When governments come forward with programs to help those in need, in this case farmers, we’d like to believe they are developed with the best of intentions.
But it seems those good intentions are routinely smothered in what could only be called games bureaucracies play in the name of protecting the public purse.
We don’t argue that responsible due diligence and care to avoid moral hazard is necessary when dispersing public funds. But questions must be asked when these processes end up costing the very people the programs were designed to help.
A case in point is this case of a CAIS overpayment.
Steinbach-area vegetable farmers Roland and Suzanne Chaput were among thousands of farmers who received overpayments averaging $10,000 between 2004 and 2007.
During those years, the formula used for interim payments, partly as a result from political pressure to get the funds flowing quickly to cash-strapped farmers, almost guaranteed overpayments.
It wasn’t farmers’ fault that the people processing the applications were working – as Canada’s auditor general summarized in a scathing 2007 report – “to standards that emphasize the number of applications processed and adherence to procedures more than accuracy of payments.”
The Chaputs’ combined CAIS interim payment for the 2004 farming year was $19,599.28, income that they received in 2005 and dutifully recorded on that year’s statement of farming activities to Revenue Canada.
The CAIS administration informed them in 2006 that their actual 2004 entitlement was only $10,860.66, less a $110 administrative fee. The government wanted them to pay $8,848.62 back, something they were fully prepared to do over time.
The Chaputs soon realized, however, that even though they weren’t being asked to pay interest on the overpayment, the government’s miscalculation was still going to cost them.
When the Chaputs, who had two children living at home at the time, reported the extra income on their 2005 income tax, it reduced their child tax credit and GST rebate eligibility to the tune of $1,568.65.
Although their income would be adjusted again in the year the funds were repaid, one of their children has since left home – so they would no longer be eligible. Those benefits were gone for good.
That didn’t seem right to Chaput.
However, when he presented his concerns to government, he started getting the ping-pong treatment. CAIS told him it was Revenue Canada’s issue. Revenue Canada said it was up to CAIS.
Frustrated, he asked his MP, Vic Toews to intervene. In Sept. 2009, he received a letter from Toews’ constituency office containing a letter from the minister of national revenue reiterating that the Chaputs’ eligibility would be adjusted in the year the funds were repaid – a response that blithely ignored the change in their family status.
By then, Chaput was refusing to pay the government any more until this issue was settled. His accountant told him to give it up. His wife suggested it was time they moved on.
But he wasn’t done yet. On Dec. 1, 2009, Chaput took the federal government to Small Claims Court.
In a handwritten affidavit, he claimed $1,568.65, the amount his accountant calculated he lost in child tax credits and GST rebates as a result of the CAIS overpayment.
“We are prepared to recognize the overpayment as calculated by the CAIS administration and Agriculture and Agri-Food Canada, but only to the extent, and in all fairness, that our request for the above-mentioned reduction is granted,” he said.
A hearing date was set for Feb. 19.
But on Jan. 25, they received a letter from a lawyer with the Department of Justice offering to reduce their bill to the government by $1,568.65. “Having reviewed the details of your matter further with Agriculture and Agri-Food Canada as well as Canada Revenue Agency, I have been authorized to propose a settlement on a without-prejudice basis,” the letter from the department’s Civil Litigation and Advisory Services says.
In a nutshell, “without prejudice” means the government isn’t admitting to any fault in this matter, only that it wants to make this case go away. Could it be because giving Chaput his day in court might open a Pandora’s box?
There is a catch. Although the government is crediting him for the exact amount his accountant says he lost in his child tax credit and GST rebate, it is treating that payment as taxable income, which means he’s still out about $300.
But Chaput won. He isn’t surprised. “To me, it was just plain common sense,” he says.
That’s what’s bothersome about his story. Why does it take the involvement of three government departments over a time span of five years to settle a four-figure dispute that any reasonable analysis would conclude is about common sense and fairness?
How many other farmers find themselves in the same boat, but give up due to bureaucratic fatigue? Moral hazard cuts both ways. [email protected]