Mr. Speaker, I would like to inform the Chair that I will be sharing my time with the member for Brandon-Souris.
I have the honour today to talk about the government's cost recovery and user fee policy. It is important that all Canadians have a better understanding of this policy. The 1995 budget announced that as a result of the program review, departments would introduce new or expanded initiatives to recover a greater portion of the cost of certain programs.
This government is committed to changing its approach to managing its activities and operations in total. In the context of program review, the government has been rethinking what its core functions are, how these core functions should be carried out and how best to finance the activities.
Cost recovery is one of many management initiatives that reflect this government's commitment to greater reliance on market forces, to improving the efficiency of its operations and effectiveness of its programs. Cost recovery and user fees involve having those who benefit the most or most directly from a government service or program pay a fair share of the cost of providing that service. It makes use of the user pay principle in which the user specific beneficiary rather than all taxpayers bears all or a portion of the financial responsibility for an activity.
On the face of it, this is viewed as reasonable, justifiable and fair to most people. However, cost recovery and user fees are often perceived as another form of taxation. It is important to recognize that cost recovery and user fees differ from taxes in their nature and function. Let us look at the way they operate.
Taxes are mandatory levies of which there is no quid pro quo for goods or services. Taxes bear no direct relationship to the use or benefits from public services or resources. Taxes are used to finance public goods such as national defence and security.
Cost recovery and user fees on the other hand are payments made by individuals and firms in exchange for some direct benefit. Generally they are levied when the people enjoying the benefits are a specialized or select group. For example, campers pay for entrance fees for camping in our national parks and Canadian travellers pay for obtaining a passport for travelling abroad.
The government recognizes that cost recovery is not appropriate for all of its activities. The government provides many programs for the benefit of all citizens, and others that for other policy reasons are intended to assist the recipient. These programs will continue to be financed from general tax revenues. Our view is that the introduction of cost recovery or similar charges for many programs or parts of programs could improve government administration and reduce costs to the general public without harming the public good.
The concept of cost recovery is not new. The principle is being applied increasingly by all levels of government both in Canada and internationally. Some federal departments and agencies have been charging fees since Confederation. Think of the fee for a new passport. That has been around since the early 1800s. Since only a limited number of Canadian citizens require a passport, it is appropriate to request a small fee for the service from a recipient of that privilege rather than have the general taxpayer pick up the entire bill.
The bottom line is that there are no free services. All government services come with a price tag, a price tag that either the recipient of the services or the general taxpayer must bear. The issue is getting the right balance. Let me provide some examples of existing cost recovery initiatives in this federal government.
Agriculture and Agri-Food Canada charges fees for the use of pastures and breeding facilities; inspection of seed, feed and food; and quality of inspection of livestock and grain. Industry Canada charges fees for issuing licences for non-broadcasting radio communication equipment; fees and charges for a broad range of activities such as inspecting equipment used for weighing and measuring consumer products; patents and trademarks; and metre inspections. Immigration and Citizenship Canada charges for immigration visas and citizenship certificates.
National Defence charges for the sale of goods and services to NATO, the United Nations and foreign governments. The Royal Canadian Mounted Police recovers most of its costs from provincial and municipal policing services. The superintendent of financial institutions recovers the costs of most of his regulatory activities from the banks and other financial institutions. Transport Canada charges for airport facilities and services provided to airlines, such as concessions, leases, landing and terminal fees.
It is important to emphasize to hon. members that the primary objective of the government's policy is not cost recovery. May I point to three objectives.
One objective is to ensure fairness by having direct users or beneficiaries pay a fair share of the cost of programs and thereby relieve some of the financial burden on the general taxpayer.
The second objective is to establish a market type mechanism to help assess which government activities should continue to be pursued and which should be scaled back, if not eliminated. In other words, can we still afford to provide a particular service and is there a market for it? If Canadians are not willing to pay a modest fee or charge perhaps it is no longer worth doing.
The third objective is to create a new relationship between users and departments. By this I mean that paying for an activity gives the user a more direct interest in how the activity is run, the quality of service provided and its cost. In turn, departments will become more attentive and responsive to the users' needs and expectations.
For example, the Atomic Energy Control Board collects fees for licensing nuclear facilities such as power reactors, uranium mines and mills. As a result of the fees, licensees are reviewing their licence requirements very closely and are cancelling unnecessary licences. Licensing costs have led some companies to review their use of nuclear processes and materials and to consider alternative and less costly processes. Atomic Energy Control Board licensing managers have become more aware of the total costs of doing their job which is contributing to an increase in the efficiency of their organization.
Canadians should also be assured that due process is used by departments and agencies when they introduce a cost recovery initiative or introduce user fees. Cost recovery initiatives are not simply imposed by departments. The government has established guiding principles for departments and agencies to follow when considering the introduction of cost recovery and user fees.
Here is a brief description of the process. The basic premise is the activities provided primarily to an independent and identifiable recipient beyond those that accrue to the general public should be paid for in whole or in part by those recipients. Implementing cost recovery or introducing user fees must be done in a transparent way that is open to public and parliamentary scrutiny.
Where fees are appropriate, they are to be implemented in consultation with users and under appropriate authorities and accounting mechanisms. Before implementing any fee, departments must assess the impact of charges on users and others affected to ensure there are no unintended effects. The decision will depend on factors such as the effects the charging will have on the clients' satisfaction with and their utilization of the activity and the impact on the program's objectives and effectiveness.
Interestingly enough simply studying the possibility of cost recovery can have some positive effects. For example, considering a new fee for a particular activity may lead to other important decisions because a good analysis may point to other management changes that should and could be made. It may be decided that people will not pay for a service if we cannot speed up delivery or reduce errors in providing the service.
Cost recovery can also improve the management of government resources by complimenting related management initiatives such as restructuring service delivery; for example, special operating agencies.
In today's tight fiscal environment there are not enough tax dollars to meet all the financial demands of government programs. Cost recovery and user fee revenues permit the government to provide and improve activities that it might not otherwise be able to afford, or to redirect the tax dollars currently being used to finance these activities or even to reduce the deficit.
The government is committed to providing Canadians with the best service possible within the resources available.
