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Most people would agree with the principle that the general public should not bear all the costs of government
services in cases where private parties derive a benefit from a service. User charging promotes an equitable approach
to financing government programs by fairly charging individuals or organizations who receive services or are the focus
of these programs.
The cost recovery policy, announced on April 16, 1997, established a consistent framework and a more equitable
application of fees in such diverse areas as food inspection, agricultural services, certification of drugs and
services to new Canadians.
In order to guarantee the establishment of a fair and efficient system for Canadians, it was crucial to incorporate
the interests and concerns of industry. Consultation with the private sector ensured that the policy includes the
following principles:
Equity: beneficiaries of services should contribute towards their cost;
Efficiency: market tests of the demand for services should help determine the quantity and quality of their
supply;
Accountability and Service Standards: cost recovery emphasizes the accountability of government departments
to fee-payers for the delivery of services against overall public policy objectives of the service and explicit
standards for its improvement;
Partnership: the decision to produce a service through the application of user fees implies consultation and
partnership with beneficiaries, both at the stage of fee setting, and in the ongoing management of the program, leading
to the satisfaction of the accountability and service standard requirements;
Cumulative Impact: in setting fee levels, departments and agencies are to review and take into account the
effects on clients not only of the specific fees they propose, but also the cumulative direct and indirect
impact of other federal fee setting activities;
Mediator: the President of the Treasury Board is prepared to review complaints about the application of the
policy and report his findings to the responsible Minister, if necessary.
The aim of the policy is:
- to promote the efficient allocation of resources (i.e., to eliminate the excess demand that often exists
with "free goods", by subjecting programs to a market test of supply and demand).
- to promote an equitable approach to financing government programs, mandatory or otherwise, by fairly
charging clients or beneficiaries who benefit from services beyond those enjoyed by the general public. This may allow
a greater share of general tax dollars to be devoted to activities that benefit the general taxpayer, or to reduce the
debt. It may also facilitate improvements in the delivery of specific cost-recovered services.
- to earn a fair return for the Canadian public for access to, or exploitation of, publicly-owned or
controlled resources.
Although user charges are sometimes perceived as a form of taxation, they differ clearly in that they are linked to
specific benefits which are over and above those enjoyed by the general public. In other words, taxes are used to fund
programs for all Canadians, whereas user fees are directed to recovering the costs of specific private goods and
services.
Information on External User Charges
The following sections provide additional information on user charge activities and associated revenues in
departments and agencies. It sets out:
- a government-wide summary comparing user charge revenues for fiscal years 1994-95 through 1997-98;
- a detailed list of user charges and the associated revenues by department and agency for the same period. All user
charges generating annual revenues in excess of $100,000 are identified individually. User charges generating less than
$100,000 are consolidated in one line for each department; and
- a list of departmental contacts in the event that further information is sought with respect to individual user
charges, or the client base involved.
For clarification, external user charges means all non-tax revenues related to the provision of goods,
regulatory and non-regulatory services, or rights and privileges, from all sources, whether generated in Canada or
abroad, from persons or organizations external to the federal government. It does not include non-tax revenues
related to: fines and penalties, foreign exchange gains or losses, investment income, recoverable contributions,
proceeds from real property, proceeds from sales of surplus assets or refunds of prior year expenditures.
For greater clarity, "rights and privileges" represent an authorization by government to access or exploit
publicly owned or managed resources or areas of activity; this is conferred through granting licences, permits,
certificates of necessity and convenience, patents, copyrights, quotas, or the like. In all cases, this confers a
special permission or privilege to an individual or group, from which everyone else is excluded.
Forecast Information:
The government does not prepare detailed forecasts of individual fee revenues because they are not required in that
same level of detail for government-wide planning purposes. In every situation where revenues are credited to the votes
of departments, forecasts for 1999-2000 are available in Part II of the Estimates for that year. In addition,
more detailed breakdowns are provided for individual departments in the new Report on Plans and Priorities. In
other cases, revenues accrue to the Consolidated Revenue Fund. For fiscal planning purposes, a general forecast is
implicitly included within the revenue projections of the Minister of Finance's Budget. Those revenues are tracked in
detail only when they are collected, and therefore are only available then.
Additional Information:
Additional user charge information can be found in the Public Accounts of Canada and in the new departmental
Performance Reports.
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