Finance Committee on March 1st, 2007

[John McCallum, Liberal, Markham—Unionville, ON]

When you get the directive from Finance as to...I still don't really understand how you're going to determine whether, for example, yoga is in or out or ballet is in. Are they going to have a list of a thousand different activities, yes or no, for each of them? Do you go out there and audit to make sure it's truly yoga instead of ballet? How does one administer all that?

[William Baker]

Mr. Chair, as I said earlier, the specific activities that would qualify are still being worked on with the tax policy folks in the Department of Finance. I can say that we would not audit this type of activity. We would seek to get a determination to clarify which activities qualify, and as long as the taxpayer can provide evidence of payment, that would satisfy us. I can't image us doing much more.

[John McCallum, Liberal, Markham—Unionville, ON]

Just to give an example, what if ballet's okay and square dancing isn't? If somebody claims ballet, how do you know it's not really square dancing? Wouldn't you at least have to have random checks?

[William Baker]

In a situation like that, unless we had information to suggest that the individual was attempting to mislead us or was forging receipts of some sort, we would normally take those on the value for what they're presented.

[John McCallum, Liberal, Markham—Unionville, ON]

You must breathe a sigh of relief when you come to broadly based income tax cuts that everybody gets.

Thank you, Mr. Chair.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. McCallum.

Mr. St-Cyr.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Thank you, Mr. Chairman.

Earlier, Pierre spoke about payments to private collection agencies pursuant to section 17.1 of the Financial Administration Act. The amount in question totals $18,503,000.

I believe the money collected by the agencies on behalf of the Canada Revenue Agency does not go to the CRA, but rather to Human Resources Development Canada. At least that's my understanding. Regardless, the money does not end up in the CRA's coffers.

That being said, I would imagine you evaluate the amount of money recovered, if only to ascertain if the process is efficient. Can you tell me if this process is efficient and if so, how efficient? Can you tell me how much money has been collected by these private agencies and turned over the department in question?

[William Baker]

Perhaps, Mr. Chair, I'll make one comment and then I will ask my colleague, Mr. Ralston, to respond further.

This agreement with the private collection agents is strictly with respect to outstanding student loans. We do not use private collection agents for other types of activity. This is work that was transferred to the Canada Revenue Agency a year or so ago from HRSDC.

Those people get paid as a contingency, so by definition, if they receive a certain amount of money the government would have recovered more than that in terms of receipts. The specific amount I'm quite certain we do not have with us.

I don't know, Jim, if you could provide any more precision on that.

[James Ralston]

We could find out the amount by inquiring with our colleagues in HRSDC. It's just that, as I said earlier, we have not been asked to do the accounting in this situation. The accounting is still done by the other department. I am quite certain we can obtain the information, but because I don't keep it in my books, I don't have that with me here today. But it's not a question that doesn't have an answer; it does have an answer, and we could obtain the information for you.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

I'm merely trying to get a grasp of the situation. If I understand correctly, handling student loan collections is a new task assigned to CRA.

Why must you call upon private collection agencies to carry out this task? Are you contractually obligated to do so? Is this a regulatory requirement? Do you find it's easier to contract out this work?

[William Baker]

Mr. Chair, the private collection agencies were already performing this function for Human Resources and Social Development Canada. When the transfer came to the Canada Revenue Agency, which included the people in that department, they were using private collection agents at that time. That practice continues to this point. It would be difficult for me to speculate whether over time that would continue to be a good business practice for the government or whether there may be a point at which we would rely on our own collections workforce. It's too soon to tell.

[The Chair, Conservative, Brian Pallister]

For committee members' information, we'll return, of course, in a couple of weeks' time. On Tuesday, March 20, we'll deal with the two private members' bills that have been put off. We got an extension on those previously, one from Mr. McTeague and the other from Mr. Watson. On the 22nd, we'll commence with panels on ATM and electronic payment fee issues.

I would ask committee members and staff to note that we'll need witness suggestions by March 10 at the absolute latest.

Thank you.

We'll continue now with Mr. Wallace.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chairman.

I have two quick questions, just so I completely understand.

My opposition friends have been talking about certain things you've listed here that they didn't like in the budget. I don't bemoan that; I understand they didn't like them. But the budget actually passed. I think it was on a technicality, in a sense that it passed relatively unanimously in the House. But it did pass, and we have to implement it. Would you not agree?

[William Baker]

Mr. Chair, it goes without saying that we administer acts of Parliament and do our very best to do them justice.

[Mike Wallace, Conservative, Burlington, ON]

I want you to check my math for me. I have seen supplementaries on other committees I've been on. Don't get me wrong, these are big numbers--big numbers--but if I have it right, your gross estimates are $3.5 billion, rounded up, and 10% of that is about $315 million. Today you're asking for $35 million, and by my math that's about 1% of your total budget. If everybody came to me and told me after a year that there has been a budget change and the difference is only about 1%....

Do you consider that to be a reasonable request, and are you satisfied with your review of the numbers on this?

[The Chair, Conservative, Brian Pallister]

We all wait with bated breath.

[Mike Wallace, Conservative, Burlington, ON]

So it was a loaded question, but it made the point.

[William Baker]

I would just say two simple things.

One is that this is simply to address those matters that are incorporated in the budget or in other government announcements that we're charged with implementing. Are they reasonable? I rely on the system. There's a terrific system of scrutiny. We cannot just go forward and take what we would like in support of budget measures. My colleague, Jim Ralston, described the process with the Treasury Board.

Also, we work with the Department of Finance, because before a budget measure is announced, part of the consideration is the administrative cost of doing it. We have a lot of experience doing this, and I think our record in delivering in accordance with our forecast is really quite good.

[The Chair, Conservative, Brian Pallister]

And we're part of that system of scrutiny as well, Mr. Wallace.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chairman.

[The Chair, Conservative, Brian Pallister]

We'll go to Mr. Pacetti.

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

It's like asking my wife if a 1% increase in the budget is okay. I think she'd correct that as well.

I just want to make a quick comment on your last comment. When we had the Canada Revenue Agency telling us about the estimates and new budget measures, what we were told was that they weren't sure and that this analysis is always done after the budget. Now you turn around and tell us something different. I have a problem with that.

I just want to focus on two quick questions, because my time is limited. For these new budgetary measures for 2006, will the agency have any additional costs for next year?

[William Baker]

As I mentioned in one of the earlier questions, to the extent that a measure.... For instance, if you introduce a new tax credit, that represents some additional workload in perpetuity. If it's an additional line on the return, we need to capture that information, and it adds somewhat to the complexity of the processing system. But it's not as much as in the first year.

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

Okay. Only because—and I get back to the GST—when we asked the question regarding GST, your estimates were based on two-year estimates. That's why I'm asking if there's anything in the 2006 budget that's also going to come forward that's going to bite you.

In the moneys already allocated, in the $2.7 billion, wouldn't we already have appropriated some moneys for the 2006 measures? Because you would have seen these changes come forward, would you not?

[William Baker]

No. It would be improper and presumptuous for the Canada Revenue Agency to assume budget measures prior to the fact.