Canada's Auditor General Karen Hogan.
Canada's Auditor General Karen Hogan. Credit: Office of the Auditor General of Canada Credit: Office of the Auditor General of Canada

Social policy researchers and advocates worry there is a backlash developing in Canada against the “undeserving” poor. 

Even more worrisome, this backlash is being fueled by an unlikely source: the federal Auditor General (AG). 

Campaign 2000, a national organization whose goal is to end child and family poverty, says the AG’s December report, if implemented, could “drive more people into deeper poverty”. 

In the report, Auditor General Karen Hogan examines the suite of COVID payments the federal government put in place, starting in the spring of 2020. 

Hogan concludes the various COVID relief measures, which the Trudeau government enacted and implemented with lightning speed, were effective in their main objective – to protect Canadians from catastrophic economic harm at a time of unprecedented crisis.

The AG’s team looked at the big three COVID spending programs – the Canadian Emergency Recovery Benefit (CERB) which cost $28.4 billion, the Canadian Emergency Wage Subsidy (CEWS) at $100 billion, and the Employment Insurance Emergency Response Benefit at $74.8 billion – and a handful of smaller ones. 

The combined cost of these measures was over $200 billion dollars.

The report states that the COVID programs “quickly offered financial relief to individuals and employers, prevented a rise in poverty, mitigated income inequalities, and helped the economy to recover from the effects of the pandemic.”

But the AG also finds there were overpayments to the tune of some $27 billion, and big gaps in the government’s verification and accounting procedures. 

To some extent, the AG admits, such failings were almost inevitable, given the depth of the crisis and the need to act with extreme haste. 

To get the money out the door in a timely manner the government simply accepted applicants’ words, the report notes, without imposing normal verification processes on those in need. 

The result, says the AG, is that some people got money to which they were not entitled.

Now the Auditor General wants the government to act forcefully. Hogan suggests they put in place vigorous procedures to recover overpayments. 

For instance, the AG recommends the Canada Revenue Agency deduct amounts individuals supposedly owe from any tax refunds to which they might be entitled.

AG moves into social policy territory

The AG’s allegations of multiple missing billions as a result of COVID relief are controversial. Some, in government and out, have disputed them. 

Indeed, a good many of the figures in Hogan’s report are estimates, the products of educated guesswork, not calculations. 

But what is more contentious is what the AG says next. 

Hogan goes beyond the scope of accounting issues when she asserts some COVID payments constituted a “disincentive to work” for several million Canadians. 

“At a time when businesses needed employees, some employees had more income by receiving the COVID-19 benefits than they would have had by rejoining the workforce,” the report claims.

The AG points out that individuals earning less than $500 per week made up nearly half, 44 per cent, of applicants for the Canada Emergency Response Benefit (CERB), and “the amount of benefit they received could impact their return to work, since they could receive an equal or greater income without working.” 

The report goes on to say that “between April and May 2020, only 11% of people earning $500 or less returned to work.”

Hogan’s conclusion? 

“The Canada Emergency Response Benefit created a disincentive to go back to work, especially for the more than one third of applicants who earned less than $500 per week.” 

For those low-income folks, the AG argues, “the Canada Emergency Response Benefit represented more than 100% of income replacement.” 

It seems like an open and shut case. But anti-poverty activists say the AG’s figures do not tell the whole story. 

Campaign 2000 issued a detailed rejoinder to the latest AG report.

For starters, the anti-poverty group points out there were lots of tangible reasons for which low-wage workers did not flood back into the workplace in droves when the authorities lifted pandemic restrictions.

Low-income workers had difficulties finding and keeping housing; they lacked supports for child and elder care; and many lived with food insecurity. All of these factors inhibited those Canadians from going back to low-paying jobs.

“For the AG to say that the availability of additional income resulted in failure to take on employment among the poorest of the poor reveals a significant misunderstanding of how the job world works,” Campaign 2000 says.

Beware the stereotypes

The anti-poverty group adds a cautionary note on stereotypes about low-income people “gaming the system.”

Campaign 2000 urges the auditor general to stick to her field of true expertise, audit and accounting issues. She should refrain from “conjectures” which, intentionally or not, support the too-widely-held view that people who require public assistance are “lazy and undeserving of help.”

To the AG’s conclusion that the government must pursue recovery of potential COVID over-payments with greater zeal, Campaign 2000 responds: 

“The federal government is already spending more than $250 million in taxpayer dollars to verify eligibility and pursue repayments from people they have deemed ineligible for pandemic benefits they received.”

The current federal recovery effort, the Campaigners say, is causing hardship for many low-income Canadians.

“Low-income earners have a much harder time meeting verification requirements.  Many are paid in cash and these payments do not flow through bank accounts because of their need to make essential purchases immediately,” states Campaign 2000.

Leila Sarangi is the National Director of Campaign 2000. She reminds the government and the Auditor General that pandemic benefits for people who struggle to survive on extremely low incomes “were not tucked away into savings accounts.” 

“The money was spent to provide for their basic needs,” Sarangi explains. “Seeking repayments now, in the context of record high inflation, from people who already cannot make ends meet, can only result in more hardship and destitution.”

Campaign 2000 points to a double standard in Auditor General Hogan’s recommendations for poor individuals versus what she says about corporations.

When the AG turned her attention to the federal emergency wage subsidies to businesses, she “was unable to determine if those payments were, in fact, used to prevent layoffs, because the government chose not to collect that data or to follow up with employers.”

“The Auditor General’s report should have recommended a more aggressive pursuit of large corporations that used wage subsidy programs to pad their bottom line and the pockets of their CEOs,” Campaign 2000 goes on to state. “The government should declare a repayment amnesty for individuals living on low and moderate incomes who continue to struggle to make ends meet.”

The Justin Trudeau government has, so far, been cautious in its response to the AG’s recommendations. It did not immediately declare mea culpa and accept them wholesale. 

National Revenue Minister Diane Lebouthillier even went so far as to suggest Karen Hogan torqued her numbers and conclusions in response to political pressure from the opposition Conservatives. 

That comment deflected parliamentary debate away from the substance of the AG’s findings to whether or not Lebouthiller should apologize to Hogan. In the end, the House of Commons voted unanimously to affirm full confidence in the AG – and that was that.

Beyond partisan bickering, the medium and long-term danger of the December Auditor General’s report is its (very Canadian) tendency to reduce enormous questions of public policy, touching such basic concerns as equality and enduring poverty, to mere matters of accounting.

It would be a shame if the chief lesson of the bold efforts the government undertook during the darkest days of the pandemic were that governments should not be too trusting of the people – that future governments, faced with a similar crisis, should act more warily and cautiously. 

Do we want a government whose motivating principle echoes the creed of Charles Dickens’ Ebenezer Scrooge, namely: All power to the bean counters?

Karl Nerenberg

Karl Nerenberg joined rabble in 2011 to cover Canadian politics. He has worked as a journalist and filmmaker for many decades, including two and a half decades at CBC/Radio-Canada. Among his career highlights...