Public Accounts Committee on June 6th, 2006

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

Ambitious. Okay, thank you.

[Sheila Fraser]

—rather than optimistic. So again, it goes back to, I think, our interest in seeing the sort of action plans and timelines going forward to ensure that those ambitious targets can actually be met.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

And Mr. Baker, how long until we take it from a more conceptual vision to a strategic plan?

[William Baker]

First I'd add that I think it's fair to say that Canada Revenue Agency has quite a history of dealing with ambitious timeframes and, on balance, has a good record of performance in meeting them.

As indicated by my colleague Mr. Proulx, we will be developing two things here. There's the response to the Auditor General's report, and then there is the agency's vision for 2010. The achievement of improvements across the full range of tax programs is something for which I'm accountable, and collections is a key part of that. So we're developing specific plans, and in fact some of them are being actioned right now.

The critical ones in the area of collections, certainly, revolve around a couple of things. First is to make sure we're organized to be as efficient as possible. The report, for instance, talks about call centres that have recently been set up to handle routine workloads so that every file doesn't have to go to an individual specialist in a tax office to action, and it talks about work on the integrated revenue collections project. Information is the fountain of creativity for everything we do. That's going to be absolutely central to our way forward.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

My colleague, I'm certain, is going to put forth a formal motion that you report to the committee. So one of the first reports I would like to see would be a strategic plan, so we know what we're going to hold you to account to. Is that in the short term? Is that 90 days away, six months away?

[William Baker]

We're working on that, and we would certainly respect whatever deadlines the public accounts committee presents to us in terms of reporting.

[David Christopherson, NDP, Hamilton Centre, ON]

I'm looking at September 30, but I'm flexible. I'm just trying to find a reasonable time this summer. I thought of doing it by the end of September.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

Okay, so by the end of September could you actually have a full-blown strategic plan around your procedures for a more robust information collection process, a way to actually get the numbers down for cash receipts versus tax, maybe even to the point where we'd see the 4% numbers?

[William Baker]

My colleague says we can do that, but he'd like to make sure you put some details...[Inaudible--Editor]

[Some hon. members]

Oh, oh!

[William Baker]

I'm interested in hearing them.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

Madam Fraser knows how interested I am in performance standards and outcomes.

Can you just help me with risk management? I can understand the age of the account, the risk of flight, and the risk of insolvency, but what else is going to affect the risk management of this tax debt not being collectible?

[Guy Proulx]

It's not just not being collectible. I think the issue here is that we are likely sending workloads to people we should not be sending to, because the account will find its way to resolution. The new generation of systems have memory, they recall, and they can go back and say, if that taxpayer paid after the second letter or the first letter, then we may not need to involve a lot of people in that, because that kind of profile will tell us that.

On the reverse, we send a lot of our accounts to collectors that probably are too complex for that level of collector. We should know ahead of time which accounts are the most complex, and we could send them straight to a more expert collector because the complexity of dealing with the cases will require roadwork, it will require an agent who has more training; it's a more complicated debt, a repeat type of situation. Those are the criteria we are looking to acquire in our data, so we can actually become more strategic in the way we use our resources and adopt strategies better suited to resolve those cases.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

I wanted to give you an opportunity to respond to something on the record, to deal with it in public. A news article, which appeared on May 22, 2005, reported that the mismanagement of the agency is the cause of the current level of the $18 billion in unpaid tax debt. According to this article, which is cited by a debt collector, it's a system plagued by inefficiency, one that rewards managers with financial incentives regardless of whether debts are actually collected, and a large percentage of CRA debt collectors at the north Toronto office are just sending letters and waiting because it's easier than contacting debtors on the telephone.

I wanted to give you the opportunity to respond to that.

[William Baker]

You're referring to the views of an individual, and I can tell you that the agency sets performance standards for all its programs. Individual senior executives such as Mr. Proulx are accountable in terms of achieving specific outcomes, both in terms of core production and strategic initiatives, as we discussed earlier--for instance, the integrated revenue collections project, and so on. So it's by no means as relaxed or as casual as suggested in that article.

[Guy Proulx]

I would also like to add to that. None of our collectors is rewarded on the basis of what they do collect versus not collect. They are not like private collection agencies and no part of their remuneration is tied to collection versus write-off versus not collected.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

The remuneration is strictly a salary?

[Guy Proulx]

Remuneration is negotiated as part of our collective agreements. If you are a PM-1, you get a PM-1 salary. You're trained to do that job, and you are asked to perform duties described in a job description, interacting with systems and taxpayers and things of that nature. None of our financial collectors is tied to bonus systems, tied to production. It's more quality than quantity, and we do not have quotas.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Sweet, Mr. Proulx, and Mr. Baker.

We are now starting round two with colleagues, and I'm going to move first to Mr. Bains for five minutes.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Thank you very much, Mr. Chair.

I have a question with respect to the $18 billion in tax debt. I'm just trying to put that in perspective. You indicated in your remarks that a significant portion of the $18 billion was attributed to new accounts and was collected. Do you have that amount? Do you know what that amount is?

[Guy Proulx]

There is churn in there. What we can tell you is that when you get into the age and balance of an account, a lot of these new balances are actually added to previous accounts. It's like a visa bill that you haven't fully paid, so they add to that and collect money on that. Then the question is which part of the debt you collected. Is it LIFO or FIFO? And you get into all of these accounting debates.

The purpose of the message is that every year we get about 440,000 accounts and we collect about $8 billion to $10 billion. The money we collect in one year is money that's associated with new accounts, older accounts, accounts that are five years old, four years old, three years old. It's whatever we can collect on all of the outstanding portfolio.

As one of the members pointed out, it's obvious that the younger the debt, the more success we have in collecting it. Those are debts that go to collectors. There are more debtors who pay on the basis of a letter. There are debts that are paid on the basis of a call from the call centre. Those never go to agents. What I'm talking about today is 4,000 collectors collecting about $9 billion to $10 billion a year.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

On the $18 billion, when you indicated that many of the significant new accounts have been collected during the course of this fiscal year, do you have a dollar value associated with that collected portion for the fiscal year 2005-06?

[Michael Snaauw]

Mr. Chair, we have a preliminary figure for 2005-06 that suggests we collected $9.5 billion through our field collections workforce. That maps with the Auditor General's observation of the prior year of $8.8 billion.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Based on that--and I'm not saying that number is inflated--the number subject to the new collections is approximately $9 billion to $10 billion, in light of the amount that was collected in 2005-06.

[Guy Proulx]

We could try to give you the exact figure of how much of the $9.5 billion that we did collect was associated with the year before, but then you're into the aging and the cycling of accounts.