The steep increase in citizenship processing fees has resulted in a sharp decline in the number of immigrants applying to become citizens.

The previous Conservative government’s hiking up of citizenship application fees – from $100 to $530 – revealed a particular philosophy: that citizenship is a private, rather than a public, benefit.

The move had measurable consequences. Data from 2015-16 shows a sharp decline in the number of immigrants applying for citizenship. The fee increase raises a number of questions around the federal government’s policy approach towards citizenship, as well as its commitment to transparency and accountability.

The genesis of the increase lies with the 2008 Report of the Office of Auditor General (OAG) (chapter 1) and its review of the implementation of the 2004 User Fees Act. The OAG’s report noted that citizenship fees had remained unchanged, at $100, since 1995, without any analysis of whether a change was warranted.

This prompted Citizenship and Immigration Canada (now Immigration, Refugees and Citizenship Canada, or IRCC) to conduct a review of the 2010-11 costs for adult citizenship fees. The review was designed to provide a baseline to assess whether enhanced processing systems had resulted in lower costs. The study showed a processing cost of $534 for adult applications (later revised to $555). Adults account for 80 percent of all applications.

IRCC sought and obtained an exemption from the User Fees Act in Budget 2013 that would give the minister discretion to increase fees without going through the full public consultations process under the Act. Because the change was put in the omnibus budget bill, it was reviewed by the finance committees in the House and Senate, rather than in the Commons immigration committee, where it would have received more rigorous study.
Less than one year later, the Conservative government tabled its comprehensive overhaul of the Citizenship Act, Bill C-24, along with the Canada Gazette notification of the first increase in citizenship processing fees, from $100 to $300. A second increase, to $530, was announced in the Canada Gazette 10 months later, and the press release was issued on December 31 to minimize public attention.

Reviewing the paper trail around the increase, some conclusions emerge.

Philosophy

The previous government made a clear choice to seek full or close to full cost recovery of citizenship processing costs, essentially treating citizenship as a purely private good. Yet citizenship is both a private good, given the benefits it confers on individuals, and a public good, in that it strengthens democracy in allowing immigrants to participate fully in Canadian political life. Treasury Board Secretariat guidelines both recognize and encourage recognition of the public benefits in the setting of fees. None of the IRCC documents or official testimony recognize this public benefit.

Assumptions

From the Budget 2013 briefing note to the Canada Gazette notifications, officials assume there will be no impact on the number of immigrants applying to become citizens (“the number of applications expected per year is not anticipated to fall following an increase in the fees”). The department did acknowledge some applicants might choose to delay their citizenship. Basic economics — the effect of price on demand — was ignored, demand for citizenship was assumed to be inelastic, given the underlying “value” of citizenship.

Consultations

Although officials assured the Senate National Finance Committee that the Canada Gazette notifications provided opportunity for people to react, no real consultations took place.

Instead, officials said the public and stakeholders had the opportunity to provide feedback after then minister Jason Kenney referred to a potential increase during a 2013 news conference.

Transparency

While the first increase was part of the discussions and debate around Bill C-24, the second increase was not. Then minister Chris Alexander presented the first increase to $300 and included Australia as one of the comparator countries, given its fee was roughly the same. At no time during C-24 hearings and debates was the possibility of a further increase that same year mentioned.

So what changed? Was there always a plan to do a “two-step” fee increase, and sneak in a second increase when it would be least noticed and debated? The closeness of the two announcements — within a year — suggests that may have been part of the original strategy.

griffith-graph-1
Figure 1

The end result is not surprising (except perhaps to the officials who did the analysis!). The number of citizenship applications, averaging 200,000 annually between 2000-2013, fell to 130,000 in 2015 when the higher fee was applied, and to only 36,000 in the first six months of 2016 (just over one-third of the number for the equivalent period in 2015).

Figure 1 contrasts the number of citizenship applications and new citizens from 2000 to 2016 (2016 annualized based on January-June data). The average of new permanent residents, 250,000, is shown for comparison purposes (annual fluctuations are within 10 percent). The slight decline in citizenship applications, from 211,000 in 2009 to 198,000 in 2014, reflected other administrative measures to improve the integrity of citizenship acquisition.

From a government finances perspective, the impact is significant. The baseline costing study assumed 174,000 adult citizenship applicants each year. At $530 per applicant, that would mean $92 million in revenues. The drop to 130,000 applicants in 2015 means a revenue shortfall of $23 million. If current trends in 2016 persist, the shortfall will be $54 million, or 58.6 percent, again highlighting the fundamental flawed assumption underlying the departmental analysis.

While the citizenship processing fee of $100, frozen for close to 20 years, needed to be revised to ensure a more appropriate balance between individual and public benefits, the manner in which it was done and the rationale for doing it was tendentious, at best.

There was no reason for the government to argue that an exemption from the User Fees Act was needed, because the process could take years. There was no urgency, just a wish to avoid full public consultations and debate. Obtaining the exemption through the Budget 2013 omnibus legislation further minimized debate.

As the government considers further increases to the number of immigrants that come into Canada, current fees mean that fewer will apply to become citizens. If the 2016 trend continues, we will have 300,000 new immigrants, and far less than 100,000 new citizens. This sets the stage for the existence of a growing portion of Canadian residents who are not citizens and who are effectively disenfranchised. From both social inclusion and social cohesion perspectives, this puts at risk the overall success of the Canadian model of integration.

Photo: Fred Lum / The Canadian Press

 


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