Finance Committee on Dec. 7th, 2006

[The Chair, Conservative, Brian Pallister]

I'd like to welcome our guest, the Honourable Carol Skelton, the Minister of National Revenue.

Minister, thank you for being here. Thank you to your associates.

Committee members, I know you'll be pleased to note the presence today of our report, “Canada: Competing to Win”. As you see, it is lovely not only in its appearance but in its content as well. I look forward to hearing comments from all of you as you peruse the work that you've done over the last number of months.

Pursuant to Standing Order 108(2) and section 89 of the Canada Revenue Agency Act, this is the first five-year statutory review of the act. I understand the minister has some opening comments, and then we'll move, of course, to questions from the members of the committee.

Welcome, and over to you, Carol.

[Carol Skelton, Conservative, Minister of National Revenue]

Thank you very much, Mr. Chair, and thank you to the committee.

I would like to introduce the officials with me today. Mr. Michel Dorais is Commissioner of the Canada Revenue Agency. Also with me is Mr. William Baker.

I want to commend the leadership of the chair for undertaking this extremely important review. In the past ten months I have learned a lot about the mandate and the unique governance model of the Canada Revenue Agency.

Based on my experiences with the agency and my peripheral knowledge of the other government departments, I am quite confident in saying that CRA has been one of the most successful business transformations within the federal system. Since assuming this portfolio, I have witnessed the timely and efficient manner in which the agency implemented and now administers several important initiatives of Canada's new government. Notably, they include the 1% reduction in the GST and the universal child care benefit program. I would like to provide an overview of the unique features of the CRA Act that make this impressive track record possible.

Within the CRA Act, our agency was given a one-of-a-kind mandate. For example, the agency has independence and freedom from political interference. It has unparalleled powers that enable it to operate more like a business, bringing the strengths of both the public and private sectors together to improve services to Canadians. For instance, the act created an internal board of management, which ensures a more strategic, businesslike approach to running the agency. The board is responsible for overseeing the CRA's organization and administration and for managing its resources, services, property, and personal contracts. Its members bring both private sector skills and practices and a provincial perspective that strengthens the agency's administration overall. You will hear more of the CRA governance model next hour, when our chair presents.

As minister, I retain full responsibility and accountability to Parliament and to Canadians for the administration of tax and benefit legislation. I'm also responsible for the agency's activities under that legislation. The commissioner, the CRA's chief executive officer, is responsible for ensuring the day-to-day management of the agency under the board's direction and at my guidance.

A further improvement is strengthened accountability to Parliament, to reflect the special powers exercised by the agency, as well as strengthened accountability to the provincial, territorial, and first nations governments on whose behalf the CRA administers programs and services. The agency now reports annually to each of these provinces and territories.

Canadians can take pride in the confidence that provincial governments place in the CRA. For example, earlier this year, the agency delivered Alberta resource rebate payments to nearly three million Albertans. The Government of Alberta was very satisfied with the agency's service on this initiative, and other governments have noticed. We have recently signed an agreement with the Government of Ontario to begin administering Ontario's corporate tax, effective 2009. It is important, however, that CRA continues to be mindful of its need to balance services to clients with an open, cooperative, and fair approach to all taxpayers.

One of the questions I asked my officials when I assumed my role as minister was whether the agency was doing all it could to be an enabler to small and medium-sized businesses. Rather than continue with more than fifty advisory committees, I had officials focus on a results-based approach. I challenged the agency to find a way to reduce its paperwork burden on small and medium-sized businesses, so that these job creators can have more time to focus on what they do best, and that is to create jobs, not fill out forms. The result of my challenge was the establishment of the CRA-led action task force on small business task issues. This task force will recommend solutions and develop a framework to ensure that paperwork burden reduction becomes systemic within the agency. I look forward to receiving the task force's recommendations in the spring.

To be the best agency it can be, the CRA must maintain the integrity of the federal and provincial tax bases. It can best achieve this by building on the high levels of voluntary compliance within Canada's tax system. These compliance levels are forged and rooted in the confidence that Canadians place in the agency by virtue of its fairness, accountability, and integrity. Maintaining and building upon the trust that Canadians place in the CRA is a critical function for any Minister of National Revenue.

With this in mind and with the issue of the agency model in the forefront this afternoon, allow me to make one additional observation. While I'm a big supporter of the agency model, I recognize that it's not perfect, and sometimes the CRA's own strengths can highlight a weakness. Without question, there exists no federal government department that can deliver what CRA delivers with the same levels of competency, scale, and efficiency.

CRA's taxpayers are well served, but sometimes in our haste to meet these objectives, some dimensions of our interactions with them can be overlooked. What may be overlooked in the agency model is an independent channel for the average person or the ordinary business to access when they feel the agency has not fully responded to their needs.

Currently, taxpayers can file appeals for an adjustment, but these inquiries are only processed by the agency's employees. I should mention that these employees operate independently of CRA's program areas. While these employees are unquestionably professional in carrying out their duties, the public may perceive this appeal mechanism to be somehow slanted in favour of the CRA. Confronting this perception is an issue I take quite seriously. I have asked officials to provide me with a blueprint to improve the current avenues of rights and appeals that provide taxpayers and benefit recipients with an additional level of confidence in their dealings with the CRA.

Mr. Chairman, I'm hoping to have more to say about this early next year, and I would be pleased to come back to share my results with this committee. I am very much appreciative of this opportunity to speak to the members of the committee about the Canada Revenue Agency, and I thank you for your invitation. I would be pleased to take any questions that you or committee members have to ask of me.

[The Chair, Conservative, Brian Pallister]

Merci beaucoup, Madame Minister.

We'll begin with six-minute rounds.

Monsieur McGuire, welcome, sir. It's over to you.

[Joe McGuire, Liberal, Egmont, PE]

Thank you, Mr. Chair. I'd like to welcome the minister to the committee.

I just want to follow up on the visitor rebate program that's offered and processed out of the Summerside Tax Centre. Has the government changed its mind on dropping that program?

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

The GST rebate?

[Joe McGuire, Liberal, Egmont, PE]

The GST rebate.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

Minister Flaherty is in charge of that policy. As far as I know, he hasn't changed his mind.

[Joe McGuire, Liberal, Egmont, PE]

In that case, there will be job losses at the centre. I believe the Minister of Foreign Affairs said there would be no job losses, and I think you may have also. I know the representative currently in charge of P.E.I. said there would be no job losses there.

Since the program will no longer exist and the work will no longer be processed at the Summerside Tax Centre, how will there be no job losses in the centre?

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

I want to reassure you, Mr. McGuire, that the program is in full operation until the spring of 2007, and the centre will continue to process claims until the spring of 2008. The agency will make every possible attempt to place and train the people so that they can continue to be employed with the CRA. We're looking at every avenue possible to see what we can do with those employees.

[Joe McGuire, Liberal, Egmont, PE]

Since the program is going to be lost and bumping really can only occur within one centre, how are the other fifty full-time positions possibly going to remain when there are only five people possibly leaving there to be bumped or be replaced? You say they're going to be trained, but are you going to transfer another division into the Summerside Tax Centre? How would you actually save those jobs?

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

I would like to say to the honourable member that there are possibilities of all kinds of positions. When the Minister of Finance comes in with his new budget, we will look at all the things that we possibly can do to try to keep the jobs in Summerside. There could be a possibility of new programs being put there.

[Joe McGuire, Liberal, Egmont, PE]

Thank you.

You had a very congenial meeting with Mayor Basil Stewart, as I understand it from you and from him. He was expecting you down before Christmas.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

Oh, I'm just like Santa Claus. I might pop up at anytime.

[Joe McGuire, Liberal, Egmont, PE]

Are you going to go down before Christmas?

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

I am looking seriously at it.

[Joe McGuire, Liberal, Egmont, PE]

Thank you.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

You're welcome.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. McGuire.

Mr. Pacetti, please continue.

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

Thank you, Ms. Minister, for coming by. We have been asking for your presence for awhile, because this five-year review is a never-ending task. I think we're on a ten-year review, actually.

I want to discuss something that you're responsible for. I understand that you're not responsible for the GST rebate, but I understand that you're responsible for cutting the advisory committees. I know you referred to them in your brief.

What I have here is that the Canada Revenue Agency eliminated not just one advisory committee, but they included various ones like the charity advisory committee, the disability advisory committee, the pension advisory committee, the tax professionals advisory committee, and the Assembly of First Nations advisory committee. How is this area going to be run if they're not going to seek any advice? This doesn't make any sense. Are we looking to just save less than a million dollars here? It think that's all you're going to save.

In the end, how is CRA going to get any direction if they're not going to speak to the public? From all the hearings we've had to date, it seems they already have a bad reputation, so I just don't see how we're going to be able to recommend anything in our five-year review if, at minimum, these advisory committee boards are going to be eliminated.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

I would like to respond to that.

When I sat down and looked at the advisory boards, there were only three advisory boards that came from western Canada. They weren't spread out across the country the way I felt they should be, and they met, to me, not the right number of times per year.

I thought we would look seriously at redoing the whole program. The small business task force is a prime example of what we are doing now. We're seriously looking at ways that we can be innovative and get a broad scope right across the country, without costing the taxpayers a lot of money.

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

I don't mean to interrupt, but we're limited in our time.

We're not talking about the small business task force. If there is nobody from out west, you can always have somebody put on these advisory committees. If anything, we could even move them to Saskatoon. I have no problem with that. But the idea is that the issues are not going to come before the Revenue Agency. The charities advisory and the disability one, from what I understand, are still functioning, but without government subsidy. They're still answering the phone and they're still running.

I think it's from a lack of understanding or because there is some type of insensitivity regarding this issue. Can you just answer on charities, disabilities, and the pension advisory? I'm not even talking about the tax professionals. The tax professionals are pretty well concentrated in big urban centres like Toronto, Montreal, or Ottawa.

[The Chair, Conservative, Brian Pallister]

Mr. Pacetti, your time has elapsed. We'll ask the minister if she cares to—No response is necessary.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

I want a clarification, though, because there was a point put on—

[The Chair, Conservative, Brian Pallister]

Thank you, Madam Minister, but we don't need a clarification. If you wish to get a clarification in the second round, please do proceed to get that.

Mr. Paquette.

[Pierre Paquette, Bloc, Joliette, QC]

Thank you, Mr. Chairman.

Madam Minister, I would like to thank you because I had informed you about a problem in one of or Attikamek communities. Yesterday, we met people from your office, as well as from the Agency, and it looks like we're headed towards a settlement.

This situation revealed a rather worrisome state of affairs, meaning that in a community like Manowan, where people are illiterate—they speak French, but cannot read it—they are sent forms, but are unable to understand what is being asked of them, particularly as the documents they are asked to provide are not the sorts of things to which they have access. For example, they are asked for mortgage contracts, even though they do not own their houses, or even rent them. It is the band council that...

So I was wondering, perhaps along the same lines as Mr. Pacetti's question, about how the Agency could do something to take these realities into account. As it happens, 30 families had their food supplies cut off and they reacted when their cheques did not arrive. Would it not be a good idea to work more closely with the band councils? This question led me to wonder about the methods we use to deal with these people, who are first class citizens. I think that you agree with me on that.