Overview of the Marine Services Fees Project. July 3, 2013
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1 Overview of the Marine Services Fees Project July 3, 2013
2 History and Context Why does Coast Guard cost recover for navigation and icebreaking services? The federal government s 1995 Budget stated that cost recovery and user fees would be introduced for a host of government services provided to targeted users including marine services. This move towards cost recovery and user fees was part of the larger federal Program Review initiative announced in the 1994 Budget. As a result, Transport Canada committed the Canadian Coast Guard (CCG) to increase its revenue collections, with five external charges to support a vote-netted (respendable) revenue target of $47.9M. In 1996 and 1998 respectively, the Government of Canada began external charging for Marine navigation and icebreaking services provided to commercial users. 2
3 Level of Cost Recovery What is the current level of cost recovery for navigation and icebreaking services? The original premise of the fees is that those who derive commercial benefit from publicly-funded services should contribute to the cost of those services. The fee rate structures were designed to collect a combined Marine Navigation Services Fee (MNSF) and Icebreaking Services Fee (ISF) revenue target of $41.5 million. Under the original allocation methodology, the cost of navigation services attributed to industry were approximately 30% of the full cost of delivering these services. The cost of icebreaking services attributed to industry were approximately 50% of the full cost. Also using the original allocation methodology, the respective revenue targets for MNSF ($27.7 million) and ISF ($13.8 million) are each less than 50% of the cost allocated to industry. 3
4 Level of Cost Recovery (Continued) What is the current level of cost recovery for navigation and icebreaking services? Services Subject to Cost Recovery MNSF ($000) Short Range Aids Vessel Traffic Services ISF ($000) Route Assistance Ice Routing Information Services Marine Facility and Port Maintenance Full Cost of Services ( Costing) Cost of Services Attributed to Industry Under the Original Methodology ( Costing) Revenue Target for Cost Recovery 191,584 87,325 62,242 39,630 27,700 13,800 4
5 Most Recent Consultations What was the result of the most recent consultations with fee-paying clients? The most recent consultative work with the marine industry as a whole was conducted from , and appeared in past CCG Business Plans as the Marine Services Fees Strategy. This consultative work examined three issues: 1) options for eliminating the revenue shortfall associated with the ISF; 2) a proposal from the marine industry to implement a fee discount based on improvements in environmental performance; and 3) the elimination of the MNSF for Arctic resupply. This work concluded in 2008, and was documented in a CCG discussion paper outlining the respective government and industry positions on the fees and on the three issues examined. Results The industry proposal for an environmental fee discount was not accepted as it did not align with federal government policy. The issue of the application of the MNSF to Arctic resupply was permanently resolved in 2012 through the implementation of a fee exemption. 5
6 Targets and Revenues Marine Navigation Services Fee ($ Millions) Target 27,711 27,711 27,711 27,711 27,711 27,711 27,711 Revenue 26,276 27,683 25,807 27,584 28,000 28,400 31, Target 27,711 27,711 27,711 27,711 27,711 27,611 27,611 Revenue 29,400 30,700 31,100 27,500 27,600 29,000 28,900 6
7 Targets and Revenues Icebreaking Services Fee ($ Millions) Target 13,800 13,800 13,800 13,800 13,800 13,800 13,800 Revenue 5,209 5,074 4,295 4,476 4,500 4,800 5, Target 13,800 13,800 13,800 13,800 13,800 13,800 13,800 Revenue 5,000 5,200 4,800 5,000 4,600 4,600 5,200 7
8 Project Scope What is the scope of the Marine Services Fees project? Establish an internal Marine Services Fees Working Group comprised of internal Departmental financial, program service delivery, and cost recovery subject matter experts. Establish a Subcommittee of the National Marine Advisory Board to serve as a forum for Canada s marine industry to observe, review and comment as CCG reviews and updates the Marine Services Fees costing methodology in accordance with the User Fees Act, with a view to amending the fees. Determine whether it is appropriate to extend cost recovery to additional CCG service lines, and if so, identify and update the full cost for the provision of these services. For example: Long Range Aids to Navigation Waterways Management Non-Vessel Traffic Services component of Marine Communications and Traffic Services Search and Rescue 8
9 Project Scope (Continued) What is the scope of the Marine Services Fees project? Determine the appropriate level of cost recovery for client groups not currently subject to the Marine Services Fees. For example: Commercial fishers Recreational boaters In consultation with current and potential fee-paying client groups, allocate the full costs of all relevant service lines to the client groups that use these services, and determine the appropriate level of cost recovery (if any). Ensure the Department complies with the provisions of the User Fees Act, Treasury Board Secretariat Guidelines on external charging, and the Fisheries and Oceans Canada External Charging Framework. Satisfy current and potential fee-paying clients that all phases of the Marine Services Fees project consultative process was meaningful. 9
10 Project Scope (Continued) What is the scope of the Marine Services Fees project? Table a User Fees Act proposal in both houses of Parliament that establishes an amended and increased fee rate structure for CCG clients. Key materials supporting the proposal would include, among others: Demonstration of how service users were provided the opportunity to provide input into how services subject to fees could be improved Amended and increased Marine Services rates or structures Results of cumulative fee impact assessment(s) on service users a comparative international user fee study (if applicable) 10
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