REPORT THE RIGHT FEES TO LIVE BETTER TOGETHER THE RIGHT FEES TO LIVE BETTER TOGETHER REPORT TASK FORCE ON FEES FOR PUBLIC SERVICES

Size: px

Start display at page:

Download "REPORT THE RIGHT FEES TO LIVE BETTER TOGETHER THE RIGHT FEES TO LIVE BETTER TOGETHER REPORT TASK FORCE ON FEES FOR PUBLIC SERVICES"

Corey Clark
5 years ago
Views:

1 REPORT THE RIGHT FEES TO LIVE BETTER TOGETHER THE RIGHT FEES TO LIVE BETTER TOGETHER REPORT TASK FORCE ON FEES FOR PUBLIC SERVICES Extracts

2 MYTHS THAT SHOULD BE DISPELLED First myth: public services are free Even if no fee or only a small fee is charged for public services, they are not free. Clearly, health, education and childcare services are paid for by taxpayers, which ensures their existence. Second myth: fees are constantly on the rise Most of the fees charged in Québec for public services have grown at a rate that has not kept pace with inflation over the last ten years. Examples include electricity rates and university tuition fees. Third myth: fees in Québec are higher than elsewhere Yet the revenues derived from fees are lower in Québec than elsewhere, and Québec does not resort to fees to the same extent as do the other provinces. Fourth myth: fees are hidden taxes In fact, the idea underlying the fee system is that the person who uses a service must also be the one who pays for it the user pays concept, whereas in the case of taxation, the person who pays the taxes may not necessarily benefit from the services funded by these taxes. Fifth myth: fees are unfair On the contrary, it is both more efficient and fairer to directly subsidize low-income households rather than to set an artificially low general rate for everyone. VIRTUES THAT SHOULD BE RECALLED First virtue: Rates contribute to improving the quality of services. Second virtue: Rates encourage efficiency in the use of public resources. 2

3 SUMMARY PORTRAIT AND DISCREPANCY IN RELATION TO THE CANADIAN AVERAGE IN User fee revenues of agencies that depend on the Québec government Discrepancy in relation to the Canadian average, (in millions of dollars) Revenues Discrepancy in relation to the Canadian average ($ ) ($/per capita) Government departments, agencies and networks Departments, agencies and special funds Health network Education network Subtotal departments, agencies and networks Other sources of user fees Electricity rates (Hydro-Québec) $7-a-day childcare services Insurance: Occupational health and safety insurance (CSST) Parental insurance Drug insurance Automobile insurance 698 Other insurance Farm income stabilization insurance 134 Crop insurance 25 Subtotal Other sources of user fees TOTAL Note: ( ): not available or not applicable. 1 Higher education and school boards. 2 Childcare centres, home childcare services and school childcare services. Sources: Ministère des Finances du Québec. The discrepancies in relation to the Canadian average for government departments, agencies and networks are calculated using data from Statistics Canada s Financial Management System (FMS). 3

4 INTERPROVINCIAL COMPARISON OF THE USE OF USER FEES Discrepancy in user fee revenues - Québec compared with certain provinces and the Canadian average, (in dollars per capita) Departments, agencies and netw orks Electricity Childcare services British Colombia Alberta Ontario Canadian average Sources: FMS data and calculations of the ministère des Finances du Québec. 4

5 EXAMPLES OF THE MAIN USER FEES The 10 main sources of public user fees in (in millions of dollars) Sector Amount Percentage of total user fees 1. Hydro-Québec Electricity % 2. Occupational health and safety (CSST) Insurance % 3. Drug insurance Insurance % 4. Parental insurance Insurance % 5. Driver s licence and vehicle registration fees Government departments and agencies % 6. Automobile insurance (SAAQ) Insurance % 7. Contribution by accommodated adults Networks (health) % 8. Childcare services 1 Childcare services and networks % 9. Tuition fees overall Networks (education) % 10. Gross stumpage fees Government departments % Total % 1 Including $7-a-day childcare services and school childcare services over $7 a day. Source: Ministère des Finances du Québec. 5

6 EVOLUTION OF USER FEES Breakdown of the user fee revenues of government departments and agencies according to the method of reviewing fees, (as a percentage of total user fee revenues) Indexed fees Fees that reflect costs Fees that have not changed for more than one year 25.2% 51.5% 23.3% Source: Ministère des Finances du Québec. Changes in certain user fees and the consumer price index (CPI), 1998 to 2007 (cumulative index, 1998=100) Electricity rates CPI Canada Private room rate - CHSLD University tuition fees Hunting licence - small game CHSLD CPI Electricity Tuition fees Hunting Freeze on electricity rates from 1998 to 2003 Source: Ministère des Finances du Québec. 6

7 FUNDING OF PUBLIC SERVICES UNDER DIRECT AND INDIRECT DEPARTMENT CONTROL Importance of user fees in funding public services under direct and indirect departmental control (as a percentage) Parental insurance 99% Transportation agencies Drug insurance Economic and finance agencies 41% 40% 38% Cultural agencies Postsecondary education 25% 29% Childcare services 1 16% Total, excluding the health netw ork 36% Health netw ork 6% Total 17% 1 Childcare centres and home childcare services. Source: Ministère des Finances du Québec. 7

8 SUMMARY OF FEE-SETTING PROCESSES IN FORCE IN QUÉBEC Key characteristics of the fee-setting processes in force in Québec, Direct and indirect departmental control Quasi-judicial tribunal Cost recovery Poor Limited to the costs allowed Overall assessment of the feesetting process Not uniform Not compulsory Lack of information on user fees, and so on Transparent Value of heritage pool electricity challenged Restrictive statute Specific insurance plans Yes, except in the agricultural insurance plans Transparent for the SAAQ and the CSST Municipalities To be evaluated Not uniform as it is highly regionalized Strong political influence Total revenues $9.7 billion $9.4 billion $3.1 billion $2.7 billion Delegation Limited Average Average Extensive Political pressure Strong Average Average Strong Allocation of revenues to the feebased service Variable Extensive Extensive To be evaluated Process - Rigour Poor High High Variable - Transparency Poor High High Variable - Accountability Poor High High Variable - Expertise, knowledge and professional staff Variable Strong Strong Variable Source: Ministère des Finances du Québec. 8

9 METHOD OF FUNDING PUBLIC GOODS AND SERVICES Establishment of the method of funding public goods and services Government policy directions Identification and determination of products and services Agencies responsible Choice of funding method Taxes User fees Source of funding 0% - 100% + User fees 100% + Taxes 0% - Taxes Taxes and user fees User fees Types of public goods and services Justice Security Envrionmental protection Health Education Mass transit Automobile insurance Electricity Ferry service 9

10 PROCESS OF DETERMINING THE NEW USER FEE POLICY Process of determining and evaluating user fees in government departments and agencies under the new user fee policy Process Determination of costs and choice of method of funding the public service 1 : - fee-based-portion and - non-fee-based portion Setting of user fee 2 Adoption of user fee Program evaluation Measure to support the least privileged members of society Allocation of revenues Government entities in respect of their activities Ministère des Finances in respect of the overall inventory Accounting for revenues and expenditures 1 Based on the criteria of fairness and efficiency, bearing in mind government policy directions. 2 Options to be considered: cost price, marginal cost, presence or absence of economic rent, interprovincial comparison, environmental impact, and so on. 10

11 PRICES FOR NATURAL RESOURCES: COMPARISON BETWEEN ALBERTA AND QUÉBEC Comparison of the gasoline and electricity price gap in Alberta and Québec with the Canadian average (Gasoline Average price in , (Electricity Average residential price as of April 1, in cents per litre) 2007, in cents per kwh) 67.7 Gap: 2.9% Gap: % 6.7 Alberta Canadian average Québec Canadian average Sources: M.J. Ervin & Associates Inc. and Hydro-Québec (2007). Comparaison des prix de l électricité dans les grandes villes nord-américaines. 11

12 UNIVERSITY TUITION FEES University tuition fees, (principal provinces and Canadian average) Tuition fees per student ($) Additional revenue if applied in Québec ($ British Columbia Alberta Ontario Québec Canadian average Canadian students registered in full-time undergraduate and graduate study. Sources: FMS data and calculations of the ministère des Finances du Québec, including tuition fees and compulsory attendant fees (registration, transcripts, library services, student associations, and so on). 12

13 WATER METERS IN THE MUNICIPALITIES OF QUÉBEC Percentage of homes equipped with water meters in municipalities in Canada, 2004 (as a percentage) Percentage of commercial customers equipped with water meters in municipalities in Canada, 2004 (as a percentage) NL PE QC BC NB Canada AB ON NS MB SK QC NL NB Canada BC PE MB ON NS AB SK Source: Environment Canada, 2007 report on municipal water use in Canada. Source: Environment Canada, 2007 report on municipal water use in Canada. 13

14 FUNDING OF CHILDCARE SERVICES Financial contribution of the Québec government and of parents for one day of childcare services, 2006 (in dollars) Government Parents Childcare services Home childcare Private daycare centre Average Source: Ministère de la Famille et des Aînés. 14

n Appendix 2: THE MANITOBA ADVANTAGE

BUDGET 2012 Taxation Adjustments / C19 n Appendix 2: THE MANITOBA ADVANTAGE Manitoba is a diversified economy where no single industry dominates the industrial base. Manitoba has been quick to adjust to