Finance Committee on May 18th, 2017

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

What would be the trigger? We've obviously gone through an industrial revolution and Internet revolution, and people are saying that eventually maybe the government will be able to catch up with innovations found in other industries like the music industry. It has gone through a massive innovation process, which has totally changed the incentives. Some government services could go the same way if they were offered that way. What would trigger that?

I'm very concerned with what the Chair has said, which is that there will be no incentive to try to keep the costs down if they know there's a guaranteed CPI, which has nothing to do with the services they offer or the costs of what they offer. There may be some connection but not much; it's tenuous.

[Roger Ermuth]

From my perspective, I think you have to look to the good management and the work that the departments do in terms of engaging with their stakeholders. If you're a consumer of some government service and all of a sudden you're finding that it's now fully automated, you don't talk to anybody anymore, and there will be no other impact on the fees, there may be a reason. Maybe the technology costs just as much, and maybe not, but I think it would spark some stakeholder discussion.

Going back to the current regime, looking at what we currently have, right now fees are not going up. Yes, departments are still delivering the service. In some cases, though, the services are having to slip because there's only so much money that can be redirected from other program areas to continue to shore up the services that are being delivered.

My final comment, too, that maybe I should have mentioned earlier, is that some departments already have some legislation. For example, Health Canada already has a built-in inflationary indicator that wouldn't be subject to the CPI. One of the things I think we would encourage, where it makes sense, is looking at what the industry's doing, having discussions with the industry in terms of aligning how those fees would go up, and having open and regular conversations in terms of how you would manage where fees would potentially go down as efficiencies are found.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I think there's always a challenge because it's been well established that people's behaviour based on prices in the short term is not quite sensitive to a higher cost or lower cost. Over the long term, obviously, that's what really begins to change the game. That's where I'm really quite worried.

I understand your point about simplicity because sometimes government needs to be expedient. In some cases, some might argue that a high value of government is expedience. Again, we're also sensitive that, as parliamentarians, you're asking us to give that authority away and to change that dynamic over the long term. I'm just not convinced, but I do appreciate that the committee probably has other questions for you.

[The Chair, Liberal, Wayne Easter]

Mr. Ouellette.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

I want to get back to this idea of the actual cost. To mirror Dan's suggestion, imagine I'm an administrator and I have people under me who are offering a service. What do you actually include in the cost of that service? You could move up the chain of hierarchy, and you could start including someone's salary here, here, and here because this person spent 1% of their time doing that service, this person spent.... You know, the hierarchical thing. You add it all up, but as you move farther and farther up, you could increase the costs, perhaps exponentially.

What's the mechanism you have to prevent any abuses?

[Roger Ermuth]

One of the things we are proposing associated with this is a policy framework that would state a gain and provide some of the direction around what and how departments would engage with stakeholders around that. Existing processes are in place. Even though many fees have not increased for the better part of a decade, there have been discussions in the past between stakeholders and departments. I think the extent to which, as you commented, you go up the chain or further out in terms of some of the support, to what degree that actually supports the prompt delivery and so on, is really a discussion that departments need to have with their stakeholders. Again, the proposal would be to have that in the policy framework where they would have—

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Is there a complaint process?

[Roger Ermuth]

There is. Under the service fees act there still is an appeals process. In fact, it's changed a little bit, but it's more in terms of giving more time so there is an appropriate amount of time for a panel to be set up and review it.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Very quickly, how much does the federal government collect in fees in total across the country?

[Roger Ermuth]

In terms of fees they collect, in total.... This is based on rolling up information from the departmental performance reports, which may not include all fees because departments don't have to put it into their departmental performance reports because they're not covered by the User Fees Act. It's about $1.9 billion to $2 billion that's collected on an annual basis.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

Mr. Dusseault.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

This will be very quick, since I already asked my questions when we met at the last meeting.

You mentioned there are thousands of fees. For information purposes, can you say whether the fees include passport or citizenship application fees? The citizen application fees recently increased drastically by several hundred dollars. I only want to make sure all my constituents will be informed if the citizenship application fees increase annually. For passports, I think people also want to know whether the fees are included in the thousands of fees you mentioned, which will be subject to adjustment.

[Roger Ermuth]

Yes, both passport and citizenship fees would be covered by the service fees act. In terms of the escalator, I'm not familiar enough with the enabling legislation for them. They may already have built an escalator in there, in which case that portion wouldn't. But if they did not have that in their legislation, then the proposal in the service fees act would apply.

[The Chair, Liberal, Wayne Easter]

Mr. Fergus.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Thank you for your presentation.

Earlier, in your response to Mr. Albas, you mentioned that you looked at a number of options before deciding on the price adjustment option.

I simply want to know whether you can describe the range of options you reviewed before deciding to move forward with the price adjustment option.

[Roger Ermuth]

Sorry. I misunderstood the translation.

However, if I understood the question, you're asking me to specify the reason for all this.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

No. My question concerns the other options you reviewed.

[Roger Ermuth]

In terms of, again, looking at it, the pros and cons, we did look at everything. From more of an industry perspective, we tried taking a look at existing ones. For example, Health Canada has one that was built in. They put it in as a 2% escalator. We looked at the benefits of those. From my perspective, if I were running one of the programs, having an escalator built into my actual legislation, where I set it by something other than CPI, is the ideal. Whether we take a different basket of CPI or a different...we looked at all those things. In some cases, the pros and cons of all of those are that it fits better with certain segments of the service fees environment. In others, it didn't fit as well. I take the point in terms of it being an overly simplistic model by taking CPI; however, we actually did that intentionally again. We figured that this covered a broad basket of goods. It was something that people understood, including the potential users, whereas if we came up with some other type of mechanism or whatever...explaining that.

Quite simply, as well, in terms of the articulation of it in legislation, because we actually put it into the legislation, CPI is one thing that can be clearly understood. It's articulated specifically in terms of the wording, in terms of how StatsCan calls that inflation indicator, and whatnot.

Again, I guess there are other options, but my feeling, in conclusion on that, would that many of those other options fit specifically within a niche set of fees versus something that could apply across the full gamut of the thousands of different types of fees that exist.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Is there a sense that your government is losing money? How much money are we losing per year that we could recover by having this provision put into the legislation?

[Roger Ermuth]

That's a very difficult question to answer. What I can tell you, based on the information that's reported in the departmental performance reports, is that associated with the $1.9 billion that's collected, the associated costs are indicated at being around $3.4 billion. Now, you can't say that there's a gap and that we could increase fees by $1.5 billion; you have to keep in mind the whole private-public split. After a decade, in many cases, of not increasing fees, there's no doubt that the difference between what the government initially set out in terms of what they wanted, and the percentage of costs to recover, that gap, has grown. But is it that full $1.5 billion? I would say no. We will have to work specifically with the departments on what the number is. In fact, many of the departments that have bigger gaps are already looking at what and how they could look at their fees in terms of whether or not that spit is still valid.

[The Chair, Liberal, Wayne Easter]

Thank you.

Are there any other questions?

Do you know if there is any other place in the world where governments are attaching escalators for fees?

[Roger Ermuth]

Escalators for fees in other jurisdictions, in terms of the fees themselves, yes. In terms of the broader policy piece, like with the service fees act, which is really the administrative legislation that covers it, I'm not sure. What we actually have is a little more of a unique situation with the User Fees Act and with the service fees act in terms of actually having that in legislation. Most jurisdictions have some degree of policy coverage in terms of how fees should be generated and so on. Again, it's a mix. In terms of the legislation stage, I don't know that we've found anything exactly like that.

[The Chair, Liberal, Wayne Easter]

I have one last question. You're with Treasury Board, and you may or may not be able to answer this question. I come from an outlying area in Prince Edward Island. I've been around for a while in Parliament, and over the years I see that when there are cutbacks, it's the outlying areas that get cut, the people on the ground who do the work. Yet, the managing segment seems to increase in the bubble—that's Ottawa. Can you either get for us or tell us now how many managers there were for x number of employees 10 years ago versus what it is now, and how that compares to the private sector? I always see our adding managers, which are the highest cost, and reducing on the people who provide the service on the other end. Do you have any answers on that, or can you attain them for me? You're with Treasury Board. You might have access to that information.

[Roger Ermuth]

I personally do not have access to that information, but I can commit to taking the question back and working with my colleagues in other sectors in terms of looking at providing a response to that.

[The Chair, Liberal, Wayne Easter]

That would be great. I have no further questions.

A very deep thank you. I don't know how many times you came before this committee, probably five or six, before you actually got to deal with your division 21. Thank you both very much, and for your responses.

I call forward, then, part 4, division 18, the Office of Infrastructure of Canada. I would mention to committee members that we will have to go, at 12 o'clock to the person from Veterans Affairs, who is appearing by video conference from Charlottetown. We might have to depart from Infrastructure for a bit at noon while we hear from division 12.

With the Office of Infrastructure of Canada, we have Mr. Kuhn, director, Canada infrastructure bank transition office; Mr. Grover, analyst, Canada infrastructure bank transition office; and Mr. Campbell, assistant deputy minister, Canada infrastructure bank. We also have Mr. Fleming, chief of infrastructure policy at the Department of Finance.

Mr. Campbell, go ahead please.