Finance Committee on June 12th, 2006

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Just to follow up on that, if a taxpayer has been unfairly treated, if there's been an element of harassment or unreasonableness, how is that dealt with internally? Is the agent, the employee of the agency, reprimanded, or is it looked into? What happens?

[Michel Dorais]

The distinction I'm trying to make is that there are two different kinds of issues here. One is a substantial issue--you've been assessed; you disagree with the amount. And there's a very elaborate system for that. The other one is when someone feels they haven't been treated well. There is an existing taxpayers' bill of rights, which was introduced years ago. We're looking at it with the minister now, reviewing the elements of it.

Every single complaint is investigated within the agency, and disciplinary measures are taken.

Our corporate culture on this is reflected I think in one of the recent internal reorganizations we've made where we brought together taxpayer service and collection, simply to illustrate that our relationship with the taxpayer is one of service to start with. As the service is delivered and if there is resistance in paying taxes, then the means escalate to the collection service. But we never start with a taxpayer by making a determinate collection action. We always start from a service perspective: how can we help to put things back in order?

So that's the culture.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Can you give me some idea of how many reprimands might be issued in a 12-month period? Is this substantial, or is it just a pro forma thing? Canadians will be wanting to know whether this is a process with teeth or whether it's just an exercise where it appears there is a stern talking to, but really there isn't.

[Michel Dorais]

Let me ask Mr. Ralston to comment on this.

[James Ralston, Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency]

I can't give you the statistics. I don't have them with me. But just to speak a bit about the process, we do have a capability, within the agency, to review any allegations regarding conflict of interest, or any sort of misconduct, or non-compliance with any of our policies on the part of an employee.

So we do have a capability within the agency to investigate, and then we render a conclusion on the nature of the allegation and whether it is founded or unfounded.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

But capability is not delivery, right? I want to know specifically what actually is done.

[James Ralston]

After we complete the investigation, the results are turned over to the manager of the employee. A discipline may be given out, according to a discipline policy we have.

We do keep statistics on that process, but unfortunately I don't have them with me. But that is the process.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. Ralston.

Mr. Christopherson, your round, for seven minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you kindly.

Thank you all for being here. It's good to see you again. We've been through this a couple of times at public accounts.

I want to begin first by putting on the record that in 1996, the government announced that the three objectives for the new organization were to: “provide better service to Canadians”, “become a more efficient and effective organization...”, and to “establish a closer partnership with provinces and territories”.

Your department provided this report. In the introduction page of this, you say:

The Report is designed to help parliamentarians understand the government’s objectives in putting the Agency in place, the general scheme of the Act, and its accomplishments over the past five years.

What I want to raise with you is the difference between what you say in this report and what the Auditor General has found.

And I know you're bringing her in separately, but some of these facts still pertain, Mr. Chair. I'm doing this for the sole purpose that this document, if it's meant to be a help to parliamentarians, should be a reflection of the reality within the agency and not just a spin document. That's the premise of why I'm asking these questions.

So to put some colour to that, on page 9 of your report it says that the act,

...has been implemented in a responsible manner that fully observes both the intent and the letter of the legislation.

On page 237 of the Auditor General's most recent review, which is only a few months old, she said the agency,

...approach to assessing files for risk continues to lack sophistication and has major weaknesses that impede the timely collection of tax debts. Further, the Agency still lacks information needed to manage its collection of the tax debt effectively.

Your document, on page 9, states:

...the fundamental transformation of the Agency’s human resource and administrative regimes also served as the essential ingredient in enabling the Agency to meet the third of its objectives: improving service to Canadians.

On page 245, the Auditor General, says:

We found that the Agency does not have a full understanding of the composition of the tax debt and why it is growing.

She further points out, on page 256:

The number of accounts that collection officers maintain in their inventories varies between 15 and 300.

Your document, on page 60, says:

Its risk-assessment processes enable it to target compliance activities towards areas of highest risk and to shift resources to these key areas.

The Auditor General, on page 252, where there are three bullet points, states:

The automatic risk scoring of delinquent accounts was ineffective because the risk assessment was limited mainly to the outstanding balance and the age of the account; other important risk factors either were not considered or did not weigh heavily in the risk scoring.

The risk scores were rarely updated or used to prioritize workload.

There were no profiles of tax debtors for use in modifying basic collection strategies to improve recoveries from debtors who posed a high risk of non-payment.

I have more, but I don't have enough time.

I would also ask the clerk, while you're beginning your response, to circulate--

[Garth Turner, Conservative, Halton, ON]

I have a point of order, Mr. Chairman.

Is this a speech, or do we actually have questions that we can get some information from? He hasn't asked any questions yet. How long does he have, six minutes?

[The Chair, Conservative, Brian Pallister]

Mr. Turner, you don't have a point of order.

Mr. Christopherson, please continue.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair. I appreciate that.

Are you done?

[Garth Turner, Conservative, Halton, ON]

Yes.

[David Christopherson, NDP, Hamilton Centre, ON]

Good. I appreciate that.

[The Chair, Conservative, Brian Pallister]

Mr. Christopherson, direct your remarks to the chair, please.

[David Christopherson, NDP, Hamilton Centre, ON]

Yes, sir.

The document I want circulated, the clerk now has. I bring it to the attention of this committee because it merely points out that it was a unanimous motion at committee, so it included government members. And I quote:

That the Canada Revenue Agency report to the Standing Committee on Public Accounts by September 30, 2006 on the status of the Agency's 2010 vision plan and that the Committee requests the Agency to provide a detailed action plan including performance indicators and a timetable for completing its 2010 vision and, provide the Committee with regular progress reports.

I would just say that it passed unanimously because the committee was not satisfied with the answers to the Auditor General's reports. And yet I have this document in front of me, which I've just quoted from, which to read it you'd swear that everything was just wonderful.

So either this is a spin document, and let's call it that, or it very much misses the mark as an operating tool for this committee.

I think I've backed up my concerns. I leave that with you. And please respond in any way you feel comfortable.

[Michel Dorais]

If I may comment on that, there are two things. First, I think, Mr. Chairman, that the member is confusing the Income Tax Act with the CRA Act. This report comments on the Canada Revenue Agency Act. So that's point number one.

Point number two is about audits. And I would encourage the committee to ask the Auditor General what she thinks of the agency and what she thinks the agency has achieved in its first five years of existence. With the internal audit and the audits from the Auditor General, I think we accumulate something in the order of 135,000 hours a year of audits within the agency. We live and breathe through audits. And to be honest with the committee, when an audit report finds nothing wrong, it's a big waste of money.

So we welcome the comments of the AG. She's helping us in building a stronger agency. We did not disagree with any of the recommendations in her last report, and in fact we're already gearing up to implement everything she has suggested. These kinds of reports are extremely helpful.

On the agency per se, the document you have in front of you, which we would like to hope is as factual as it can be, has been prepared by the agency. It hasn't been prepared by the Auditor General, but I would encourage the committee to ask questions of the AG on that report. She has commented numerous times on the agency and has essentially said that the agency has one of the best systems of reporting to Parliament and provides parliamentarians with the most accurate information.

Of course, not everything is perfect. You will hear from the unions about the recourse in the staffing process. You will hear from the AG, as the member has pointed out, about some of the audit. If everything was perfect, it would be a wonderful world, but the agency has made enormous progress. I think what we've been saying to the committee is that five years has yielded incredible results, and we believe, from a management perspective, that another five years will confirm that the model Parliament chose in 1999 has the potential of bringing amazing governance results in the public sector.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. Dorais.

Madam Ratansi, ask your questions. You have five minutes.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

I'll ask a quick one.

In your report you say “develop closer partnerships with provinces and territories”, and you say you've matured into a truly pan-Canadian organization. Could you tell me how many provinces and territories are your partners? How many do you do business for or do collections for?

[Michel Dorais]

We have partnerships in every province of the country. We have clients in all provinces except the Province of Quebec, which collects its own income tax. For all the other provinces, we have agreements on collection, and also on the administration of benefits. They're less visible activities, like the $400 Alberta rebate, which we administered under contract with Alberta. We're doing some work as well for most of the provinces.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

In 2004 or 2005, the federal government and the Government of Ontario were engaged in discussing a single collection for corporate tax. Could you tell me the status of this? How close is CRA to finalizing the deal with the Government of Ontario? And is this a priority going forward?

[Michel Dorais]

It is certainly on the books. I have to say to the committee that in that case--an agreement between the federal Minister of Finance and the Minister of Finance of Ontario--we are there as one party to the agreement, because we would have to deliver it. From our perspective, technically the discussions are proceeding very well, and we hope the two ministers of finance will reach an agreement very shortly.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

As the critic for National Revenue, I get a lot of calls from different ministers for small business, and so on.

One of the concerns was expressed by British Columbia, that there was a deal with CRA in terms of performance measures--because according to the agreements that you have with your partners, British Columbia is the largest, and I don't think Alberta, Quebec, and Ontario are party to that. Could you tell me where you're moving with performance review and how you are meeting your clients' needs when they have some issues with the way you perform?

[Michel Dorais]

In fact, I will ask Mr. O'Connor, who was in British Columbia not too long ago, to comment on where we are at. I think relationships are good.

[Stephen O'Connor, Assistant Commissioner, Corporate Strategies and Business Development Branch, Canada Revenue Agency]

We have just concluded a service management framework agreement with the Government of British Columbia. We're now working on the actual service parameters of that agreement. We're expecting that we can conclude those certainly by this fall at the outside.

Relationships with provincial officials have certainly been very positive over the last few months, which in fact included a meeting we had last Thursday with the senior revenue officials of all provinces, including British Columbia. It had a very positive outcome as we discussed parallel tax administration issues there. As I said, it was a very positive, collaborative meeting.