Frequently Asked Questions: Cost Recovery Initiative
The Canadian Food Inspection Agency has extended the comment period for the phase one consultations on the cost recovery initiative. Submit comments and have your say by April 21, 2017.
Consultations and feedback from stakeholders
How will the Canadian Food Inspection Agency (CFIA) consult stakeholders on the Cost Recovery Initiative?
To advance the Cost Recovery Initiative, the CFIA is undertaking a two-phased consultation.
Phase one: The CFIA has published a consultation document to provide information to stakeholders and to seek feedback on the proposed changes to the CFIA's list of services and service standards. It has also published an impact assessment questionnaire to obtain insights on the impacts of potential fee increases on regulated parties. These consultations are taking place from January 26, 2017 to April 21, 2017.
Phase two: The CFIA will provide stakeholders with a summary of feedback received during phase one consultations and specific fee proposals for each service. These consultations are anticipated to occur in fall 2017.
What type of input is the CFIA seeking from stakeholders during this consultation period?
The Agency is seeking your feedback on the following:
- the proposed list of services that allows fees to be charged consistently for similar CFIA services;
- the proposed service standards for CFIA services;
- the appropriate level of cost sharing between regulated parties and taxpayers;
- impacts of potential fee increases on businesses.
Will stakeholders be able to comment before any changes are implemented?
Yes, the CFIA will consult stakeholders during both phases of the consultations through a variety of channels, including the Agency's web site, webinars and face-to-face meetings, to receive comments and input.
Streamlined list of services and service standards
Why is the CFIA proposing a streamlined list of services for charging fees?
The CFIA Fees Notice has not substantially changed since the Agency was created in 1997. Fees are charged for services based on sector (plant, animal, food) and commodity, which creates complexity and leads to differences in fees for similar services. For example, product inspection fees vary based on commodity and can be based on weight or volume in a shipment, though the inspection may be done by the same inspector, and take the same amount of time.
A streamlined list of services will provide a consistent basis for the Agency's services and fees.
Under the proposed approach will there be differences in how fees are charged between different commodities?
No, the objective is to have a common approach to service and the application of fees. Fees would be applied on a consistent basis for all commodities and sectors and be charged either at a flat or an hourly rate. Services would no longer be defined by commodity, but rather organized by activity (e.g. requested inspection).
Could CFIA services change as a result of the cost recovery initiative?
No. CFIA service offerings will not change as a result of the cost recovery initiative.
How will the cost recovery initiative impact the standard of services provided to regulated parties?
The introduction of formal service standards will improve predictability for regulated parties and reflect current service levels. The introduction of formal service standards is part of a broader Agency effort to improve service to stakeholders.
Will the cost recovery initiative have an impact on plant/animal health or food safety in Canada?
No, there will be no impact on plant health, animal health or the safety of the Canadian food supply as a result of the cost recovery initiative.
Background on cost recovery
What is cost recovery?
Cost recovery is the practice of establishing and collecting fees to defray the costs of government activities. User fees are commonly charged to businesses for regulatory services, including a range of inspection services conducted by the CFIA. The establishment of user fees reflects the important benefits to businesses that result from access to such services. Other fees, known as regulatory charges, may be imposed to offset a portion of overall regulatory costs, including activities such as surveillance, compliance verification and enforcement.
Under what authority does the CFIA collect fees?
The CFIA has the authority to collect fees for certain services under the Canadian Food Inspection Agency Act (CFIA Act).
Does the Agency currently charge fees?
Yes, the Agency currently charges fees. Since its creation, the CFIA has been partially dependent on revenue generated by fees to support its operations. A list of fees is found in the Fees Notice.
Why is the CFIA undertaking a cost recovery initiative at this time?
The current fee structure has remained largely unchanged since 1997. It is complex, out of step with costs to deliver activities and inconsistent between and within industry sectors. As a result, there is a need to:
- simplify and apply a consistent approach for services
- introduce formal service standards, and
- re-examine the appropriate balance of cost-sharing of services between taxpayers and regulated parties.
What will happen to the fees that the CFIA currently charges?
The existing CFIA Fees Notice remains valid and in effect throughout the consultation period and until a new Fees Notice is introduced and published in the Canada Gazette.
How much of the CFIA budget is funded by cost recovery?
Currently, the CFIA recovers approximately $55 million per year of its annual costs of $824 million from charging fees to regulated parties (less than 10%). Of that $55 million, approximately $38 million is related to food safety activities, $10 million is related to plant health activities and $7 million is related to animal health activities.
Is the CFIA's approach to cost recovery similar to that followed by other federal government departments/agencies?
Yes. All Government of Canada departments and agencies are expected to follow a number of key steps when establishing or updating their fees, as set out in the Guide to Establishing the Level of a Cost-Based User Fee or Regulatory Charge. These steps include:
- establishing the full costs of activities for which fees are contemplated;
- evaluating or quantifying the mix of public and private benefits associated with each of the various activities;
- considering the impacts of potential fees on businesses of fee payers, as well as considering other factors such as fees charged in other jurisdictions for similar services.
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