Public Accounts Committee on May 27th, 2008

[David Christopherson, NDP, Hamilton Centre, ON]

Okay. Thanks. That's helpful.

I don't expect a detailed answer, but how might one go about measuring something that doesn't have a clear cost in terms of the time it takes or in terms of being value-added? You're probably going to say to me that this is our problem, but I'd like to hear how one even begins to do that. I really don't know. What are some of the procedures to measure something that is almost esoteric in nature?

[Clyde MacLellan]

Clearly, that is not an easy question to answer.

One way is to simply try to do some type of benchmarking that may be present in other jurisdictions, whether they be domestic or international, to see if similar fees are charged and what those fees may be. That's one way of looking at determining a value-based fee that is, as you say, somewhat intangible in terms of trying to determine how to approach it.

You could look, speaking in very broad conceptual terms, at what the market will bear. Sort of auction-type concepts are used somewhat in government to try to determine a value for a fee that is not otherwise easily determined.

Those are a couple of examples. They are very general in terms of how one can go about that. Obviously this is specific to the particular case you asked about earlier. That question will become even more complicated than it currently is now.

[Douglas Timmins]

If I could just add, the auction example is being used by industry right now in terms of spectrum and the licensing we did touch on, but there is further spectrum licensing they're doing now.

[David Christopherson, NDP, Hamilton Centre, ON]

Okay. Thank you.

Next, I want to get into the issue that has been touched on, which is the question of whether there's a deficit for consular service fees, and I'm a little unclear about the chronology.

The Auditor General's office went in and did the analysis. There was a response from the department, from the ministry, and if I'm reading correctly, there is still a concern on the part of the Auditor General that there is some disagreement as to whether the trend line is deficit or the trend line is surplus. Or did they answer?

What happened after the department answered in a way that was inconsistent with the Auditor General's original findings? Where do you go from there?

[Stephen Rigby]

I'm not sure that there's an inconsistency between the Auditor General's view and ours. I think, generally speaking, that the Auditor General said that we're not properly applying the right deductions to the gross charges to bring down to a net charge the amounts that are properly comparable to the fees. We agreed with that.

The only difference, and the reason you see two lines of presentation in the report, is that we suggested to the Auditor General that some of the costs borne by our consular officers abroad for passport services are properly consular fees and consular services, so we built those back into our calculations. You see a slight discrepancy in calculation. But fundamentally, there is no disagreement in the conclusion.

[David Christopherson, NDP, Hamilton Centre, ON]

Okay, we'll leave the “fundamentally”. We're in agreement. How much disagreement is there?

[Stephen Rigby]

I would defer somewhat to my colleague from the Auditor General, but I think you see two sets of calculations there. I believe the Auditor General has agreed with the calculations we made but has made the point that we should take steps to make some enhancements to our performance information capturing system before we reach conclusions on how we might adjust the fee.

[David Christopherson, NDP, Hamilton Centre, ON]

Can I hear from the Auditor General's side on that?

[Douglas Timmins]

There are two columns of calculations. We believe our calculation is a legitimate calculation on the basis of the time reporting system within DFAIT.

The recalculation by DFAIT was on the basis of a time allocation in the original approval of the fee. As Mr. Rigby has stated, there are some concerns as to whether the time reporting system is adequately capturing the time charges. Therefore, if those time charges were off, our calculation would be off. So the default was that we presented the second calculation as the one based on the original time study in 1993, and we believe in both cases they need to be looked at. The time study done in 1993 could be out of date, and the time reporting system may not be correct.

But in both cases, the point is there was a trend of surpluses on both calculations at least three years in a row, and the final year that brings it back into deficit is because of something that was unique, the one-time cost of Lebanon.

So I think the message is that there is an issue that needs to be looked at. Multiple aspects include looking at the time reporting system, perhaps doing another study of that, and finally, some consideration of whether they want to revisit entirely the basis of calculating the fee and the approval of the fee.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Christopherson.

Mr. Cullen, seven minutes.

I should point out that Mr. Cullen is the author of the User Fees Act.

Welcome to the committee.

[Roy Cullen, Liberal, Etobicoke North, ON]

Thank you, Mr. Chairman. Thanks to the presenters, and thank you for the indulgence of my colleagues.

I'm familiar with many of the aspects of Bill C-212, so I thought I'd come here.

First, I want to congratulate the Auditor General for taking on a review of this particular matter. It was overdue, and I am as frustrated as I'm sure many others are.

I saw the process as being more evolutionary rather than revolutionary, but evolution should have a pace to it as well. And I must say, I'm very disappointed in the way the government has responded. That's a general statement. Some departments are doing better than others, but....

I had a couple of questions. In the Auditor General's report, you say Bill C-212 does not apply to existing fees, it applies only to new fees or increases in fees.

I was surprised I wasn't included in your interview list when you did this review. Nonetheless, that's just an aside.

I know all the lawyers of the departments and agencies were briefing the deputy ministers or whoever they briefed to say it didn't apply to existing fees, which I debate. In fact, there would be lawyers who would argue it does apply to existing fees.

We know for sure that it applies to new fees and increases in fees, but I don't think it's as absolute as you say in your report, that it doesn't apply to existing fees. You're aware that following the proclamation of Bill C-212, Treasury Board came out with the guidelines to clarify in case there was any ambiguity about the application of Bill C-212 to existing fees. Treasury Board guidelines said that the word, the letter, the intent, the spirit of Bill C-212 applies to all fees; there must be performance standards, there must be accountabilities, etc., in reporting.

Presumably, hopefully, you didn't rely on legal counsel for the departments and agencies, because departments and agencies are uncomfortable with the requirements of Bill C-212. I think there's no question about that.

Did you get independent legal advice that would lead you to conclude that Bill C-212 does not apply to existing fees?

[Clyde MacLellan]

Mr. Chair, the answer to that question is yes, we did obtain independent legal advice. For the interest of the member, we have our own lawyers on staff, who advised us carefully in the performance of this chapter and in the interpretation of the legislation and how it was to be applied. Yes, I think it is fair to say that it's not a clear-cut case, but in writing our report we also wanted to reflect what was happening in terms of the application of this legislation within the departments and in reality. And that's why we chose, in terms of the wording, to very much focus on the fact that it is being picked up only for new and amended fees and not for existing fees.

[Roy Cullen, Liberal, Etobicoke North, ON]

Yes. Well, I know that certainly the departments and agencies are interpreting it that way, but notwithstanding that, even if you take that legal interpretation, the Treasury Board issued some very clear guidelines that there should be performance standards, that there should be.... I forget the exact wording—I don't have it with me—but the President of the Treasury Board was fairly clear that the spirit and intent of Bill C-212 would have been applied to all of them.

I must say that if you look at the reporting annually, it's been a pretty sad commentary. I've looked through some of the reports. In terms of benchmarking or whether performance standards have been met, I saw that one department wrote in, “Well, we haven't had any complaints”, and this sort of thing. I mean, it's really an affront to Parliament that people would actually do things like that.

As I say, I accept the fact that it can be evolutionary, but the evolutionary pace is so slow that it's really an affront to Parliament.

I would like to come back to the question of the passport or the consular fees. I haven't studied this as carefully as I might have. Was this an increase in a fee or a new fee? And if so, did the department table it in Parliament, as is clearly required under Bill C-212?

[Douglas Timmins]

No, there was no change in that fee. That fee was established before the User Fees Act, and the interpretation, as we've just discussed, has only been relative to changes in fees.

[Roy Cullen, Liberal, Etobicoke North, ON]

But if there was this one-time charge, the whole intent of tabling the fee would be that the department or agency would be required to explain what costs were being recovered, how this benchmarked against other international norms, etc. And if it had been tabled in Parliament, maybe someone might have asked why you were including this one-time non-recurring—hopefully, or at least certainly it was one-time at that time—fee into this cost recovery.

So you're saying that.... It's this grey area where the departments and agencies interpret it to suit their own needs, where you're saying the fee has been around, but the fee that is being charged is different, right? And it went up?

[Douglas Timmins]

No, it hasn't changed. It was introduced in 1995 and it has not changed.

[Roy Cullen, Liberal, Etobicoke North, ON]

That fee hasn't changed. Okay. Well, I'd better study that a little more carefully then.

Did you find any evidence of any new fees or increased fees that were not tabled in Parliament with the package of information that's required? I know I saw some. I picked up about three, but I haven't done an exhaustive study to determine that all those new fees or increases in fees were actually tabled in Parliament with the required information. Did you examine that?

[Clyde MacLellan]

No, we did not examine that particular question. We only looked at the fees that are identified in the report and then determined whether or not those fees were covered by the act, whether they had gone through that process. So we did not do that question of completeness you're referring to.

[The Chair, Liberal, Shawn Murphy]

One last quick question.

[Roy Cullen, Liberal, Etobicoke North, ON]

Okay.

Just coming back, you start out by saying you're covering $1.9 billion in fees, whereas the number I'm used to is around $4 billion annually. So you've excluded the contracts, is that right?

[Clyde MacLellan]

That would be correct.

[Roy Cullen, Liberal, Etobicoke North, ON]

That's the only thing you've excluded?

[Clyde MacLellan]

We've also grouped in terms of counting numbers of fees. We've grouped a lot of access to information fees within one category. That would be across a number of different departments. We can provide a list, which I think we—

[Douglas Timmins]

Mr. Chairman, we have already provided the committee with a full list of the fees that add up to the $1.9 billion, which, by the way, may already address the question Mr. Laforest asked of the Comptroller General.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. MacLellan. Thank you, Mr. Timmins.

Mr. Sweet, for seven minutes.