Federal tax collectors have yet to audit multi-billion dollar Canada Emergency Response Benefit payments despite the Canada Revenue Agency knowing of suspected fraud since June 2020.
MPs on the Commons finance committee expressed surprise at the slow pace of investigations.
“We haven’t started the post verification work on these programs, and we don’t have an estimation of the fraud on those programs,” testified Marc Lemieux, assistant revenue commissioner. Audits of the program will not get underway until 2022, he said.
“As we begin that work, we will assess the risks, and we will determine how much resources we have to put,” said Lemieux. “You know, we will be doing that work over the coming years.”
“Do you think that’s a good plan?” asked Conservative MP Jake Stewart. “You’re going to wait two years to even think about going after the fraudsters?”
Parliament on March 25, 2020, just two weeks after the pandemic outbreak, passed a bill to pay $2,000 cheques to jobless taxpayers facing eviction or foreclosure. Cabinet originally budgeted the program at $24 billion.
Costs instead soared to $81.6 billion with a record 8.9 million Canadians receiving benefits, about triple the number of jobless workers. Cost overruns have never been explained.
Conservative MP Pierre Poilievre said there appeared to be no excuse to delay audits when the program had gone three-and-a-half times over budget. “According to one of the government’s own agencies, the Financial Transaction and Reports Analysis Centre, people defrauded the CERB,” said Poilievre.
In its submission to the finance committee, the Analysis Centre said it was alerted by banks to suspicious transactions in which CERB claimants received multiple cheques in the same accounts under different names.
Data show 8,899,170 Canadians claimed CERB cheques. According to Statistics Canada Labour Force Surveys, the actual number of new unemployed who lost work as a result of the pandemic recession peaked at 1,485,400 in May 2020.
The federal money laundering agency, the Financial Transactions and Reports Analysis Centre, testified on December 8 it was alerted to suspected fraud by CERB applicants as early as June 2020.
“This has been going on since 2020, and nobody’s investigated anything?” asked MP Stewart.
“What do you think of the total scope of the defrauded aspects of the program?” he continued. “What do you think that would total in terms of millions of dollars?”
The Revenue Agency said it had no estimate. “I do not have this information,” said Janique Caron, chief financial officer with the Agency.
On November 29, the Department of Employment admitted it paid millions in fraudulent claims for pandemic relief cheques for the first time. It followed a preliminary audit that found 30,000 suspected fraud cases worth $42 million.
“At a time when so many Canadians are making sacrifices, it has always been important that we make sure our support goes to those who really need it,” Employment Minister Carla Qualtrough told reporters. Qualtrough said her department would “work to investigate potential fraudulent claims” but did not indicate if they involved the police.
Qualtrough’s department, in a statement, said: “The Government of Canada is committed to addressing cases of deliberate fraud.” Staff previously had dismissed suspicions of fraud as groundless. “Of course, we believe Canadians are honest,” Qualtrough said last August 20.
In a report Canada Emergency Response Benefit, Auditor General Karen Hogan noted the “significant cost” of the program. Authorities “were aware that they issued some payments to applicants who were not entitled to the benefit,” wrote Hogan. “This includes potential cases of intentional misrepresentation.”
Hogan said reviewing a total of 8,900,000 paid claims will take four years.
The program paid automatic benefits to applicants who claimed to be jobless and without income. In a July 21, 2020 Inquiry Of Ministry tabled in the Commons, the Department of Employment said it knew of $422.6 million in benefits paid to people who weren’t entitled to payments. Ineligible claimants numbered at least 221,320 people.
According to in-house research by the Canada Revenue Agency, taxpayers oppose amnesty for undeserving Canadians who claimed $2,000 pandemic relief cheques.
“There is consensus that overpayment of emergency benefits and related income taxes should be paid back to the Revenue Agency regardless of people’s personal situation,” wrote researchers. The CRA polled the question “to gather background contextual information,” it said.
“The concerns around the quick distribution of incentives primarily related to some people having purposefully abused the program, and other recipients who were not ill-intended potentially experiencing problems repaying the benefits later this year,” said the Agency report Annual Corporate Research Qualitative Findings. Pollsters said taxpayers had “little appetite to allow longer repayment periods for those who had taken advantage of the situation.”
“There was an eloquent argument made that the tax system must have accountability, integrity and fairness and that included an obligation to pursue repayment of money that is owed,” said the report. “For example, it was felt if ineligible recipients were not asked to repay benefits, it would be unfair to those who did not apply because they knew or thought they were not eligible.”
Through an Access To Information Request, Blacklock’s found unexplained payments under the program intended to save jobless workers from eviction or foreclosure. In one Yukon hamlet, Old Crow, 53 percent of residents received CERB cheques. Old Crow had a jobless rate of twelve percent at the time.
Across Yukon, CERB claimants were six times the Territory’s actual unemployed. In the hamlet of Leaf Rapids, Manitoba, forty percent of 390 working-age residents received pandemic relief cheques. In Iqaluit, 28 percent of the working population received CERB payments.
According to Access To Information records, the program also paid a total of $635.9 million to 317,900 high schoolers nationwide. Payments included a total of 40,630 claims by Grade Nine students, another 92,784 claims by Grade Ten students and 184,576 claims by Grade Eleven applicants.
