Federal COVID-19 vaccine, benefits rollout swift but wasteful: AG
Karen Hogan's report says $4.6B went to ineligible individuals, 13.6 million doses expired before donation
The federal government succeeded in quickly securing and distributing COVID-19 vaccines and rolling out pandemic benefits to help people and backstop the economy, but wasted millions of doses and gave billions in benefits to ineligible recipients, the auditor general of Canada says.
Auditor General Karen Hogan's fall audits, which were released Tuesday, give the government a mixed pandemic report card, saying that while benefit programs were swift and did what they were supposed to do, they were also wasteful and lacked proper verification.
"In 2020, the government decided to rely on information provided by applicants and limit pre-payment controls to expedite helping people and employers affected by the pandemic," Hogan said in a statement. "In doing so, it recognized that there was a risk that some payments would go to ineligible recipients."
The audit of benefits "found that overpayments of $4.6 billion were made to ineligible individuals, and we estimated that at least $27.4 billion of payments to individuals and employers should be investigated further," she said.
Watch: AG report reveals Ottawa overpaid pandemic benefits by $4.6 billion:
Hogan's audit of pandemic benefits warns that while $2.3 billion in overpayments had been recovered by this summer, the federal government may be running out of time to identify and recover the rest because of legislative time limits.
Legally, the federal government has 36 months from the time benefits are paid to verify the payment was proper, a time frame that can be extended to 72 months if the Canada Revenue Agency suspects recipients provided false information when applying for the benefits.
In its analysis, the auditor general's office looked at:
- The Canada Worker Lockdown Benefit.
- Canada Recovery Benefit.
- Canada Recovery Sickness Benefit.
- Canada Recovery Caregiving Benefit.
- Canada Emergency Response Benefit (CERB), including the Employment Insurance Emergency Response Benefit and the Canada Emergency Wage Subsidy.
Achieving objectives
The audits not only looked at whether the payments were made to eligible recipients, and how well the government later verified if those payments were legitimate, but also how effective the pandemic supports were in achieving their stated goals.
"The government of Canada set an objective of helping Canadians as quickly as possible. The COVID-19 emergency programs that we audited achieved that objective," the audit said. "They 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."
Canada's gross domestic product took a 17 per cent hit between February and April 2020, shrinking the economy by some $350 billion. But by November 2021, the audit said, the economy was back to pre-pandemic strength.
The audit also said that without the pandemic supports offered to individuals and businesses, the poverty rate would have almost doubled during the pandemic, from 6.4 per cent to 11.6 per cent.
Although the government was successful in sending a sufficient number of doses to provinces and territories, the Public Health Agency of Canada ended up with a large surplus of doses.- Auditor general of Canada
Those pandemic supports, the audit said, primarily went to lower-income workers who benefited with an increase over their pre-pandemic incomes.
"Overall, these increases in government transfers to households exceeded losses in wages and salaries and self‑employment income," the audit said. "This income compensation through the COVID‑19 programs helped to financially support the population."
The audit said that because the financial support offered to low-income families boosted incomes beyond pre-pandemic levels, the benefits program created a disincentive to work that contributed to the labour shortage.
"The CERB created a disincentive to go back to work, especially for more than one-third of applicants who earned less than $500 per week," it said.
"For them, the CERB represented more than 100 per cent of income replacement. This may explain why approximately two million people stayed on the benefits for all seven periods, for a total of 28 weeks."
More vigour needed in verifying payments: AG
Despite achieving their stated goals, the auditor general's report says that the government's efforts to verify and recover improper payments has "not been timely" and that "significant unrecoverable amounts are likely to materialize."
"The CRA and Employment and Social Development Canada did not manage the selected COVID‑19 programs efficiently given the significant amount paid to ineligible recipients," the audit said.
The audit said that the $27.4 billion includes payments made to individuals and businesses who did not meet the requirements. Those payments include:
- $8.3 billion in benefits paid to 647,000 individuals who may not have earned more than $5,000 in 2019, or in the year before their application.
- $3.8 billion in benefits paid to 1.4 million individuals who may have earned more than $1,000 during their four-week CERB period.
- $15.5 billion in CEWS payments made to companies whose income did not decline as much as it should have to qualify.
"I am concerned about the lack of vigour post-payment verification and collection activities," Hogan said in her Tuesday press conference, adding that the federal government needs "to act now to expand their post-payment verification plans … and recover COVID-19 benefit amounts owed."
Verification not 'cost effective,' government says
Responding to the report, the federal government said that it only partially accepted the recommendation to increase post-payment verification to include all cases suspected of being ineligible.
The federal government said it looked at the resources required to investigate every payment made to determine whether taking such an action would be worthwhile.
"It would not be cost effective nor in keeping with international and industry best practices to pursue 100 per cent of all potentially ineligible claims," the federal government said. "This approach is evergreen, and will be adapted as circumstances warrant."
Hogan said Tuesday that, legally, the federal government is required to verify every payment. She said that if it does not want to do so — considering that many payments went to low-income families and individuals — it must explain that to Canadians.
"I absolutely think it would be a reasonable approach, but I encourage them to be clear with Canadians," Hogan said.
"I think one of the greatest things about our country is that you can expect fairness and transparency and I'm just asking the government to be clear with its decisions and approaches with Canadians."
Procuring and distributing vaccines
When it came to the procurement and distribution of vaccines, the auditor general gave the government a similarly mixed review, saying that while it did a good job sourcing supplies and striking procurement deals, the rush to acquire vaccines led to the waste of millions of doses.
"We found that, although a non-competitive approach was taken, Public Services and Procurement Canada exercised due diligence on the seven vaccine companies by conducting assessments to examine the companies' financial capability to meet requirements and by conducting integrity checks to mitigate the risk of unethical business practices," the audit said.
Watch: PHAC's efforts to minimize COVID-19 vaccine wastage 'unsuccessful': auditor general:
Hogan's fall report said that the average cost of one dose of COVID-19 vaccine stood at about $30 and estimates that the total cost of the 169 million doses bought between December 2020 and May 2022 was about $5 billion.
"Although the government was successful in sending a sufficient number of doses to provinces and territories, the Public Health Agency of Canada ended up with a large surplus of doses," the report said.
By May 31 of this year, the report said that Canada had 32.5 million doses, estimated to be worth about $1 billion, in inventories across the country, and another 50.6 million doses that were deemed surplus and were being offered up for donation.
Of those surplus doses, 15.3 million were donated, but another 13.6 million expired before they could be gifted to another country in need of vaccines.
"By the end of our audit period, the majority of these remaining doses still had a shelf life and could be used in booster campaigns or donated; however, most will expire by the end of 2022 if unused," the audit said.
Watch: MPs debate the auditor general's reports on COVID-19 vaccines, benefits
NDP health critic Don Davies said it's unacceptable that nearly 14 million doses expired while developing countries around the world remain in need.
"The Liberals must act swiftly to ensure our remaining doses are delivered to the people who need them most," Davies said in a media statement. "Millions of lives have been lost across the globe due to COVID-19. Vaccination is the best way to reduce these deaths and take pressure off our overburdened hospitals."
Watch: Singh calls AG report's revelations about pandemic programs 'very problematic':
The Conservatives said the Liberals bought too many vaccine doses, decided not to implement pre-payment controls and failed to properly verify payments, which resulted in extra money being pumped into the economy, driving inflation.
"It's clear in the auditor general's report that the lack of controls was a concern, and that was a concern for us as well," said Conservative finance critic Jasraj Singh Hallan.
"The Conservatives are calling on the Liberals to present a plan that shows that they are going to take this report seriously and put in the controls that the auditor general is also calling for."
WATCH: Conservatives call on Liberals to take auditor general's report 'seriously':
The Conservatives stopped short of calling on the Liberal government to track down and verify every payment, but said they are waiting to hear how aggressively the federal government will pursue ineligible payments.
Minister of National Revenue Diane Lebouthillier said the Canada Revenue Agency is sending out letters and verifying benefits on a "case by case basis." She pledged to recover some of the benefits paid improperly but did not say how much would be pursued.
Employment Minister Carla Qualtrough said the only way to get money to Canadians who lost their jobs because of the pandemic was to ask them to attest that they needed it — because there was no time to vet every application.
Qualtrough also said that work on recouping ineligible payments continues.
"I wouldn't mistake a lack of aggressive pursuit for not doing it. It's just that we're being compassionate," she said. "We are trying to balance risk and fairness and get to a point where the best way forward is pursuing but not jamming Canadians."
WATCH: Qualtrough says she 'remains extremely proud' of pandemic benefit programs:
Health Minister Jean-Yves Duclos said that since the pandemic began, almost 14 million doses of the AstraZeneca vaccine ordered by Canada have been destroyed abroad because they could not be used inside the country. Another 10 million vaccine doses expired within Canada before they could be used.
Duclos also said that he welcomed the recommendation from Hogan to improve the quality of information-sharing between the provinces, the federal government and the Public Health Agency of Canada (PHAC) to reduce the amount of waste in future.
"We'll continue to engage provincial and territorial immunization programs to seek opportunities to further advance and enhance vaccine data sharing and COVID-19 vaccine monitoring," he said.
WATCH: Health minister reacts to auditor general's report:
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