Vol. 148, No. 27 — December 31, 2014
SOR/2014-298 December 12, 2014
Regulations Amending the Citizenship Regulations
P.C. 2014-1453 December 12, 2014
His Excellency the Governor General in Council, on the recommendation of the Minister of Citizenship and Immigration, pursuant to paragraph 27(b) (see footnote a) of the Citizenship Act (see footnote b), makes the annexed Regulations Amending the Citizenship Regulations.
REGULATIONS AMENDING THE CITIZENSHIP REGULATIONS
1. The portion of item 1 of the schedule to the Citizenship Regulations (see footnote 1) in column III is replaced by the following:
2. The portion of item 5 of the schedule to the Regulations in column III is replaced by the following:
COMING INTO FORCE
3. These Regulations come into force on January 1, 2015.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues: Despite an increase in service fees for applications by adults for the grant and resumption of Canadian citizenship made in February 2014, a significant imbalance remains between the cost of providing these services to users and the service fees paid by the users. The estimated cost to Government of processing an application for an adult grant or resumption of citizenship in 2010–2011 was $555, yet adult applicants only pay a $300 service fee, or 54% of the actual processing cost to the Government. The Government of Canada is therefore currently subsidizing the cost of providing this service by 46%.
Description: This regulatory package amends the Citizenship Regulations to increase the service fees for adult applications for grants and resumptions of citizenship from $300 to $530.
Cost-benefit statement: The cost-benefit analysis (CBA) estimates that the overall costs associated with these amendments will be $287.5 million (present value [PV]). The estimated overall benefit is $287.4 million (PV), resulting in a net cost of $0.1 million (PV) over 10 years. The cost to adult applicants of the proposed fee increase is offset by the benefit to the Government of Canada resulting from a reduction in the subsidy provided to adult applicants seeking or resuming citizenship. The net cost reflects the cost to Government to transition to the new fee structure, including Citizenship and Immigration Canada (CIC) administrative resources required to implement the fee increase and costs to communicate the fee increase to the public. A reduction in the subsidization by the Government of Canada shifts more of the cost burden to the user. This is in line with the Government’s support for having the user, who gains most directly from the service, bear the majority of the cost of the service.
“One-for-One” Rule and small business lens: The “One-for-One” Rule and small business lens do not apply to these amendments as there is no change in administrative or compliance costs to business.
Canadian citizenship is very valuable and signifies full membership in Canadian society. It serves as a common bond for Canadian-born individuals and newcomers alike. Approximately 85% of eligible immigrants become Canadian citizens. The benefits of citizenship include a greater attachment to Canada and a feeling of belonging, which facilitates integration. Citizenship also includes the possibility of applying for a Canadian passport, which facilitates international travel.
The Government of Canada supports a cost-recovery approach to financing Government programs with the view that costs should be borne by those who receive the service and resulting benefits. The Citizenship Regulations set out fees for services related to the administration of the Citizenship Act. Included in these fees are service fees for the grant and the resumption of citizenship.
A grant of Canadian citizenship is the acquisition of citizenship by naturalization in Canada. This is a process whereby qualified applicants obtain citizenship upon meeting certain requirements. The resumption of citizenship is an application for reinstatement by former Canadian citizens (who are now permanent residents) who, in the past, willingly gave up their Canadian citizenship, and now want to become Canadian citizens again.
The current service fee for processing an application for either a grant or resumption of citizenship is $300. This fee was raised from $100 to the current level ($300) in February 2014.
Based on CIC’s 2010–2011 Cost Management Model, the average cost to CIC and partners for processing either a citizenship grant or resumption application is estimated at $555. This cost includes direct, indirect, and overhead costs as well as costs from federal partners such as Public Works and Government Services Canada, the Department of Justice, the Canada Border Services Agency, the Treasury Board Secretariat and the Royal Canadian Mounted Police. The cost can be subject to minor fluctuation arising, for example, from increases in the number of complex cases. However, program efficiencies resulting from the Strengthening Canadian Citizenship Act (2014) are expected to further regularize costs.
The Government of Canada promotes a cost-effective approach to financing Government programs, which means the costs of providing a service should mainly be borne by those who receive the service and benefit from it. Despite the increase in service fees for the adult grant and resumption of citizenship in February 2014, a significant imbalance remains between the cost of providing these services to users and the service fees paid by the users. The estimated cost to Government of processing a grant or resumption of citizenship application in 2010–2011 was $555, yet adult applicants only pay a $300 service fee, or 54% of the actual processing cost to the Government. The Government of Canada is therefore currently subsidizing the cost of providing this service by 46%.
The objective of this regulatory amendment is to reduce the subsidization burden of the processing costs for adult grant and resumption of citizenship applications. This amendment increases the grant and resumption of adult citizenship application service fees from $300 to $530, thereby reducing the Government of Canada subsidization burden from approximately 46% to 5%. This reduction in the subsidization aims to shift the cost burden to the user who benefits the most from the service.
This regulatory package amends the Citizenship Regulations by increasing the service fees payable for an application for grant or resumption of citizenship submitted by adult applicants (persons 18 years of age and over). The regulatory amendment increases the service fees for an adult grant or resumption application from $300 to $530, a fee increase of $230.
Under this amendment, the grant and resumption of citizenship application service fees for minors ($100 for persons under 18 years of age) will not change. Also, the right of citizenship fee (a fee of $100, payable with adult grant and resumption applications) will not change. This fee is a privilege fee paid for the right to be a Canadian citizen and is refunded to the client if their application for citizenship is not approved.
Regulatory and non-regulatory options considered
CIC has established the citizenship fees in regulations and there is no other readily available means of achieving the stated objective of recovering the cost to the Government of Canada of providing these services.
Furthermore, maintaining the status quo was not tenable as the Government of Canada would have continued to subsidize the majority of the cost of delivering the program. This would have continued to create pressures on the Government and, in turn, would have resulted in less investment in programming. No growth in dedicated resources would have resulted in increased processing times and a loss of competitiveness with competitor nations.
Benefits and costs
The cost-benefit analysis (CBA) provides a summary of the impacts on stakeholders of fee increases for grants and resumptions of citizenship over a period of 10 years (2015–2024).
An important assumption made in the monetized analysis is that the fee increases are not anticipated to affect the demand for citizenship. The last census (2006) reports that 85% of eligible immigrants received Canadian citizenship, or approximately 228 000 individuals. The CBA assumes that the fee increase will not impact the naturalization rate as the value placed on obtaining citizenship is very high and the benefits associated with obtaining citizenship far outweigh the fee increases. Thus, the number of applications expected per year is not anticipated to fall following an increase in the fees.
The analysis monetizes the cost to adult applicants who will be required to pay a higher fee to apply for a grant or resumption of citizenship. While the fee increase will be borne by adult applicants applying for citizenship, this cost will be offset by the benefit the Government of Canada gains from a reduction in the subsidy it provides to users for the service. Overall, the analysis results in a small net cost.
Based on the analysis of incremental impacts, the total estimated cost of the citizenship fee increase is approximately $287.5 million in present value (PV) and the total monetized benefits is estimated at $287.4 million (PV), resulting in a net cost of $0.1 million over the analysis period, or an annualized average of slightly more than $14,000 per year.
The table below provides an overview of the cost-benefit analysis results. The analysis period is 10 years, starting in 2015 and ending in 2024. All costs and benefits are forecasted over that period and are expressed in 2013 constant dollars. All costs and benefits in PV were calculated using a discount rate of 7%.
Cost-benefit accounting statement
|Costs, benefits and distribution||2015||2019||2024||Total Present Value||Annualized Average|
|A. Quantified impacts (in present value $)|
|Less subsidy burden||Government of Canada||41.2M||29.1M||18.9M||247.0M||40.9M|
|Total benefits (in PV)||41.2M||29.1M||18.9M||287.4M||40.9M|
|Higher fees for citizenship grants and resumptions||Citizenship applicants||41.2M||29.1M||18.9M||287.4M||40.9M|
|Total costs (in PV)||41.3M||29.1M||18.9M||287.5M||40.9M|
|B. Distributional impacts|
|It is acknowledged that there may be instances when some eligible applicants may choose to delay the acquisition of citizenship due to the increased fee. However, it is not expected that the fee increase will generate any significant changes to the demand for citizenship, thus this impact is not monetized in the above analysis.|
Explanation of the baseline scenario
An important first step in developing a cost-benefit methodology is establishing a baseline scenario against which options may be measured. For this analysis, the baseline is a scenario in which eligible adult applicants seeking and resuming citizenship will continue to pay a fee of $300 and Canadians will continue to subsidize the processing of citizenship applicants by an estimated $255 (the estimated full cost of processing is calculated at approximately $555).
The number of citizenship applicants in the baseline is based on a proportion of those persons entering Canada in previous years who would be eligible to apply for citizenship. Plans for future immigration levels of the number of permanent residents admitted to Canada and Ministerial Instructions, which can impose application intake caps, are not possible to forecast, given that such decisions are made annually. For this reason, the cost-benefit analysis assumes that the number of applicants applying for citizenship remains constant over the study period, at 182 400 adult applications each year. The estimated application intake is derived using the average number of citizenship and resumption applications received from 2009 to 2011.
The analysis assumes that the fee increases will not impact demand, thus a level of 182 400 adult citizenship applications or resumptions will continue to be reached annually. The analysis monetized the impact of a fee increase of $230 on these applicants. Thus, applicants will be required to pay $230 more per adult application and the Government of Canada will reduce the subsidy provided for each such application by $230.
Distributional impact of the regulated scenario
A fee increase of $230 may impose additional financial pressures on some individuals or families. While the analysis assumes that there will not be a reduction in overall demand for citizenship as a result of the fee increase, it is acknowledged that some may be required to delay their application as they will need more time to save for the new fee. Overall, in the long term, this will likely not have a significant impact on the uptake for citizenship.
Determination of the increased fee
In order to determine an appropriate fee for the grant and resumption services, CIC first estimated the full cost of providing the service by using an activity-based costing methodology known as the Cost Management Model (CMM). Through data obtained from the CMM and departmental data systems, CIC calculates a unit cost that is equal to total costs divided by total volume.
The estimated full cost is derived by totaling the costs of all functions that support the primary activity. This estimate encompasses direct and indirect costs, the latter including departmental support costs and the costs of other Government departments for any services they provide relating to processing of grant and resumption applications.
The common law and subsection 19(2) of the Financial Administration Act (FAA) reflect that the full cost of providing a service represents the maximum allowable price for cost-based fees. Full cost may be viewed within the context of all costs to the Crown in the provision of the associated service. The full cost for grant or resumption services is estimated to be $555.
There are a number of additional factors that are taken into account following the assessment of the maximum fee level. These pricing factors include the mix of public and private benefit, consideration of the total cost of citizenship to the client, stakeholder views and future changes in processing resulting in efficiencies. Any combination of these factors support establishing the final price at a level below full cost. The final fee is thus set at $530 (under the estimated full cost of $555).
Costs and benefits
The primary cost associated with the regulatory amendment, as outlined in the cost benefit accounting statement above, is the direct cost to adult applicants applying for citizenship, as they face a fee increase of $230 per application. The analysis takes application intake at 182 400 annually and multiplies it by the fee increase (downwardly adjusted for inflation to represent real values as measured in 2013 Canadian dollars at an assumed rate of 1.88%). This determines the annual impact of the fee increase on adult citizenship applicants. The total estimated annualized average cost to citizenship applicants is $40.9 million.
Further costs accounted for in the analysis include CIC’s communication costs to advise applicants of the fee increase as well as administrative costs to implement the fee increase such as updating bulletins, forms, and computer systems. The total estimated transition cost to the Government is less than $100,000.
The primary beneficiary is the Government of Canada, which will realize a reduction in the level of subsidy it provides to adult applicants seeking citizenship. A savings of $230 per adult application (downwardly adjusted for inflation to represent real values as measured in 2013 Canadian dollars at an assumed rate of 1.88%) multiplied by the intake of 182 400 applications per year is accounted for as a benefit to the Government of Canada. The estimated annualized average benefit is $40.9 million to Canadians.
The cost of a fee increase to citizenship applicants is completely offset by the benefit to the Government of Canada from reducing the subsidy provided in citizenship processing. Thus, the overall net impact of the Regulations, as illustrated above, is the administrative resources required by CIC to implement the fee increase, which is estimated at less than $100,000.
Information about the CBA methodology is available upon request.
The “One-for-One” Rule does not apply as there is no change in administrative costs to business.
Small business lens
The small business lens does not apply to this proposal, as there are no costs to small business.
CIC received numerous media requests following the February 6, 2014, increase in the citizenship grant and resumption fees. In the months following the announcement, there was minimal to no media interest.
These fee increases apply only to individual applicants who are 18 years of age and over who submit an application for a grant or resumption of citizenship. This increase in the fees will shift more of the cost of providing these services to the user who benefits from the service. The portion of the cost subsidized by the Government of Canada will be reduced.
CIC also charges a $100 service fee for applications for grants or resumptions of citizenship submitted by or on behalf of minors (persons under 18 years of age); this fee remains unchanged. The cost for processing such applications is slightly more than $100 for each unit processed. It was decided not to increase this fee as nearly 100% of costs are currently being paid by the user. The fee has also not been raised in order to respect the principles reflected in the FAA that the amount of a service fee may not exceed the cost of providing that service.
The new adult grant and resumption application fee is not out of step with Five Country Conference partners’ processing fees, nor will it make Canada a less attractive destination for prospective immigrants. The amended fee is within the broad range charged by comparator countries such as Australia ($264), the United Kingdom ($1,740, which includes a £80 ceremony fee), New Zealand ($426) and the United States ($743, which includes a US$85 biometrics fee).
Implementation, enforcement and service standards
The Regulations will come into force on January 1, 2015.
Complete grant and resumption applications received prior to January 1, 2015, will be accepted with the former fee ($300). Applications received on or after January 1, 2015, require the new processing fee of $530. Applications received on or after January 1, 2015, that do not include the correct processing fee will be returned to the applicant unprocessed. Evidence of the correct fee payment must accompany any application for a grant or resumption of citizenship submitted to the citizenship Case Processing Centre in Sydney, Nova Scotia.
Processing officers have been instructed on the administrative rules in an operational bulletin. Applicants may obtain further information regarding changes to the fee schedule through CIC’s Web site at http://www.cic.gc.ca/english/index-can.asp.
The communications approach will include a news release or Web notice to announce the change in fees and an update to the CIC Web site to reflect the new fees.
As a result of program changes, service standards are expected to improve over time. Information on CIC’s service standards can be found at http://www.cic.gc.ca/english/helpcentre/results-by-topic.asp?t=13.
CIC is a service delivery department that is subject to the Government of Canada’s policy on service standards for external fees. Currently, many fees paid by users do not fully cover costs: they are not fully cost-recovered. The balance of these costs is funded by the Government of Canada.
The amended Regulations increase the fees for some citizenship services to ensure that the users of these services are paying their fair share of the costs incurred by the Government of Canada. CIC followed both the Treasury Board of Canada Secretariat’s Guide to Establishing the Level of a Cost-Based User Fee or Regulatory Charge and Guide to Costing when determining fee levels.
Performance measurement and evaluation
In order to measure performance, CIC will, to the extent possible, use relevant existing performance indicators, such as the number of citizenship grants, to measure outcomes such as the number of cases processed at the new fee level. CIC will monitor the fees for grants and resumptions of citizenship on an ongoing basis. The key citizenship uptake indicators, such as processing times and number of citizenship case decisions, will also be continuously monitored.
CIC will undertake reviews of its fees every five years or sooner to ensure that CIC conforms to the requirements of the FAA, specifically that the fee charged may not exceed the cost of providing the service, and to consider the potential for processing efficiencies realized through modernization initiatives. CIC will monitor the fees environment closely in order to adjust any fees as necessary in response to fluctuations in program costs.
Fees information is reported through the Departmental Performance Report (DPR); costs, revenues and performance are included in this report. The DPR can be found on CIC’s Web site. CIC will also report through its Annual Report to Parliament in the section on the Citizenship Program and in public financial statements (http://www.cic.gc.ca/english/resources/publications/annual-report2013/section4.asp#a2).
Karine Paré, CPA, CMA
Cost Management Division
Financial Management Branch
Citizenship and Immigration Canada