FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 24, 1998

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[English]

The Chairman (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I'd like to call the meeting to order and welcome everyone here this afternoon.

As everyone knows, the order of the day for the finance committee is Bill C-43, an act to establish the Canada Customs and Revenue Agency, and to amend and repeal other acts as a consequence.

We have the pleasure to have with us Association de planification fiscale et financière, the Canadian Federation of Independent Business, the Certified General Accountants' Association of Canada, Felesky Flynn, Barristers and Solicitors, and the Canadian Bar Association.

We will begin with l'Association de planification fiscale et financière.

Mr. Caron is not here. Therefore, we will begin with the Canadian Federation of Independent Business and Mr. Garth Whyte. Welcome.

Mr. Garth Whyte (Vice-President, National Affairs, Canadian Federation of Independent Business): Thanks very much, Mr. Chairman. On behalf of the Canadian Federation of Independent Business, which represents over 91,000 small and medium-sized businesses, my colleague, Peter O'Brien, and I would like to thank the finance committee for asking us to appear before it today to discuss the Customs and Revenue Agency Act.

My colleague, Peter O'Brien, has come in from Halifax. He's our vice-president of Atlantic Canada, and he'll be making some comments as well.

This is the third time this month that we have appeared before the committee, and, like many committee members here today, we're not looking for more work to do. However, this bill is important to CFIB and small business owners because Revenue Canada touches virtually every business in Canada.

Last week we presented to the committee a CFIB survey on tax policy, which was sent to our members in May 1998. Today we are releasing the responses from another part of that survey that dealt with Revenue Canada and the proposed revenue agency. The following graphs that I'll be talking about in this presentation, which you should have, are based on more than 7,000 responses from owners of small and medium-sized businesses from across Canada.

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When examining the issues of tax administration in Canada as it affects small-firm operators, it's useful to reflect on the recent history of the relationship between Revenue Canada and its clients and how that relationship evolved. In the early 1980s, small business in Canada had a disastrous relationship with Revenue Canada and its staff. From our perspective, the department's decisions that impacted on small and medium-sized enterprises were made arbitrarily and with no consultation. Small business owners felt they were treated as guilty until proven otherwise by the department.

In the mid 1980s, a few change agents working in the department attempted to move the department to a more client-centred orientation. Unfortunately, with the introduction of the GST, small business and CFIB still had a very rocky relationship with the department. The department was still insensitive and, at best, apathetic to small business concerns.

In November 1992, we made a presentation to the Subcommittee on Regulations and Competitiveness of the Standing Committee on Finance. At that time, we said the cost and time wasted in order to deal with these problems with Revenue Canada alone had a significant impact on small firms' competitiveness.

Soon after that presentation, CFIB's relationship with Revenue Canada began to steadily improve. We worked together, along with the Department of Finance, to develop initiatives to reduce paper burden and costs for small business—such as the simplified input tax credit for small firms—improvements to the quick method, the T-4 short, and the single business registration number. Over the years, we have participated on several Revenue Canada advisory committees, such as the small business advisory committee, and more recently as a member of the revenue agency ministerial advisory committee. Recently, Revenue Canada used CFIB's year 2000 checklist for its own Y2K pamphlet, which was sent to businesses across Canada.

Today, I would say we have a very good working relationship with the department. A large part of the credit should go to several senior officials in the department who have strived to improve conditions for small and medium-sized businesses.

Before everyone gives us a standing ovation, it's important to note that the department has a long way to go to improve service to the small business sector. Although CFIB was a member of the revenue agency advisory committee, we are not here to defend or sell the proposed new revenue agency. As an organization representing SMEs, CFIB is cautiously optimistic about this new agency. However, the act and proposed board of management must ensure that mechanisms are put in place to ensure the revenue agency better serves Canadian taxpayers.

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I'd now like to refer the committee to figure 1, which gives our members' ratings of Revenue Canada's performance. When asked about speed and consistency of rulings by Revenue Canada, over one-third of the respondents gave the department a poor rating, less than 5% said good, and 58% said adequate. One-third of the respondents said the knowledge level of Revenue Canada staff was poor, and almost one out of two—48%—said accessibility to Revenue Canada staff was poor. Finally, 56% of the respondents said readability and simplicity of information received from the department was poor, and one-third said availability of information was a problem. These issues need to be addressed whether or not a new revenue agency is established.

Although there is a willingness at the senior levels to address these problems identified by our members, it is evident that the current revenue department has been unable to respond at the ground level as quickly as we would want. Even more disconcerting is that, in our experience, provincial revenue departments are even less responsive than Revenue Canada. We feel a change is needed.

If the federal government does create a new federal revenue agency, the board of management and the commissioner, with the support of the federal and provincial governments, should monitor and report on a regular basis the above performance ratings in the corporate business plan, with the aim of improving service and accountability to the Canadian taxpayer. Measures must be taken to ensure that we do not return to the difficult times experienced in the 1980s.

I'll now turn it over to Peter O'Brien to talk about potential advantages.

Mr. Peter O'Brien (Vice-President, Atlantic Canada, Canadian Federation of Independent Business): Earlier this year, we asked our members what they thought of replacing Revenue Canada with a new revenue agency, and you'll see the response to that in figure 2: 36% were neutral, 33% were positive, and 31% were negative. There is neither strong support nor strong opposition to the agency concept.

When asked about the potential advantages of the new agency, which we show in figure 3, the top three benefits identified were the ability to complete all taxes on a single return, by 56%; 55% said simultaneous rate registration for all taxes; and 53% said more efficient use of government resources. Other benefits identified include remittance of all funds owing with a single cheque, 45%; the ability to use a refund on one tax to offset other payments, 45%; and similar administrative rules and filing deadlines, 39%.

In our view, the provinces can also eliminate some of their costs through eliminating their responsibility for sales tax collection, as well as through a requirement for audits at the provincial level. This should see real savings for provincial governments and real benefits for business.

Since the implementation of the harmonized sales tax in Nova Scotia, New Brunswick, and Newfoundland, the relationship with Revenue Canada has changed significantly. For example, in Nova Scotia, the provincial sales tax commission has been eliminated altogether, and all provincial taxes have been rolled into the harmonized sales tax. This is collected by Revenue Canada and is rebated proportionately—as is done in each of the three provinces.

Recently the Province of Nova Scotia and Revenue Canada entered into an agreement whereby Revenue Canada—and hopefully the agency when and if it comes into force—will become responsible for the collection of workers' compensation premiums on behalf of the Nova Scotia Workers Compensation Board. This means a number of things to business. First, it will allow for monthly contributions rather than annual contributions, and that will really improve cashflow for small firms. Secondly, it means that businesses will be able to pay their workers' compensation premiums based on actual wages rather than estimated wages.

Currently, on estimated wages, because of changes in demand for various types of industry in the run of a year, penalties of approximately $5 million are charged to businesses in the province that underestimate their annual premiums. That sort of thing will become a thing of the past, and we think those are efficiency potentials for this new agency. In the next month, we will be meeting with officials in the balance of Atlantic Canada to raise this same issue, because we think it's one of the ways in which the agency can be effective in helping smaller provinces particularly.

Mr. Garth Whyte: Thanks, Peter.

We also asked our members to identify potential disadvantages, and they're on the list identified in figure 4, at the back. The number one disadvantage identified by our members is the concern that it will be costly to create a new agency. Hopefully, with the reduction of overlap and duplication between federal and provincial departments, there should be greater savings over time as the agency becomes established.

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The next two concerns were that political accountability is not clear and there is less privacy. We believe these concerns, which were not clearly addressed last spring when the survey was conducted, have been adequately dealt with by the proposed legislation. In fact, the minister consulted with us on numerous occasions, not only with our head office on national affairs, but he went across the country talking to our people in various provinces, and we believe he listened. We think that many of these concerns are addressed in the survey, and the new bill ensures that the privacy provisions in the current legislation are continued.

As far as political accountability is concerned, we're very supportive of the minister maintaining ultimate responsibility, along with the agency being required to annually submit a corporate business plan and report to the provinces.

One-third of the responses expressed concern that the provinces will have less flexibility and control. Again, the bill states that the mandate of the agency is to implement agreements arranged with the provinces and does not give the agency the power to change federal-provincial tax and fiscal policy arrangements. The agency is required to consult with the provinces and meet annually with the provincial ministers. Again, we see that as a positive step.

There are some concerns that directly impact on business. Almost one in four said that the change in business routine caused by a new agency would be a disadvantage. And 37% of the respondents identified the agency being able to target companies to audit as a possible disadvantage. Interestingly, 38% of respondents identified a single auditor for all taxes as a potential advantage for the new revenue agency.

In conclusion, Mr. Chairman, it appears that Bill C-43 addresses the main concerns of political accountability, privacy, and provincial autonomy identified by our members. However, if the new revenue agency is to achieve the potential advantages that business wants, several conditions must be met. First, the directors of the board must not be political appointments, but rather represent a wide range of expertise necessary to oversee the stewardship and accountability of the agency.

Second, the agency's corporate business plan should include goals to markedly improve its service performance in areas such as speed and consistency of rulings and availability and quality of information.

Third, the agency should strive to develop and train its staff to improve their knowledge level and accessibility to the clients they serve.

Fourth, the agency should not be used to better target companies to audit—a concern identified by over one-third of CFIB respondents.

Finally, cooperation and coordination of tax administration between the federal and provincial governments must occur if the agency is to realize the ultimate goal to reduce paper burden, compliance burden, and unnecessary expense caused by overlap and duplication by levels of government. The establishment of a new revenue agency is only the first step to improving Canada's tax administration system, and we must be vigilant to ensure that over time the agency will not only meet the needs of government but also the needs of business and all Canadian taxpayers.

Thank you, Mr. Chairman.

The Chairman: Thank you very much, Mr. Whyte and Mr. O'Brien.

We'll now hear from Mr. Mark Boudreau from the Certified General Accountants' Association of Canada and Mr. Art Silverman. Welcome.

Mr. Mark Boudreau (Vice-President, Public and Government Relations, Certified General Accountants' Association of Canada): Thank you, Mr. Chairman. CGA-Canada is pleased to appear before your committee to provide members with our perspective on the proposed creation of the Canada Customs and Revenue Agency.

Before I begin my presentation I would like to indicate that Don Goodison, the chair of our taxation policy committee, was supposed to be with us today, but unfortunately he experienced some medical problems when he was flying out here. I hope the committee will bear with me as I substitute for him. But I've brought Art Silverman, who chaired our committee looking at this specific piece of legislation, with me today.

I'd like to begin my presentation by taking just a few moments to remind you who we are and who we represent.

CGA-Canada was formed in 1908 to promote professionalism among accountants and has since become one of Canada's leading accounting bodies and a major force in international accounting education. CGAs have been an integral part of Canada's accounting and business community for almost nine decades. Chartered by an act of Parliament in 1913, CGA-Canada works in partnership with its provincial and territorial associations to produce an educational program that maintains recognized standards of excellence.

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The association serves the public interest by ensuring that members adhere to the highest measure of professional and ethical conduct. It also funds the internationally renowned CGA-Canada Research Foundation, which publishes research monographs and funds research. CGA-Canada is a member of several international bodies that set standards in accounting such as the International Accounting Standards Committee. It also participates in other international accounting organizations such as the Confederation of Asian and Pacific Accountants, the Inter-American Accounting Association, and the International Federation of Accountants.

Today the association is a self-regulating and professional body that represents some 56,000 certified general accountants and students throughout Canada. A substantial number of our members are directly affected by the subject of comptrollership and governance in one way or another, and 20% of our members, some 10,000 individuals, are currently employed in the federal and provincial governments and in the public service.

Many of our members are accounting and tax practitioners who serve individuals and businesses of all sizes. Others occupy financial, administrative management, and policy positions in governments, financial institutions, charities, and corporations. Clearly, we at CGA-Canada have a vested interest in this matter in which Canada structures and implements its revenue collection responsibilities.

Turning to the matter at hand, let me begin by stating that the relationship between citizen and tax collector is among the oldest relationships in the course of the development of human civilization. In general, up until relatively recently, this relationship has been viewed by citizens as essentially negative. For that matter, even today in democracies such as ours a call or a letter from the tax collector can fill the most stout-hearted of us with dread. However, having said this, it is true that today most citizens can readily see the correlation between the service they receive from government and the role played by the tax collector.

As a matter of fact, because of the ability of citizens to see that linkage between tax collection and the public service, Revenue Canada has been able to structure itself in such a way that the success of its revenue collection programs has depended by and large on the voluntary compliance of individuals and businesses with Canada's tax requirements. CGA-Canada strongly believes that before making any significant change to the structure of this most fundamental of government activities, we need to ask ourselves what were the root causes of that significant change in citizen perspective. It is CGA-Canada's view that this change in citizen perspective can be directly linked to the fact that this critical role of government is now done within the context of the public service.

We believe that the ethos of the Public Service of Canada, based on public trust that requires an exceptional standard of personal integrity from public servants, has played a fundamentally important role in ensuring that the revenue department has never been a tool of any political party. As a matter of fact, we believe that the majority of Canadians feel safe with Revenue Canada. Their privacy is respected, they are treated with respect, and most find Revenue Canada officials helpful.

In that regard, we are aware of one recent case where an elderly widow from western Canada mailed all her tax documents, receipts, etc., to her son in eastern Canada so that he could prepare her tax return. However, she inadverently enclosed all the documents in the tax return envelope and mailed it to Revenue Canada instead. Not long after that she received a call from Revenue Canada, which, instead of berating her and mailing the documents back for her completion, actually prepared the entire return for her. In my understanding, Mr. Chairman, she actually got a rebate.

The Auditor General has recently commented on the relationship between citizens' voluntary compliance with their tax obligations and their perception of the conduct and fairness of their tax collectors. In September of this year, the Auditor General made several recommendations to Revenue Canada regarding steps to be taken to develop and support ethics among Revenue Canada's employees. In its response to the Auditor General's observation, Revenue Canada has undertaken to consider them in the context of the move to the proposed new agency. CGA-Canada is of the view that the major challenge facing the establishment of the new agency, particularly as it relates to its employees, will not be organizational structures, reporting relationship, classifications, or administrative authorities. Rather, it will be finding an answer to the dilemma of how to maintain an ethos in the public service when we are no longer part of the Public Service of Canada and how to maintain ministerial accountability and parliamentary control in a timely, effective manner.

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In July 1998, the American Congress completed its extensive revision of its own Internal Revenue Service structure. Congressional intervention has required the IRS to revise its mission statement so that it provides greater emphasis on serving the public and meeting the needs of taxpayers. The Congress direction also ran to the issues of internal structure by substantially modifying the IRS's three-tier geographic structure and replacing it with an organizational structure that features operating units serving particular groups of taxpayers with similar needs, with the obvious intent of improving service.

Congress created an oversight board for the IRS and severely limited the powers of the examination and collection division of the IRS. Specific due-process rights were granted for the first time with respect to collection matters. Congress limited the use of many aggressive examination techniques, granting taxpayers specific rights to sue the IRS when it abused its discretion.

What underlies all of the American initiatives is the desire to instil, within the IRS, values such as equality, fairness, openness, public trust, and accountability, all of which go together to form the very ethical standards that now underpin the ethos of the public service, all of which we now have at Revenue Canada.

The administrative efficiencies that seem to underpin much of the argument for moving to agency status are worth achieving, but we should be aware that this is a fairly dramatic step in order to obtain them. It's important to be efficient, but at what price? In our view, the government would do well to articulate more clearly why these administrative gains could not be achieved within the structures of the public service, which has been undergoing significant modernization itself over the past decade. Efficiency is important and cost-effectiveness is a modern mantra, but integrity, honesty, and respect are of fundamental importance to the collection of taxes within the context of voluntary compliance both now and in the future.

CGA-Canada believes the government has put forward many persuasive arguments as to why the bulk of Revenue Canada should be moved outside the traditional structure of the public service. However, the lack of participation at this point on the part of the provinces and territories is worrisome. We believe the reasons now being used for not moving forward collaboratively will be subject to an ongoing review, and in due course the efficiency promised by the creation of the agency will overcome many of these objections.

Therefore, from the perspective of CGA-Canada, if the government can demonstrate all that has been gained over the years from operating within the ethos of the Public Service of Canada can be translated into the new agency, we would be pleased to offer our support.

On behalf of the 56,000 members of CGA-Canada, I would like to thank you for your invitation to appear before you today and the opportunity to share with you our thoughts regarding this very important piece of legislation.

The Chairman: Thank you very much, Mr. Boudreau and Mr. Silverman.

We'll now hear from the Canadian Bar Association. I welcome Mr. Blair Nixon.

Mr. D. Blair Nixon (Lawyer, Felesky Flynn, Barristers and Solicitors): Thank you.

Mr. Chair, members of the Standing Committee on Finance, I've been asked to speak on behalf of both the Canadian Bar Association and, for the record, the Canadian Tax Foundation. On behalf of those two organizations, I would like to take this opportunity to thank you for allowing us to appear. Regrettably, we have not provided a submission, only because the short timeframe has not allowed us to write one and put it through all the approval processes required in our organizations.

In summary, our position is that we support the CCRA initiative currently being advanced by the Government of Canada. We believe the agency initiative provides an opportunity for the Government of Canada to revitalize Revenue Canada and reconnect with taxpayers.

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The move to the agency should provide more flexibility to deal with personnel issues, a fundamental aspect, we think, of the organization. That flexibility should provide better positioning for the agency to hire, train, and retain good personnel. The agency needs to bolster its ranks with good people in order to provide better service to taxpayers, which we understand is one of the fundamental thrusts of the agency.

We emphasize that the focus of the agency should be on a broadly based and even-handed enforcement, taking into account all relevant matters and aspects of the underlying legislation and indeed its legislative thrust. To carry out this task, officials must approach their task in a well-thought-out and timely manner. This will require hard judgments about the scope and effect of the law. The exercise of such judgment will often require a willingness to compromise positions in the interests of a constructive application of that law. This is why there is a fundamental need to have an ongoing pursuit of bolstering the ranks of Revenue Canada. The agency should provide the flexibility to better deal with this challenge.

To best achieve all of these objectives, the agency should continue its ongoing connection and dialogue with groups such as the Department of Finance and the Department of Justice.

We raise a caution, however, that should be kept in mind. While the agency will be in the business of collecting tax, it must do so within the confines of the particular legislation being applied. Success of the agency should not be determined by how much is collected. Its success should be determined in part by whether it has applied the law appropriately.

In this regard, the agency should consider its views and the views of others who might have an interest in these matters. It should have the confidence, however, to deal with challenges, whether those challenges are from the Department of Justice, the Department of Finance, or indeed, the Office of the Auditor General. If the law is inadequate, then the law should be changed by Parliament; it should not be changed by the agency.

We believe the continuation of the above-noted dialogues on the future of the agency between Revenue Canada and the departments of finance and justice will greatly assist in this regard. Where there are deficiencies in the law, these parties, in conjunction with taxpayers perhaps, can make recommendations to the Minister of Finance for legislative changes where appropriate. These external dialogues are important in order to ensure the agency properly reflects the underlying thrust of the law, and these dialogues will serve as one of the checks and balances in the system.

These checks and balances are important; indeed they're likely fundamental in the view of most practitioners. Taxpayers and their advisers have been participating and will continue to participate in this challenge in terms of making sure that where Revenue Canada, in their view, has overstepped its boundaries, there is a dialogue. It is a dynamic process and one we would encourage.

In summary, we support the agency concept. Both the Canadian Bar Association and the Canadian Tax Foundation will continue to act in an effort to make sure the agency is a success should Bill C-43 be enacted. We will work with the agency in a constructive way to support its objectives. In this regard we will be encouraging the agency to deal with substantive issues, first, on a timely basis; and second, always in a fair manner in the context of the legislation and in a manner that avoids wherever possible retroactivity and an element of double taxation.

Thank you very much.

The Chairman: Thank you very much, Mr. Nixon. I'd like to thank the panellists for their excellent presentations and insight.

We're now going to move to the question and answer session and we'll begin with Mr. Kenney.

Mr. Jason Kenney (Calgary Southeast, Ref.): Thank you, Mr. Chairman. I'd like to thank all of the witnesses and the organizations they represent for their time here and their thoughtful presentations.

My first question is for Mr. Whyte and Mr. O'Brien from the CFIB. You mention that this survey you took of your membership was conducted, I believe, in the spring, just before that last progress report was issued. Is that correct?

Mr. Garth Whyte: Sorry, I didn't catch that.

Mr. Jason Kenney: Before the progress report was issued—the last revision of the legislation.

Mr. Garth Whyte: Right.

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Mr. Jason Kenney: Okay. Your findings seem to contradict a little bit the results of the public policy forum's focus groups and panels with business organizations, which showed that 40% of businesses surveyed by the public policy forum saw no advantage to a single tax collection agency and 68% thought that a single tax collection agency would either increase their compliance costs or have no impact at all. I'm just wondering how you would account for this discrepancy in results from surveys of businesses.

Mr. Garth Whyte: I don't know. I couldn't answer that.

Mr. Jason Kenney: Did you review the public policy forum paper on this?

Mr. Garth Whyte: No, we didn't. But I can give you a little anecdote; we love giving them.

One time the department—this was before this government—wanted to improve the quick method. They did round tables with the business community on the quick method and they came back with the conclusion that business didn't understand the quick method. We surveyed our members and we found out that they understood it; they just weren't prepared to pay a penny more. There was a little bit of inconsistency between the forum and the survey.

All I can say is that this is the response of over 7,000 business owners from every province, and this is what they've informed us.

Mr. Jason Kenney: Do you interpret the results overall as being neither strongly in favour nor strongly against, that people are generally neutral about this proposal?

Mr. Garth Whyte: When we got the results back in May, yes, that was the response. Also, though, leading up into the act, we lobbied and pushed the idea that there should be more ministerial accountability in some of the things concerned with privacy and some of those issues.

Mr. Jason Kenney: One of the potential disadvantages that your members indicated was the possibility of less flexibility for provincial governments in controlling tax policy. But I think Mr. O'Brien made comments that more or less endorsed the direction of the HST and harmonization and how this would work in terms of collection of WCB premiums in Nova Scotia. I wonder if you could respond. It's my understanding that currently Nova Scotia is reviewing its participation in the HST and that two of the opposition parties in legislature want to remove Nova Scotia from the HST agreement. Is that correct, or am I mistaken?

Mr. Peter O'Brien: No, that isn't correct. One of the opposition parties has introduced a bill in the House, which hasn't gone beyond first reading. I'm in that legislature almost every day. My view is that it will not go beyond first reading.

Mr. Jason Kenney: Okay. So it's not going the other way.

Mr. Peter O'Brien: No.

Mr. Jason Kenney: My next question is for the representatives of the CGA.

Thank you very much for your presentation. In it you discussed some of the recent revisions of the IRS that have been adopted by the American Congress following extensive hearings they held last year on abuse of taxpayers by the IRS. The official opposition will be putting forward amendments similar to some of those adopted by the Congress in terms of what we call a taxpayer bill of rights, which would codify rights to due process for taxpayers in the auditing and collection process to make them clearer and more accessible in plain language than is currently the case.

Do you think that would be a positive development in concert with the adoption of the agency, that is to say, to more clearly enshrine in legislation the rights of taxpayers to due process and to more clearly enshrine in legislation an ethos, as you put it, of fairness and openness, accountability, etc.? Would that be a worthwhile companion to the agency legislation, in your view?

Mr. Art Silverman (Chair, CGA-Canada Working Group on Canada Customs and Revenue Agency, Certified General Accountants' Association of Canada): Yes, we certainly think it would be.

Ms. Beth Phinney (Hamilton Mountain, Lib.): Mr. Chairman, can I ask that Mr. Whyte answer this same question, please, on behalf of the Canadian Federation of Independent Business?

The Chairman: All of these questions are open to anybody, sure.

Mr. Garth Whyte: We have pushed for a code of fairness, and actually the department has one within its ranks. Perrin Beatty introduced that, and that's one of the things we've pushed.

Mr. Jason Kenney: I have it here, the declaration of taxpayers' rights, but it is simply an internal code. It doesn't have the force or effect of a statute. So what we're proposing as a companion to this legislation—

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Mr. Garth Whyte: The problem is once you put it in the act it's pretty hard to enforce. It's kind of a cultural thing we want to change. You could maybe put an intent in there of what this is for, but we'd like to see that more ensconced in the corporate plan.

We want to see this as a cultural change happening in the department and a dedication to service. You can write it in the act, and we've seen many things written in the act but then people think it's done. That's not the way we're going to pursue it. I think it should be done at the department level.

Mr. Jason Kenney: As a point on the culture of the department or agency, Mr. Boudreau said in his statement that values such as equality, fairness, openness, public trust, accountability, etc., form the very ethical standards that underpin the ethos of the public service, which we now have at Revenue Canada.

He mentioned that Revenue Canada's culture has improved, in terms of accountability to taxpayers, over the past 12 years or so. I don't deny that for a moment. However, one could infer from your submission that everything at Revenue Canada is all sweetness and light, and there aren't abuses of the very considerable powers we grant to Revenue Canada agents.

Yesterday we had a tax practitioner from Calgary talking about some of the clients he has represented, such as a quadriplegic who was forced into tax court to make payroll tax back-payments on home care subsidies given to her by the province of Alberta.

I have files a foot high on similar kinds of abuses by Revenue Canada agents that have been thrown out by tax courts when they've reached that level. I just wonder if you could comment on whether you think there are still problems within the culture of Revenue Canada, or whether you think everything is completely dealt with in an attitude of fairness and openness.

Mr. Mark Boudreau: I agree with Garth that there has been significant improvement over the years in the department. Obviously there are always individual cases that come forward. Our members deal with them on a daily basis. We're trying to say these are values the agency should be striving for and it's that cultural thing.

You can enshrine this in legislation or put it in a bill of rights, but still, at the end of the day, it's the standards you are trying to achieve. If we look around the world, Revenue Canada has a high standard of service and delivery. I think you only have to go on the Internet to see some of the things that are said about IRS and why this was brought in by Congress.

Mr. Jason Kenney: Mr. Whyte, do you have a comment?

Mr. Garth Whyte: I would say again, the willingness to improve is there. The mandate to improve is there, but I was taken aback by the results of our members' responses when they're still very similar. Our relationship has improved, and when we have individual cases we can get right into the department and help improve them. But there's still a perception out there, and when you have 56% of 7,000 business respondents saying readability and simplicity of information are poor, we collectively have a problem we have to deal with. When 48% say accessibility to staff is poor and only 6% say it's good, we still have a problem. We have to find ways to improve that.

Mr. Jason Kenney: The first proposal of this draft taxpayer bill of rights would be to give taxpayers the right to understand the tax laws they're required to comply with in plain language. I think a lot of progress could be made there, and that's what your survey seems to be indicating.

I have a question for Mr. Nixon, or anybody in the panel, that relates to provincial involvement in this proposal. All of you referred to the department's hope that there will be efficiency gains realized from the adoption of the agency model. But as the public policy forum paper indicates quite clearly, and many of the other independent commentators suggest, all or most of those efficiency gains would be achieved through provincial involvement in the new agency and a concurrent reduction in overlap and duplication.

Given that none of the provinces, with the exception of Nova Scotia, on WCB have clearly indicated their willingness to cooperate with this agency, what's your comment on that? What do you think the chances are of provinces eventually coming on board? Don't you think it would be more sensible for Parliament to hold back in approving this legislation until we see more concrete agreement on the part of the provinces? Don't you think this is sort of throwing an idea out there that may not get by, when perhaps we should wait and see what happens?

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Mr. Garth Whyte: If I could jump in quickly, there was an initiative your party pushed forward that the government should use its power to make the provinces get together on internal trade barriers. We find if we wait for everybody to come on side it never gets done. I guess you could look at the revenue agency as a means to start doing that. We're hopeful momentum will build.

Peter will give you some examples of where he thinks some of the provinces are willing to come on side, but we haven't heard much opposition on this from the provinces.

Mr. Jason Kenney: Have you talked to either the Quebec or Alberta finance minister?

Mr. Garth Whyte: We've talked to the Alberta finance minister. The Quebec finance minister—you know why that's not going to happen. They're not going to be first at the gate. We're certainly dealing also with the Ontario revenue agency.

Mr. Jason Kenney: I've certainly had a very negative impression from the Alberta finance minister.

Mr. O'Brien.

Mr. Peter O'Brien: I'm convinced three of the four provinces in Atlantic Canada will be on side. Prince Edward Island's moving a little more slowly. I'm meeting with ministers in Newfoundland next week and I've already raised the issue with the finance minister in New Brunswick, who seems to be very positive.

I think it's a matter of finding out what's there and then participating. I don't think any government will move before they see what they're going to move into. They want to see what the agency will be. Nova Scotia moved more quickly because they have serious Workers' Compensation problems and this is one of the ways of starting to alleviate some of them.

Mr. Blair Nixon: Mr. Kenney, in response to the query you raised, I would be in favour of seeing the legislation passed so we have the framework and therefore the ability for this new agency to convince other provinces or political bodies that might be able to take advantages of the services.

Notwithstanding some of the deficiencies we will always see in a big organization, we should be striving to improve those deficiencies and convincing other bodies we can see efficiencies by way of the application of the agency and the administration of their tax. My recommendation would be to allow it to go forward, pass it, and then let the agency convince those who are going to be able to enjoy the efficiencies.

The Vice-Chair (Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.): Thank you, Mr. Nixon and Mr. Kenney. If there's time afterwards, we'll come back.

[Translation]

Mr. Perron, please.

Mr. Gilles-A. Perron (Rivière-des-Mille-Îles, BQ): First, I would like to say to Mr. Whyte that I did not appreciate his comments on Québec. I would like to remind you that Québec was the only province to harmonize its provincial sales tax, and that did not cost the federal government one penny. Furthermore, the province of Québec was the first one to support foreign trade, although it did not do any good. So I would invite you to be careful about what you say. You should start by knocking at the door of the Minister of Revenue, after which you may be in a position to make comments on this.

[English]

Mr. Garth Whyte: We're working right now with Revenue Quebec. They've asked for our assistance and we've been working very closely with them.

[Translation]

Mr. Gilles Perron: In that case, be careful about your comments. I am sorry, but what you said irritated me a little. Anyway, I come back to earth.

It seems to me that most of you do not really agree with establishing this agency. As most witnesses, you do not see the need for this agency and do not exactly know what it will be all about. My concerns are also shared by my friends on the other side of the table. There seems to be an urge to adopt this bill and establish this agency. In fact, we had a good example this afternoon, when Mr. Nixon came and told us that he had not even had time to prepare a paper because there was not enough time.

Would you recommend that we wait six months, a year, or even more before establishing this agency? Are we going too fast?

[English]

Mr. Garth Whyte: I don't think we should postpone it. If we want the agency running by 2000, we have to move fairly quickly.

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I must say, at least from the point of view of the Canadian Federation of Independent Business, we've been consulted to death. We've met several times with the department and the minister on these issues. We've gone back to our membership many times. We've made presentations year after year on ways to reduce compliance burden and costs to our members. We've also dealt with overlap and duplication issues. We see this as a positive step, with the caveats we put forward. From our point of view, I don't see the need to slow down the process.

Mr. Peter O'Brien: I would also suggest the consultations have been nation-wide, not just in Ottawa. I've had as many consultations in Halifax with the minister and his officials as have perhaps happened here.

I think there's a very real awareness now of where the agency's going. People are prepared to watch it grow and then participate.

Mr. Garth Whyte: That doesn't mean we won't stop the process. We're going to be on this. This is only the beginning; it's not the end of the process.

Mr. Blair Nixon: Our firm deals with Revenue Canada on a daily basis, several times a day. We talk to people at all levels of Revenue Canada. While we don't agree on much on a consistent basis, the one point that is universal at all levels of Revenue Canada is an eagerness to see an entity such as the agency so that personnel issues can be dealt with efficiently and effectively, all with the sense of giving better service to the taxpayer.

I think anything we can do to encourage that, which to my mind includes passing the bill now as opposed to delaying it, should be given serious consideration.

[Translation]

The Vice-Chairman (Mr. Nick Discepola): Mr. Boudreau.

[English]

Mr. Mark Boudreau: From CGAAC's perspective, the timing is a political issue. The efficiencies and what it is trying to achieve have to be out there on the table. We're of the view that the efficiencies are really not going to come from the administration side at the end of the day. These efficiencies will be if we're able to achieve some tax harmonization down the road.

We also have to ask ourselves what we are trying to achieve. Are we creating this agency to overcome problems of hiring classifications and paying people different wages? That's a government-wide problem. Not only this agency or department has that particular problem. So you have to ask yourself if that's the only reason you're doing it, in terms of whether it makes sense to create such an agency. The timing issue is a political one.

[Translation]

The Vice-Chairman (Mr. Nick Discepola): Thank you, Mr. Boudreau.

Do you have any other questions, Mr. Perron? No. Mr. Nystrom then.

[English]

Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP): Thank you very much, Mr. Chair.

I want to first of all welcome all the witnesses before the table today—Garth Whyte, a former Saskatchewanite, and of course Art Silverman, the former administrator of the House of Commons several years ago. I want to ask you questions in about two or three different areas, drawing on the experience of your various organizations.

There has been some concern that the employees of Revenue Canada are not very happy with the idea of a new agency beginning. We've had the union's employee representatives here before the committee. In addition to that, the Canadian Taxpayers Federation yesterday said:

To move with the agency proposal in the context of serious employee concern that presently exists would be a mistake.

Mr. Silverman, perhaps you had a lot of experience in personnel issues when you were in the House of Commons. I know CFIB has a lot of experience, and other organizations as well. Would you agree it is a serious mistake to move at this time while so many employees are very unhappy about the move, the lack of security of their jobs, and being taken out of the public service? Are we moving with too much haste? Should there be a six-month pause here while there's more consultation? After all, if there's unhappiness amongst the people who have to work in the agency, it may not work as effectively and efficiency as possible.

All of you at the table today represent a great deal of wealth of experience, so what advice do you have? On one hand, we have the Canadian Taxpayers Federation, which is not exactly a raving socialist organization, as you know. Mr. Kenney was part of that at one time. On the other hand, we have trade unions. I suppose it's a sort of united alternative, Mr. Kenney—representing the left and the right.

• 1630

Now, I think if we are parliamentarians listening to our constituents, that should cause a great deal of concern. After all, this will affect 20,000 employees or thereabouts. I certainly take that seriously. I get people from both spectrums lobbying me on this, and I'd like to have your wisdom on it.

I'll start with Mr. Silverman. I haven't seen him for a while. He was a very important person around here for many, many years in the days of Speaker Sauvé, I believe, and thereafter.

Mr. Art Silverman: I certainly appreciate the introduction, and I'm going to try to recruit you as an agent.

Mr. Lorne Nystrom: I won't charge you a fee.

Mr. Art Silverman: Mr. Nystrom, the question of the human resource issues, the question of the relations of the department with its employees, is a profound question throughout the entire public service. The unions have had issues for a very long time and continue to have them, and we don't believe this action or inaction is going to resolve in the short term those particular questions. The questions of salary, numbers of employees, working conditions, and training are all issues that have preoccupied the public service for many, many years.

The current reforms of the public service, the reforms that have been going on for almost a decade and longer, have all been aimed at the issues of attracting and keeping the right people—the questions of retention—and, in fact, convincing Parliament and parliamentarians to pay the appropriate salaries. I need not remind you that the appropriations are approved by you folks, and indeed, even under the new agency arrangement, ultimately the appropriations will come from Parliament, not by taking revenues collected and distributing them.

I think the members of Parliament and the appropriate parliamentary committee would do well to address those issues on a government-wide basis, including the folks at Revenue Canada.

Mr. Garth Whyte: I think I'd like to start by saying that since we represent 91,000 business owners who care very much about their employees, what's a concern in the public sector is also a concern in the private sector whenever there is change introduced. But in this case we feel change is necessary just to provide better service to the people they serve.

We are also under the impression that this negotiation or discussion about some of these concerns has been going on for over a year. I also thought they would have a no-cut contract or something for two years. That's pretty good. That's more generous than what anybody who's going through change in the private sector would get.

I couldn't agree with you more, Mr. Nystrom, that you have to have happy employees and that they do a better job. That definitely has to be resolved, but I think if we delay the bill to see if they can resolve their issues, we will be here six months from now and it will still be going on. I don't know the full details of the negotiations; I do not have inside information on the Canadian Tax Federation's point of view. But I do know from our members' point of view, change is needed.

Mr. Peter O'Brien: I would, if I might, Mr. Nystrom, indicate that for the last four years I've been very deeply involved with the Nova Scotia government in very significant change in regulations, paper burden, and things of that nature. At the outset there was a lot of resistance. As we get down toward the end and as the employees themselves are much more satisfied with the way they're able to provide service, they're asking me to speed up rather than slow down. I think it's been a remarkable change, and it's a recognition, I think, that the people I've dealt with in the public sector in Nova Scotia, and I'm sure it would be true federally, really want to provide service. Sometimes the structure has to be changed so that you can in fact effect the kind of service provision people do want to provide.

Mr. Lorne Nystrom: Mr. Nixon.

Mr. Blair Nixon: I have just a brief comment. Revenue Canada currently has a multitude of very good people. As mentioned earlier in our presentation, it does not, as an entity if you will, have the flexibility I think it wants and indeed needs to be more effective and efficient, and I think the bill will provide that.

• 1635

From our very informal discussions with personnel, notwithstanding the points raised by you, Mr. Nystrom, we see a pretty positive influence with a number of people at Revenue Canada. I think to delay the bill would just simply stall an opportunity that will provide flexibility to simply improve the process.

Mr. Lorne Nystrom: What about the fact that, to my knowledge, there hasn't been a single province yet that indicated it wanted to sign on with the agency, except for the collection of WCB, which was, I think, in Nova Scotia or New Brunswick? We do live in a federation, and this agency is designed to not just collect federal taxes, but also provincial taxes, maybe municipal taxes, and so on.

Does that concern you at all? We have a pretty interesting federation here. We have lots of tensions and sensitivities. Of course, Quebec does their own already. I understand that negotiations in Ontario are pretty negative at this stage with Mr. Eves, the Minister of Finance there. I understand that Alberta, which is a pretty large province, is pretty negative on this as well. None of the others are very positive.

So again, is it wise to move ahead really quickly? This committee, for example, has never travelled. We've never gone out there to talk to customs workers on the front lines in Windsor or Vancouver or places like that. We've had very few witnesses before the committee. The minister himself only appeared here a few days ago, and he can't really give us any guarantee that the provinces are going to sign on.

Does that concern you? Who wants to respond?

Mr. Garth Whyte: It certainly concerns us, if that's the case. It concerns us not only on the federal side, but the provincial side too. We've been encouraging them to stop fighting like a bunch of deckhands on the Titanic and get together to work to serve the Canadian public better.

We have a good relationship with the Ontario government. But we get concerned when we see them hiring a whole bunch of auditors. We're seeing two armies coming at one taxpayer. However, Revenue Canada is already collecting on behalf of many provinces now. They already have a pretty good relationship, and I suspect this will continue. Our information is that, even before the revenue agency, there wasn't the trust among the provinces just to allow a federal entity to do all the things that should be done in the future.

But there's another issue that's coming over the horizon. I guess it was two months ago when Ottawa hosted the OECD e-commerce conference, which brought in many countries from around the world. There were ministers, the president of the World Trade Organization, and a lot of different organizations. They all said this e-commerce wave is coming. They don't know how to deal with it in issues of privacy, tax collection, or commerce. We have to work together as a world.

Well, we do know the provinces aren't even there. Sooner or later, they're going to have to lean on a bigger organization to be able to deal with those changes. I don't think it's the case that we should just sit here and wait. I think this is a case where we do need leadership at the federal level to establish an agency that can respond to provincial needs. I think, over time, you will see provinces buying in. We have not heard, aside from some examples, open opposition to this concept either.

Mr. Mark Boudreau: Certainly, it's a concern to us, but again, we're never privy to what the actual negotiations are at this particular time between the finance minister and his provincial counterpart.

But I totally agree with Garth that what we're talking about is down the road. The real benefit to business is tax harmonization, if that can occur. I think this issue of e-commerce—we also participated in this at the summit—is coming very quickly. We need to be prepared for it. It's going to push us toward more and more harmonization or else we're not going to be able to compete globally in the e-commerce game.

The Vice-Chair (Mr. Nick Discepola): Thank you very much, Mr. Nystrom.

Mr. Brison, please.

Mr. Scott Brison (Kings—Hants, PC): Thank you, Mr. Chair. Thank you all for your presentations.

Look at the potential advantages of this agency. I know the CFIB has posited that there would be several potential advantages and it polled your membership on those advantages.

• 1640

What would be the reasons why those advantages would not be achievable within the current framework of Revenue Canada, given that Revenue Canada has made progress in recent years, and also given that if there are, for instance, human resources issues within Revenue Canada, those would be systemic within all departments? If in fact that is the case, I believe Mr. Boudreau mentioned that perhaps a more holistic approach to the public service in Canada would be a better focus for government than a stop-gap, knee-jerk reaction to a specific department.

I would appreciate your feedback on that, to start with, please.

Mr. Art Silverman: Let me try that one.

As our brief presents, we're cautiously optimistic. I think that's what you're sensing from the table here. It does concern us that indeed Revenue Canada is a people department—and I'm going back to Mr. Nystrom's point. It is a people department and the employees should be celebrating the potential of change, and it concerns us that this is not the case. It concerns us that there are these issues that remain unresolved.

If you went through other government departments, you similarly would have the same kind of survey results—not as thorough as a CFIB survey, but I think informal surveys would indicate.... The government has published data on the question of morale in the public service, the question of people seeking packages to leave, etc., as opposed to seeking to stay. The question is why? Why is that the case? And why are the employees not looking forward to the change? We don't have the answer to that. We don't know what those causes are, other than those broad systemic issues that have been discussed for so many years in this city and in various journals and that have been the subject of many conferences.

So we think that this committee, or another committee, looking at the human resources policies in the government generally and challenging the status quo, challenging the wisdom of the current salary structures, looking at those issues from the top down, might in fact be called for. The changes being brought about by Revenue Canada are basically changes that are saying: we can't work within this environment; the environment of the regular public service doesn't work for us, and therefore we have to seek another solution. And the question is why? What about all of those who don't have the opportunity to seek another solution? The employees who are going to be affected by the change are extremely nervous about it, as was demonstrated yesterday.

So the question remains why? Why is this the solution? But it apparently is the only solution available at this time. And as Mr. Boudreau has indicated, if this is a step towards tax harmonization and the reduction in costs and the increases in efficiency that are possible through that, then so be it.

Mr. Peter O'Brien: Let me respond in a different way. At approximately this time last year, I was in Wolfville for my annual speech or lecture on small business at Acadia University, an institution you know very well. On my way to that meeting I was in New Minas, which I believe is in your riding, and visited one of our members, who was so frustrated he didn't even want to see me.

Mr. Scott Brison: It wasn't me.

Mr. Peter O'Brien: No. In the previous six weeks he'd had a federal auditor, he had a provincial sales tax auditor and he had a workers' compensation auditor, and in six weeks they had tied up over four weeks of his own accountant's time. That, to me, says as much about why you need this kind of agency, when you get right into a business and see what happens, as anything else. I think that's very important, and I think we lose sight of that too often.

There's only one taxpayer in the end, and to have more than one agency coming in is inefficient, I think. I think that's really what business is saying in the end. When you look at the potential advantages, they all have to do with those kinds of efficiencies. Time is very significant for business, particularly smaller firms, because, quite frankly, when a tax auditor comes in they usually have to spend time with them, far more than larger firms do, and that is really an impediment to business growth.

• 1645

Mr. Scott Brison: As a small business person, I guess I was around 22 years old when I received a letter from Revenue Canada, one of those letters that say you're being audited, which has about the same impact on you emotionally as the death of a close relative or something like that. I know some relatives that I would have been probably less upset about the loss of at that juncture—

Some hon. members: Oh, oh!

Mr. Scott Brison: —but in any case, it worked out all right.

But I spent a year and a half defending myself against my own government, and at the end of that time—

An hon. member: Against your own party.

Mr. Scott Brison: —it was determined that in fact I had been right. But I had spent copious quantities of money with a tax accountant to defend myself.

My concern is that this agency potentially could have the capacity of having less accountability. One thing mentioned by Mr. Whyte was the potential for political interference in the appointment process, for instance, and I think that's a very real risk, because if the appointment process is tainted with political interference, then the decisions made would have an increased potential for that kind of interference.

We need only look at the CPP Investment Board to see the potential for that. Six of the twelve people appointed to that board are very, very well connected politically to the Liberal Party through the donation process, and once a defeated Liberal member. Whereas 0.2% of Canadians contribute to the Liberal Party, 50% of the board for all Canadians' pensions is dominated by Liberal contributors, so I would argue that there's significant risk there. That is something I hadn't really considered very much before, but I'd like you to elaborate further on that.

Mr. Garth Whyte: We are concerned about accountability and stewardship of this entity. That is a major concern. One thing that has caused us to be less concerned is that in the act the minister is responsible. So we still have someone's neck to grab, which is very important.

Secondly, the provinces put forward three names, I believe, and then the federal government picks from those names. So that's a check and balance that I hope will be in there. We cannot have a post office scenario; that cannot happen with our revenue agency, and we think there are some safeguards in here that will assure that. But at the same time, all provinces will have to participate, and that's why all provinces should have a seat, to ensure that they have appropriate people on that board.

Mr. Scott Brison: Cooperation with the provinces in the appointment process is essential. That being the case, I'll go back to the recent example with the CPP Investment Board. Each province had a member on the appointment board, and that appointment board was chaired by Mr. Phelps, who is a prominent Liberal. They submitted 20 names to the minister, of which 12 were chosen, and I would argue that it's more than coincidental that 6 of those 12 ultimately were extremely well-connected Liberals. So even those processes can be abused.

Mr. Garth Whyte: I should add that there are competent people from all political parties. You have to appoint competent people, and we've seen that you have competent people in each one of your parties. It's just that it should not be a political appointment; it should be people who oversee running a major entity. That's the issue.

The fact that you have to do a corporate plan is very important and very good, and that corporate plan becomes public. The fact that you have to meet with the provinces on a regular basis is very, very important. A commissioner and the staff...there are lots of checks and balances that we see in this bill that should cover off some of those concerns.

Mr. Scott Brison: Thank you very much.

The Chairman: Mr. Nixon, do you have a comment?

Mr. Blair Nixon: Just a brief one.

I think the question Mr. Brison has asked is a critical one. I've thought about it a lot. I've actually addressed the question to Revenue Canada senior management, and the response I've received back is simply that in order for the flexibility to be there that they would like, there would have to be a pretty revolutionary change. We could probably achieve it—we, as a country. The agency is one option to achieve that. Maybe because of the process I have seen going on in the last year, year and a half, it's not so much a revolution as it is an evolution that we are seeing, and that flexibility will be forthcoming. But you could probably achieve it. It's just that the foundation has not been set for it.

• 1650

In terms of the risk of less accountability that you raised, I think that's always a risk, and I think we as a community just simply must be vigilant to make sure it does not occur.

Thank you.

The Chairman: Mr. Szabo.

Mr. Paul Szabo (Mississauga South, Lib.): Thank you, Mr. Chairman.

I've been a chartered accountant for 25 years now, and I must admit that in all the years I've had operations that had to do with Revenue Canada, I have always been very impressed with the professionalism and the thoroughness in which they can discharge their jobs. It really struck me when the comment was made by a number of you about the negative attitudes and stuff. When you think about it, of all the clients I've had who have been assessed, or have been audited, 99% of them were audited for good reason. And I know why they feel really pissed off at Revenue Canada. But I think Canadians should be very comforted by the fact that Revenue Canada does a very good job.

In terms of this issue of the polarization even of the witnesses, it's interesting that the labour unions have come before us, and not only have they talked about the labour situation, but they have talked about every aspect of this revenue agency and condemned it. It's been total blanket condemnation.

The point, though, by Mr. Silverman about...I don't understand why the employees—this is the fundamental problem here. The employees did not come to speak to this committee; the unions did. The unions came before this committee, and I hate to say it, but the guy from the Fraser Institute, I think it was, came yesterday and said the union culture is not compatible with a knowledge business, which Revenue Canada is.

The unions have one problem they have to face, and that is if Revenue Canada is successful in this agency and if it in fact does bring itself into the new millennium as a knowledge-based, high-tech business being able to provide efficient services, there is going to be downsizing and the unions are going to lose union dues.

The question after all of that is, in your experience with Revenue Canada, do you feel the employees' positions or views about their business, Revenue Canada, has been fairly reflected by the representations of the unions?

The Chairman: Who would like to answer that question? Mr. Boudreau? Mr. Whyte?

Mr. O'Brien.

Mr. Peter O'Brien: I don't know really how you can answer it, except to say that I was in the regional office of Revenue Canada in Halifax last week and I told about six or seven people I was coming here today to make representations. None of them seemed particularly interested, or particularly concerned, and that's the only answer I can give. Certainly we cannot reflect the view of the union membership, nor should we try, because that's not who we represent, and I think it's difficult, given the complexity of the workplace today, to interpret some of those views quickly and easily.

I sometimes have the same concerns you do. But I've dealt with labour-mangement relations for a long time, and there's good and bad in every sector of society. It's very difficult I think to go beyond that with this kind of an issue today. I think it would be inappropriate to cast aspersions in a specific sense at all. I think it would be wrong perhaps.

The Chairman: Any further questions?

Mr. Paul Szabo: Mr. Whyte, in your opening remarks, you said that virtually every Canadian business has dealings with Revenue Canada. Which ones don't?

Mr. Peter O'Brien: The ones that are in the underground economy.

Mr. Garth Whyte: You blew my line. I was going to say that means this committee will not be studying the underground economy.

• 1655

Mr. Paul Szabo: The reason I raised it is that Revenue Canada in fact has been extremely active in addressing the underground economy, as you well know. Its revenue contribution by its efforts has been something like a 1,700% return, a $17 return for every $1 it spends. It's also important that there is a function and a role played that is extremely important to Canadians.

Mr. Garth Whyte: You bring up an excellent point, and I would like to spend a moment talking about it.

There are two strategies to deal with the underground economy. One is a big stick, more auditors. Another is to pull people out of the underground economy. We think that by reducing the compliance burden and the tax burden, you will pull people out of the underground economy. We also believe that if some of these performance ratings are addressed, you will have a better compliance relationship and you will get more compliance.

We have had instances—not from yourself, sir, but from other accountants who have clients who have said this burden is so onerous, some of their clients are saying, catch me if you can. We feel there are two strategies. One strategy is by having a revenue agency and getting the federal government, the provincial governments, and even the municipal governments get their acts together collectively down the road, you will have a better compliance and you may pull people out of the underground economy. We think that's very positive.

The Chairman: Thank you very much, Mr. Szabo.

Thank you, Mr. Nixon, Mr. O'Brien, Mr. Whyte, Mr. Boudreau, and Mr. Silverman. I really appreciate your comments. You certainly helped us understand Bill C-43 a lot better. We appreciate your input.

We'll suspend for approximately 15 to 30 minutes.

• 1655

• 1801

The Chairman: I'd like to call the meeting back to order and welcome everyone here this evening. As you know, the order of the day is Bill C-43, an act to establish the Canada Customs and Revenue Agency and to amend and repeal other acts as a consequence.

This evening we have the pleasure to have with us representatives from the following organizations: the Canadian Institute of Chartered Accountants; Public Policy Forum; and RESO Innovac. We will begin with Mr. Robert Spindler, from the Canadian Institute of Chartered Accountants. Welcome.

Mr. Robert Spindler (Chair, Canadian Institute of Chartered Accountants and Canadian Bar Association Joint Taxation Committee): Thank you.

On behalf of the Canadian Institute of Chartered Accountants, we'd like to thank the committee for inviting us to appear and comment on Bill C-43.

I'm Rob Spindler, and with me here today are Catherine McMillan and Sal Badali. As a group, we've been involved with the CICA in looking at the agency issue. I will say a few words about the government's overall proposals, while Sal and Catherine will provide you with some comments on specific issues.

Representatives of the CICA have been working with Revenue Canada officials over the last eighteen months to provide input into the government's proposals for the agency. As well, we were pleased to provide additional feedback on this initiative by nominating a representative to sit on the minister's special advisory committee on the agency, Mr. Jack Vicq, of Saskatchewan.

Over this period of time, we have focused our commentary on a range of government and accountability issues. We were very concerned with initial proposals that the agency be placed at arm's length from government. We recommended that the existing ministerial oversight of the revenue system exercised by the Minister of Revenue be maintained. We said it was vital that MPs speaking on behalf of taxpayers be able to hold the minister accountable for the workings of the system.

It is clear that the comments provided on this issue during the consultations were heard and taken into account. We're pleased to see that under Bill C-43 the Minister of Revenue will retain responsibility for the agency; that it will be structured to allow for close ministerial oversight; and in particular that the minister's power of inquiry into any activity of the agency will be maintained.

Sal Badali will now talk about issues related to the governance of the proposed agency.

Mr. Sal Badali (Member, Communications and Government Affairs Committee, Canadian Institute of Chartered Accountants): Thank you, Rob.

In providing feedback on the agency, we took a close look at the roles being proposed for the board of management, the commissioner and the minister. We wanted to ensure that there was appropriate accountability built into the proposals for the overall directions of the agency. We said the minister should retain responsibility for matters of public policy relating to the agency. We also said the board of management should be responsible for developing day-to-day administrative policies.

We thought it was important that these respective responsibilities be spelled out in legislation. We're pleased that Bill C-43 clarifies these rolls. The minister will be able to issue written directions to the agency on matters of public policy, while the board of management is responsible for overall administration of the agency—in effect, able to manage its resources, services and personnel.

• 1805

In this regard, we know it is intended that the agency have the flexibility to tailor its administrative requirements and arrangements to meet its operational requirements. In light of this, we have already provided the minister with two publications prepared by the CICA, Guidance and Control and Guidance for Directors: Governance Processes for Control. These publications address matters relating to control—all the elements in organization that, taken together, support people in the achievement of the organization's objectives. These elements include resources, systems, processes, cultures, structure and tasks. Looking at control means looking at all these elements and how they are interrelated and aligned with objectives. The publications describe the control responsibilities of a board of directors and how they can fulfil these responsibilities, and they set out criteria for effective control in an organization. We urge the agency's board of management to refer to them in creating the administrative framework for the agency.

Catherine will now address issues related to the board of management and user fees.

Ms. Catherine McMillan (Past Chair, Commodity Taxation Committee, Canadian Institute For Chartered Accountants): Thanks, Sal.

We said that getting the composition of the board of management right was absolutely fundamental in determining the success of the agency. With respect to the qualifications of directors, we recommended that they be selected for their talent, expertise and accomplishment, looking at characteristics such as integrity, informed judgment, teamwork, financial literacy, absence of conflicts of interest, and high performance standards. Selection criteria should ensure that the core competencies needed on the board are addressed in such areas as tax, accounting and corporate finance, human resources, facilities management, business judgment, leadership, crisis response, and strategy and vision.

To address these considerations, we strongly recommended that rather than nominate a single candidate for the board of management, each province should be asked to put forward a list of nominees—perhaps four or five candidates—from which the federal government could select a board with appropriate overall balance. We believe this will serve to promote the long-term success of the agency, and we are very pleased to see this recommendation incorporated into the legislation.

We also said there was some concern that a range of new user fees might be introduced by the agency. We thought it was very important that the minister retain responsibility for bringing forward all user fees for approval, and we understand that this will continue under the agency. We also understand that a user fee plan for the agency will be part of the annual corporate business plan that is required by the legislation. We believe it is essential, in the interests of program enhancement, that all user fee revenue remain within the agency itself.

I'll now turn it back to Rob, who will comment on some other areas of interest.

Mr. Robert Spindler: As we look forward to the development of the agency, there are two areas of interest that we'll be following. The smooth functioning of the administration of taxes is affected by many factors. Of those, two are of particular interest to the CICA: the advanced tax ruling process, and the interaction between the agency and the Department of Finance.

With respect to the first issue, taxpayers and their advisers rely heavily on the advance ruling process to provide timely information on the application of taxes. A well-staffed, well-trained rulings group is essential to the system. Our hope is that the rulings group will not be adversely affected under the new agency. Furthermore, we would hope that the rulings group would be fully supported and developed further so that it can provide improved service in an increasingly complex environment.

The second issue is perhaps a little more sensitive. It is a fact of life that legislation must at times be drafted using broad wording. As such, the interpretation of tax legislation requires exercising judgment to ensure that appropriate results are achieved based on established and sound policy. The close interaction of the agency and the Department of Finance is essential to the appropriate interpretation of tax legislation. We understand that existing relationships will be preserved, and we encourage the agency to interact closely with the Department of Finance on matters of interpretation.

We have appreciated the opportunity to work with the minister and Revenue Canada officials to provide input into the government's proposals for the agency. We are pleased that many of our suggestions have been accepted and are contained in the legislation. The CICA is supportive of the government's current proposals contained in Bill C-43. We believe the government will be well positioned to provide enhanced service to taxpayers under the proposed agency. We also think allowing the agency greater freedom in tailoring its systems to meet specific needs offers the potential for increasing the efficiency of the tax compliance system. We look forward to these things becoming a reality, and we will be pleased to answer any questions you may have.

The Chairman: Thank you very much, Mr. Spindler, Ms. McMillan, Mr. Badali.

We'll now hear from the Public Policy Forum, and Mr. David Zussman and Mr. Robert Plamondon. Welcome.

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Mr. David R. Zussman (President, Public Policy Forum): Thank you very much for the invitation to be here this evening, Mr. Chairman. We've been looking forward to having an opportunity to meet with parliamentarians on this bill for some time.

For those of you who don't know, the Public Policy Forum is an independent think-tank that is actually located in Ottawa. It brings together government, business, labour, and the not-for-profit sector on issues of public policy. One of our areas of interest during the last few years has been the area of governments and accountability, so we have been particularly interested in the development of this agency over the last two years, since it was announced by the Minister of Finance in the 1996 budget.

At the Public Policy Forum we have taken a particular interest in the area of alternative service delivery. We have published considerably on that, and Bob Plamondon and I have in fact done a number of different studies on tax compliance for the Department of Finance, particularly with regard to the GST. We were therefore very pleased when we had the opportunity to look at the issue of tax compliance and administrative compliance in the context of this new agency.

Bob is going to go through the results of our study, which I believe all of you have before you. In our view, it situates the economics, if you like, of the creation of an agency of this kind. But before I turn it over to Bob, I just want to note for your information that I served on the minister's advisory board in the preparation of the legislation.

Thank you.

Bob.

Mr. Bob Plamondon (Consultant, Public Policy Forum): Thank you, David.

I will be going through the study in order to give you some of the highlights, and I look forward to any questions you may have about our research and other areas. I would first like to highlight our research methods and what was involved in leading us to the observations and findings that we have before you today.

The first thing was a review that examined all of the literature on compliance and administration costs internationally. Most of it has taken place in the U.K., Australia and New Zealand, but there is also Canadian research, much of which has been done in the last four or five years.

This is an area of study that is attracting a lot more attention. At least in Canada, the work has generally been done by two or three individual academics, of whom I am one. The trend is to increase the level of study on compliance and administration costs. As you will see today, what's at stake is clearly material and relevant to our economy.

In addition to the literature review, we conducted a number of panels to get an in-depth discussion on issues. One panel was with a group of accountants who work with thousands of small and medium-sized businesses on a day to day basis, and so are working in the guts of the tax system. We also had a panel of large business individuals who have almost daily active relationships with revenue departments at the federal and provincial level. As well, there was one for not-for-profit organizations whose interest in the system is passionate, as it affects their credibility in the Canadian public.

We also conducted a national opinion poll of 1,500 small and medium-sized business owners in order to get their views on the issues, and we did a detailed, analytical review that is bringing together all that we know from past research in our panel and opinion polling. We did these things in order to make reasonable judgments and perhaps conservative estimates about the level of compliance costs and the impact that a single administration would have in this area.

For the first time, in this study we are able to report the level of compliance costs that exist for all major tax systems in Canada. It was our estimate that these systems cost the Canadian economy between $2.3 billion to $4.5 billion each year, or about $3.4 billion at a mid-point. This represents four-tenths of 1% of our gross domestic product—this is just the cost that businesses incur—and about 1.5% of the taxes that are ultimately remitted to government. With numbers at this level, it's clear that even modest reductions of compliance costs, in percentage terms, matter to our economy.

In our presentation today is a listing of the various taxes and our estimates, high and low, of compliance costs. You can see that the taxes collected by the federal government, both on their own behalf and on the part of provinces, represent about three-quarters of the compliance costs incurred by business.

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In terms of administration costs—this is the cost incurred by government to maintain the system—excluding customs, our research showed they were spending $1.7 billion to collect approximately $165 billion. The provinces, relative to that $1.7 billion, spend $513 million. So you get an order of magnitude between the two orders of government. Although that's skewed because of the level of spending in the province of Quebec, inasmuch as they administer their own personal income tax system as well as the QST and GST.

Excluding the province of Quebec, the provinces spend about $183 million in tax administration, and that's ultimately where we focus our efforts in trying to determine how much of that cost could be saved if there was one administration of the tax system in Canada.

At the provincial level, the taxes they are collecting for themselves are largely the retail sales tax, and corporate income tax in the provinces of Quebec, Ontario, and Alberta. From that base and in our research, our question was what would happen to those costs if there were one entity managing all federal and provincial tax systems? Looking at the detail in a number of different ways, and based on our research, we estimated the compliance cost savings from single administration would be between $171 million and $285 million, which is about 7% of the overall costs.

We thought it appropriate to segment that to include and exclude the province of Quebec, largely because their system is quite different in that they are today administering a personal income tax system. They are today administering the GST on behalf of the Government of Canada and the province of Quebec, and our judgment was that the likelihood of them participating in single administration, at least at the outset, was lower than it was in other provinces. So on that basis we found that without Quebec participating in single administration, the savings would be between $116 million and $193 million.

Most of these savings come in a few areas. One is registration. Take, for example, when a new business is formed and it wants to register itself for the various tax systems. It takes time when you have to deal with all the various elements of a tax system, for example the different orders of government—the provincial government and Revenue Canada—employer health tax, workers' compensation tax, corporate income tax, GST, and source deductions.

There are also savings with unified accounting, if businesses can write one cheque for the taxes they owe each month as opposed to five or six. And if the various taxes that are similar, such as those applied on payroll, can be linked, savings are available there. As well, administrative cost savings could be achieved. We estimate it in the range of $97 million to $162 million, again about 6% of the overall level of cost. This amount would be reduced of course if Quebec did not participate.

There were a number of other observations from our study, from the panel discussions. First, the business community is of the view harmonization is the preferred method of reducing compliance cost, rather than single administration. Nonetheless, single administration was endorsed. There was concern about the ability of one entity to bring all these systems together in the transition and to operate efficiently. It was noted as well that because of the ability to link information there would be opportunities to minimize the tax gap, so the tax that is not collected would be collected properly because of the ability to link different taxes.

As was mentioned by the CICA, large business was seeking political accountability, which has been addressed. And not-for-profit organizations at least saw the transition to an agency as an opportunity to improve the tax system in their area. In the opinion polls we did, the majority of small businesses supported a single agency, believing it would reduce the compliance effort and avoid duplication. There is concern, however, about the transitional costs. And to the extent savings are realized in moving to single administration, they would like them to be applied in areas other than, for example, increased audit.

Mr. Chairman, thank you for the opportunity.

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The Chairman: Thank you.

[Translation]

Mr. Vallerand.

Mr. André Vallerand (Chief Executive Officer, RESO Innovac): Thank you, Mr. Chairman. I also thank the members of the committee for inviting me to discuss with them the merits of establishing the new agency, which is the purpose of Bill C-43.

I would first say, Mr. Chairman, that insofar as we want to see the merits of the new agency, we must not loose sight of the fact that this reform is consistent with what we are seeing in most western countries, that is the governments of these countries are trying to reform their public administrations to make them more performing and productive, to bring them closer to the users, and also to enhance their services. This is an international trend that we cannot afford to overlook.

Mr. Chairman, I raise this issue at this point, because based on this, consumers are asking their governments to introduce reforms that will be consistent with the new economy.

Concretely, we cannot ignore that for several years, we have been in what we call the new economy in terms of our economic activities. If we look at the growth rate in national production, including that of Canada, or at the growth rate in our exports and imports, it is obvious that our public institutions must adjust to this new reality.

This context is certainly consistent with the rationale behind the establishment of this new agency, or with converting the Department into an agency, and the need to have an organizational and administrative structure that can better meet the requirements of this new economy. A structure such as that of Revenue Canada could, a few years ago, meet the needs of those years, but today, we must look at what kind of structure we should have to adapt to this new global economic reality.

As the representatives from the Public Policy Forum have just explained, concretely, such a reform must translate into substantial savings, if only at the tax compliance level. As you know, the costs of tax compliance are almost $3.5 billion, while administrative costs are about $2.2 billion.

Insofar as Mr. Plamondon's study shows that we could realistically expect savings of $165 to $285 million, if we include all provincial and territorial administrations, even if only for tax compliance, and of $100 to $200 million for administration, imagine what the impact would be for our businesses, and specially for small businesses.

In my opinion, this is how we must see the reform. We must understand that the administration of this agency will be more flexible. It will be able to better adapt to the requirements of general management and personnel management in terms of staffing and training, which are critical objectives today if we want to have the skills that will enable us to meet the challenges of tomorrow.

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Think of the introduction of new information technologies and all the electronic trade applications in public administration. Imagine the impact of those challenges on tax administration. Think of the staff our public administrators must recruit to meet those challenges, given the competition from the private sector. I think the agency will enable us to meet these needs.

I know that speaking before this committee, I am speaking to elected and responsible members who take the interests of their constituents into consideration. It is therefore important to say that the agency is totally accountable to the responsible minister. Therefore, with respect to the concerns that there might not be any direct recourse involving elected officials, I would tell you that this bill includes all the ministerial accountability guarantees, i.e. a significant accountability in a reform like this, that of the elected members of Parliament.

Mr. Chairman, I would like to add that this reform is definitely a step in the right direction on the part of our governments, who are trying to reform our public administrations. I believe it is a leading case, an example.

I would like to point out that I was also on the Minister's advisory committee which proposed this reform for establishing this new agency.

Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Vallerand.

[English]

Now we'll move to the question and answer session. We will begin with Mr. Kenney.

Mr. Jason Kenney: Thank you, Mr. Chairman.

Thanks to all the witnesses, some of whom I know have put a lot of volunteer unpaid time into assisting the department and the minister in developing the design for the agency. I think on behalf of all parliamentarians we owe you a debt of gratitude for the work you've done. I particularly want to congratulate the Public Policy Forum for their very detailed and thoughtful analysis.

When I first had meetings with the department and the minister on this subject, I emphasized consistently the need for more detailed information on the potential efficiencies to be achieved through the agency, and the need to look at the international experience with respect to New Zealand, Australia, and other jurisdictions. I think you've done a very good job of it.

My first question is for the representatives of the CICA. I'm glad you addressed an issue that hasn't come up in our hearings but is an issue you've obviously concentrated some considerable attention on. That is the interplay between the board of management, the minister, and the commissioner, and the competing areas of responsibility they have.

You say in your submission you're pleased with the...that Bill C-43 clarifies the roles. The minister will be able to issue written directions to the agency, while the board of management is responsible for the overall administration of the agency.

I wonder if you could just help us by elaborating on this question, because I must admit I'm still a little confused about what appear to be competing areas of responsibility. In clause 6, the act gives the minister carte blanche responsibility for the agency. The minister is responsible for the agency.

However, in clause 31, under responsibilities of the board, it says the board is responsible for overseeing the organization and administration of the agency, and the management of its resources, services, property, etc. Furthermore, the board will make bylaws and will advise the minister.

I'm wondering if you foresee any potential conflicts here. The minister is responsible, but the board is responsible. Who ultimately is responsible, and isn't there some ambiguity still here in this bill?

Mr. Robert Spindler: During the consultation process, we received considerable assurance—and this was one of our primary issues at the outset—that the agency had evolved to a point where the minister would remain primarily responsible for matters of policy, and the board of management would be responsible for the administration or functioning or the daily mechanics of resources, property management, those sorts of issues. It was very important to us that the minister be retained as the person responsible for matters of policy.

• 1830

The point a number of people have made is that they didn't want this agency to drift towards the IRS model of an independent body that could implement collection procedures and the like that were counter to good public policy. We were satisfied that in Bill C-43 this ministerial involvement had been retained and those controls continued in place.

Mr. Jason Kenney: So you just don't see the potential for any confusion there. You think it's perfectly clear as the bill is currently drafted.

Mr. Sal Badali: The bottom line is that we feel there's ministerial accountability, which is very important to us.

Mr. Jason Kenney: Agreed. I think we're all glad to see a change in this final draft of the bill. I'm glad also that you put so much emphasis on the need for competence in the appointment of directors to the board. I'm glad to see that there actually is a nod in that direction in the statute itself where it lists some of the qualities we would like to see in these directors so that hopefully they will be strictly on the basis of competence and not politics.

I wondered if you would go one step further—any panellist could respond to this—and support the idea that at least the person who the Governor in Council intends to appoint as chair and as commissioner, and possibly the directors as well, ought to first appear before a committee of Parliament to be questioned about their background in regard to their competence for the position and so forth. This is something such as in a conventional and congressional system, where before a commissioner of the IRS is appointed he has to come before Congress for an interview. I'm not suggesting that the final say be here—ultimately it would be the cabinet—but at least have some kind of public vetting process. Would you maybe comment on that?

Mr. Sal Badali: That's an interesting concept, but for us the bottom line is ministerial accountability. Once you have ministerial accountability and the opportunity for the media to ask the minister questions in the House, that's the most important thing. That's the paramount issue. It's something we were consulted on, and we really asked for. So, quite frankly, we're probably quite content with the way the bill is now.

Ms. Catherine McMillan: On the point you're making on the composition of the board, we felt very strongly that each province should put forward more than one candidate. Otherwise, the areas of the core competencies that I talked about—tax, corporate finance, human resources, facilities management—are large areas and you need people with the range of skills to address all of those issues if you are to have a properly functioning board of management. We didn't get into the process as far as whether or not it should be a parliamentary process to select the people, but we felt it was important for there to be a pool of good resources to draw from to get the right mix.

Mr. Jason Kenney: We share your principal concern about the ultimate accountability to the minister, although we all know that on a day-to-day basis currently the deputy minister and designees of the minister exercise day-to-day management authority. And that would continue under the commissioner.

The next question is for the representatives of the Public Policy Forum. In your study, obviously, as you indicated, your estimate of compliance savings is predicated on the assumption of all the provinces participating, or all of the provinces minus Quebec. Have you run the numbers with a small number, say one or none, of the provinces participating in the model?

Mr. Bob Plamondon: We didn't address that particular issue in the study, although I could comment that I think the savings would be available proportionately across various provinces. If you're a small-business owner operating in the province of Ontario, GST and retail sales tax are being managed by the same entity. You're filling in one form. Whether Saskatchewan and Manitoba have come onside with that system ought not to make any difference at all. The saving at the compliance cost level I think exists regardless of whether you had one province come onside or all of the provinces come onside.

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For national organizations, their level of compliance costs is rather infinitesimal relative to the size of their business organizations. The large majority of the cost is at the small-business sector. I think that's where the savings are most relevant. I think they would come under a partial, a single administration, if you will.

Mr. Jason Kenney: Did your study address, or were you able to estimate, any potential cost savings from the more flexible personnel management regime that would prevail under the new agency?

Mr. Bob Plamondon: We didn't examine that issue within our study.

Mr. David Zussman: That's an interesting question.

Mr. Jason Kenney: Would you care to speculate, although not on specific numbers? The reason I raise this question is because the government is trying to balance two political concerns here. On the one hand they're saying that this will result in efficiencies. On the other hand, they're saying to stakeholders, interest groups, and unions that there will be no lay-offs. So I'm trying to get my head around how you drive efficiencies out of a $2.3 billion department with 45,000 employees if you keep the same payroll. How do you address that problem?

Mr. David Zussman: You're raising a very important question. Some of the savings clearly would come through some degree of efficiencies regarding the use of technology. But the second question has to do with human resources and requirements you're going to need once the system becomes more harmonized. Unfortunately, I can't really fully estimate what the full impact of that might be. I think this is an important variable you're raising, but I'd be very reluctant to actually estimate what it ultimately might be.

Mr. Jason Kenney: Of course.

Mr. Bob Plamondon: There is one observation that came from the panels on this issue, which may be surprising, and that is the relationship between compliance costs that businesses incur and the quality of the staff at Revenue Canada. The view largely held, particularly among the larger organizations that get audited continuously, and even among smaller businesses, is that if they're going to be audited they would rather have competent staff dealing with them who are very sharp, can get to the point, ask the right questions, and if there's nothing there to find they can let them get on with their business. So they want to have quality staff.

Mr. Jason Kenney: Paying people more in terms of auditors could result in greater efficiency is what you're saying.

Mr. Bob Plamondon: Paying the right people, who have the competence to do their job properly, more money.

Mr. Jason Kenney: Yes.

Mr. Bob Plamondon: In the panels it was observed that there is a flowthrough of some of the best staff from Revenue Canada into the private sector, understandably.

The Chairman: You're talking about efficiency. I'd like to move to another topic called productivity. The issue of productivity is something that concerns me quite a bit, not just when it comes to government programs, but generally speaking in our economy. We all know that productivity is the underpinning of a higher standard of living. I'm wondering whether this particular agency would in fact meet the productivity test as designed.

Mr. David Zussman: I think we're saying that when fully implemented it would be more productive. That is to say it would be less expensive for business to comply and therefore add to the bottom line. And also, in terms of the actual public administration, the point that André raised, it will be a much more efficient system in the context of being an interesting alternative service delivery model, if you like. But it all is predicated clearly on more and more partners in this venture.

The Chairman: Will it result in higher wages for workers? Will it be able to absorb highly skilled Canadians? Paint me the picture.

Mr. David Zussman: It's hard for us to fully speculate on that. I think we're looking at market forces, of course, where in fact salaries in the public service are now lagging behind those in the private sector. So if we're talking about a truly competitive marketplace, it looks like governments in general are going to have to pay more. This is not only true in the case of auditors, but also for economists and other specialized skilled people in the public service today.

• 1840

At the same time, though, I think this is one area of public administration where technology can be fully brought to bear on the issue. And I think there is an enormous potential for linkages there, for instance with existing databases within Revenue Canada. Also, I think the notion of e-filing, for instance, has caught on as a popular means of filing one's income tax. All of these things will add to the efficiency and productivity of the agency.

To a large extent, it depends on the creativity of the people who manage it, and the extent to which they take advantage of all these new possibilities. I guess that's the challenge you parliamentarians can put to them.

The Chairman: Mr. Kenney, any further questions?

Mr. Jason Kenney: Some witnesses who have appeared before us have raised the concern that a merit-based system of pay—which is partly contemplated in the legislation—would result in de facto pay for quotas for auditors. Now, this is obviously a concern to taxpayers. Anybody in the panel may comment on this, but my question is principally directed to Mr. Plamondon, who studied New Zealand.

I know in their special operating agencies, the corporatization of the department, they included incentives—sort of profit-style efficiency incentives—for senior managers. Is there any evidence that resulted in quotas for tax collection amongst auditors? And do you have any concern this might find its way into the new revenue agency here in Canada?

Mr. Bob Plamondon: I have no direct evidence of the experience in New Zealand on that issue. I can tell you panel members in our research were concerned the move to an agency could be construed as a money machine. The incentive to increase the cost as opposed to the efficiency of the department was also a concern. Largely, they thought it would be addressed through increased ministerial accountability.

I would say there are a number of ways by which you can evaluate the efficiency of Revenue Canada's staff, and their ability to collect money is not the most appropriate one. It may not be an appropriate one at all. For the millions of Canadian businesses that are filing their taxes on time and in the appropriate amount, they deserve to have the least amount of interference in their business from Revenue Canada. That ought to be recognized. So if that's a mentality of “I've got to collect more dollars”, as opposed to collecting the right amount of dollars, that would be a problem. I've seen no evidence of that within Revenue Canada, nor in the concerns of those who have participated in our research.

In fact there is within the Canadian business community reflected in our panel, in our opinion poll, an acceptance that the proper amount of tax ought to be collected. And if this agency can link more taxes together, and through that information target audits in areas where there's clearly a problem, then that's a good thing.

Mr. Jason Kenney: Do you have a comment on that?

Mr. Robert Spindler: We'd just echo those points. I think the issue of quotas or pay that reflects perhaps inappropriate audit or collection techniques is covered completely by ministerial accountability.

Mr. Sal Badali: And there are all kinds of other performance measures that many governments have to base pay on merit. The Province of Ontario has a merit-pay system for senior executives. Each ministry has its own set of criteria—

Mr. Jason Kenney: Right. I want to be clear that I'm all in favour of paying on merit in the public sector, but when it comes to tax collection, it does seem to me the temptation is to make the dollars collected the principal measurement. So that doesn't register with all of you as a concern?

Mr. Robert Spindler: No, I think the control feature is in place. It's always a concern; it should be a concern continuously. It is a concern today; it'll be a concern tomorrow under the agency. We would look to you, for example, to make sure the Minister of Revenue does avoid that sort of situation and maintains the policies that have been there in the past in terms of taxpayers rights.

[Translation]

The Chairman: Mr. Perron.

Mr. Gilles Perron: I would like to ask a question to Mr. Plamondon.

• 1845

In the observations contained in your paper, we see that your survey of small businesses shows that most respondents support the establishment of a single agency. What is this majority? Is it a 50% plus 1 majority, as one might say these days, or a 66% majority? How many companies participated in the survey?

I will get back to the conclusion after your answer, but I could give you a hint. The small business representatives came to tell us this afternoon that the survey included 7,375 respondents. About one third of them were satisfied with the current situation, one third wanted a new agency, one third were neutral for establishing an agency, and one third were against. Yet, you suggest that most small businesses support the establishment of an agency. I would like you to clarify this for me.

[English]

Mr. Bob Plamondon: On the first question, the number of small and medium-sized businesses that were polled in this research was 1,500, which allows us to have statistically reliable results.

In terms of the businesses being supportive or not, we asked questions about the importance of outcomes from agencies. We asked them what they thought would be an advantage to having a single tax collection agency. Without being prompted they were able to identify, for example, that completing all their taxes on a single form and remitting all of their taxes with a single cheque would save them money.

They were concerned on the negative side, particularly about the cost of transition. The learning curve is an issue here. Their staff perform their tax functions on a monthly basis, and change is something that is an issue.

In terms of support, this is not an issue that in a telephone interview would necessarily excite small businesses to become avid cheerleaders, which might explain why 50% roughly don't think this will have much of an impact on their compliance costs. That might be for businesses that aren't dealing with both the retail sales tax and the GST. Maybe they're in the province of Alberta and it's not a big an issue for them or they're in Atlantic Canada.

One of the other reasons they may not get as excited is that despite the fact we operate in a federal system, we have an incredibly high level of integration of our tax systems and a high level of harmonization. So the areas where there are improvements to be made aren't that great, but they're nonetheless important and material.

Of those polled, 50% think this single administration would have no impact on their compliance costs. By a factor of three to one, those who think it's going to have an impact think their costs will go down. These are some of the reasons why they would be supportive of a move toward a single tax collection agency.

[Translation]

The Chairman: Thank you, Mr. Perron.

[English]

Mr. Brison.

Mr. Scott Brison: Thank you, Mr. Chairman. I had to step out earlier and I apologize. I had a speech to give in the House.

There have been concerns raised at the committee throughout today and yesterday by presenters, as well as some supportive arguments. Why are the benefits of the revenue agency not attainable within Revenue Canada? An earlier presentation raised the fact it may indicate a systemic problem within the public service in Canada, and perhaps we should be looking at dealing with it in a holistic way instead of in some sort of department-by-department, agency-by-agency way. Are we just avoiding the problem?

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Secondly, the savings discussed are contingent upon provinces signing on, and there has been embarrassingly poor response from provinces on this to date. We understand the minister has not had a face-to-face discussion with the Minister of Finance in Ontario, the most populous province and certainly an engine for tax revenue.

Provinces are indicating they are seeking greater autonomy in tax policy and tax enforcement policy, and Ontario and Alberta are examples of that. It does seem inconsistent with federal-provincial relations and trends in those areas, and I need not remind anyone in this room of the importance of those relations in the current context.

Those are the two general issues on which I'd appreciate your feedback.

Mr. Robert Spindler: I suppose in a way you're describing a bit of a chicken and egg problem with provincial buy-in. My understanding, and I think the way a lot of business operates, is if you have an attractive idea, an attractive structure and attractive concept that makes good sense, over time there can be buy-in. It's usually better to start the process and then draw people in, rather than turn it around and wait for people to come and then develop the system.

The way the CICA is looking at this, and the way a great many businesses are looking at this, is the agency represents an opportunity. It's up to the government and the people at the agency to capitalize on that opportunity, but having the infrastructure at least allows that opportunity. Without the infrastructure the opportunities for simplification and harmonization are much harder to achieve.

Ms. Catherine McMillan: On a different issue, Scott, where you were concerned about the lack of autonomy on tax policy for the provinces, clearly the agency is structured for administration, not to take over tax policy. That's important for everyone to keep in mind. There has been a lot of press that seems to suggest concern at losing autonomy in tax policy, but that clearly isn't the intent.

Mr. Bob Plamondon: On your first question about whether the benefits are attainable within Revenue Canada, in terms of single administration they would be attainable within Revenue Canada and they are attainable today.

If you're in Ontario filing your personal income tax, it's a combined return and that all happens within Revenue Canada. But to take it to that next level and encourage provinces to hand over the administration of their retail sales tax, their excise tax or some of their payroll taxes, the environment would suggest a change would be appropriate in gaining their confidence. While these things could happen and do happen within Revenue Canada, this is taking it to another level.

You also asked whether the savings are contingent on provinces coming onstream. There may be some savings in changes if no provinces come onstream, but that's not an issue we looked at. What we can say to parliamentarians at the federal and provincial levels as a result of our research is, this is what's at stake. There's a potential here for savings in administration and in compliance, and the decision to keep those administrations separate comes with an opportunity cost.

We hope our research will provide some focus for that debate and perhaps some incentive to try to minimize those costs because, let's face it, compliance costs and administration costs, while necessary, are dead weights on our economy. They don't add to our productive capacity. This reports back to the five maxims Adam Smith wrote about good economic policy, that tax collection costs ought to be minimized—compliance costs ought to be minimized. That's what our focus is on with this research.

The Chairman: Thank you, Mr. Brison.

I have two final questions from Mr. Pillitteri and Mr. Szabo, but before we get to those questions I'm going to ask the parliamentary secretary, Ms. Phinney, to make a statement.

• 1855

Ms. Beth Phinney: Thank you, Mr. Chairman.

This is a reply to comments made by Frank Balics yesterday. He was the last one to present yesterday. He appeared before this committee to express his concern that clause 57 of the bill would take away rights that Revenue Canada employees now have regarding political activities once they become employees of the agency.

We have confirmed with lawyers at the Department of Justice that clause 57 ensures that agency employees will be subject to the same rules for political partisanship that apply throughout the public service. Therefore, clause 57 maintains the status quo for Revenue Canada employees who become employees of the agency.

The Chairman: Thank you, Ms. Phinney.

Mr. Pillitteri.

Mr. Gary Pillitteri (Niagara Falls, Lib.): Thank you, Mr. Chairman.

In the last few years we've seen quite a brain drain, especially in Revenue Canada. Do you think this brain drain will stop? Is there a way to slow it down, at least? We can see from the last deputy minister, how many have left the service. It's not only because of the wages and certainly the freeze, but when you're controlled, it's almost like you see how little you can do. Really, there's no incentive for anyone to really advance themselves or be more productive, as the case may be. That's one part.

Here's another part I would like to ask. Say we take a look at the efficiency of an agency. Take a look at how this relates to business. I know, being a businessman, what it is. A question was asked a few minutes ago about how many responded. I'll tell you that if you ask some business people some of those questions, they'll say to go fly a kite. They'll say they don't have enough time to answer some of your questions. That would be probably the first response you would hear, because they have had it up to here sometimes from answering questions. If you're a small firm, there's an amount of time you have to dedicate to government agencies, tax collectors, and other people. I think only a person who is in it understands how much time he has to spend.

Specifically talking about Ontario, there is another bureaucracy called the Liquor Control Board of Ontario, which is an animal by itself. You know, it's wondrous. Some of those individuals should be brought into line and some policies should be put into place.

Another part we would have to see concerns savings. Even in the largest bank in Canada, six chairmen gave their payroll to somebody who's independent. We see a bank making $1.8 billion in profits and then giving out their payroll to somebody who has much more of an expertise with this. I could see how much expertise would be collecting in an agency because it surely would be much more in tune and much more expert.

Another question is this. No provincial governments have responded to this. So do you think that with the formation of this agency the provinces would have to give it all parts of their collection, or do they want this agency to collect only certain segments that they want them to collect?

The Chairman: Who would like to answer that? Mr. Badali.

Mr. Sal Badali: I'll take a shot at it.

We discussed this with Revenue Canada officials. I guess our view is that efficiencies can be had if there is an agency with or without provincial support. Obviously, if the provinces are involved, so much the better. It gets down to a question of focus to allow an organization to be the best it can be in its own environment. That's really how we see it.

Mr. David Zussman: I'd like to make a couple of quick responses.

On the issue of the brain drain, this is a serious issue that I think you've properly identified. I think the agency status will give the people who manage the organization some flexibility in the way in which human resources are done. They'll have more flexibility than they have to date. So in that sense, the agency should be better positioned to address the issue of brain drain.

On the issue of survey respondents, we actually found from our research that people are quite happy to talk to us when you tell them you want to talk about tax collection. In fact we enjoyed very high response rates for this study. We found this previously with our GST work as well.

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The question you raised of lack of provincial participation I think is a critical one. Do you need all of them? No, you don't need all of them at the same time, and you don't need all of them asking this agency to collect all of their taxes.

I think what will happen, frankly, is over time provinces will experiment perhaps with different taxes, and as they get more comfortable with the agency status, our participating in the decision-making through the board management, they will hopefully come to the conclusion that this is in fact in their own best interest and as a consequence will come onside.

The onus will be on the agency to prove to participating provinces that they can offer a better service than they offer today.

Mr. Gary Pillitteri: Thank you.

The Chairman: Mr. Szabo, final question.

Mr. Paul Szabo: Thank you, Mr. Chairman. I have two questions the panel can possibly help us with.

If you have the perfect agency, with all of the bells and whistles and all of the tools and all of the best plans and all of the best strategies, if your people are not with you, you're not going to be successful. The representations we have had from the unions representing the employees have spoken unanimously against the creation of this agency. Maybe you want to comment on why you feel, in spite of that representation, that the agency should go forward.

The second one is something that has come up often in our pre-budget work and in the MacKay report. It has to do with Y2K issues. All levels of government have spent an enormous amount of time and dollars preparing for the millennium bug, for the Y2K. I can't imagine any province being really anxious to say that now that we've done this, our systems are all going to be abandoned so that another revenue agency can take over the stuff we've just prepared for. It really puzzles me about the timing of all of this. Maybe you can help me understand whether or not the provinces have legitimate reasons for not saying they're not coming onboard.

Mr. Robert Spindler: Dealing with your first question, on Revenue Canada employees, it was my understanding that the proposals were very conscious of dealing with and providing transition for Revenue Canada employees. Great care was being taken to ensure that people did not suffer as a consequence of the introduction of the agency. I was of the understanding that this message had gotten out to a great many Revenue Canada officials or employees. Perhaps that's a message that needs to be spread further. I thought there was considerable time and attention and effort paid to that. Certainly in the discussions we've had, the officials we've talked to are very concerned about those issues as a very large employer charged with the responsibility of developing a very sound structure in administration.

With the scarcity of resources and the brain drain, maintaining and cultivating human capital seems to be a very important factor for those involved with developing the agency. So I would have thought they're exercising all prudent management to make sure there's as smooth a transition as possible for all of their stakeholders.

Mr. Sal Badali: One of the things we talked about before we came was we have about 500 members of our institute who are Revenue Canada employees, and we've not received a single letter of concern from any of them about the agency. So at the employee level, as far as our 500 members go, right across the country, it doesn't seem to have been an issue as far as we know.

Mr. Bob Plamondon: I can perhaps comment briefly on your second question, about provinces abandoning their systems. Although I'm a chartered accountant and not an economist, I could argue that those costs really are sunk and don't really matter once they've been incurred. More importantly, if you asked a business operator who's dealing with the tax system on a day-to-day basis what they care about the systems that exist at the provincial level to monitor their taxes, when they think that they can really just deal with one form and one organization, they won't care very much about maintaining those systems. That's where most of the savings are available—at the business side in non-compliance costs.

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Mr. Paul Szabo: Based on the work you've all obviously done, and it's very impressive work, is it your assessment that Revenue Canada, in terms of its resources and systems now, is able to deliver the breadth of service that's contemplated in the agency, or are we talking about a major overhaul or rewrite of the entire tax collection computer system?

Mr. Bob Plamondon: I think there would be a number of significant changes. I wouldn't want to minimize the challenge that exists in that area in any way, and it's been mentioned by our panel as a concern among businesses. They observed the success the department had in moving toward a single business number for all tax systems that allowed them to link various taxes together.

In some areas the changes would be relatively simple. For example, with corporate tax, where there are significant savings available in Ontario and Alberta, Revenue Canada already administers the corporate tax systems for all the other provinces, except for Quebec, so the model already exists for them to move in.

The area where the change would be most dramatic for Revenue Canada in administration.... They're already involved in payroll taxes; with excise taxes there are relatively few registrants; and with corporate tax, there's a model that exists. Retail sales tax would be the trickiest for them to administer.

The systems would be challenging. But with collections, for example, if Revenue Canada is out collecting money for source deductions, chances are there's money owing for GST and provincial sales tax at the same time, so those dimensions could be incorporated rather readily. Otherwise it would be an enormous challenge for the department to bring all these tax systems together, as they're doing today. But the potential and benefits are obviously there.

The Chairman: Thank you, Mr. Szabo.

I'd like to thank the members of the panel for giving us great insight into Bill C-43 and helping us study this bill. As always, our committee is very grateful to those who choose to contribute to the process. Thank you.

We're going to suspend just for a minute and a half.

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• 1910

The Chairman: I would like to call the meeting to order. As you know, we'll be dealing with clause-by-clause consideration of Bill C-43. But before we do that, I have been handed a motion by Mr. Kenney that the Minister of Finance be requested to appear before the committee at the earliest possible opportunity, but not later than November 26, 1998, to address the supplementary estimates and the performance reviews of the department for the fiscal year 1998-1999. It is moved by Mr. Kenney.

Mr. Jason Kenney: May I just speak briefly to the motion?

The Chairman: Yes.

Mr. Jason Kenney: This is a rather pro forma motion, I understand, and several other committees have passed similar motions requiring five other ministers to appear before them to discuss their supplementary estimates. The reason for the date of November 26 is that anything after that would be too late for consideration by this committee of those supplementary estimates. So it's just a normal part of scrutiny by the committee.

The Chairman: Thank you, Mr. Kenney.

Any comments? Mr. Valeri.

Mr. Tony Valeri (Stoney Creek, Lib.): Thank you, Mr. Chairman.

I think it's quite right, as the honourable member indicated, that it's part of the normal process. I understand that a number of other committees that had made requests to have ministers appear before respective committees to go through the estimates did so quite earlier on in the process, in the early part of November. Unfortunately, as I understand it, November 26 is Thursday, and I don't believe the minister is going to be available.

I would like to propose a friendly amendment if I could. I move to amend by striking the words “but no later than November 26, 1998” and replacing them with “depending on availability”.

I understand the estimates will be deemed to have been reported or accepted by November 26. The problem is really one of scheduling. It is just not possible to get him here in two days.

The minister appeared before the committee last year, so I might also suggest the minister could come before the committee and at the same time appear with respect to the committee's general reference to Standing Order 108. That would allow the committee members to at least ask the pertinent questions they would like to ask. But I do believe it would be quite difficult to get him here by November 26.

The Chairman: Thank you, Mr. Valeri.

I think we have agreement here, Mr. Kenney. Is that correct? Do we all agree?

(Motion as amended agreed to)

Mr. Jason Kenney: On a point of order, Mr. Chairman, I have another procedural motion related to Bill C-43.

I move that in relation to the committee's consideration of Bill C-43, the committee seek the authorization from the House to hold hearings across Canada, and that the steering committee be instructed to draft details.

The Chairman: Okay. Is there any discussion?

Mr. Jason Kenney: I would like to address that motion, Mr. Chairman.

I think it's evident to all of us that this is an extremely important bill that will affect in perpetuity tax collection for Canadians, perhaps the most significant power this Parliament operates. It's also evident to us all that the vast majority of Canadians are likely unaware of this very significant change proposed by Bill C-43.

There has not been a fulsome national debate on something that will affect every single Canadian taxpayer. While I commend the government on the excellent work it has done in consulting various expert stakeholders, such as those who have appeared before us this evening, I do think, as I made evident in my questioning of the minister, that ordinary Canadians, including the individual employees of the revenue department—i.e., not the union leadership—have not had an opportunity to express their concerns about this very important bill. That is why I seek a more fulsome consideration of the bill by extending hearings in places where Canadians can immediately appear before us and express their concerns.

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The Chairman: Thank you, Mr. Kenney.

Since there is no further discussion here, we'll move to a vote.

Mr. Jason Kenney: I'd like a recorded vote, Mr. Chairman.

The Chairman: You may have a recorded vote.

Mr. Ken Epp (Elk Island, Ref.): We thought it would just pass because it was so reasonable.

The Chairman: Okay, Mr. Epp, but we'll move to a recorded vote.

Just so everybody understands what we're voting on, it has been moved that, in relation to the committee's consideration of Bill C-43, the committee seek authorization from the House to hold hearings across Canada and that the steering committee be instructed to draft the details.

(Motion negatived: nays 8; yeas 5)

The Chairman: We will now move to clause-by-clause consideration. Pursuant to Standing Order 75(1), consideration of clause 1 is postponed.

Mr. Kenney.

Mr. Jason Kenney: I have a question regarding clause 1, but you got past me there. Can I ask that question?

The Chairman: Consideration of clause 1 is postponed pursuant to Standing Order 75(1), as I just mentioned.

Mr. Jason Kenney: Oh, I see.

The Chairman: Before we go on, then, I'm going to ask for unanimous consent that when we get to clauses where there are no amendments, we deal with clauses in packages. Is that okay?

Some hon. members: Agreed.

(Clauses 2 and 3 agreed to)

(On clause 4—Establishment)

The Chairman: I understand there is an amendment to clause 4. Is that correct?

Ms. Beth Phinney: As it is currently worded, the headquarters and the agency must be in the national capital region. The proposed wording is that the headquarters must be

at such place in Canada as may be designated by the Governor in Council.

(Amendment agreed to)

(Clause 4 as amended agreed to)

(Clauses 5 to 7 inclusive agreed to)

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(On clause 8—Authorization to act on Minister's behalf)

Mr. Jason Kenney: Mr. Chairman, I'm trying to follow along through the statute. I have a question on clause 8. It's on subclause 8(4), under Commissioner's authorization. It reads:

(4) The Commissioner may authorize any person employed or engaged by the Agency or who occupies a position of responsibility in the Agency to exercise or perform on the Minister's behalf any power, duty or function that the Commissioner is authorized to exercise or perform under subsection (1).

I would like to understand clearly whether or not the authority being given to the commissioner under subclause 8(4) has the same limits as those listed in subclause 8(3). That is to say, this authorization that the commissioner has does not include a power to make regulations, or a power, duty, or function of the minister under this act, etc.

Ms. Sherry Moran (Legislation Coordinator, Revenue Canada): The minister can't give away those powers. In subclause (4), we're only talking about the commissioner subdelegating powers that have already been delegated to him by the minister.

Mr. Jason Kenney: I just wanted to be clear about that. Thank you.

The Chairman: Okay. Do you have any further questions on clause 8?

Mr. Jason Kenney: No.

(Clauses 8 to 10 inclusive agreed to)

(On clause 11—Directions to the Agency)

The Chairman: Mr. Kenney has a question on clause 11.

Mr. Jason Kenney: Subclause 11(1) reads:

(1) The Minister may issue a written direction to the Agency, addressed to the Chair of the Board, on any matter within the authority or responsibility of the Board that, in the Minister's opinion, affects public policy or could materially affect public finances.

My first question is, how is the term “direction” defined? It's not included in the definitions. What form does this take?

Ms. Sherry Moran: It's a term used in a lot of federal statutes, and it remains undefined in them. It's pretty well understood that a direction means telling somebody how to do something, so it would take its common meaning. In this clause, we have specified that it must be written; we're talking about something formal, not simply a verbal direction.

Mr. Jason Kenney: And “public policy or could materially affect public finances” is pretty broad. Is it intended to be pretty sweeping?

Ms. Sherry Moran: The clarity comes from the fact that it's the minister who makes the determination. The minister must believe that there is a question of public policy. I would assume the minister could be challenged if it truly was a private matter and not a matter of public policy, but it is the minister's perception.

Mr. Jason Kenney: Okay.

I have a further question on 11(2), Statutory instruments. I'm not a legislative drafter, so perhaps you could elucidate for me. What is a statutory instrument?

Ms. Sherry Moran: A statutory instrument is defined under the Statutory Instruments Act. It includes a long list of things. Orders and regulations are included in that number, of course. Formal directions of the nature of those we're talking about in subclause (1) would also be included, without the exclusion in subclause (2).

Mr. Jason Kenney: Thank you.

(Clauses 11 and 12 agreed to)

(On clause 13—Minister's power of inquiry)

The Chairman: There is a question on clause 13.

Mr. Jason Kenney: Yes, Mr. Chairman. This clause regards the minister's power of inquiry. It says “The Minister may inquire into any activity of the Agency and has access to any information under the Agency's control.” I wonder if the public servants could explain for us how the minister is bound by the Privacy Act, and how the information to which he has access is limited in any way by the Privacy Act.

Mr. Bill McCloskey (Assistant Deputy Minister, Canada Customs and Revenue Agency Implementation Team, Revenue Canada): There is no limitation on the minister there.

I'll tell you what we're trying to do here. Currently, the minister is named something like 1,470-odd times in the pieces of legislation for which he is responsible—things like the Income Tax Act, the Customs Act, and the GST legislation. In those acts, he has all of those powers to assess people, to inspect goods at the border, etc. Of course they're all delegated down through the various levels of Revenue Canada in terms of administration.

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By virtue of having those powers, when you write him a letter about a taxpayer concern that you have, he's able to ask us questions about that issue, about what we have done in this instance. Of course he's interested in knowing that we've given the person due process, etc., and have given the full benefit of the law, not in making individual decisions. What we're trying to do is recreate that situation here so that he has the authority to ask any question about any matter that's before us. It's just to ensure that he is in the same position. When we say he's accountable, like he is today, that's one of the reasons for why he is accountable. He has access to all that information that he has today.

Mr. Ken Epp: He can't tell anybody what he sees there in an airplane, though.

Some hon. members: Oh, oh!

Mr. Bill McCloskey: No, our various acts—section 241 of the Income Tax Act, for example—have very strict restrictions on the conveyance of any information to which he is party.

The Chairman: He's just kidding, Mr. McCloskey.

Mr. Ken Epp: I appreciate the assurance, in any case.

Some hon. members: Oh, oh!

The Chairman: He gets like that at this time of the night.

(Clause 13 agreed to)

(On clause 14—Establishment)

The Chairman: On clause 14, you have a question, Mr. Kenney.

Mr. Jason Kenney: Yes, Mr. Chairman.

Clause 14 stipulates that there will be fifteen directors. It enumerates the chair, the commissioners, a director from each province, and one from the territories. Unless my math is wrong, I count thirteen. I don't see in clause 15 a provision for direct appointment of the remaining two officers by the Governor in Council. Maybe I'm missing it, but where did those missing directors go?

Ms. Sherry Moran: The appointment provision is in subclause 15(1), in which it's clear that the GIC appoints all the directors. In clause 14, we're simply elaborating that the board includes certain ones. What's unspoken or unwritten are the two federally nominated and federally appointed directors.

Mr. Jason Kenney: Okay, so they'll be appointed. Obviously they're not subject to the further restrictions in subclause 15(2) that apply to provincial nominees.

Ms. Sherry Moran: No. Actually, maybe the easiest way is to do the count. There is a chair and a commissioner, both of whom are federally selected and appointed; there are ten provincially nominated but federally appointed directors; one territorially nominated but federally appointed director; and then there are two others that the GIC could select and appoint.

Mr. Jason Kenney: I wonder also if consideration was given to providing a seat on the board to the minister or for the minister to act as chair. I understand there are some special operating agencies in which that structure is the case—the minister has a seat on the board. With crown corporations, certainly at the provincial level, I know the minister has a seat on the board.

Mr. Bill McCloskey: At the federal level, that's very unusual. We're not aware of any crown corporation in which the minister actually sits or chairs the—

Mr. Jason Kenney: So that was never a consideration.

Mr. Bill McCloskey: Not really, not once we looked at other federal models. We thought we gave him the authority to intervene in any matter of importance to public policy.

Mr. Jason Kenney: Since this is related to clauses 15 and 16, can I just carry on questions on those two clauses?

The Chairman: Do you mind if we vote on clause 14 first?

(Clause 14 agreed to)

(On clause 15—Appointment and tenure of directors)

The Chairman: On clause 15, we have a government amendment. We'll deal with that first, and then we'll get back to your comments.

Ms. Beth Phinney: Thank you, Mr. Chairman.

The proposed amendment would shorten the nomination process for the initial board to two months rather than six months, so that it would be established on a more timely basis. The agency proposal has been extensively discussed with the provinces. They're well aware that it's coming, and are also aware that they may submit the list of nominees for the appointments. I wish to point out, however, that the amendment process after that continues to provide a six-month period for subsequent nominations.

The Chairman: Okay. And just to make sure of that, the amendment moved by Ms. Phinney reads that Bill C-43, in clause 15, be amended by replacing line 23 on page 5 with the following: “within two months after the day on which this”. Is that all right?

Ms. Beth Phinney: Yes.

Mr. Jason Kenney: This comes in at—

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The Chairman: It's amended by replacing line 23 on page 5 with the following: “within two months after the day on which this”.

(Amendment agreed to)

Mr. Jason Kenney: I have a question on 15.

The Chairman: Okay.

Mr. Jason Kenney: The question relates to subclause 15(2). You haven't defined the number of nominees who can be fielded by a province. It could be open. Presumably they could field one name or a hundred. Is that right?

Mr. Bill McCloskey: It would be more than one name. It calls for a list, so it....

Mr. Jason Kenney: Two. It could be two to a hundred or more.

Mr. Bill McCloskey: It could be two. It could be a hundred.

Mr. Jason Kenney: Did you give any consideration to limiting this?

Mr. Bill McCloskey: We didn't. We thought we'd leave it up to the provinces to determine how many people it wanted. There was a clear indication it needed to be more than one, but it's really up to the province to decide.

Mr. Jason Kenney: Now in subclause 15(3) you contemplate the possibility that the province may choose not to submit a name. Is there any intention on the part of the government as a matter of policy that it would use its power of appointment to select somebody from the province that has vacated its right to nominate?

Mr. Bill McCloskey: There's no requirement here, but it would really be left up to the government of the day to decide whether to choose someone from that province.

Mr. Jason Kenney: Has this matter been discussed in the consultations with the various provincial governments?

Mr. Bill McCloskey: They've seen the legislation in earlier drafts of it, and we got no feedback on this issue.

Mr. Jason Kenney: So you have no concrete knowledge as to whether or not provinces intend to exercise this power of nomination.

Mr. Bill McCloskey: None have told us they won't.

Mr. Jason Kenney: But any province may do so. Even if, for instance, a particular province chooses as a matter of policy not to contract with the agency, they'll have this power of nomination, will they?

Mr. Bill McCloskey: I think just by way of clarification I should make it clear. In a sense, the provinces, even Quebec, are already involved with the agency. Revenue Canada now administers personal tax for nine provinces and corporate tax for seven provinces. We administer taxes at the border for a number of provinces, including Quebec. What this does is give them a greater say in what we're already doing for them. Whether they contract for us to do more or not, they've still got an interest in what we're already doing for them, so no province has come back and said they're not interested in having a person on the board.

Mr. Jason Kenney: Thank you.

(Clause 15 as amended agreed to)

The Chairman: Now we have a block here from 16 to 45. Mr. Kenney, do you have questions?

Mr. Jason Kenney: You'll have to bear with me for just a few more clauses, Mr. Chairman.

The Chairman: No, no. This is part of the process.

Mr. Jason Kenney: All right. I have a question on clause 16.

The Chairman: Okay. Go ahead.

(On clause 16—Qualifications of directors)

Mr. Jason Kenney: The question relates to the definition of the qualities appointments to the board should have for discharging their functions. It says they should have “experience and the capacity required for discharging their functions”. This is language I'm not familiar with in any other statute as it relates to Governor in Council appointments. Maybe I'm wrong about that. Is this a sort of innovation in this statute? If so, how would we define experience and capacity? What are we expecting there? What's the intention here?

Ms. Sherry Moran: I don't have the specific statutes that I can refer to. I apologize for that. But definitely, it has been used in other enabling statutes at the federal level. At the advice of our advisory committee we've placed it in the opinion of the Governor in Council. That therefore sets a standard, so it's easy. The Governor in Council can define what those things mean, but it can still be challenged if they're clearly going beyond something that would be the experience and capacity required.

(Clauses 16 to 18 inclusive agreed to)

(On clause 19—Part-time office)

Mr. Jason Kenney: I have a question on clause 19. It relates to the definition in 19(1) of “on a part-time basis”. It says:

All the directors except the Commissioner must carry out the duties and functions of their office on a part-time basis.

Well, if they're maniacs and they like spending 60 hours a week on agency business, how can we stop them from doing so? Isn't this a bit arbitrary?

• 1935

Mr. Bill McCloskey: I think it probably relates as much to the remuneration they will be paid, that everyone but the commissioner will only be paid as if they were on a part-time basis. The commissioner is recognized as the only full-time job, but clearly if an individual wanted to spend more time than in a sense they're being paid for, that's their call. They're not prohibited from spending as much time on this as they would like to.

Mr. Jason Kenney: Okay.

The Chairman: Thank you, Mr. McCloskey.

(Clauses 19 and 20 agreed to)

(On clause 21—Accident compensation)

Mr. Jason Kenney: I have a question.

This clause essentially makes it clear that the commissioner is deemed to be an employee in the Public Service of Canada. Could you remind me, does this apply as well to the commissioner, or is he not an employee?

Mr. Bill McCloskey: Is this clause 21?

Mr. Jason Kenney: Yes. It speaks of the deputy commissioner. Is the commissioner an employee of the public service?

Ms. Sherry Moran: The commissioner is a director.

Mr. Bill McCloskey: The commissioner is a director, so it would apply to the commissioner and the other 14 directors.

Mr. Jason Kenney: Of course. I missed that.

Mr. Bill McCloskey: Yes.

Mr. Jason Kenney: Thank you.

(Clauses 21 to 23 inclusive agreed to)

(On clause 24—Powers, duties and functions of Chair)

The Chairman: On clause 24 there's a question by Mr. Kenney.

Mr. Jason Kenney: Yes, Mr. Chairman. Section 24 reads that:

The Chair must preside at meetings of the Board and exercise any powers and perform any duties and functions that are assigned by the by-laws of the Agency.

Later in the bill we see these bylaws referred to. What are we talking about in terms of these bylaws? They're not regulations, they're not statutory instruments. How do you distinguish the bylaws of the agency from the other kinds of authority the minister can exercise?

Mr. Bill McCloskey: This is quite a common type of clause you see in this sort of legislation, and it's really the boards that decide on how they're going to govern themselves in the sense of how they probably would talk about the number of meetings they're going to have, where they're going to be held, how frequently, etc. It's really how the board itself is going to operate.

It's not anything that would require regulation under any other pieces of legislation. In other words, it doesn't overrule or override any other legislation.

(Clauses 24 to 27 inclusive agreed to)

(On clause 28—Full-time office)

The Chairman: On clause 28 there's a question from Mr. Kenney.

Mr. Jason Kenney: Yes. This relates to subclause 28(2) regarding remuneration. The subsection reads:

The Agency must pay the Commissioner and Deputy Commissioner remuneration at the rate fixed by the Governor in Council.

Given that I believe the bill elsewhere exempts the agency from Treasury Board guidelines with respect to compensation, what will be the scale of compensation that cabinet can reference in establishing this remuneration?

Mr. Bill McCloskey: It's really up to the Governor in Council to decide that. There are guidelines they themselves follow, different categories. For example, the chairman of Canada Post is in a certain category and paid a certain amount. I'm not sure what those are.

Again, it's really up to the Governor in Council to decide that.

(Clause 28 agreed to)

(On clause 29—Expenses)

The Chairman: There's a question on clause 29 by Mr. Kenney.

Mr. Jason Kenney: Yes. This relates to the expenses of the commissioner and deputy commissioner.

This is really a similar question. Are there guidelines that would be applicable to these expenses? And secondly, would these expenses have to be published in the Public Accounts of Canada, or would the other sections of the act exempt the agency from the requirement to publish these expenses in the Public Accounts of Canada?

Ms. Sherry Moran: The Treasury Board policy with respect to hospitality and travel expenses, etc.—I don't have the exact reference here—would apply to part-time GIC appointees, so it would apply to members of the board of directors. I think it was in an order in council last December where they basically made it apply to all government corporations.

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So that policy applies in terms of the expenses. I'm not sure about the public accounts. I assume if it's something the agency has to pay, it would show up there.

Mr. Jason Kenney: So if other sections of the act that are exempted from various Treasury Board guidelines do not apply here, that order in council would supersede?

Ms. Sherry Moran: Yes.

Mr. Jason Kenney: Okay.

(Clause 29 agreed to)

(On clause 30—Matters over which Agency has authority)

The Chairman: Mr. Kenney.

Mr. Jason Kenney: First of all, subclause 30(1) says:

30.(1) The Agency has authority over all matters relating to

(a) general administrative policy in the Agency;

It's sort of a redundancy. I don't understand why it's worded that way.

Then I come down to subclause 30(2), which relates to the Financial Administration Act:

...the Agency is not subject to any regulation or requirement established by the Treasury Board under the Act that relates to any matter referred to in subsection (1)...

Could you just explain what this does?

Ms. Sherry Moran: The wording used in clause 30 is the wording that's used in section 7 of the Financial Administration Act. In a sense, what you're seeing there is the overall administrative authorities that we're transferring from the Treasury Board to the agency. So that's why the wording may look a little bit confusing.

But they talk about general administrative policy. That's intended to include contracting policy, for example, under the Financial Administration Act. So we have stated those as being within the authority of the agency.

Subclause 30(2) makes it quite clear that any Treasury Board regulations made under the authorities they have now that apply to us as a department, with respect to the agency, those regulations or policies wouldn't apply to us except to the extent they deal with financial management matters. We're clearly under the Financial Administration Act for financial management matters, including user fees.

(Clause 30 agreed to)

(On clause 31—Role of the Board)

Mr. Jason Kenney: Mr. Chair, this regards the responsibilities of the board. This really is my principal question. This clause says the board is responsible for overseeing the organization and administration of the agency and the management of its resources, etc.

I'm a little confused. As I indicated in my questioning of the representatives of the Canadian Institute of Chartered Accountants, I'm confused about how this responsibility and authority of the board relates to the general responsibility granted to the minister in subclause 6(2), which simply says: “The Minister is responsible for the Agency”.

If the minister is responsible, and if the board is responsible for overseeing the organization and administration of the agency, I see this as kind of a strange hybrid between a special operating agency, so to speak, and a departmental vertical structure. It seems to me we're creating a kind of duplication of responsibility and authority here that could lead to tension. I wondered if the framers of this could comment on that concern.

Mr. Bill McCloskey: Certainly there was a lot of discussion with a lot of Department of Justice people just to ensure we got this right. I think the best way of explaining it is that those 1,470 or so powers of the minister that I referred to earlier are not changing at all; he still has all those powers. Essentially, he has the responsibility for the administration and enforcement of all those powers in the Income Tax Act, the GST legislation, etc.

What the board is being given in this clause is the responsibility for almost the overall management of the agency, as in the personnel policies, contracting policies, etc. There's no differentiation now. In a sense, the minister today is not responsible for those; it's with the Treasury Board and the Public Service Commission. We're taking those and giving them to the agency.

That clause 6 you referred to, which gives the minister the overall authority, is essentially saying that he has the overall authority for the agency, but he's then accountable to the House for those 1,470 or so powers that he's been given directly. He's answerable to the House for what the board does with these powers they're given directly, since the board in a sense can't appear before the House other than through a committee. So he's accountable for those authorities he's given directly and he's answerable for what the board does on this management side. That's essentially what clause 6 does.

• 1945

Mr. Jason Kenney: But conventionally, boards have policy-making power.

Mr. Bill McCloskey: They are what?

Mr. Jason Kenney: They have the power to make policy for their internal matters. So this board will have that power to make policy.

Mr. Bill McCloskey: Only policy relating to the management of the agency, not with respect—

Mr. Jason Kenney: Right, tax policy.

Mr. Bill McCloskey: —to the administration and enforcement of legislation. It's a more narrow authority than what boards have in most crown corporations, or certainly in the private sector.

Mr. Jason Kenney: So help me with this. Suppose I'm a taxpayer who feels I've been subject to undo collections proceedings or something, and I take this up with the appropriate chains of appeal within the department, go through the fairness appeals, etc. My ultimate appeal isn't on the desk of the chairman, the commissioner, or the directors of the board, but rather with the minister. Is that right?

Mr. Bill McCloskey: That's correct.

Mr. Jason Kenney: And what is the board's role with respect to that vertical appellant structure within—

Mr. Bill McCloskey: Absolutely nothing, in terms of the substantive issue. It would determine, I suppose, the number of resources that might be devoted to the appeals function, the collections function, or the customs function, etc., but it would have no role with respect to handling individual cases.

Mr. Jason Kenney: Now, if a union has a contractual problem, a problem with personnel management, or whatever, who is their ultimate court of appeal? Is it the board, the commissioner, or the minister?

Mr. Bill McCloskey: It would be the board in that respect, if it's a personnel policy issue.

Mr. Jason Kenney: When it comes to ratifying a contract say, would this be done under the sole authority of the board and the commissioner, or would the minister would be involved in that?

Mr. Bill McCloskey: No, the minister would not be involved. It's given to the board.

Mr. Jason Kenney: Now if I, as a member of Parliament, have a constituent case file concerning a Revenue Canada matter or a CCRA matter, I would bring that to the attention of the minister, and he would bring it to the attention of the commissioner. Is that how that line would operate?

Mr. Bill McCloskey: That's essentially the way it operates today, and that's how it would operate in the future, yes.

Mr. Jason Kenney: So essentially, the commissioner would continue to operate with the powers the deputy minister currently has. Is that correct?

Mr. Bill McCloskey: By and large, yes.

Mr. Paul Szabo: While Mr. Kenney is thinking of another question, I just want to comment on this accountability and political accountability issue. Members, if they get the authorization from the constituent, can deal directly with Revenue Canada officials, and I assume that will continue to be the case—

Mr. Bill McCloskey: Absolutely.

Mr. Paul Szabo: So Canadians should be assured they're not going to be in a queue waiting for the minister to deal with their problem.

Mr. Bill McCloskey: That legislation doesn't change. So yes, you're absolutely right.

(Clauses 30 to 32 inclusive agreed to)

(On clause 33—Advisory role)

The Chairman: We have a question on clause 33.

Mr. Jason Kenney: Clause 33 speaks to the board's advisory role to the minister:

The Board may advise the Minister on matters that relate to the general administration and enforcement of the program legislation.

Could you explain how this operates? I assume what it means is if the board finds that in terms of their internal management of personnel, property, services, purse, etc., they need a legislative change, they will write a recommendation to the minister saying they need this statutory change. Is that what is anticipated here?

Mr. Bill McCloskey: That's correct. Again, because the board is the management and the minister is the administration and enforcement of the legislation, if we get the kind of board that is clearly anticipated in this legislation, they're going to have views on the administration and enforcement of legislation they'd want to bring to bear to the minister. We wanted to ensure they had a vehicle to do that. So you're absolutely right in the example.

Mr. Jason Kenney: It's really not even necessary. It's assumed the board could do that anyway, right?

Mr. Bill McCloskey: They could do that, but we just wanted to make it clear this would probably be an important role for the board. But without that, it could still happen, yes.

• 1950

(Clause 33 agreed to)

(On clause 34—Limitation)

Mr. Jason Kenney: Clause 34 says the board may not direct the commissioner or any other person in the exercise of a power conferred or delegated by the minister, etc. I'm just looking for a general explanation here. Could you just explain how this relates to the minister's power to direct the commissioner to do things? Can the minister directly go to the commissioner without going through the board?

The Chairman: That's a good question.

Mr. Bill McCloskey: Absolutely. Clause 34 is basically saying because the administration and enforcement of the legislation belong to the minister, the board in no way can give orders to officials on the administration and enforcement of the legislation. That's the minister's role.

Mr. Jason Kenney: It really is an advisory board in that respect, isn't it?

Mr. Bill McCloskey: On the administration and enforcement of legislation, it is only advisory. It's decision-making on the management and advisory on the administration and enforcement of legislation.

(Clause 34 agreed to)

(On clause 35—Board's access to information)

Mr. Jason Kenney: On clause 35, I just don't understand the section that says

35. Nothing in this Act authorizes the disclosure to the Board of information

(a) that directly or indirectly reveals the identity of the person, organization or business to which it relates;

Is this basically protecting the confidentiality of the tax files?

Mr. Bill McCloskey: Absolutely. We wanted to make it clear again that the board's role is management, not to get involved in individual tax files. Again, the conflict of interest would otherwise be great, and it was thought beneficial to show to the world, in a sense, this board doesn't have any.... If the chairman of GM were on this board, you wouldn't want them getting confidential information about Chrysler. It's just to ensure that cannot happen.

(Clauses 35 to 43 inclusive agreed to)

Mr. Jason Kenney: I have a question on clause 42.

The Chairman: I'm going to need unanimous consent to go back. Granted. Thank you.

Mr. Jason Kenney: I'll try to keep up. I asked about the indemnification of the directors earlier, and you said the Treasury Board guidelines would not apply here as earlier. Is that right? Who establishes what the indemnification would be? Is this based on other similar statutes that deal with indemnifying directors on government boards?

Ms. Sherry Moran: Yes, it is. These are all standard clauses that are used in enabling statutes for government corporations, whether they're departmental corporations or crown, or wherever they have a board of directors.

Mr. Jason Kenney: So essentially all the directors are indemnified from personal damages.

Ms. Sherry Moran: When they've acted in good faith and reasonably, it's a protection directors get.

(Clauses 44 and 45 agreed to)

(On clause 46—Power to indemnify)

The Chairman: We have an amendment. We'll deal with the amendment first and then we'll get back to you, Mr. Kenney.

Ms. Beth Phinney: Thank you, Mr. Chairman.

I move that clause 46 be amended in the French version in lines 34 to 39 on page 13. The change will only include two words. The first change is taking out “ceux de”, which is not necessary. That's a grammatical error and it should not have been there. The second change replaces “entraînés” with “engagés”, which just improves the wording of the clause. They are technical changes.

(Amendment agreed to)

The Chairman: Now we will have discussion on clause 46, Mr. Kenney.

Mr. Jason Kenney: Yes, my question relates to subclause 46(2), which says “An amount that is payable in respect of indemnification under this section may be paid out of the Consolidated Revenue Fund.”

• 1955

I presume this means the Government of Canada's consolidated revenue fund. Why is the Government of Canada on the hook for essentially legal errors, as opposed to the agency? Why shouldn't amounts payable in respect of indemnification be made out of the operating budget of the agency as opposed to the government's consolidated revenues?

Ms. Sherry Moran: The agency would be an almost fully appropriated government entity and would probably have to go to Treasury Board for more funds in any event. This isn't something you normally anticipate. It's where there are some proceedings where the director has acted in good faith and there's some kind of liability.

(Clause 46 as amended agreed to)

(On clause 47—Corporate business plan)

The Chairman: Mr. Kenney has a question on clause 47.

Mr. Jason Kenney: Having read through the section on the corporate business plan, I wonder if you could verbalize for me the purpose of this. I can understand there's an internal business purpose for having a business plan, but why is it necessary to put this in the statute? Wouldn't this just be sort of a discretionary thing that good management would do?

Mr. Bill McCloskey: It is quite normal in corporations like this to actually have the requirement in the legislation for a corporate business plan. We also wanted to ensure the minister had a role in approving the corporate business plan before it went to Treasury Board.

Mr. Jason Kenney: This wouldn't require a submission to Parliament or a committee of Parliament, just Treasury Board. Is that correct?

Mr. Bill McCloskey: It has to be approved by Treasury Board, but the summary of the corporate business plan is then laid before Parliament. Again, this is common type of wording for corporations like this.

(Clause 47 agreed to on division)

(Clauses 48 to 56 inclusive agreed to)

(On clause 57—Political partisanship)

The Chairman: Mr. Kenney.

Mr. Jason Kenney: We heard from the parliamentary secretary earlier about the concerns raised by a witness yesterday afternoon. I wonder if we could just address that for the sake of clarity once more. This witness, Mr. Balics, indicated he was afraid this would some how impugn the charter rights of public servants to engage in partisan activity. I wonder if we could just review that once more for the record.

Ms. Beth Phinney: You want to hear what I said before over again?

Mr. Jason Kenney: Sure.

Ms. Beth Phinney: The clerk has to find it.

Mr. Jason Kenney: I don't understand where his concern arises from. Your answer there is kind of dismissing it. Does he have any grounds for concern at all?

Ms. Beth Phinney: No.

The Chairman: Perhaps Ms. Phinney can read the statement she made earlier, for clarification.

Ms. Beth Phinney: We have confirmed with the lawyers at the Department of Justice that clause 57 ensures that the agency employees will be subject to the same rules for political partisanship that apply throughout the public service. Therefore clause 57 maintains the status quo for Revenue Canada employees who become employees of the agency.

Would you like further explanation?

The Chairman: Does that clarify it?

Mr. Jason Kenney: That's really what I was looking for. Maybe there's deeper understanding of what the nature of his concern was.

Ms. Marie Tremblay (Legal Counsel, Revenue Canada): His concern would be as a result of the Osborne decision given by the Supreme Court of Canada in 1991. It declared inoperative part of section 33 of the Public Service Employment Act with respect to employees other than deputy heads. Since that decision, the interpretation has been that part of section 33 only applies to deputy heads.

• 2000

I understand that because we were carrying forward sections 32 to 34 of the Public Service Employment Act, his concern might be that we may go back to pre-Osborne days. But it's a matter of legal interpretation that when you carry forward a provision of an act, you also carry forward with it the case law interpretation that is made of such provision, especially when a court says a section is inoperative because it offends the Charter of Rights and Freedoms.

The Chairman: Thank you, Madame Tremblay.

(Clauses 57 to 86 inclusive agreed to)

(On clause 87—Audits and assessments)

Mr. Jason Kenney: I have a question.

The Chairman: On clause 87 there's a question.

Mr. Jason Kenney: I just wanted to slow you down, Mr. Chairman.

This relates to the Auditor General's authority with respect to the agency. Could the witnesses just clarify for me that the Auditor General will have full and conventional access to the internal financial situation of the agency? Is this standard for agencies of this nature?

Mr. Bill McCloskey: It's pretty standard. We've discussed this with the Auditor General and he's happy with it. Essentially, it gives him the same powers over the agency as he has over Revenue Canada today.

Mr. Jason Kenney: He's raised no serious concerns with this?

Mr. Bill McCloskey: No, we discussed this with him and he's quite happy with it.

Mr. Jason Kenney: Thank you.

(Clauses 87 to 89 inclusive agreed to)

The Chairman: Now we have a new clause, 89.1.

Ms. Beth Phinney: Mr. Chairman, there's no specific provision in there now.

The amendment reads that Bill C-43 be amended by adding after line 14 on page 26 the following....

The Chairman: Can we dispense with the reading?

Ms. Beth Phinney: All right.

The Chairman: Everybody has it.

Ms. Beth Phinney: It's application of the Official Languages Act. The way the agency bill is written now, it would be considered a federal institution under the Official Languages Act, so that act would apply to the agency. But the first two words we put in for greater certainty.

Mr. Peter Adams (Peterborough, Lib.): That's pretty clear to me.

Ms. Beth Phinney: We're putting the statement right in the bill so there won't be any question at all. The proposed amendment would make it very clear the Official Languages Act applies to the agency the exact same way it now applies to Revenue Canada. It's just to make it clear.

(Amendment agreed to [See Minutes of Proceedings])

(Clause 90 agreed to)

The Chairman: On clause 91, we have an amendment by the government. Ms. Phinney.

Ms. Beth Phinney: It reads that Bill C-43, in clause 91, be amended by adding, after line 30 on page 27, the following:

In this section, a reference to any provision in the Workforce Adjustment Directive is to be read as a reference to the equivalent provision of a collective agreement, if the collective agreement contains provisions that replace the Directive.

This is a technical change, by the way. This accommodates a recent agreement that was made between the Treasury Board and the Public Service Alliance of Canada. Under that agreement, the workforce adjustment directive is now part of their agreement. It's not separate; it's part of their agreement. It just makes sure that if any changes were made, they would also include the Public Service Alliance of Canada. We wouldn't want them to feel excluded. So it's a technical amendment and it doesn't make any substantive change. It just makes sure the Public Service Alliance of Canada is included in any changes that are made affecting the workforce adjustment directive.

• 2005

(Amendment agreed to)

(Clause 91 as amended agreed to)

(Clauses 92 to 185 inclusive agreed to on division)

The Chairman: Now there is a new clause 185.1, amendment G-6. Ms. Phinney.

Ms. Beth Phinney: Thank you, Mr. Chairman.

The amendment reads that Bill C-43 be amended by adding after line 13 on page 71 the following.... Shall I dispense?

The Chairman: Yes, please.

Ms. Beth Phinney: This is a technical amendment, and it applies to the agency's real property provisions. New clause 185.1 would make the changes to the agency's real property provisions in the event that Bill C-50, an act to harmonize federal law with the civil law of the Province of Quebec, receives royal assent. If that receives royal assent, then this will apply.

(Amendment agreed to [See Minutes of Proceedings])

(Clauses 186 to 188 inclusive agreed to)

The Chairman: Shall clause 1 carry?

Some hon. members: Agreed.

The Chairman: Shall the title carry?

Some hon. members: Agreed.

The Chairman: Shall the bill carry?

Some hon. members: Agreed.

The Chairman: Shall I report the bill, as amended, to the House?

Some hon. members: Agreed.

The Chairman: Thank you very much.

On behalf of the committee, I'd like to thank the officials and everyone involved in drafting this legislation. I know that it takes a lot of hard work to provide us with this quality of legislation. Also, committee members, as always, I really appreciate your hard work on this bill and many others.

I know that this is indeed the 163rd meeting of the finance committee, and on this particular occasion I'd like to thank Ms. Phinney, the parliamentary secretary to the Minister of Revenue, for joining us on this particular bill. You were a welcome addition to the committee.

The meeting is adjourned.