and had to try to get back on. Many lost their subsidized housing as well. I know that’s an issue you’re working on.
I know various ministers have indicated, both through Finance and CRA, an attempt to try and develop guidelines and agreements between provinces and territories. I would like to hear more about how this is going.
What kinds of agreements do you have with provinces and territories around clawbacks? What assurances can you provide to us that steps are being taken to ensure a repeat of these sorts of issues doesn’t occur with these benefits?
Christopher Veilleux, Director General, Financial Management Directorate and Chief Financial Officer, Department of Finance Canada: Thank you for the question, senator.
I would defer that to my colleague, the Assistant Deputy Minister of federal-provincial relations, Ms. McDermott.
Ms. McDermott: Thank you for the question, senator.
What I can say about this in relation to the CERB benefit, I won’t comment on the extent to which these clawbacks have or have not occurred in the sense that the benefits were intended for people who were working and had lost their jobs. They weren’t intended for individuals who were on social assistance. That, in general, should not have been a source of clawbacks.
My colleagues in Employment and Social Development Canada would be the ones that are most involved in these discussions with provinces in terms of development of new programs.
I can assure you that it, indeed, is an objective of the Government of Canada when developing new programs to work with provinces and make sure that they’re coordinated and that we don’t have perverse situations where the federal government provides payments that are intended to help individuals and that clawbacks result.
That kind of discussion tends to relate to new programs that are being developed. With respect to the CERB, it would be better to have someone from Employment and Social Development Canada speak about the extent to which they observed that.
Senator Pate: It sounds like there may not be sufficient information available. But as you are no doubt aware, on both disability and social assistance schemes, many times people can work a certain number of hours before there are clawbacks.
There were a number of people on those benefits who did qualify for CERB or thought they had qualified and were encouraged to apply for it because they were less well off.
If you have those numbers, I would appreciate receiving them. If not, if you could provide us with information about how you plan to document this going forward, that would be extremely helpful, as well as any steps being taken going forward.
My second question is for Treasury Board.
This is Persons Day. Today is Persons Day as we’re meeting. In the Auditor General’s third report this year, they found that the Treasury Board did not provide adequate guidance to ensure accurate conclusions about the department’s progress on Gender-based Analysis Plus. The recommendation for this was that the Treasury Board should issue further guidance to ensure accurate and consistent results regarding progress in this respect.
I’m curious what has been done to ensure that this happens, and what the timeline is for receiving reports — hopefully, more accurate reports — from the department about the progress on GBA+.
Ms. Boudreau: Thank you very much for the question.
I will start by saying that the OAG report was extremely useful, not only to us, Treasury Board, but as well to PCO, Finance Canada and, obviously, WAGE. We did accept all the recommendations coming from the OAG report. As you know, it was a follow-up audit of 2015.
We are working very closely with our partners, like I said, in order to make sure that the information is shared, and also to make sure that we are doing more training. We’re working closely with the Canada School of Public Service in terms of GBA Plus. It’s really to understand what the meaning of the “Plus” is. This is really lacking in Canada among ourselves, so we are trying to understand it better to be able to provide more information to all.
I think I will stop there. If you have any follow-up questions, I would be happy to answer them. Thank you.
Senator Pate: Mr. Chair, I’m suspecting my time is almost up. I wonder if we could seek in writing the answers about the adequacy, impact and negotiations with provinces and territories about clawbacks in particular.
The Chair: Directed to Ms. Boudreau?
Senator Pate: It would be all three organizations really who should have an interest in this, or I presume have an interest in this. Thank you.
The Chair: Ms. Boudreau, have you heard the comments made by the senator?
Ms. Boudreau: Yes. It relates to her previous questions to Finance Canada.
The Chair: Okay. Thank you.
Ms. Boudreau: Thank you.
The Chair: Honourable senators, before we move to the second round, I will recognize Senator Duncan for the first round.
Senator Duncan, the floor is yours for five minutes, please.
Senator Duncan: Thank you to my colleagues for their patience. I apologize if this question has been addressed. It is for the Canada Revenue Agency. It concerns the issue that was raised by the CPA and the comment of the low accessibility for vulnerable Canadians due to tax complexity.
I’m talking about the filing of income tax and the issues of rural and Northern Canada particularly, in how the Canada Revenue Agency assists these smaller, northern communities in accessing and filing their income taxes.
I especially note — this committee has previously heard — that there have been outreach programs. I would like to know what resources are offered to areas in Canada other than the major centres. I would like CRA to specifically address that. How are you helping these Canadians file their income taxes?
Mr. Pagé: Thank you for the questions. I will turn to Gillian Pranke again.
Ms. Pranke: Thank you, senator, for your questions.
I would start by stating that the Canada Revenue Agency opened three Northern Service Centres back in February 2019. These centres are located in Yukon, Northwest Territories and Nunavut. At that time, the Canada Revenue Agency, under the direction of the Minister of National Revenue, looked to see how it could further improve service to citizens in the North. It started with the Northern Service Centres.
With respect to outreach activities, I do have some figures. To be fully transparent, the information is pre-pandemic because the majority of outreach activities came to a halt during the pandemic. The Canada Revenue Agency has conducted over 940 outreach activities to communities across the North. Just over 700 of them have been in conjunction with our colleagues at Employment and Social Development Canada, or ESDC. The idea is to fully serve the citizens when we visit communities. Tremendous outreach activities have been conducted in the North.
I would also like to point out that last week the Minister of National Revenue announced an expansion to the grant program available through the Community Volunteer Income Tax Program. This is a program where local communities across the country are established, and they help individuals who find themselves in an income threshold that is in the lower range to file their returns. Nationally, over 600,000 individuals are assisted by this program. I’m quoting figures during the pandemic. Pre-pandemic, they were higher than that, but about 600,000 individuals are assisted by that program.
The grant program that was expanded recently by the Minister of National Revenue for CVITP clinics includes an incentive for clinics to operate in the North. Individuals or clinics are either being housed in the North or serving Indigenous citizens. They have an increased financial compensation. Clinics can receive up to $30,000 a year in support through this program. I mention that because these are clinics on the ground, assisting individuals.
I would also like to mention two other points. One is that prior to the pandemic, we launched an easier way for individuals in the North to receive benefits and credits. We set aside the tax form, and we created something called “Let us help you get your benefits!” It is a form where we ask very few questions. In the development of it, we consulted with citizens in the North and with band chiefs, and that product was launched pre-pandemic. The idea is to reduce friction to make it easier for individuals in the North to access benefits and credits.
The second point I would like to share with you is that we have been expanding our information products. We have information graphics and fact sheets on how to access benefits and credits, and they are available in a number of Indigenous languages. These languages continue to be expanded and enhanced.
Senator Duncan: Thank you. I appreciate that. Do I still have a moment, Mr. Chair?
The Chair: Yes, you can have another question, senator.
Senator Duncan: I appreciate that very fulsome response. As a follow up to that, are there quality assurance and service standards in place in terms of your rural telephone answering? I’m not necessarily referring to the internet, which is not always accessible everywhere — not just for Northern Canada; I’m speaking of rural Canada. Are there quality assurance standards for the telephone calls to the CRA and the programming you’re offering in rural Canada? Thank you.
Mr. Pagé: I’ll turn to Gillian Pranke again.
Ms. Pranke: Super. Thank you for that question.
With respect to service in our contact centres, a number of years ago, we moved to a new telephone platform that’s allowed us to absolutely up our game with respect to quality assurance across the board.
You asked specifically about rural citizens, and I would like to point out that it’s not possible for us to assess the level of service with respect to individuals in rural areas as opposed to urban centres. We do have a dedicated telephone line available to northern residents. That line is fully staffed. It’s fully accessible. We do monitor service levels. We monitor the quality of information provided. That is one separate, dedicated line.
I can assure you, senator, that the quality of information provided by contact centre agents is of the utmost importance. Since we made changes to our platform back in, I think, 2018, the quality of information that’s being provided to citizens is very high. We look at service quality, and we look at the accuracy of information provided. Service quality is in the 96% range, and information accuracy is in the 97% range. It is something that we monitor daily.
Senator Duncan: Thank you.
The Chair: Honourable senators, before we move on to the second round, we have connected with Mr. Veilleux from the Department of Finance. He was responsible for giving us comments at the beginning of our meeting.
Mr. Veilleux, I will now recognize you to give your comments, and then we will move on to the second round.
Christopher Veilleux, Director General, Financial Management Directorate and Chief Financial Officer, Department of Finance Canada: I will apologize to the chair and the committee for my delay in joining the session. Unfortunately, there were some technical issues this morning.
Good morning, Mr. Chair and members of the committee. Thank you for the opportunity to present the 2022-23 Main Estimates on behalf of the Department of Finance. I would like to begin by acknowledging that I am speaking to you from the traditional, unceded territory of the Algonquin Anishinaabe peoples. Joining me today are other departmental officials to assist in providing a more in-depth perspective on the rationale and policies supporting the numbers within these estimates.
As you know, the Department of Finance supports the Deputy Prime Minister and Minister of Finance as well as the Minister of Tourism and Associate Minister of Finance by developing policies and providing advice to the Government with the goal of creating a healthy and resilient economy for all Canadians.
The 2022-23 Main Estimates reflect departmental budgetary spending of $110.7 billion and non-budgetary spending of $361.7 million. This is composed of $137.9 million in voted budgetary expenditures, $110.5 billion in statutory budgetary expenditures and $361.7 million in statutory non-budgetary expenditures.
The 2022-23 Main Estimates reflect a net increase of $23.8 million in voted budgetary expenditures since the 2021-22 Main Estimates, stemming primarily from additional funding to address substantial, sustained workload increases, address immediate and ongoing pressures in IT services and maintenance and the continuance of the COVID-19 economic support and recovery advertising initiative.
Statutory expenditures are not included in the appropriation bill as they have already been approved by Parliament through enabling legislation. However, they are included in the estimates documents for information.
The statutory budgetary expenditures in these Main Estimates reflect a net increase of $6.9 billion in statutory budgetary expenditures, which is mainly due to legislated increases in major transfers to other levels of government and an increase in interest on unmatured debt. The statutory non-budgetary expenditures included in these Main Estimates reflect financial assistance by way of loans to the International Development Association.
Mr. Chair, this concludes my overview of these estimates for the Department of Finance. My colleagues and I would be pleased to answer any questions the committee members may have.
The Chair: Thank you, Mr. Veilleux.
Senator Marshall: Because we had technology issues earlier, I’m going to read all my questions into the record, and then the officials can start providing responses.
I wanted to know how close the government is to the debt ceiling of $1.8 trillion. Also, I want to know if it’s publicly reported. I was previously referred to the Public Accounts, but because we waited nine months last year for the Public Accounts, that information is dated. I’m wondering if there is somewhere where that information is currently provided.
I would like to know the interest rate that the government is being paid on the most recently issued bonds and whether the bonds are being issued at a discount or premium.
Budget 2022 estimated that public debt charges would be $26.9 billion for the current year, and I realize it includes other transactions besides interest on the debt, but I want to know if the $26.9 billion is still a good number.
There was a media article a little while ago saying the Bank of Canada is going to have a loss this year, so my question is: Does this affect the 2021-22 Public Accounts or the 2022-23 Public Accounts, and how does it affect the government’s bottom line?
Perhaps we can go back and talk about the debt ceiling and how close we are.
Mr. Veilleux: Thank you for the question, Senator. I will direct that question to Mr. Julien Brazeau.
Mr. Brazeau: Thank you, Senator Marshall, and apologies for the technical difficulties I was experiencing earlier.
As of March 31, 2021, what was reported was that $1.1 trillion of the parliamentary-approved borrowing authority had been used. Section 15 of the Economic Statement Implementation Act, 2020, had adjusted the maximum amount of borrowing approved by Parliament to $1.83 trillion, effective as of May 6, 2021. As I said, the budget reported a number of about $1.13 trillion. At the moment the number is estimated to be just a bit below $1.2 trillion.
Senator Marshall: Does that include the Crown corporations, because Mr. Wu, I think, testified in June, and he gave me the figure of $1.6 trillion. Because the $1.8 trillion is the ceiling up to March 31, 2024, and he said it was $1.6 trillion in June.
I had gone through and tried to calculate it myself, and I came up with a figure of $1.599 trillion or something like that, so I figured I was in the ballpark.
Mr. Brazeau: I can take that back. The numbers I have in front of me are just under $1.2 trillion. I’ll confirm.
Senator Marshall: That’s an old number.
I would like to know if that number is available on a current basis somewhere, so I don’t have to go through and calculate it myself.
There is a lot of interest in the public debt charges, especially with inflation now and the Bank of Canada raising its policy rate. Is that $26.9 billion that is in Budget 2022 still a good number?
Mr. Brazeau: I’ll have to get back to you on that number. I’ll talk specifically to our debt management team and get an answer back to you.
Senator Marshall: I was also wondering what interest rate is the government — they must have recently sold some bonds. I’m wondering what interest rate they’re getting, and are the bonds sold at a discount?
Mr. Brazeau: Yes, we’ll get that.
Senator Marshall: Do you know anything about the Bank of Canada and the loss? They’re saying it’s going to be the first time that the Bank of Canada is going to show a loss on its books. Do you know anything about that?
Mr. Brazeau: Yes, I think you’re referring to the Bank of Canada going potentially into negative equity, which is a result of some of the quantitative easing that was done in the context of the government’s spending on COVID-19 programs.
There are discussions at the moment between the Bank of Canada and the Department of Finance in that regard. There are other jurisdictions, such as Australia, that have announced that they will be going into negative equity territory. There is a mechanism by which the Bank of Canada can request an arrangement with the Department of Finance for a potential injection of capital, but those discussions are ongoing at the moment.
Senator Marshall: Are you able to share how that’s going to impact the government’s bottom line?
Mr. Brazeau: My understanding is —
Senator Marshall: I guess it depends on the financial assistance provided, but the statements of the Bank of Canada are combined with the statements of the government, right?
Mr. Brazeau: That’s right. It’s a charge that is already accounted for in the fiscal framework in terms of the cost to government. I can endeavour to give you a clear breakdown of exactly —
Senator Marshall: There was a $19 billion loss last year because of the Bank of Canada, which is quite significant. That would be appreciated if you can get that information.
I’ll read this question into the record in case the Canada Revenue Agency doesn’t have time.
I keep reading these articles about how the government is missing out on the collection of revenues. I was reading one yesterday about the black market for tobacco and how the government is missing out on about $2 billion in revenue. Then we hear about the tax gap, and we hear about the offshore accounts.
Who assigns the priority? The black market is alive and well. We have the honest taxpayers, who keep getting their taxes increased, but who is looking after the taxes that should be collected but are not being collected? It seems like there’s not enough effort going into that area.
Could the Canada Revenue Agency give me a little bit of information on it?
Mr. Pagé: I will turn this question to my colleague, Cathy Hawara.
Ms. Hawara: Thank you, senator.
There are actually a number of us around the Canada Revenue Agency who are quite concerned about this issue that you’ve raised from a tobacco perspective, a high net worth perspective and the use of offshore structures to hide wealth. Generally, what the tax gap is, we have undertaken a number of studies to be able to measure the tax gap in different areas.
My area, in particular, is interested in everything having to do with offshore. I can tell you that over the last few years we’ve made significant investments in terms of better access to data, including data that comes to us from our international partners, better tools to be able to risk assess and pick the right files to audit. We have had an injection of funds to be able to bolster our teams, both on the civil side and on the criminal side, and to be able to tackle aggressive tax avoidance and tax evasion.
Certainly, it is one of our priorities. We report publicly on our efforts, and it is something that we are absolutely focused on.
The Chair: Thank you.
[Translation]
Senator Gignac: My questions are for the Canada Revenue Agency.
As people probably know, taxpayers in Quebec have to file two tax returns, one for the federal government and one for Quebec. Quebec introduced the solidarity tax credit in 2011. It’s a refundable tax credit for low-income families to offset sales tax and housing costs. Approximately 3 million Quebec households benefit from it.
Has the Canada Revenue Agency been working with Revenu Québec, or does it intend to, in order to understand what Quebec has been doing to contact people and convince them to file a tax return so that they can take advantage of these tax credits?
As we speak, some Quebec families with two children are on track to receive $1,600 in the coming year. That’s a considerable amount of money. To the extent that the federal government is making significant efforts, I’d like to know if it’s currently discussing this with Revenu Québec to understand how the Quebec government is going about contacting people?
Mr. Pagé: Thank you for the question. I will ask my colleague Maxime Guénette to answer, since he’s in charge of relations with the provinces.
Maxime Guénette, Assistant Commissioner, Service, Innovation and Integration Branch, Canada Revenue Agency: I want to reassure the senator that we have a very close and productive relationship with Revenu Québec. We work together a great deal at all levels, including our efforts to reach out to taxpayers in all regions of Quebec.
As I was saying, we make an effort to align when our practices are involved. We meet regularly. In fact, we have meetings about this planned for this fall.
Senator Gignac: I’m pleased to hear you have such a great partnership, especially since Christine Tremblay, the CEO of Revenu Québec, was a deputy clerk at the Privy Council and she worked here for the federal government until recently.
My second question it is also a bit complex. In Quebec, the solidarity tax credit could be retroactive, in that if someone doesn’t file their tax return this year, they will have until December 2024 to do it, and it will all be retroactive. Therefore, they won’t miss out on their solidarity tax credit.
With respect to the tax credit introduced in Bill C-30, which we are currently studying, or Bill C-31, does the federal government plan to follow in the Quebec government’s footsteps, so that if someone doesn’t file their tax return by the end of this year, they will have until the end of 2024 to file it, and therefore be eligible for the tax credit?
Mr. Pagé: I believe the question is more for our colleagues from the Department of Finance, since it deals with tax policy.
[English]
Miodrag Jovanovic, Assistant Deputy Minister, Tax Policy Branch, Department of Finance Canada: Thank you. In this case, the Canada Revenue Agency may confirm my understanding, but I believe, effectively, a taxpayer may have up to 10 years to come back, call back and request the benefits that they are entitled to but have not received. I think this is an administrative practice. I would ask the Canada Revenue Agency to confirm that, but that’s my understanding.
[Translation]
Senator Gignac: If possible, I’d prefer to get a written response, so that we can be sure efforts are made in the coming months and years to contact as many people as possible who don’t file their federal tax return, so that they don’t miss out on their tax credit.
So, I’d appreciate it if you could send us a written response to confirm that everything is being done like Quebec does it?
The Chair: Did you hear Senator Gignac’s remarks, Mr. Veilleux? Can we expect to receive follow-up in writing, please?
[English]
Mr. Veilleux: Thank you, chair. I do commit to return to the committee with a written response with respect to that question. Thank you.
Senator Boehm: This question may be difficult to answer, and it is for the Treasury Board Secretariat. I am following up on Senator Bovey’s earlier question. It relates to the negotiations taking place between the various bargaining units and the Treasury Board. There are two major issues there. One is the increase, where the Public Service Alliance of Canada has requested more than what the Treasury Board has offered at 1.7% per year over a four-year agreement, against an inflation rate that’s running at about 7%; slightly higher or slightly lower sometimes.
The second issue, of course, is where to work and how to work. In retrospect, it seems that the refitting of offices, workplace 2.0 or having hot desks — hot desks meaning quick connectivity for everyone working closely together may not have been the best idea. But we didn’t know that a pandemic was coming.
My question, and perhaps it is more of a comment, is because there seems to be an inconsistency across departments and agencies in terms of how people are going to return, this might encourage some to find departmental jobs in other departments where the circumstances are more to their liking in terms of working arrangements. To Ms. Boudreau, or her colleagues, is this all being taken into consideration in terms of forward planning? I don’t expect you to tell me anything about negotiations that are currently under way, but I know as a former deputy minister, these are serious issues and a lot of it will lead to the morale of you are workforce and, ultimately, its effectiveness.
Ms. Boudreau: Thank you for the question. As you said, these are all serious issues or challenges. One of your colleagues asked the same questions earlier, and I committed get back to you with written answers to both of your questions and to your comments.
Senator Boehm: Thank you.
Senator Loffreda: My question is for the Treasury Board Secretariat on the building of a trusted digital identity platform. When the Auditor General appeared before us two weeks ago, we discussed one of her most recent reports on hard-to-reach Canadians, which is an important issue. It was frequently raised this morning and in the chamber. I asked her, what possible solutions might help the government to reach these individuals. She referred to a personal identifier for individuals over and above their social insurance number. This would help Canadians interact with the government and allow for better information and sharing across departments.
As part of TBS’s digital transformation, I know you are working with departments across the public service to continue to build the trusted digital identity platform to support seamless service delivery to Canadians across the country by establishing an all-of-Canada approach to digital identity in cooperation with the provinces and territories. Can you elaborate on this initiative? How far along is the government on this project, and when could we see this idea of a personal identifier implemented across the country? I think this would resolve many of the issues of hard-to-reach Canadians and more.
Ms. Boudreau: Thank you so much for your question. My colleagues are not with me today, but again, my commitment is to come back to you with answers to all the questions that you have posed to me. I will come back to you, as the chair indicated, by November 4.
Senator Loffreda: Thank you.
This question is for Finance Canada. I know it is a priority for the government and Finance Canada to help Canadians enjoy stronger, more sustainable and inclusive economic growth that contributes to higher standards of living. On that topic, I noted in your departmental plan for 2022-23 that one of your targets is for Canada to rank within the top 15 positions of countries within the OECD with the highest levels of GDP per capita.
According to your report, we ranked fourteenth in 2018-19, and fifteenth between 2019-21. According to current data on the OECD website, we are now sitting in the seventeenth position. This trend is worrisome, and we are now outside your target. Can you share with us, what measures are the government taking to increase GDP per capita in Canada? How will we reverse this trend, and what analysis of current measures have been made that will give us confidence that we can crack the top 15 again? We have great resources and we live in a great country; I could go on and on. An educated population; low unemployment. Why are we not progressing on this front?
Mr. Veilleux: Thank you for the question, senator. I direct that one to Mr. Rhys Mendes.
Rhys Mendes, Assistant Deputy Minister, Economic Policy Branch, Department of Finance Canada: Thank you, senator. I would say a couple of things. One, I think it is too early to call it a trend given that there is volatility in those rankings from year to year. There were a number of measures announced in the past couple of budgets aimed at improving economic growth. Going back a couple of budgets, for example, the Early Learning and Child Care initiative means higher labour force participation over time and higher GDP per capita. A number of measures aimed at enhancing growth, including the Canada Growth Fund and the Innovation and Investment Agency, aim to enhance investment and productivity overtime. All of these and others should, over time, contribute to sustaining our leading position in economic rankings.
Senator Pate: Thank you, Mr. Veilleux, for being able to join us. I am sorry you had technical difficulties earlier. I want to ask you some of the questions I asked your colleagues prior to you joining us regarding access, adequacy and impact of various benefits. In particular, I would like to focus on the confusion around eligibility and messaging that led many Canadians to claim CERB and other benefits, and later they were asked to repay those benefits, in particular where it resulted in them losing other benefits or in windfalls to provinces and territories, because clawbacks were implemented by provinces and territories to the detriment of individual Canadians.
I am curious what enforcement measures and agreements have been put in place with provinces and territories with respect to benefits going forward and how will you assure that these kinds of clawbacks don’t exist, whether it is through federal support guidelines, whether it is cost-sharing agreements? If you don’t have time to provide all of that, then you could provide it to us in writing.
Mr. Veilleux: Thank you for the question, senator. I think that question might be best directed to CRA.
Senator Pate: When I asked CRA, they asked me to direct it to Finance.
The Chair: Any comments on this, Mr. Pagé?
Mr. Pagé: We commit to working with our colleagues in the Department of Finance to provide a complete response to the senator.
The Chair: In writing?
Mr. Pagé: Absolutely.
Senator Pate: Thank you very much.
Senator Bovey: Again, I would like to thank all the personnel who are with us here today. I found it interesting.
I will change the tone or the scope a little bit. With COP27 taking place in just a few weeks, I would like to ask about the Climate action incentive payment, or CAIP. I understand that in 2021 the government did propose to change the delivery of climate action incentive payments from a refundable credit claimed annually on personal income tax returns to quarterly payments made through the benefit system starting in 2022.
As I understand it, it was decided to give payments on a more regular basis. I would like to know — and I guess these links in with some of the questions we asked earlier — how many eligible individuals do you estimate will not receive their climate action incentive payments because they will not be filing a tax return this fiscal year?
We talked about outreach programs to help eligible individuals claim other payments. I wonder what we’re doing about this, and I also wonder about how this is going to affect non-taxpayers and non-tax filers in the northern regions of our country? That was a question for CRA.
Mr. Pagé: My apologies. I can respond to part of it and maybe our colleagues from the Department of Finance can also weigh in as it relates to the calculation of whom will be benefiting from the payments.
In terms of the outreach, as you’ve heard from my colleagues earlier, when we provide information to taxpayers or to citizens who are entitled to some of those benefits, we include all the benefits, including the climate action incentive payments. So whatever outreach we do, it focuses on all the benefits that recipients would be entitled to.
As it relates to the calculation of the climate action incentive payments — so the number is calculated by our colleagues at the Department of Finance, a calculation based on volume as well as price. The distribution is based on certain demographic numbers that are used to calculate the number of recipients for provinces who have not met the federal expectations as it relates to the carbon pricing system.
I don’t know if our colleagues from the Department of Finance have anything else to add as it relates to volume and beneficiaries.
Mr. Veilleux: We can provide some supplementary information to the response provided by our CRA colleagues. Go ahead, Mr. Jovanovic.
Mr. Jovanovic: Thank you, Mr. Chair. In terms of filing rates, understanding that the issues are more salient in the northern part of the country, I would point out that the climate action incentive payment is like basically the backstop system that applies as of now in four provinces; Ontario, Manitoba, Saskatchewan and Alberta. So it does not apply in the territories and in northern Canada.
We’re happy to provide more detail as to the calculation, but as Mr. Pagé mentioned, this is based on the total proceeds, estimated, for each jurisdiction, from the fuel charge. It is roughly about 90% that is being returned for the Climate action incentive payment. The amount per adult and per kid is being estimated on that basis. And it is made available to all taxpayers in each jurisdiction. It is a flat amount, essentially.
Senator Bovey: If I may just follow up with perhaps a comment based on the fact that I am new to this committee, so forgive me if I’m walking into wrong territory.
I really appreciate that we’re being told on a number of fronts today that you’re looking at people you think are eligible for these payments. What about people who are eligible but may not be on your radar? I’m concerned about that.
My other concern — and if I could get some answers in writing as soon as possible — before COP27 — I think it would be very interesting to have some of this information for the delegates who are going to be representing Canada in that really important international forum. Thank you.
Mr. Pagé: If I could, Mr. Chair, my colleague, Ms. Pranke, would like to add.
Ms. Pranke: Thank you, senator. I would like to respond to two of the points you made. First, with respect to your question regarding the filing rates, when the Canada Revenue Agency identifies areas where we need to direct our activities with respect to outreach, we actually look at filing rates geographically. We have a heat map to see where citizens are, where there may be a lower percentage of Canadians filing, and we actually target our outreach to those specific areas.
Of course, it is not possible for us to link who is participating in the outreach sessions and who has filed, but that data informs the actions we take in the Canada Revenue Agency.
You asked about the Canada incentive action payment. What I can share is that the first quarterly payment was issued to Canadians in July. Nationally, the Canada Revenue Agency issued 10.3 million payments totalling $2.9 billion. Those payments were to individuals in Alberta, Saskatchewan, Ontario and Manitoba.
The Chair: Thank you to the officials for participating. It was certainly informative. We have a common denominator, and that is about transparency, accountability, reliability and predictability for all Canadians.
I would like to bring to the attention of Mr. Pagé, Ms. Boudreau and Mr. Veilleux, this morning you have shared with us that you will be sending written answers to many of the questions that were asked by the senators. We appreciate that. I would like to bring to your attention that we will continue to monitor the written answers coming in, in order that we can meet our timeline. Our timeline will be November 4, 2022. That will enable us to draft our report which we will table in the Senate of Canada.
I say to Mr. Pagé, Ms. Boudreau and Mr. Veilleux, are you agreed for the timeline?
Mr. Pagé: Agreed for the CRA.
Mr. Veilleux: Agreed for the Department of Finance.
Ms. Boudreau: Yes, certainly, Mr. Chair.
The Chair: Thank you very much.
Honourable senators, I inform you before we adjourn that our next meeting will be tomorrow, Wednesday, October 19, at 6:45 p.m., and we will continue our study on main estimates. We will have officials from three departments: Indigenous Services Canada, Crown-Indigenous Relations and Northern Affairs Canada, and also the Canadian Northern Economic Development Agency.
On this, honourable senators, thank you very much. I declare the meeting adjourned.
(The committee adjourned.)