Finance Committee on June 21st, 2006

[Carole Presseault]

Before asking your question, you spoke about the conflict of interest facing members of our association in that they provide professional service to their clients, and benefit from a very complex tax system. Mr. Colby referred to this as well. However, as a professional association, we do have some responsibility with respect to the public interest. That is the very basis of a professional association.

In all the pre-budget presentations we have made in the last five years — and Mr. Colby referred to them — we recommended a comprehensive reform of the Canadian tax system. That is not the subject of your proceedings today, but we very much look forward to appearing before you again as part of the pre-budget consultations so that we can make this recommendation again this year. The system is very complex, and that is not in the public interest.

[The Chair, Conservative, Brian Pallister]

Merci.

Monsieur Turner, you have a couple of minutes, sir.

[Garth Turner, Conservative, Halton, ON]

Can I ask you quickly, when you talked a bit about your dual role, serving your client and also serving CRA, what exactly are you required to do in order to meet the requirements of CRA?

I would ask that you give a really basic answer, because I have a follow-up.

[Everett Colby]

In 1989 I moved to Canada. In 1990 I joined the CGA program and I became an accountant. In 1991 I became a quasi-tax collector, with the introduction of the GST. In 1998 I became a quasi-auditor for the government, due to the civil penalties and having to double-check everything my client does. In 1999 I became a member of the RCMP, with the money laundering issue.

I don't know if I'm James Bond or what, but I really don't feel like an accountant anymore. While there's no direct legislative authority that says I have to act in a particular way, the penalty situations and the professional obligations I have call for me to ensure that our clients, no matter who they are or where they are, comply with the act. Maintaining a Westminster principle, they do have a right to structure their affairs so as to pay the least amount possible.

[Garth Turner, Conservative, Halton, ON]

All right. So I pay you $2,000 to do my taxes; I get audited, and I'm coming to you and saying, “Everett, I'm in a tough place here.” Who do you serve?

[Everett Colby]

I serve you.

[Garth Turner, Conservative, Halton, ON]

But you also serve the CRA at the same time, right?

[Everett Colby]

Serving the CRA in terms of the civil penalties means that if I have done my job properly in my initial service to you, then I'm not going to be concerned about being assessed with civil penalties. But if it is a grey area, a matter that's subject to judgment, and the CRA disagrees with us, that's what could potentially put me in a conflict of whether I'm serving the CRA or my client.

[Garth Turner, Conservative, Halton, ON]

Do you believe that this committee, or somebody, should be looking at the potential conflict of interest situation in which our legislation has effectively put all the people in your profession, or is everything hunky-dory?

[Everett Colby]

I was actually the expert witness for our association in dealing with civil penalties, and we hashed that out for months. We're beyond that; we've changed our code of conduct to allow us to try to avoid those situations, but that's an inevitability.

[The Chair, Conservative, Brian Pallister]

Thank you.

I'm sorry to interrupt this line of questioning; it's interesting.

Mr. Colby, I'll give you just a couple of minutes. If you'd like to make some brief closing comments, you're welcome to.

[Everett Colby]

We don't want our comments to be misconstrued that any particular individuals, whether members of our profession or not, are not doing their job. My impression, when reviewing the CRA Act and what it tried to accomplish for the agency, in becoming an agency, is that I think there's a lot of area for improvement. They have done some good things. Their introduction of a lot of the electronic-based things is the way business is moving. I call that window dressing. Now they need to start to look at the infrastructure and the foundation that supports all that, and make sure everything is synchronized, because that seems to be where there are difficulties and problems, not just up and down but across the board from area to area.

[The Chair, Conservative, Brian Pallister]

Thank you very much for being here today. I appreciate your responses, and your presentation, and your time.

We'll now ask the representatives from the CRA if they would come forward and we'll continue our discussions.

Thank you, again.

[Everett Colby]

Thank you.

[The Chair, Conservative, Brian Pallister]

While the CRA officials are coming forward, I'll just offer an explanation to committee members. You'll recall that in the CRA's initial testimony they were asked some questions by some of the committee members. They did provide me with a response, I think on Monday or Tuesday, which I did not forward a copy of to you because I assumed they had also forwarded it to the clerk. However, such was not the case. We'll get that translated and get it to you as soon as possible.

I'll also make a point to Mr. Dorais that in future, when the committee requests information from CRA, we would like it to go through to the committee clerk directly, as opposed to through the chair. You can send me a copy--I much appreciate it--but we want the information to go to the clerk.

[Michel Dorais, Commissioner, Canada Revenue Agency]

Absolutely.

[The Chair, Conservative, Brian Pallister]

If you're ready, Mr. Dorais, I welcome you again. Thank you for being here with your officials. We appreciate your being here.

If you would like to make some introductory comments, please proceed.

[Michel Dorais]

Thank you very much, Mr. Chairman.

With your permission, I had some prepared comments, which I would like to table with the committee, but rather than speak from that, I'd rather speak from the heart and be very brief with the committee and tell you a few things at the outset of this hearing.

The agency, which was created in 1999, is truly unique. I believe it's at the cutting edge of public sector governance. I base that comment on 30 years of public service in 13 departments and agencies and two levels of government. I think this experiment, which brings into the public sector the wisdom and the business acumen of a corporate board and marries it to political direction, is absolutely unique. The agency is strictly operational; we hardly do any policy, we administer the policies of government clients of other departments. Our value proposition is that we can, and we're attempting to, streamline complex, large-volume operations for the benefit of taxpayers, business, and client governments. We also try to safeguard the integrity of the tax system. We think we can do that faster, cheaper, and more simply than anybody else.

It is true that it is an major challenge to be accountable to both a minister and a board of management and to government clients — we have 126 of them — and to taxpayers and also to the beneficiaries of the service.

This is a challenge I would like to share with the 44,000 employees with whom I have the privilege of working.

I would like to pay tribute to them publically today.

We're a young organization, and we're very far from perfect. You heard the testimonies, but we all share the same desire to make this model of governance work and prove that there's more than one way to manage public institutions. We'd like to believe that we could be allowed a little more time to pursue the experiment and that we would be allowed to continue to do things differently, so that we will continue to produce excellent results and do so in a transparent, professional way.

Thank you, Mr. Chairman.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Dorais.

We'll continue with the five-minute rounds to allow more members to participate, I hope.

We'll go first to Mr. Pacetti.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chairman.

I guess everybody knows that the first question is going to be about the article in The Globe and Mail today regarding the GST and the fact that there's been no communication to the clients regarding the reduction in the GST rate. I'd like to hear your comments on that, quickly if you please, because I have other questions.

[Michel Dorais]

To answer quickly, a number of measures were announced in the budget, and they were all implemented. All the acts of Parliament were implemented, and there is no special communication directed at one of these measures, with the exception that we worked with third parties and distributed information to business. It's available on our website and through our phone lines.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

I can help you with that. You do send out notices and GST returns. I think a little insert is not something that is going to require a lot of work. I don't understand why that couldn't have been done.

It leads me to other questions, because we're sort of recapping here and trying to close the circle on some of the other items.

We don't seem to have a real issue, or we haven't heard major issues as to why we should renew the mandate. But we have all kinds of other issues where we had the Auditor General, we had problems with the unions, and we had problems with some of the professionals who came and testified.

At what point are we going to rectify some of these problems? The Auditor General says, well, there's been some good improvement, but what was happening before? I don't understand. It's not as though it was a brand new company and we just incorporated five years ago. This was a continuation of a department that turned into an agency. Everybody we've heard seems to have one type of problem or not, and now we see it again; this is the proof. It's something so simple, where you're trying to inform the public, and the public is not being informed.

I'm not really sure if this is the venue where we should be talking about where the CRA is going. It's part of the mandate, so do we accept the renewal of the CRA mandate?

[Michel Dorais]

Personally, Mr. Chairman, I think with 25 million taxpayers and 44,000 people, there's bound to be problems. It's our job to manage the issues. I think what the committee may wish to look at is whether there has been improvement in the level of service and in the agency's efficiency.

I was listening to the previous witness, and 86% of the professional auditors in the last survey we did said that the service had improved—or was good or acceptable, I'm sorry. There is progress. We're progressing in the right direction, as one of the members said. I think this is what the committee should be looking at, not the individual problems.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

How do we evaluate this? Do we redo this again next year? Or is this just an internal CRA issue, not necessarily a problem, but a goal that we should set and say, okay, we're going to improve collections, or collections was an issue last week, and the Auditor General is going to audit your department based on human resources; or based on some of the unions having a problem, for example with the closing of service counters; or based on some of the others, such as the professional unions having a problem with staffing, promotion, and training?

How do we do this? Do we write a report or do you come back to us? I'd like to close the circle somehow and say, fine, we'll renew the mandate of the CRA, we think it's fine, and there is going to be an improvement. But you have to help us, because we're not hearing the same thing, and everybody who appeared before the committee on this issue had a problem. Do we put it on the shelf and say, okay, fine, we'll improve next year, or five years from now?

[Michel Dorais]

There are a number of things in the question, Mr. Chairman.

We do performance reports every year, and the Auditor General has qualified those performance reports as some of the best that are tabled in Parliament. So this is one piece of information, and Parliament obviously calls us regularly to examine the performance.

The constitutional legislation of an organization is the structure, the backbone, on to which you build. Our suggestion has been that changing the culture of an organization of 45,000 people is a major undertaking. The five first years were especially bousculés by an organizational change when customs left in year three of the organization. We are suggesting that another five years would be extremely useful for us to demonstrate progress in the performance.