Fraser Forum

Ottawa has long troubled history of writing cheques

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Ottawa has long troubled history of writing cheques

In a recent report, Canada’s auditor general (AG) found that large amounts of spending by the federal government during COVID was essentially wasted. Specifically, the AG found that $4.6 billion in payments for programs (such as CERB) were made to individuals who were ineligible, and flagged an additional $27.4 billion in payments requiring further investigation. While this report has been described as a “bombshell,” this isn’t the first time governments have had difficulty issuing cheques to Canadians.

This seemingly simple task— governments issuing cheques to individuals or businesses— can be much more difficult than expected. This blog post is an update to a previous piece we wrote that reviewed two comprehensive studies examining AG reports showing that Ottawa has a history of problems with designing, executing and administering cash transfer programs. These studies, issued in 2007 and 2013 and covering 614 AG reports through the years 1988 to 2013, illustrate the consistent 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 many programs and payments to Canadians, 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 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 more than 50 per cent of SINs had no supporting documentation.

Follow-up reports in 2002 that noted many problems persisted, and in 2007 concluded that progress on previously identified problems with the SIN system was “unsatisfactory.” Put simply, outstanding issues had not been sufficiently resolved as of 2013.

The AG reports also include specific program evaluations. Consider the government’s heating relief program in 2001, which was designed to send money to low-and modest-income households to help with increased heating costs. While this goal seems straightforward, the AG found that 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 25 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.

Twenty-one years later, these problems persist. Overall, the recent AG report concluded that “the Canada Revenue Agency and Employment and Social Development Canada did not manage the selected COVID 19 programs efficiently given the significant amount paid to ineligible recipients.” The amount of wasted taxpayer money is staggering.

But we shouldn’t be surprised, given government’s long-standing difficulty with issuing cheques to Canadians. At the very least, the report should raise concerns about the practical limitations of government.