Finance Committee on June 12th, 2006

[William Baker]

I think the point is worth clarifying, and it relates to the earlier question as well. The tax collection agreements under which we administer the tax regimes for provinces, be it on corporate income tax or individual tax, are all treated the same way that way. The province does not have to pay for us to do that, because, as the commissioner has pointed out, there has been a longstanding view—and I think a correct one—that the public policy benefit of a single tax administration is so beneficial to individuals, businesses, and the central governments of the country that it's worth the price of administration to do that.

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

When you streamline and harmonize the system, you have efficiencies. In those efficiencies, who is the beneficiary? The central government or the provinces?

I think that comes back to the question of the one-stop shopping, and why CRA was not participating, or in participating there was some push back from the unions. Is it true or false? Am I misinformed?

[Michel Dorais]

On the benefit, there is a huge saving for the taxpayers in the consolidating of this. There is also an efficiency saving. As I said earlier to the committee, all the growth of the agency has been financed through efficiency savings within the agency. We certainly hope that when we sign an agreement with a province and we collect either a harmonized sales tax or a corporate tax, provincial and federal, we can realize economies of scale there, and we benefit from that.

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

Fair enough.

I only have a few seconds left, so I'm not going to ask another question.

[The Vice-Chair, Bloc, Yvan Loubier]

Thank you, Ms. Ratansi.

Monsieur Dykstra, for five minutes.

[Rick Dykstra, Conservative, St. Catharines, ON]

Thank you.

Mr. Chair, I don't think I will take my five minutes, but I do have a general question.

This is the first time I've had a chance to listen to all you folks present and speak with respect to the agency and its existence for the last five years.

Some of the priorities that you have outlined and indicated in both your report and in your responses today and some of the facts or some of the issues outlined in the auditor's report aren't necessarily similar. I take what you said about needing to prioritize in terms of the direction you're going in, albeit those issues are as important as one is to the next.

There is only one question I would have. As an organization, if you had three priorities that you were going to be focused on for the next 12 months and you came back here and were asked about them, what would those three priorities be?

[Michel Dorais]

I think it would be focusing on our core capacities. I think the agency is always at risk. Because we are good at certain things, we're always at risk of spreading ourselves in all kinds of directions. We are good at collection and benefits administration in large volume or for the benefit of government clients. That's our core business, and I think we really need to keep our eyes on the ball. That would be priority number one.

Priority number two is maximizing the use of the particular governance model we have. I would venture to say that we have not, over the first five years, taken as full advantage of the private sector and applied this to our organization as we could have. This is why we came with the recommendation that we need some more time to really make that work to a peak.

The board of management has evolved tremendously over the last year, and it has had input more and more into the management of the agency, and we're starting to see some results.

The last element is to look at maximizing the use of the capacity we have throughout the country. We can grow the business in areas that we're already in; we can solicit new business. We have additional capacities in some places we can use to deliver programs on behalf of governments across the country, so we're looking at ways to maximize that. Those would be my three priorities.

[Rick Dykstra, Conservative, St. Catharines, ON]

I have a quick follow-up to that. I need a comment very quickly. The board versus management--I wondered, you said in the last year it has really developed rapidly and has become a lot more efficient. Could you just quickly expand on that?

[Michel Dorais]

For example, the board gave itself charters for all the committees. It passed a resolution to participate in the performance assessment of the CEO and the COO. It is developing a major project tracking system, and it has an audit committee, of which I'm not a member, as management. It's strictly composed of private sector individuals nominated by the province and the federal government. There are no officials there. It meets in camera with the auditor, without us present in the room, so they can really question the internal auditor.

All of these elements are new things that have happened over the last year. It is very innovative in the public sector environment.

[Rick Dykstra, Conservative, St. Catharines, ON]

Thank you.

[The Vice-Chair, Bloc, Yvan Loubier]

Thank you, Mr. Dykstra.

Mr. McKay, you have five minutes.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Merci, monsieur le président.

I want to ask you about the issue of clawbacks for the purposes of calculation of seniors' income. If I'm a senior receiving OAS and I receive a dividend of $100, the clawback, I believe, is treated at $125. I think that's correct. If I receive $100 cash, it's treated as $100 cash income, but for purposes of a dividend it's the gross-up amount of $125. I'm given to understand that in the budget of 2006, that $100 is now going to be treated as $145 for the purposes of clawback.

The first question I have of you is on dividends. Why, for clawback purposes, is a $100 dividend treated as anything other than $100? Second, for the purposes of this budget, is it true that the clawback provisions have increased effectively from $125 to $145?

[Michel Dorais]

Thank you, Mr. Chair.

I would have to ask for some help from my colleagues, because I don't have the technical background to answer the question.

[A voice]

It's a tax policy question.

[John McKay, Liberal, Scarborough—Guildwood, ON]

I'm not sure it is actually a tax policy question, because that's the usual dodge. It is an administrative issue. I just want, first, to confirm the truth of my analysis, and second, to find out why you folks pick the $125 over the $100, or the $145 over the $100. There has to be some rationale.

[Michel Dorais]

Mr. Chairman, the question is very clear, but we don't have any technicians who could answer it. With your permission, I'd like to call on our colleagues from the Department of Finance in order to provide the committee with a quick answer.

[The Vice-Chair, Bloc, Yvan Loubier]

All right. You can give us the results of your analysis next week. Thank you.

Mr. Boshcoff, you have five minutes.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Merci.

I'll come back to my earlier round of questions in terms of cost-benefit analysis between jurisdictions. Do you actually have an A-level intensity of Calgary, Vancouver, or Toronto accommodation, or a differential between Ottawa and, say, a Lethbridge, a North Bay, or a Quebec City--that type of thing? Can you actually define the cost of operations between those sizes of centres?

[Michel Dorais]

I don't know. Jim, do we have that?

When we do specific projects, we certainly take some of the things into account, but I don't know if we have that.

[James Ralston]

You would be referring to the total cost of operating--salaries, everything. I don't have that information readily at hand. In our accountability documents we normally present, in terms of programs and activities, something like a detailed organizational unit. We would have to do a bit of research to get that information.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Okay. The question was whether you can or do, and that is how you do it.

If we're not experiencing much walk-in traffic and those kinds of things, the tasks at hand can be performed almost anywhere in an electronic age. In fact, my file would be available for an audit just about anywhere in the country. Someone could perform it in Labrador as well as they could in Winnipeg or something.

I ask that costing question: have you determined what you can save by not being in the intense downtown, in an electronic age in which you don't have to fly staff to be physically present at meetings? Can you actually compute the cost benefits to being in regional areas for an operation of your size?

[Michel Dorais]

I'm not sure if we do it on a systematic basis throughout the country, but every time we have a project and we have options of locales for the centre, that's certainly a factor that enters into the decision. In fact, we made some decisions. We relocated one of the compensation centres to Winnipeg, for example. We've got the GST and the rebate in Summerside, P.E.I. For each of those, a study determined where it made more sense.

It's a combination of where the staff is, whether we've got capacity. We have tax centres, as you know, in seven major cities, or minor cities--I don't know how to qualify them, but cities in the country. So when we have free capacity, obviously, there's an advantage in putting some of the work there. That's what the whole geography of work initiative is all about, putting the work in the right place with the right people.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Probably, diplomatically, calling them “smaller communities” might be—

[Michel Dorais]

Thank you. That's what I meant.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Respectfully submitted. Thank you.

Two quick questions. Are you aware of underused capacity around the country?