CCRA Risks and Challenges

The CCRA delivers its programs and services in a complex environment that is in a continual state of evolution. To keep pace and maintain and build client confidence, we must clearly identify the risks and challenges we face and address them by organizing our business priorities, commitments, and investments accordingly. This section summarizes eight key risks and challenges in our operating environment that have a direct bearing on our business priorities as set out in this plan.

1. National Security

National safety and security have taken on a new level of urgency and importance in the wake of 9/11. The CCRA’s challenge has been to tighten border security to contribute to the fight against terrorism, while ensuring that the flow of legitimate trade and travel, which is critical to Canada’s economic stability and growth, is as unimpeded as possible.

Over the planning period, the CCRA will be required to continue to implement measures called for in the 30-Point Smart Border Action Plan with our U.S. border partners, which involves using leading-edge technologies to build a stronger, safer, and smarter border. However, across all these efforts, increased border protection must be balanced with Canada’s need to preserve and ultimately expand our trade and commerce with the U.S. and other trading partners.

In addition, in the coming months we must continue supporting other elements of the government’s Public Security and Anti-Terrorism Agenda, including preventing and suppressing fundraising and other forms of material support to terrorism as per new provisions relating to charities in legislation passed in December 2001 [i.e., the Charities Registration (Security Information) Act].

2. Financial Resources

In the face of increasing tax and trade volumes, combined with our commitments on border security, the CCRA faces major financial pressures. Workload increases challenge our ability to maintain program integrity. We have reallocated funds from lower-priority activities to the Future Directions initiative, a key component of our innovation agenda, which we expect will deliver efficiency gains to help offset pressures from increases in workload volumes. However, these efficiencies are not expected to begin accruing before the end of 2004-2005. In the meantime, we will pursue discussions with the Treasury Board Secretariat on securing the resources needed to support the new and/or fast-tracked contributions expected of the CCRA in the area of public security. In addition, while we contribute to the Government’s review and reallocation process by re-allocating resources in our base budget toward higher priorities, any sizable reduction to our base budget would pose a risk to our ability to deliver on our commitments in this plan.

3. Managing the Compliance Continuum

Ensuring that we maintain the right mix of compliance activities in light of our resource pressures and a rapidly changing socio-economic environment continues to challenge the agency. To promote compliance, it is essential that we manage risks associated with the changing nature of Canada’s socio-economic environment, globalization, and the growth of e-commerce. For example, the exponential growth of electronic transactions and e-commerce has made it far easier to move funds offshore “electronically”, which is a potential risk to Canada’s tax base. A key feature of our approach is to ensure that our plans for technology replacement and improvement are protected, and that adequate resources are allocated to areas of highest risk by maintaining an appropriate level of investment in direct program delivery and the core information technology infrastructure that supports it. We must also ensure that we adequately communicate our compliance approach, particularly in Tax Services, to build greater public confidence in our activities and encourage voluntary compliance.

4. Workforce

The CCRA is faced with the challenge of maintaining a knowledgeable and skilled staff while it pursues the workplace cultural shift necessary to ensure a cohesive and adaptable workforce. The ageing of the public service and the changing make-up of Canadian society pose significant challenges to the agency. More than 43% of federal executives plan to retire within the decade, and at the CCRA, approximately 16% of our employees are eligible to retire before the end of 2006-2007. We must gear up to replace our retiring employees at double the current annual rate (from 1.5% to 3% of our permanent workforce), while making progress toward fully representing within our workforce the increasing ethno-cultural diversity of the Canadian population we serve.

Meanwhile, we are adopting a more client-focussed approach to our business that will change the skills and competencies required of our workforce. Because we have a highly unionized workforce and 80% of our budget is allocated to employee salaries and benefits, transforming our workplace and culture in areas from training to labour relations is a significant challenge and major priority. For example, a recently completed independent Job Hazard Analysis in Customs recommended many improvements to policies, training, and equipment for Customs staff. In the first year of our planning period, we will be engaged in negotiations with the two unions that cover all of our unionized employees. The challenge will be to maintain effective dialogue in our union-management discussions to resolve this and many other issues.

5. Business Operations

The CCRA faces the challenge of developing modern business operations, innovative management practices, robust information technology, and accurate and transparent reporting mechanisms. The volume and complexity of information that the agency handles, and the speed at which it travels, continue to accelerate. In one area alone—individual taxes—for the 2001 tax year, nine million returns were filed electronically (an increase of over 1.1 million from the previous year). The capacity of our IT systems to process and track information, the clarity of our internal communications, and the integrity of our procedures and processes are all pivotal to our ability to manage our resources and deliver service in a timely, accurate, and confidential fashion. However, the systems that support our service levels are ageing, and emergency short-term fixes have limited our ability to fund more robust and sustainable IT solutions. The main operational challenge for the agency is to maintain current levels of service while expanding capacity through innovation to keep up with change on the client side. Over the first year of the planning period, the agency will be under particular pressure to demonstrate value for money in its business operations and devote sufficient funding to advance and modernize IT systems.

6. Partners

Managing relations with our partners is a challenge as we strive to keep pace with our international partners on border management and improve our federal-provincial and client relations. Fully engaging our partners and integrating our efforts with theirs is a major priority for the CCRA. We aim to deliver cost efficiencies and reduce overlap by pursuing opportunities to expand our operations and offer more services on behalf of partners, particularly provinces and territories, to reduce the overall administrative cost of government to taxpayers, limit compliance burdens, and deliver higher levels of service. However, the current federal/provincial/territorial climate is affected by many contentious issues outside our control. In addition, in the critical area of border security, we co-ordinate counter-terrorism efforts with departments and agencies in Canada and abroad, which requires unprecedented levels of communication and co-operation with these partners. Our challenge is to be prepared for new partnership opportunities as they arise, while ensuring we are as responsive as possible to the needs, expectations, and priorities of our current partners.

7. Balancing Priorities

Our challenge is to balance priorities to deliver on the objectives of our change agenda in an integrated, cost-effective way while preserving the integrity of our core operations. Our ability to advance our innovation agenda and continue to achieve high overall levels of compliance, while responding quickly and effectively to new government priorities (e.g., our expanded border commitments), requires that we balance initiatives aimed at transforming the agency with those that support our ongoing compliance activities. The challenge is to maintain the integrity of our core operations, while taking a rational approach to innovation that will produce returns in the form of better service and enhanced compliance. The horizontal reviews we have initiated will help identify opportunities to streamline and improve efficiency, and to reallocate resources to areas of highest priority. However, we must also continue to be a leader and champion in supporting the broader government agenda, including initiatives like Government On-Line, Modern Comptrollership, human resources reform, and modernizing service.

8. Demographic Trends

Demographic trends pose a significant challenge given the changing makeup and size of the Canadian population, driven by ageing, labour market shifts, migration patterns, and immigration. The changing demographics of Canada’s population have a profound impact on consumption and income patterns, which in turn pose new challenges and risks in terms of compliance and influence the mix of services and enforcement activities the CCRA must employ. For example, shifts in the make-up of the labour market, such as the increase in the number of self-employed Canadians and those in the construction labour category, are both considered areas of higher compliance risk. To protect the tax base, we must ensure we adjust our assisted compliance and enforcement efforts accordingly. At the same time, demographic changes pose a challenge to our capacity to continue to provide responsive services that encourage voluntary compliance. For example, the vast majority of the approximately 223,000 immigrants admitted to Canada each year take up residence in metropolitan areas like Montréal, Toronto, and Vancouver. A large portion (44% over the last several years) lack fluency in either English or French, which suggests that we need to find new ways to meet the needs and expectations of these clients to meet our compliance mandate.

Conclusion

The environment in which the CCRA operates is highly dynamic. Successfully addressing the risks we face in a transparent manner is made all the more challenging by the legitimate expectation that we continue to deliver our core programs in a timely, accurate, and confidential way, while providing the best possible services at the lowest possible cost. The following sections of this Summary of the Corporate Business Plan set out how the agency will continue to address the many challenges in its operational environment.

Date modified:

2002-03-21