GST Heating Rebate Fiasco:
Unplugged and Uncensored

Ottawa - Thursday, March 14, 2002 - by: Walter Robinson, Federal Director, Canadian Taxpayers Federation


Think back to October mini-budget, just before the last federal election. Part of the federal Liberals tax relief measures included vote buying in the form of a hastily cobbled together, relief for heating expenses (RHE), GST rebate scheme.




This scheme – or scam if you prefer – resulted in rebates going to dead people, prisoners, and non-residents. Now, documents obtained by the Canadian Taxpayers Federation (CTF) through Access to Information reveal the true extent of the bungling and ill design of this boondoggle.




Last March the CTF asked for


“all intradepartmental information including emails, letters, reports associated with the establishment of the Relief of Heating Expenses (RHE) GST rebate initiative … in addition, please also provide copies of all correspondence (in the same modes identified above) between Finance Canada and the Canada Customs and Revenue Agency concerning implementation, cost of and/or recipients entitled to receive the RHE.”




Just this week, almost a year later, a mere forty-one pages were delivered to the CTF. Half of these documents deal with artwork and messaging for information fliers pointing to the political nature of this rebate fiasco.




Even with this limited range of documentation, Ottawa’s haste to buy votes is apparent. It appears that there was no departmental correspondence before this initiative was announced in the October 18, 2000 mini-budget.




In November and early December 2000, Finance bureaucrats were scrambling to implement this scheme. Due to the election being called, an Order in Council was needed to authorize the payments and an exemption was sought to waive the requirement for those receiving “ex gratia” (read: freebies) payments from the Crown to be listed in the Public Accounts.




The documents show that the RHE was originally worded as relief “to ease the burden of higher energy costs.” But this was changed to relief for “higher heating expenses.” Using the acronym approach, one can only surmise that some spin-doctor figured out that “relief for energy costs” would translate into REC, pronounced wreck, so RHE was much more nebulous. In French, use of higher energy costs remained.




This is similar to 1995 when some genius figured out that plans for federal block funding transfer payments to be called the Canada Social and Health Transfer would read as CSHT – like fecal matter – so it was switched to CHST at the last moment. Of course, the provinces will tell you cut to the CHST still smells bad, but that’s another story.




On December 6, 2000, Finance officials estimated that the rebate would amount to five million individual cheques ($125) and three million family cheques ($250) for a total cost of $1.375 billion. But the Auditor General (AG) notes that the cost was actually $1.459 billion. Then again, what’s an error of $84 million when you’re trying to buy votes?



$1.2 to
heating costs

But it gets worse. On January 16, 2001, a Canada Customs and Revenue (CCRA) official did an interview on CJME radio in Regina and admitted that some of the $1.2 billion in RHE rebates will go to people who don’t even pay for heating costs. And in question period (QP) responses (January 18th and 24th, 2001), the government admits that clients who do not pay heating costs “can spend it as they see fit.”


Starting on January 31st, the RHE GST rebate cheques started to be mailed to some 8.6 million people. From the AG’s report, we know that at least 4,000 cheques went to non-residents, 7,500 to dead people and 1,600 were sent to prisoners.


But no one ever figured out that convicts would get cheques. The first inkling of this screw-up comes in a suggested QP response dated February 5, 2001. The RHE should have remained as the RHEC, because this is surely a taxpayer wreck.
  Walter Robinson
Federal Director
  Candadian Taxpayers Federation web site