Vol. 148, No. 4 — February 12, 2014

Registration

SOR/2014-20 January 29, 2014

CITIZENSHIP ACT

Regulations Amending the Citizenship Regulations

P.C. 2014-50 January 28, 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

AMENDMENT

1. The schedule to the Citizenship Regulations (see footnote 1) is replaced by the schedule set out in the schedule to these Regulations.

COMING INTO FORCE

2. These Regulations come into force on the day on which section 171 of the Economic Action Plan 2013 Act, No. 1, chapter 33 of the Statutes of Canada, 2013, comes into force.

SCHEDULE
(Section 1)

SCHEDULE
(Subsection 31(1))

FEES

Item	Column I Application	Column II Payable to	Column III Fee ($)
1.	Application for grant of citizenship under section 3, 5.2, 5.3 or 5.5	Department of Citizenship and Immigration	300
2.	Application for grant of citizenship under section 4, 5.1 or 5.4	Department of Citizenship and Immigration	100
3.	Application for renunciation of citizenship under section 7	Department of Citizenship and Immigration	100
4.	Application for resumption of citizenship under section 8 by a minor child	Department of Citizenship and Immigration	100
5.	Application for resumption of citizenship under section 8 by a person who is 18 years of age or older	Department of Citizenship and Immigration	300
6.	Application for certificate of citizenship under section 10	Department of Citizenship and Immigration	75
7.	Application for search of records under section 29	Department of Citizenship and Immigration	75

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Background

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 both integration and the issuance of a Canadian passport to travel internationally.

The Government of Canada supports a cost-recovery approach to financing Government programs — costs should be borne by those who receive the service and resulting benefits. The Citizenship Regulations have established 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 fee for processing an application for either a grant or resumption of citizenship is $100. The fee is the same for both adults and children. This fee has not changed since 1995.

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, Department of Justice, Canada Border Services Agency, Treasury Board Secretariat and the Royal Canadian Mounted Police.

Additionally, the Office of the Auditor General of Canada has been recommending, since its May 2008 report, (see footnote 2) that CIC review its citizenship service fees. The audit noted that the costs the Department had already identified were higher than the fee revenue. It was recommended that CIC establish formal systems and practices to review its fees. The report indicates that all factors must be examined before establishing fees and periodically after the fees are established to determine whether changes are needed, with a view to ensuring that a fair share of the fee is borne by the fee payer and general taxpayers.

Issues

Since the service fees for the grant and resumption of citizenship have not changed since 1995, a significant imbalance has been created between the cost of providing these services to applicants and the service fees paid by the applicant. The Government of Canada promotes a cost-effective approach (see footnote 3) to financing Government programs, which means the costs should mainly be borne by those who receive the service and benefit from it. The estimated cost to government of processing a grant or resumption of citizenship application in 2010–2011 was $555, yet all applicants only pay a $100 service fee, or less than 20% of the actual processing cost to the Government. The Canadian taxpayer is therefore currently subsidizing the cost of providing this service by more than 80%.

Objectives

The objective of this regulatory amendment is to decrease the subsidization burden on the taxpayer for the processing costs for grant or resumption of citizenship applications. This amendment increases the grant and resumption service fees from $100 to $300 thereby reducing the taxpayer subsidization burden from more than 80% to less than 50%. This reduction in the subsidization by taxpayers aims to shift more of the cost burden to the user who benefits the most from the service.

Description

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 $100 to $300, a fee increase of $200.

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 with the amendment to the Citizenship Regulations and will continue to apply. 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

Additional options were considered for the grant and resumption fees:

1. Keeping the status quo; and

2. Increasing the fee to reflect 100% cost recovery.

Maintaining the status quo is not tenable as the taxpayer would have continued to subsidize the majority of the cost of delivering the program. This would have continued to create pressures on government and in turn 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. Keeping the status quo would also not have been in keeping with the Government’s policy on cost recovery.

Increasing the service fees for grant and resumption applications to reflect 100% cost recovery would have imposed too large a fee increase and too much hardship on applicants. Additionally, CIC does not expect improved processing times of applications in the short term.

Benefits and costs

The CBA provides a summary of the impacts on stakeholders of fee increases for grants and resumptions of citizenship over a period of 10 years (2014–2023).

An important assumption made in the monetized analysis is that the fee increases are not anticipated to impact the demand for citizenship. The last Census (2006) reports that 85% of eligible immigrants received Canadian citizenship, that is approximately 228 000 individuals. The CBA assumes that the fee increases 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 with an increase in the fees.

The analysis monetizes the cost on 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 Canadian taxpayers gain from a reduction in the subsidy they provide to applicants. 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 $247.1 million in present value (PV) and the total monetized benefits are estimated at $247.0 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 study results. The analysis period is 10 years, starting in 2014 and ending in 2023. All costs and benefits are forecasted over that period and are expressed in 2013 constant dollars. All costs and benefits in present values (PV) were calculated using a discount rate of 7%.

Cost-benefit accounting statement

Costs, benefits and distribution		2014	2018	2023	Total Present Value	Annualized Average
A. Quantified impacts (in present value $)
Benefits
Less subsidy burden on Canadians	Canadian taxpayers	32.8M	25.3M	16.4M	247.0M	35.2M
Total benefits (in PV)		32.8M	25.3M	16.4M	247.0M	35.2M
Costs
Transition costs	CIC	0.1M	0.0M	0.0M	0.1M	0.01M
Higher fees for citizenship grants and resumptions	Citizenship applicants	32.8M	25.3M	16.4M	246.9M	35.2M
Total costs (in PV)		32.9M	25.3M	16.4M	247.1M	35.2M
Net benefit					-0.1M	-0.01M
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 where eligible adult applicants seeking and resuming citizenship will continue to pay a fee of $100 and Canadians will continue to subsidize the processing of citizenship applicants by an estimated $455 (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. Future immigration level plans 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 by taking 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 will continue to be made annually. The analysis monetized the impact of a fee increase of $200 on these applicants. Thus, applicants will be required to pay $200 more per adult application and Canadian taxpayers will reduce the subsidy they provide for each such application by $200.

Distributional impact of the regulated scenario

A fee increase of $200 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 run, this will likely have a negligible 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 which is equal to total costs divided by total volume.

The estimated full cost is derived by totalling 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 services.

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 benefits, impact and contextual analysis, 10-year analysis regarding future investment, stakeholder consultation and future changes in processing resulting in efficiencies. Any combination of these factors can suggest establishing the final price at a level below full cost. The final fee is thus set at $300 (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 $200 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 applicants applying for citizenship. The total estimated annualized average cost to applicants applying for citizenship is $35.2M.

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 IT. The total estimated transition cost for the government is less than $100,000.

The primary beneficiaries are Canadian taxpayers who will realize a reduction in the level of subsidy they provide to adult applicants seeking citizenship. A savings of $200 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 intake of 182 400 applications per year is accounted for as a benefit to taxpayers. The estimated annualized average benefit is $35.2 million to Canadians.

The cost of a fee increase to applicants seeking citizenship is completely offset by the benefit to Canadian taxpayers from reducing the subsidy they provide 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.

CBA methodology information is available upon request.

“One-for-One” Rule

The “One-for-One” Rule does not apply as the regulatory amendments apply to individuals; there is no change in administrative costs to business.

Small business lens

The small business lens does not apply as the regulatory amendments apply to individuals; there are no costs to small business.

Consultation

CIC’s former minister, Jason Kenney, has spoken publicly about a potential increase to the grant of citizenship processing fee in the media. In a news conference given by then Minister Kenney on March 22, 2013, to highlight the benefits of Economic Action Plan 2013, the former CIC minister indicated that there could be a substantial increase in the citizenship application fee, that no decisions had been made on the level of the fee increase, and that the fee will be subject to regulatory amendments. The news conference resulted in media attention in newspapers, social network sites, and tweets.

The attention given to a processing fee increase for grants and resumption of citizenship has provided an opportunity for the general public in Canada, and immigrant serving organizations, to present reaction to the planned increase in processing fee. No reaction has been forthcoming.

Rationale

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 taxpayer portion of the subsidy 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 applications by minors for the grant or resumption of citizenship is slightly more than $100 for each unit processed. It was decided not to increase this fee as nearly 100% of costs are 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 increase is not out of step with Five Country Conference (FCC) partners’ processing fees, nor will it make Canada a less attractive destination to the best and the brightest immigrants. The amended fee is more within the range charged by comparator countries such as Australia ($250), the United Kingdom ($1,492), New Zealand ($406) and the United States ($627).

Implementation, enforcement and service standards

The Regulations will come into force simultaneously with amendments to the Citizenship Act that will be brought into force on February 6, 2014, via order in council.

Complete grant and resumption applications received prior to February 6, 2014, will be accepted with the former fee ($100).  Applications received on or after February 6, 2014, require the new processing fee of $300.  Applications received on or after February 6, 2014, 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 details of the administrative rules in an operational bulletin. Applicants may obtain further information regarding changes to the fee schedule through CIC’s Web site: www.cic.gc.ca/english/index-can.asp.

A medium profile communications approach will be taken when the increased fee comes into effect.

As a result of program changes, service standards are expected to improve slowly over time. Information on CIC’s service standards can be found at the following link: www.cic.gc.ca/english/helpcentre/results-by-topic.asp?t=13.

CIC is a service delivery department which is subject to the Government of Canada’s Policy on Service Standards for External Fees. Currently, fees paid by users are not fully cost recovered. Only a portion of the cost to provide the service is paid by the users. The balance of these costs is funded by all Canadian taxpayers.

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, while the general public contribution is reduced. The increased fees thus place an enhanced emphasis on a user pay philosophy, reducing the subsidy that taxpayers provide to users of CIC’s programs and services.  CIC followed 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 devising 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 like the number of cases processed at the new fee level. CIC will also use data sources such as the Citizenship Dashboard or the Citizenship Grant Production Achievement Report where applicable and available for this initiative, and will undertake ongoing monitoring of the fees for grants and resumptions of citizenship.  The key citizenship uptake indicators, such as processing times and number of citizenship case decisions, align with the broader departmental Performance Measurement Framework, and will be monitored on an ongoing basis.

CIC will undertake reviews of its fees every five years or less as CIC must conform to the principles reflected in the FAA, that the fee charged may not exceed the cost of providing the service, and considering 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 Citizenship Program Annual Performance Measurement Report (www.cic.gc.ca/english/resources/publications/pmf-2012/index.asp) and in public financial statements.

Contact

Karine Paré, CPA, CMA
Director
Cost Management Division
Financial Management Branch
Citizenship and Immigration Canada
Email: Karine.Pare@cic.gc.ca

• Footnote a
  S.C. 2013, c. 33, s. 170
• Footnote b
  R.S., c. C-29
• Footnote 1
  SOR/93-246; SOR/2009-108
• Footnote 2
  OAG May 2008 Report: Chapter 1 — Management of Fees in Selected Departments & Agencies.
• Footnote 3
  The Cost Recovery and Charging Policy was implemented across government departments in 1997. The current policy can be found in the Treasury Board Guide to Costing.