Liberal bill would automatically increase user fees for federal services by rate of inflation

This kind of fundamental legislation should not be part of an omnibus bill but needs to be debated separately. As I have written before (The impact of citizenship fees on naturalization – Policy Options), CIC/IRCC obtained an exemption from the User Fees Act for citizenship fees in Budget 2013.

This allowed the department to raise fees twice in one year with minimal consultation and arguably misleading Parliament both with respect to the impact of the exemption (i.e., fee increases would not lead to a decline in applications) and that the second increase (from $300 to $530) was not mentioned during the C-24 hearings in either the House or Senate:

The Liberal government has introduced a bill that would significantly increase the fees that Canadians pay for a variety of federal services, such as campsites, fishing licences and passports.

In an omnibus budget bill brought forward Tuesday, the government proposes a new Service Fees Act that would automatically hike hundreds of fees by the level of inflation each year.

The move would also make it much easier for departments to apply for fee increases to better match the cost of providing services to individual Canadians and businesses. The proposed law is slated to come into effect April 1 next year.

The federal government collected about $2 billion in various fees in 2014-15, the latest year for which figures are available, but estimates it cost $3.4 billion to provide those services — resulting in a massive shortfall of $1.4 billion.

FedBudget 20170322

Finance Minister Bill Morneau’s last budget only hinted at the significant changes in user fees being contemplated. Over the four years, starting April 1, 2018, the government expects to collect $364 million in additional fees. (Justin Tang/Canadian Press)

The measure was briefly mentioned in last month’s budget document, which estimated aggregate fee revenues would increase by $36 million in 2018-2019, and by $147 million in extra revenues by 2021-2022.

The measure does not target specific fees. Rather, it replaces 13-year-old legislation that effectively froze fees by making it too onerous for departments to apply for increases as costs rose.

Federal officials estimate only about 20 per cent of all federal fees are captured by the User Fees Act of 2004. But the new legislation would capture almost all fees, and would require government to report in detail to Parliament each year on the amounts collected versus the cost of providing services.

Opposition critics have called the measure a tax grab, which can especially hurt low-income Canadians.

But a spokesman for Treasury Board President Scott Brison, who is shepherding the new user-fee regime, says the bill would relieve taxpayers of the unfair burden of paying for services enjoyed by individuals and corporations, while it also increases transparency.

Exempts some fees

“The government is always looking for ways to minimize costs for taxpayers and making the fee system transparent,” said Bruce Cheadle.

“We want to give everyone equal access to high-quality government services and we’re going to ensure middle-class Canadians aren’t disproportionately footing the bill for this.”

The new bill exempts some fees from the new regime, including fees under the Food and Drugs Act and some fees considered too small to be material.

The government also suggests that some costs, such as those related to food safety, will not always be fully charged back to users because there is a public good also attached to some government services.

CBC News first reported on the government’s plans in February, citing an internal briefing note for Brison that argued fees have been largely frozen since 2004 as departments shied away from the complex regulatory process of arguing for increases.

The briefing note from August 2016 said 84 per cent of existing user fees have not changed in 13 years, and cover a diminishing fraction of the actual cost of delivering the services.

Despite the fresh measures to increase fees, Brison last year eliminated all retrieval, processing and reproduction fees under the Access to Information Act. And this year, Parks Canada is waiving entry fees for its national parks and historic site to celebrate Canada’s 150th anniversary.

Source: Liberal bill would automatically increase user fees for federal services by rate of inflation – Politics – CBC News

High fees blamed for sharp decrease in Canadian citizenship applications | Toronto Star

Another article on the impact of the increase on citizenship fees, just before Minister Hussen testifies before the Senate committee studying the bill:

The number of immigrants applying for citizenship has plunged by a whopping 50 per cent at the same time as Ottawa has stripped a record number of Canadians of their citizenship.

According to the latest data from the Immigration Department, only 56,446 new citizenship applications were received in the first nine months of last year, a sharp decline from the 111,993 during the same period in 2015.

The number of new citizens approved also dropped by 48 per cent from 198,119 to 111,435 over the same period, said Andrew Griffith, a retired director general of the department who obtained the data.

While the tightened language proficiency and longer residency requirements have contributed to the decline, the steep increase in citizenship application fees under the former Conservative government is a key factor, Griffith said.

The processing fee was raised from $100 to $300 in February 2015 and again to $530 later that year, with an additional $100 right-of-citizenship fee required once the application is approved. Historically, citizenship applications have averaged close to 200,000 per year.

“The fee hike is a huge part. When you increase the price, you are not going to be able to afford it,” noted Griffith, a fellow at the Canadian Global Affairs Institute. “The fee is a significant barrier. If you are a professional, you can pay it with no problem. But if you are low-income, it becomes a burden.”

The federal Liberals have tabled Bill C-6 to amend the Citizenship Act, which would make citizenship less restrictive by reducing the residency requirement to three out of four years from four out of six and limiting the language and knowledge tests to applicants aged 18-54, instead of 14-64. However, there is no mention of a fee reduction in the bill.

Toronto lawyer Avvy Go, who spoke at Senate hearings into the bill, said the fees are a problem for the low-income households she serves at the Metro Toronto Chinese & Southeast Asian Legal Clinic.

The legal clinic organized a number of workshops in 2015 to urge eligible immigrants to apply for citizenship before the changes by the Tory government came into effect. Many attendees to the workshops said they were not able to afford the fees, Go told the Star.

“When you look at who the poor are, they are people from racialized communities, women and the disabled, who are bearing the consequences. You are going to further disenfranchise the vulnerable,” said Go.

“Many of my clients work long hours in restaurants and are paid minimum wages. They have to choose between putting food on the table and applying for citizenship. Many have no choice but choose to put food on the table first.”

Source: High fees blamed for sharp decrease in Canadian citizenship applications | Toronto Star

Canadian citizenship applications decline after processing fees triple

citizenship-metropolis-2017-017

Citizenship Country Comparisons

Article based in part on my brief, C-6 Senate Hearings: Expected Impact on the Naturalization Rate.

The IRCC comment that the government has no plan to reduce fees is notable and surprising, given its diversity and inclusion agenda and expanded Immigration levels.

Equally notable that the IRCC spokesperson is incorrect on the level of Australia’s citizenship fee, our most appropriate comparator country (above comparison chart). He also cites that the increase in citizenship fees was not raised in recent consultations on immigration levels despite there being no questions in the consultation document on citizenship (IRCC Discussion guide on immigration: What about citizenship?):

A sharp fee increase has helped fuel a dramatic drop in the number of immigrants applying to become Canadian citizens, according to immigration advocates.

In the first nine months of 2016, there were 56,446 applications filed for citizenship, a decrease of nearly 50 per cent from the same period a year earlier, when 111,993 applications were submitted.

The figures are included in a briefing by former Immigration and Citizenship director general Andrew Griffith prepared for the Senate social affairs, science and technology committee, which begins hearings this week on Bill C-6, a law to amend the Citizenship Act.

Griffith, an author on immigration issues and fellow at the Canadian Global Affairs Institute, calls it an “alarming” trend that can be linked directly to a steep increase in fees.

The processing fee jumped from $100 to $530 in 2014-2015, which amounts to a tripled price tag when the additional $100 “right of citizenship” fee is added.

“If you’re a professional doing reasonably well, you may not like it, but you pay it. It’s important to you,” Griffith told CBC News. “But if you are a struggling immigrant or refugee, suddenly $630 may become prohibitive, and especially if you’re talking about a family of four or more.”

Newcomers face other costs associated with the citizenship process, including language testing, he said. He recommends cutting the processing fee to $300, abolishing the right-of-citizenship fee, and considering a waiver for refugees and low-income immigrants.

Financial and other barriers

Griffith’s brief points to a broader pattern of declining naturalization rates. He warns that a growing part of the population may not fully integrate by becoming citizens due to financial or other barriers and that could lead to marginalization.

“We’ve always prided ourselves where we have a model where we don’t just encourage immigration, but we encourage immigrants to become citizens so they be fully part of society. They can take part in political discussions, they can vote and do all the things that are part of it,” he said.

Bill C-6 reverses reforms brought in by the previous Conservative government and takes steps to streamline and strengthen the integrity of the citizenship process. Those include reducing the time permanent residents have to live in Canada to become eligible for citizenship, counting time for work or study in residency requirements, and reducing the language proficiency requirements for younger and older immigrants.

Oath

A man raises his hand while taking the Oath of Citizenship at a ceremony in Mississauga, Ont. (Jonathan Castell/CBC)

But the government does not appear prepared to reverse the fee hike brought in by the Conservatives.

Bernie Derible, a spokesman for Immigration Minister Ahmed Hussen, said citizenship fees in Canada are “significantly less” than other comparable countries such as the U.K., Australia and New Zealand. Throughout the cross-country consultations last summer, there was little discussion or concern raised about the fee, he added.

Dory Jade, CEO of the Canadian Association of Professional Immigration Consultants, said he has heard from plenty of clients who are delaying citizenship because they can’t afford the fees.

Make process ‘accessible and easy’

“If we want to bring immigrants, especially under a Liberal government which believes in nation builders, making it accessible and easy to become members of your society is a big, big issue,” he said.

Jade has met with officials from Immigration, Refugees and Citizenship Canada to propose a way to address the financial burden.

He said he was told by officials that the current fees are not cost-recovery, which means they are still financed in part by the tax base despite the increase. [Note: IRCC costing study indicated processing cost $555, about the same as the current fee of $530.] But he suggested the government could ease the cost barrier by adopting a tax-like formula based on income, developing a loan program, or capping the total fee for a family.

Stephen Green, a Toronto-based immigration lawyer, said he has not heard of the fee being a significant factor in seeking citizenship. He said many of his firm’s clients who don’t currently qualify under the existing law are anxiously awaiting C-6 to become law so they can apply for citizenship.

The Senate social affairs committee hearings will be held Wednesday and Thursday this week, with a number of immigration and refugee lawyers and academics scheduled to testify.

Ottawa looks at user-fee hikes for potential new revenue

While it is appropriate that the government is reviewing the User Fees Act to streamline the process (and increase revenues), there is a risk in providing departments with too much flexibility and too limited public consultations.

A clear case in point is with respect to citizenship fees, set at $100 in 1995.

The previous government obtained an exemption from the Act in Budget 2013 omnibus legislation which allowed it to avoid lengthy consultations and increase the fees to $300 in February 2014 along side Bill C-24’s revamping of the Citizenship Act. The government then did a further increase to $530 January 2015, with the change buried during the Christmas holidays.

This further increase was never mentioned during the Commons and Senate hearings on C-24, highlighting again the risk to public accountability.

There is also the broader risk that the current government may only look at fees from a cost recovery or private interest perspective, and not take into account that some fees reflect a mix of private and public interest.

I have argued elsewhere that citizenship fees have such a mix (see The impact of citizenship fees on naturalization – Policy OptionsC-6 Senate Hearings: Expected Impact on the Naturalization Rate) given the shared interest in encouraging political as well as economic and social integration.

Passports, also part of IRCC, are IMO more of private than public interest, where full cost recovery makes sense. Passport fees are subject to the Act and in testimony, departmental witnesses indicated that it took about two years to obtain approval:

The Liberal government is eyeing the user fees Canadians pay for federal services as a new source of revenue.

Since 2004, fees for everything from fishing licences to campsites have generally fallen farther behind the cost of providing those services. That’s the year the User Fees Act was passed, compelling departments to justify to Parliament any proposed fee increases or new fees.

The requirements under the law have been so onerous, however, that they effectively discouraged departments from applying for increases even as costs rose. The result is that taxpayers are stuck with higher bills for private benefits enjoyed by individuals and corporations.

The federal Treasury Board wants to fix the law to smooth the way for more fee increases, putting the fee-cost arithmetic back into balance — and snaring fresh revenues that could be worth millions of dollars.

The wide-ranging initiative, called the Modernizing of the Management of User Fees, is outlined in an internal document CBC News obtained under the Access to Information Act.

“While fees have not increased over time, costs have,” says the heavily censored Aug. 8 memo for Scott Brison, the Treasury Board president. (Numerous sections of the document, available below, have been whited out.)

“This resulted in an increase in the rate of taxpayer subsidies for government services that benefit private interests,” it says.

The freezing effect of the 2004 User Fees Act was dramatic, says the memo. Prior to the legislation, there were an average of 10 proposals each year to increase fees. After 2004, that dropped to 2.4 proposals annually.

Increased paperwork

Changes brought about by the legislation added “significant time and effort” in paperwork for fee increases or new fees, which discouraged applications. Departments have also since been wary of a provision that requires them to cut fees whenever they fail to meet performance standards, says the document.

As a result, 84 per cent of existing user fees have not been revised in nearly 13 years, and now cover a diminishing fraction of the cost of providing the services.

The memo cites the example of the Canadian Food Inspection Agency, which in 2004–2005 collected $54,999 in user fees for services that cost government $694,641 — or only about eight per cent of the bill.

Nine years later, at $55,988 in fees versus $877,306 in costs, the ratio had worsened to 6.4 per cent.

Other departments, including Health Canada and Industry Canada, have been more successful in keeping the fee-to-cost ratio in balance.

The released sections of the memo do not contain an estimate of potential new revenues.

A spokesman for Treasury Board declined to provide details or timing for the initiative.

‘Strengthening the accountability’

“While the matter of modernizing user fees is still under consideration, we remain committed to strengthening the accountability, oversight, and transparency of user fees,” Alain Belle-Isle said in an email.

Sheila Fraser, then-auditor general of Canada, found in 2008 that there were about 220 federal fees reported publicly, worth about $1.9 billion to the federal treasury. Fees are charged on a wide range of services, including passports, licences for manufacturing drugs, marine navigation, citizenship, and national park entry.

Fraser’s report, which made headlines that spring, criticized the government for overcharging Canadians for consular fees that were attached to passport application fees.

‘Inappropriately subsidizing’

Less noticed was her warning that the government “may be recovering less than an appropriate amount from fee payers, or, depending on the fee, taxpayers may be inappropriately subsidizing a private benefit …”

Source: Ottawa looks at user-fee hikes for potential new revenue – Politics – CBC News

ICYMI: US Immigration fees jump for the first time since 2010, making it tougher for would-be Americans

immigration_fees_jump_for_the_first_time_since_2010__making_it_tougher_for_would-be_americansIn contrast to Canada, US CIS is a revolving fund, with all fees raised used for the citizenship program. In Canada, any increase in fees goes to the Consolidated Revenue Fund (general government revenues), with no direct link to the citizenship program expenditures:

For the first time since 2010, the Department of Homeland Securityhiked a range of administrative fees for citizenship applications — in a few cases more than doubling the costs of key services. Any new petitions filed after Dec. 23 will not be accepted unless they include the higher fees.

The U.S. Citizenship and Immigration Services, the agency charged with handling immigrant applications, said in a statement the proceeds will help cover detecting fraud, processing cases and a range of other administrative costs, in what USCIS called a “weighted average” price hike of 21 percent.
Experts say the stiffer bureaucratic costs means the path to becoming an American could become a heavier burden for many cash-strapped would-be citizens. However, USCIS justified the price hike by arguing the agency was almost exclusively funded through the fees paid by petitioners, and needed the cash infusion.

Still, USCIS Director Leon Rodríguez said in a statement that the agency was “mindful of the effect fee increases have on many of the customers we serve,” which is why it waited so long to increase fees.

Peter Boogaard, a spokesperson for the Department of Homeland Security, told CNBC that along with the new fees, “USCIS will also offer a reduced filing fee for certain naturalization applicants with limited means.”

Still, “these changes are now necessary to ensure USCIS can continue to serve its customers effectively,” he added.

US citizenship ‘as soon as possible’

The new pricing could have far-reaching implications for the vast number of immigrants that vie for U.S. citizenship on an annual basis. Each year, USCIS naturalizes hundreds of thousands of new citizens.

Source: Immigration fees jump for the first time since 2010, making it tougher for would-be Americans

Citizenship applications plummet as fees soar

 citizenship-data-slides-2015-009My article in IRPP on the drop in citizenship applications following the steep increase of adult citizenship processing fees to $530 and the related Toronto Star article:

The impact of citizenship fees on naturalization 

Citizenship applications plummet as fees soar: The number of immigrants applying for citizenship has dropped significantly for the second year in a row after fees went up from $100 to $530.

Obama Administration Seeks to Lower Cost of Citizenship for Lower-Income Immigrants

Something for the Canadian government to consider given the quintupling of citizenship fees in 2014-15 ($630 plus language assessment cost):

In a rule published in the Federal Register Wednesday, the Department of Homeland Security is proposing changes to the fee schedule that it says would ensure that U.S. Citizenship and Immigration Services — a largely fee-funded branch of DHS — can cover the cost of its immigration processing mission. The total adjustment amounts to an average 21 percent increase in the fee structure.

Largely exempt from the increases are, however, low income immigrants who wish to become U.S. citizens. Under the proposed rule, “DHS would charge a reduced fee of $320 for naturalization applicants with family income greater than 150 percent and not more than 200 percent of the Federal Poverty Guidelines.”

“DHS is proposing this change to increase access to United States citizenship,” the proposed rule explains.

The allowance effectively cuts in half the current cost of naturalization — $680, including the $85 biometric fee. The rule, however, also seeks an additional $45 increase in the cost of naturalization applications for immigrants who can afford it.

USCIS last adjusted its fee schedule in 2010 and the proposed rule will be open to public comment for 60 days.

Rep. Luis V. Gutiérrez (D-IL), who has been promoting naturalization and voter registration across the country as a means for immigrants to “Stand Up to Hate,” cheered the rule.

“Right now, a lot of immigrants face a difficult choice: pay $700 or so for the chance to take all the tests and apply for citizenship, or pay $450 to renew a green-card for five years,” Gutiérrez said in a statement.

“Now, the math is much better,” he continued. “You can apply for citizenship and a fee waiver and become an American citizen – with all the rights, duties and honor of citizenship – for a more attainable price or maybe even for free. The new calculation is going to mean that millions of those who are already eligible can finally take the step and apply for citizenship.”

Applicants can apply for a fee waiver if their income is below or 150 percent of the poverty line, they are receiving a means-tested benefit, or they are experiencing a “financial hardship.”

Obama Administration Seeks to Lower Cost of Citizenship for Lower Income Immigrants

USA/New York: Costs of applying for #citizenship soaring

A local illustration of the impact of costly citizenship fees (Canada not immune given the increase in fees from $100 to $530 in 2014, along with the cost of language assessment around $200, a definite contributing factor in the decline of citizenship applications from an earlier average of some 200,000 a year to a more recent 130,000 per year):

Nearly 670,000 New Yorkers are eligible to apply for citizenship, but the costs have spiked so high that immigrants may no longer be able to afford becoming full-fledged Americans, the city comptroller has warned.

The citizen application fees have soared nearly 500 percent since 1989, after adjusting for inflation, from $68 to $680 [CAD 940] today, according to Comptroller Scott Stringer. In addition, the city recently cut back on adult literacy programs and now provide only limited access to affordable legal services.

These barriers to citizenship are among the findings in a new report from Stringer released last week.

“With costs that can reach into the thousands of dollars, our citizenship process has become too expensive for hundreds of thousands of New Yorkers,” Stringer said. “High fees and diminished access to English instruction and affordable legal services are throwing up roadblocks to naturalization for this generation of immigrants. Becoming a citizen is an integral part of the American experience. Every New Yorker deserves a fair and fighting chance to make it in this city and it’s the job of government to break down barriers to help those who have lived and worked here to make citizenship an attainable goal.”

Low-income immigrants are currently offered free waivers for the paperwork costs, but the waiver process is “plagued by problems,” according to Stringer. In 2011, only 23,000 fee waivers for naturalization were granted out of a total of 756,000 applications, just over 3 percent.

Applicants must pass a language-proficiency test, but English language classes cost around $400 per week for group lessons. Although the New York Public Library expanded seats for free English classes by 300 percent over the last three years, the report said, several branches have reported having to turn away applicants, unable to meet the high demand.

Source: Costs of applying for citizenship soaring: Stringer • TimesLedger