History of government difficulty in writing cheques to Canadians
In response to COVID-19, there have been calls for governments to quickly get money into the hands of Canadians to help stabilize incomes and thus the economy. The idea of sending cheques to people may seem like a relatively straightforward task, but Canada’s history shows it can be much more difficult than expected. Indeed, the federal government has a history of problems with designing, executing and administering cash transfer programs.
The Fraser Institute has published two comprehensive studies examining reports by the federal auditor general (AG)—2007 and 2013—covering the years 1988 to 2013. In total, 614 reports by the AG were reviewed, and a number illustrate the practical difficulties the federal government has experienced issuing cheques.
A quick survey of the reports shows critical evaluations by the AG on the design, implementation and/or administration of the following programs that involve transferring cash (i.e. writing cheques) to both individuals and businesses: Agricultural Stabilization Board (1988, 1990), Newfoundland Offshore Development Fund (1988), Employment Insurance (1989, 1994, 2000, and 2013), Northern Cod Adjustment and Recovery Program (1993), Business Assistance Programs (1988, 1990, 1991, 1995, and 2000), Income Support for Seniors (1991, 1993, and 2006), Regional Economic Development Programs (1988, 1995), Income Support Tax Credits (1996, 2001), Heating Expense Relief (2001), Foreign Aid (1988, 1993, 2005, and 2009), Western Grain Stabilization Program (1991), Jobs Creation Program (1992), Small Business Loan Guarantees (2002), and the Canadian Agricultural Income Stabilization (2007).
And remember, these are only the programs selected by the AG for review between 1988 and 2013.
The reviews of the social insurance number (SIN) system, which underpins much of the income transfer system in Canada is particularly interesting. The evaluation in 1998 raised enormous concerns about the integrity of the SIN system and its vulnerability to fraud. For instance, the AG noted that there were 3.8 million more SINs for Canadians 20 years and older than actual people in that age group; there were 100 times as many active SINs for those over the age of 100 as living Canadians over that age; and that over 50 per cent of SINs had no supporting documentation.
A follow-up report was completed in 2002 that noted many problems had persisted. The AG concluded there were five million more SINs for people over the age of 20 than there were Canadians of those ages and that since 1998 more than half of all SINs were not properly verified with the applicant’s identity and citizenship status. A subsequent report in 2007 concluded that progress on previously identified problems with the SIN system was “unsatisfactory,” largely because outstanding issues of concern had not been resolved.
The AG reports also include specific program evaluations that are enlightening. For instance, the AG reviewed the government’s heating relief program in 2001. The program was intended to provide money to low and modest income households impacted by an increase in heating costs. Seems straightforward but the AG’s report found at least 40 per cent of recipients were not low-income or did not incur increased heating costs, approximately 90,000 Canadians in need of assistance received no relief due to a technicality in eligibility, and between 25 per cent to 35 per cent of individuals received money despite having heating included in their rent or heating with electricity. The report also found that at least 4,000 taxpayers not living in Canada received money, up to 1,600 prisoners may have received money and at least 7,500 deceased people received payments.
Similarly, the AG has several times evaluated Old Age Security (OAS) and the Guaranteed Income Supplement (GIS), which together represent the largest single federal program. Reviews in 1991 and 1993, for instance, showed material overpayments of OAS benefits. A follow up report in 2006 found continued deficiencies in up to 40 per cent of cases and payment errors in up to 7 per cent of cases.
The government is rightly working to stabilize incomes given the nature of the current recession. However, there are practical realities and limitations related to the way in which governments operate compared to private for-profit and non-profit organizations, which affects its ability to effectively execute seemingly simple tasks such as writing cheques.
Subscribe to the Fraser Institute
Get the latest news from the Fraser Institute on the latest research studies, news and events.