Canada’s auditor general claims that, while emergency COVID-19 benefit was effectively provided by the federal government during the pandemics, the decision to not front-end verify resulted in $4.6 Billion in overpayments to non-eligible persons.
A performance audit was presented in the House of Commons Tuesday. It found that Canada Revenue Agency and Employment and Social Development Canada were “falling short” in following through on late verification of recipients’ eligibility after they had sent out $211 billion in COVID-19 assistance.
Audit notes that the government relied on applicants’ attestation information and limited federal prepayment checks to provide funding for benefits such as the Canada Emergency Response Benefit (CERB), and the wage subsidy beginning in 2020 in order to speed up financial assistance. These payment verification plans were delayed further as the pandemic progressed, knowing that money could have been lost to those who weren’t eligible.
The federal agencies responsible for these financial aid programs have ended, but Karen Hogan, the auditor general, says that they are still trying to determine how much money was given to people who aren’t eligible. With deadlines nearing, the federal government may run out of time to recover amounts owed. It’s possible that a substantial amount of funds won’t be recovered.
Hogan noted in her report that, despite these concerns, federal aid prevented an increase in poverty and benefitted those most affected by the pandemic. It also helped Canada recover from the global crisis.
The audit revealed that $3.1 Billion was paid to 1.8 Million recipients who were eligible for an EI lump-sum overpayment. This is a total of $4.6 Billion in overpayments to non-eligible recipients. The audit states that this could have been through either the initial Employment Insurance Emergency Response Benefit or the evolution of that program into Canada Emergency Response Benefit (CERB). $1.5 billion was paid to more than 710,000 recipients who were eligible for more than one benefit.
The auditor general concluded that in addition to the overpayments in the millions of dollars, $27.4B in additional payments to employers and individuals should be “investigated further” to determine if they are eligible for the wage subsidy program, which paid out $15.5B.
Hogan stated that she was flagging the additional funding because she was “pretty certain” that there were indicators that certain people and businesses weren’t eligible for the funds. These indicators included not meeting income metrics or showing revenue declines that are not sufficient.
The report states that “an additional definitive estimate of payments to ineligible recipients, and amounts to be collected by the government” will only be made after agencies and departments have completed their postpayment verifications.
The audit revealed that the CRA has only been able to collect overpayments from Canadians who have opted to voluntarily repay their COVID-19 benefits. As of this summer, $2.3 billion was recovered through these efforts.
On Tuesday, Hogan was asked by reporters how much she believes the overpayments were due to Canadians making good-faith errors and what could be fraud. Hogan stated that she couldn’t answer the question confidently because she didn’t have enough information from the CRA when she did her audit.
WHAT IS REQUIRED TO RECAPTURE BILLIONS?
Hogan now calls for a number of changes in order to get as much of the incorrectly-paid funding back as possible.
- Update the government’s postpayment verification plans to “include every activity to identify payments to ineligible beneficiaries of COVID 19 benefits programs”
- To better evaluate outcomes, it is important to ensure that applicants provide accurate data.
- Implementing a real-time payroll program.
The auditor general also urged the CRA to implement system functionality to apply refunds on COVID-19 amounts owed before the end the year, in order to increase the recovery of COVID-19 amount owed and decrease the administrative burden.
Although the federal government agreed in part to Hogan’s findings they were cautious about their risk-based approach, which was supported by Parliament and ultimately supported millions of Canadians.
In its response to Hogan, the CRA suggested that it wouldn’t pursue all ineligible funds. According to the CRA, this was because it would be inefficient and not in line with industry best practices to pursue 100% of potentially ineligible claims.
Hogan responded that the government must act under the current legislation when money is sent to people who shouldn’t have. If the Liberals decide to change their approach and write off losses, they should be “clear and transparent with Canadians.”
WHAT ARE THE FEDS PAYING IN COVID-19 AIDA?
The audit reveals the ineligibility and overpayment concerns. It also provides an accurate breakdown of the amount that the federal government spent on each COVID-19 benefit program.
Here’s the bill
- Canada Emergency Wage Subsidy $100.7 Billion
- Employment Insurance Emergency Response Benefit/Canada Emergency Response Benefit: $74.8 billion
- Canada Recovery Benefit: $28.4 Billion
- Canada Recovery Caregiving Benefit: $4.4 Billion
- Canada Recovery Sickness Benefit: $1.5 Billion
- Canada Workers Lockdown Benefit: 0.9 billion
Hogan discovered that, while Employment and Social Development Canada had made adjustments to certain benefit programs in an effort to reduce disincentives to work, there was not enough data to evaluate the effectiveness of the wage subsidy program. This is partly because employers were not required to submit information about rehiring.
The Liberals responded to the report by highlighting how many people each program had helped. They stated that the programs were worth $211 billion.
- Canada Emergency Wage Subsidy: 460,000 Businesses to Keep 5.3 Million Employees on the Payroll
- Employment Insurance Emergency Response Benefit/Canada’s Emergency Response Benefit: 8.5 Million People
- Canada Recovery Benefit: 2.3 Million People
- Canada Recovery Caregiving Benefit for 560,000 People
- Canada Recovery Sickness Benefit: 1.2 Million People
- Canada Worker Lockdown Benefit: 455,000 People
Minister of Employment, Workforce Development, and Disability Inclusion Carla Qualtrough said Tuesday that she was “incredibly proud” of how her government dealt with the economic and public health problems posed by the pandemic. “We made it clear that eligibility would only be confirmed after the pandemic, and this process is ongoing.
Qualtrough stated, “We’re trying with Canadians during a very difficult period. I wouldn’t mistake lack of aggressive pursuit for not doing so.” “It’s just, we’re being compassionate.”
CONSERVATIVES BALK AT “WASTE”
The federal Conservatives didn’t buy the Liberals’ compassion argument and instead told reporters that the potential loss of multi-billion dollars was indicative of a pattern in wasteful Liberal spending.
Jasraj Singh Hallan, Conservative MP, and finance critic, stated that “Today’s auditor general confirmed what Conservatives had been warning about since 2020.” “The auditor general identified that the Liberal government had not implemented controls, which undoubtedly contributed to the mess taxpayers will have to pay.”
Now, the Conservatives want the Liberals’ to present a plan that “shows that they’re going take this report seriously” and implement the controls the auditor general also demands.
Responding to the NDP, who throughout the pandemic demanded that the Liberals offer financial assistance more generously, Daniel Blaikie, MP, and finance critic, focused on the fact that the AG’s office had noted the importance of this income support.
Blaikie stated that “New Democrats don’t believe Canadians who applied in good conscience to these programs but do not have enough money to repay it back should be persecuted.” Blaikie called for a “repayment amnesty” for low-income people.
Blaikie suggested that this would allow the government to use its limited resources to pursue fraudsters and people who can repay their debts.
