Transcript Document

The Creation of the
Canada Revenue Agency:
A Backroom View of
Public Sector Reform
King’s University College
February 28, 2006
Overview of Presentation
• Intention to create CCRA announced in
February 1996 SFT
• Good example of strengths and weaknesses of
policy making at federal level
• Critical importance of consultations – shaped
policy
• Important role of personalities in policy process
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Overview of Presentation (cont’d)
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CRA at a Glance
The Creation of the CCRA, now the CRA
Attributes of the CRA
Accountability in the CRA
Accomplishments over the First Five Years
Conclusion
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CRA at a Glance (2003/4)
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Collected over $288 billion—averaging over $1.1 billion every working day
1.5 million employers - $162.6 billion in source deductions
Benefit and credit payments of $12 billion to 10.6 million eligible recipients
Over 60 agreements with other govt depts/agencies for joint program delivery
Collected over $40 billion on behalf of the prov/terr/First Nations
Fairness Provisions - $475 million in interest and penalties waived/cancelled
Over 77 million tax and benefits related hits on CCRA’s web site
Approximately 23.4 million public enquiries answered
16,100 volunteers completed more than 516,000 tax returns
23 million individual and trust tax returns, 1.5 million corporate tax returns
Workforce of over 44,300 employees across Canada (during peak periods)
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Evolution of Unique
Canadian Public Institution
• Customs – oldest public administration (> 200 yrs)
Excise – established pre 1900
Income Tax – temporary measure - WW I
• Dept of National Revenue, Taxation (1926)
Dept of National Revenue, Customs and Excise
Department of National Revenue (1994)
Canada Customs and Revenue Agency (1999)
Canada Revenue Agency (2003)
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Creation of the CCRA
• Intention to create CCRA announced in 1996 SFT.
• Two drivers behind announcement:
– Alternative Service Delivery (ASD)
– Strengthening Relationships with the Prov/Terr
• Objective to create “arm’s length” organization
– administer revenue laws – federal, particpating prov.
– a “national” institution
• Question of governance, authorities and
accountabilities
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Alternative Service Delivery
• System-wide reform unsuccessful (e.g. PS 2000)
• Program review created pressures for redefining
government role in service delivery
• Beneficial experience of other countries (N.Z., U.K.)
• Federal government decided ASD could provide
innovative, flexible approaches,but rejected broad
system-wide approach of N.Z., U.K.
• Step-by-step with no standard model
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Strengthening Relationships with
Provinces and Territories
• Revenue Canada already provided extensive
service to provinces
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Personal income tax for nine provinces
Corporate income tax for seven provinces
Sales tax for three provinces
Social benefit delivery
• But provinces increasingly unhappy
– Finance Canada forced them to harmonize with federal
tax regime to get free administration
– Little say in tax admin – wanted more accountability
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SFT Announcement
• Last minute decision to include
• Talked of creation of a national revenue agency
• Caught most major players by surprise (e.g. DM,
Minister)
• Wording ambiguous (“national revenue agency”)
– No clear idea of what intended (new form of governance?)
– Where was Customs?
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Process to Create Agency
• First 6 months spent clarifying SFT announcement
– Difference of opinion amongst senior civil
servants
– Several rounds of discussion at Clerk/DM
levels
• Decision was federal body, with Customs, with
more accountability to the provinces
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Process to Create CCRA (cont’d)
• First Round of Consultations in Fall 1996
• Informal discussions with provincial officials
(ADM level)
– wanted Agency arm’s length as possible from feds
• DM and Minister also wanted arm’s length model
– Gravelle had long advocated Crown Corporation model
– Stewart questioned need for Revenue Minister (Canada
almost unique in having one)
– “Work myself out of a job”
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Process to Create CCRA (cont’d)
• Issued progress report April 1997
• Arm’s length agency with sign. mgmt. flexibility
• Like Crown Corporation
– Board of Directors responsible for all aspects of agency
(except unable to intervene in specific cases)
– CEO responsible for day-to-day operations
– Minister has access to info, directive power (like C.C.’s)
– 1470 legislative authorities vested in CEO, not Minister
– Full admin/management authorities
– Under Canada Labour Code, not PSSRA
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Process to Create CCRA (cont’d)
• Consulted target audiences
– provincial governments (DMs, Ministers)
– private sector tax/customs associations
– business associations (CFIB, Boards of Trade, Chambers of
Commerce)
• Results interesting
– private sector troubled by reduced Ministerial role
– provincial Ministers concerned re: arm’s length of agency
– M.P.’s very concerned over responsiveness, role of Min.
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Process to Create CCRA(cont’d)
• Other factors
– New DM on scene (January 1997) – not
comfortable with arm’s length from government,
esp. CLC
– New Minister, Dhaliwal (June 1997), concerned
about diminished ministerial role
– Consequently, DM and Minister receptive to
messages
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Process to Create CCRA (cont’d)
• Led to a redefinition of the concept in second
“Progress Report”, issued in January 1998
• Strengthened role/accountability of Minister
– Retains 1470 legislative Authorities
• Board of Management
– Responsible for overseeing management authorities
(formerly with TB, PSC, etc.)
– Advisory only on admin/enforcement of legislation
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Process to Create CCRA (cont’d)
• CEO:
– accountable to Minister for administration and
enforcement of legislation
– accountable to Board for management of Agency
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Accountability in the CRA
Continuum of Ministerial Accountability and Involvement
Dep’ts CFIA
& CRA
&
SOAs Parks
Other
Dept’l
Corps
Dept’l Corp
Regime
More Ministerial
Control &
Accountability
Crown
Corps
($)
Crown
Corps
Fed
Corp
Regime
Nav
Can
Comm
&
ETOs
Priv
Sector
Less Ministerial
Control &
Accountability
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Process to Create CCRA (cont’d)
• Wide distribution of report to target audiences
– Ministerial letter to stakeholders
– Internet site
• Created Advisory Committee of small business and
tax/customs professionals
• Ministerial cross country trip
• Caucus briefing of M.P.’s, Senators
• Reaction very favourable
– private sector
– M.P.’s and Provincial Ministers
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Process to Create CCRA (cont’d)
• Drafted legislation (with much redrafting)
• Legislation:
– introduced June 1998
– passed April 1999
– came into force November 1999
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Attributes of the CRA
• Departmental Corporation (Schedule 2, FAA)
• Minister has overall responsibility
• 15 member Board of Management
– 11 nominees from provinces and territories
– Responsible for overseeing management authorities
• Commissioner is CEO, responsible for day-to-day
management
• Funded primarily through appropriations
• Financial statements – govt. accounting system
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Attributes of the CRA (cont’d)
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Significant human resources management authorities
Separate employer under PSLR Act
Responsible for its own collective bargaining
Can establish its own HR policies
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classification
staffing and recruitment
recourse
employment adjustment
• Mobility with rest of public service
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Attributes of the CRA (cont’d)
• May enter into contracts, agreements or other
arrangements (except legal services)
• Manages its own intellectual property (e.g.
publications)
• May manage its own real property (e.g. land
and buildings)
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Design Principles of CRA
• Governance framework reflects three
fundamental principles of CRA
– Ministerial accountability for program legislation
– Improved accountability to provinces and
territories
– Flexibility to tailor human resources and
administrative management activities to needs of
tax
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Accountability in the CRA
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Minister
Board
Commissioner (CEO)
Other government departments
– Treasury Board
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Role of the Minister
• Administers/enforces program legislation (Income
Tax Act, GST Legislation, etc.)
– Power to delegate day-to-day administration to officials
– Can direct officials in exercise of powers
• Approves Corporate Business Plan (CBP) and
recommends it to Treasury Board
• Can inquire into any activity of the CRA
• May issue written direction to the CRA (BOM) on
any matter that affects public policy or could
materially affect public finances
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Role of the Board of Management
• Different than private sector or Crown Corp board
• Accountable to Parliament, through the Minister, for
meeting objectives of the CBP
• Oversees management of authorities given to the
CRA in legislation (e.g. general administration, hr)
• Directs the development of the CBP
• Recommends the Annual Report to the Minister
• May provide non-binding advice to Minister on the
administration of program legislation
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Role of the Commissioner (CEO)
• Responsible for day-to-day management and
direction of the CRA
– accountable to Minister for exercise of ministerial
powers delegated by the Minister
– accountable to the BOM for efficient
management of the CRA
– has specific management authorities, such as
appointment of staff
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Role of the Commissioner
• Develops the CB Plan for the BOM
• Ensures preparation of the CRA Annual Report
• Required to keep Minister informed - so Minister
can give direction to BOM (if and when necessary)
• Required to consult federal departments on whose
behalf CRA administers programs
• Required to consult and report annually to provinces
and to seek annual meeting with provincial Ministers
of Finance
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Role of the Treasury Board
• Retains financial management authority under
the FAA
• Is consulted on CRA’s HR plan before
collective bargaining
• Approves the CRA’s Corporate Business Plan
(including funding requirements for CRA to
be included in appropriations)
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Accountability to Parliament
• Minister answerable in Parliament for CRA
• Minister accountable to Parliament for the
administration of program legislation
• Minister tables summary of Corporate
Business Plan in Parliament
• Minister tables Annual Report in Parliament
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Accountability to Parliament
• Auditor General continues to be auditor
• PSC may report, in its annual report, on the
compatibility of the CRA’s staffing principles
with those governing staffing under the PSEA
• Parliamentary review of legislation after 5
years
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Accountability
to Provinces and Territories
• Commissioner required to:
– provide provinces/territories with information to
evaluate taxes on programs administered by Agency
– consult with provinces/territories on matters of
significant impact on their taxes/programs
– annually report on administration of provincial and
territorial taxes/programs
– Offer to meet Ministers of Finance annually to seek
their views on administration of their programs
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Summary
• Unique form of governance structure to meet
objectives of CRA
• Requires cooperation among Minister, Board
of Management, and Commissioner
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Five Year Review
• CCRA Act mandated a review after 5 years
• Review being undertaken by the Standing
Committee on Finance
• Minister submitted report:
– Reported on implementation of CCRA Act and Agency
accomplishments
– Well received
• Agency stakeholders to also appear before the
Committee
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So what have we done in 5 years?
• Used our management flexibilities (human
resources, finance, administrative) to create a
more efficient and effective organization
– Guidance by the Board of Management with its
private sector perspective
• Strengthened our relationship with the
provinces and the territories
• Improved services to Canadians
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Human Resources Management
• Tailored HR regime based on business needs
– Large decentralized organization with many HR transactions
– Workforce:
• Predominately career employees
• Knowledge workers
• Large term population
• New staffing and recruitment system:
– Values and competency based framework
– Development of PQP system
– Simplified recourse
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HR Management (cont’d)
• Strengthened labour relations
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Simplified bargaining unit structure
Developed Agency compensation policy
Tailored employment conditions
Negotiated CRA specific collective agreements
• New dispute management system:
– Shift from litigious to preventive
– Based on interest based conflict resolution
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HR Management (cont’d)
• Focus on good management practices
– Created management group for all supervisors
– Revamped performance management system
– Created a learning environment:
• Agency learning policy with measures of learning
investment (5%-6% of salary)
• Individual learning plans
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Financial/Administrative Areas
• Cost reductions in administration through
technology based re-engineering
• New partnership with PWGSC on real property
management
• Strong emphasis on comptrollership
– Good financial and performance reporting, internally
and externally
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Strengthened Relationship with
Provinces and Territories
• Developed new Service Management Framework
Agreements
• Comprehensive reports to provinces and territories
• Regular meetings of the Commissioner and his
counterparts
• Generated economies and efficiencies for prov./terr.
• Requested new programs to be taken on by the Agency
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Operational Accomplishments
• Significant use of technology to enhance service many examples, including:
– Internet filing and on-line access to information
– On-line registration, Internet filing and electronic payment
by businesses
• Strong emphasis on achieving compliance through
assistance, education and enforcement carried out by
a knowledgeable and professional staff
• Enhanced services to charities
• More effective revenue collections
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Conclusion
• Agency status with its unique governance
structure (e.g. BoM) has been key to the
continued success of our organization
• Over 5 years we have built a strong foundation
for the challenges of the future,
– Better serving Canadians
– Stronger relationships with prov/terr.
• A truly “national organization”
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