Vol. 132, No. 7 — April 1, 1998

Registration
SOR/98-163 12 March, 1998

FINANCIAL ADMINISTRATION ACT

Order Amending the Honey Fees Order

The Minister of Agriculture and Agri-Food, pursuant to Order in Council P.C. 1995-325 of February 28, 1995 (see footnote a), made pursuant to paragraphs 19(1)(b) (see footnote b) and 19.1(b) (see footnote c) of the Financial Administration Act, hereby makes the annexed Order Amending the Honey Fees Order.

Ottawa, March 12, 1998

Lyle Vanclief
Minister of Agriculture and Agri-Food

ORDER AMENDING THE HONEY FEES ORDER

AMENDMENTS

1. The Honey Fees Order (see footnote 1) is amended by adding the following after section 6:

Compliance Assistance

6.1 The fee that is payable by a person who requests assistance from an inspector in order to meet the requirements of the Act or the Honey Regulations is the greater of $87 and $21.75 per quarter hour, the time being rounded off to the nearest quarter hour.

2. Subsection 7(2) of the Order is replaced by the following:

(2) The fees prescribed by sections 3 and 6.1 shall be paid on receipt of an invoice from the Canadian Food Inspection Agency.

3. The portion of section 9 of the Order before paragraph (a) is replaced by the following:

9. Despite section 7, if required by an inspector, the fees prescribed by sections 3 to 6.1 shall be paid before the service is provided where the person who requests that service

COMING INTO FORCE

4. This Order comes into force on April 1, 1998.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Order.)

Description

These amendments have been made by the Minister of Agriculture and Agri-Food under the Financial Administration Act to increase fees for services provided by the Canadian Food Inspection Agency (CFIA) to individuals and businesses whose activities are regulated under the Processed Fruits and Vegetable Regulations, the Honey Regulations and the Maple Products Regulations.

Alternative ways for delivering inspection programs in a cost-effective and efficient way are a priority for the Agency. Under the CFIA Business Alignment Plan, cost sharing agreements have been negotiated with the users of CFIA services, and during 1996 and 1997, fees were increased or newly introduced for many of the services provided by the Dairy, Fruit and Vegetable Division of the Agency. CFIA is also focusing on program redesign according to client needs.

CFIA is committed to annually review its fees and services with the affected industry groups and make adjustments as required to achieve a balance between cost sharing targets and client needs. The Agency is working with its clients to bring about an evolution of policies and programs to produce an effective, efficient, uniform food inspection system. As a result of that process, the following changes have been made to both fees and services:

CHANGES TO FEES AND SERVICES

Honey and Maple Products

A new compliance assistance fee is now in effect. This service will be provided, as resources permit, when a client requests the presence of an inspector to assist in meeting the requirements of the regulations. The fee will be the greater of $87 and $21.75 per quarter hour and is based on the program hourly rate. Compliance assistance fees will be set to recover 100% of the program costs. Compliance assistance is an example of a service which is provided entirely for the private benefit of the client. This is the only fee change for honey and maple products.

Processed Products

Every shipment of imported processed food products is required to be accompanied by an import declaration. The fee for the verification of an import declaration is increased to $14 per shipment from the former $11.

A compliance assistance fee is also included for processed products. The fee will be the greater of $87 and $21.75 per quarter hour.

Alternatives

Alternative methods of program delivery

Some client industry groups have discussed possible alternate methods for delivering inspection program. These alternatives include privatization, joint delivery and accreditation of non-government inspectors. Consultations planned for 1997/98 will focus on these alternatives to further reduce the costs of the inspection programs. Industry representatives are aware that should acceptable alternative methods to deliver services not be found, CFIA will provide the services with appropriate fees to maintain the level of service desired by the industry. Without adequate cost recovery, the status quo is not a viable alternative due to the budgetary cutbacks imposed by the Government.

Cost sharing and cost reduction

Various combinations of cost sharing and cost reduction have been investigated to maintain services that CFIA's clients want to continue. The lowest priority programs have already been eliminated. In response to continuing government resource cutbacks and the ongoing need for services, the Agency has negotiated additional fee increases and modifications to the present services. These changes will assist CFIA to maintain services that are essential for the health and safety of Canadians and that assist Canadian businesses to market products worldwide. The changes address the current fiscal reality and are in line with the CFIA Business Alignment Plan for 1997.

Benefits and Costs

Benefits

Without cost-sharing combined with program modifications and cost reductions, the $70 million budget reduction faced by CFIA would likely have a heavy impact on the Canadian agricultural industry. As a result of CFIA programs, the Canadian agricultural sector enjoys a high level of inspection and certification service, healthy productivity, broad access to foreign sources of products and strong export markets for Canadian products. Without cost-sharing, these benefits would be diminished and this would be unacceptable to the affected industries. The revenue generated from the fees will ensure that these programs continue and help the Agency to meet its fiscal obligations without increasing the tax burden on Canadians.

With the fee increases, the recovery of expenditures in the processed products program is estimated to be $1.7 million. The honey and maple programs annually recover around $236,000 and $189,000 respectively.

Costs

The added cost to the processed products sector of the fee increase is estimated to be between $100,000 and $170,000 per year. Cost recovery in CFIA programs is consistent with the Federal Government's goal of reducing its deficit and the tax burden on Canadians under the principle that the primary beneficiaries of a government service should pay for that benefit.

There are no increases to existing fees in the honey and maple programs.

Collection cost is estimated to be about 12% of revenue collected for fiscal year 1995/96. The Agency is developing new financial systems to reduce collection costs.

International Trade Agreements

The new fees comply with GATT obligations for inspection procedures. They are also consistent with the WTO and NAFTA agreements. The fees will be uniformly applied to all trading partners and will not exceed the actual cost of the service provided.

Consultation

The proposed changes to fees and services were prepublished in the Canada Gazette Part I on August 9, 1997.

Processed Products

The CFIA Business Alignment Coordinating Committee (BACC) organized a Processed Products Industry Advisory Committee with a representative cross section of industry members to discuss the evolution of the processed products program. Two meetings were held in February and April of 1996 with BACC. The committee discussed the proposed fee increases and the re-design of several major program areas. Through these negotiations various issues were identified that will require further discussion. As a result, the Dairy, Fruit and Vegetable Division has established an ongoing consultative mechanism with the industry to discuss program design and inspection issues. Industry representatives expressed their opposition to any new fees or fee increases because of the negative impact on operating costs and the industry's inability to pass the costs on through the marketing system. Technical program design issues will be further developed by the technical working groups. Any implications for program costs and revenue will be evaluated by the joint industry-government Processed Products Industry Advisory Committee.

Honey and Maple Products

CFIA representatives met with representatives of both commodity groups between June 1995 and December 1996. User fees for the honey and maple products programs were put in place in July 1997. CFIA discussed the development of the compliance assistance service. The industry appreciated that it would be voluntary. Similar to industry representatives in other commodity areas, the honey and maple products industry representatives also expressed strong opposition to the introduction of any service fees which in their opinion will negatively affect their profitability.

Compliance and Enforcement

In cases where fees become outstanding, payment, including interest, may be recovered from the person on whom the fees were imposed as a debt due to Her Majesty in Right of Canada. Also, until outstanding fees have been paid, payment for future services may be required in advance, or services may be refused.

Contact

R. Carberry,
A/Director
Dairy, Fruit and Vegetable Division
Canadian Food Inspection Agency
59 Camelot Drive
Nepean, Ontario
K1A 0Y9
Telephone: (613) 225-2342, ext. 4727
FAX: (613) 990-0607
E-Mail: carberryr@em.agr.ca

Footnote a

SI/95-34; SI/97-38

Footnote b

S.C. 1991, c. 24, s. 6

Footnote c

S.C. 1991, c. 24, s. 6

Footnote 1

SOR/97-305

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