Recently, the federal Standing Committee on Public Accounts (PACP) met to discuss the Auditor General’s December 2022 performance audit report, Report 10 – Specific COVID-19 Benefits, on the treatment of pandemic benefits.
ISAC’s analysis found several serious problems with the AG’s report, which evaluated the administration of pandemic benefits from March 15, 2020, to September 30, 2022. In short, the AG’s report failed to consider that the pandemic has hit low income people the hardest.
The AG’s report included simplistic claims about work disincentives; a failure to consider challenges with income reporting; little clarity on whether workers actually benefitted from the Canada Emergency Wage Subsidy (CEWS), which was paid directly to employers; no value-for-money analysis of the government’s pursuit of repayment from low-income individuals; a failure to address inaccessible appeal mechanisms; and finally, recommendations advocating for vigorous post-payment repayment that will hurt low-income people for years to come. Read our full analysis here in English (PDF) and en français ici (PDF).
Last week, the PACP Committee considered how to approach problems flagged in the AG report including problems with CEWs, the pandemic wage benefit paid to employers. The report estimated $15.5 billion was paid out through CEWS to employers who “represented a risk of being ineligible,” (p. 76) and advised that this should be investigated further by the Canada Revenue Agency (CRA).
The debate at the Standing Committee painted two opposing views on how to deal with recouping pandemic benefits from those deemed ineligible after the fact.
On one hand, the Auditor General wants the CRA and Employment and Social Development Canada to aggressively investigate $27.4 billion in funds paid to individuals and employers who may not have been eligible. Their position is: find the ineligible first and recover amounts owing, regardless of whether they are multi-billion dollar corporations or families with the lowest levels of income struggling to make ends meet. This is not the fair approach. It is a punitive approach that will hurt the most vulnerable people living on low incomes, including those who engage in precarious, cash-based work and who may face access to justice barriers in proving their eligibility. Many living on low incomes already cannot afford rent, food, medicine, and other basic necessities due to skyrocketing inflation.
On the other hand, the CRA says that it is not worth the effort to investigate and attempt recovery of the $15.5 billion paid out in wage benefits to employers who may not have been eligible. This CRA recommendation amounts to de-facto forgiveness of billions of dollars for major corporations who, while receiving pandemic wage benefits meant for their workers, paid out dividends to shareholders, afforded bonuses to executives, experienced billions of dollars in windfall profits, hired replacement workers during strikes, or proceeded with massive layoffs.
There is a third option that the AG and the CRA have ignored: the CRA can and should investigate and hold accountable major corporations that misused wage benefits, and ensure that they repay the public funds they misused. This pursuit must be paired with a broad program of debt forgiveness for low-income individuals who received pandemic benefits who may not have been eligible, but applied in good faith and spent the money to meet basic needs.
Forgiving major corporations for misusing taxpayer dollars while pursuing repayment from individuals living at or below the poverty line does nothing to alleviate the poverty crisis. It only perpetuates the false message that the pandemic has impacted everyone – individual and corporation – equally, while people living on low incomes continue to bear the brunt of the pandemic. This is an opportunity to change course on the response to pandemic-intensified poverty and income inequality.