Fee-for-service proposal to Parliament
Table of Contents
- Executive summary
- Rationale for a new fee and service structure
- Consulting Canadians and stakeholders
- Developing the fee-for-service proposal
- Passport Canada's fee-for-service proposal
- International comparison
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As mandated by the Canadian Passport Order, Passport Canada is responsible for issuing, refusing to issue, revoking, withholding, recovering, and providing instructions on the use of Canadian passports. The Passport Services Fees Regulations prescribe fees for various passport services.
An agency of Foreign Affairs and International Trade Canada, Passport Canada must generate enough revenues from fees to pay for its expenditures. Rather than being financed by taxpayers, the organization is financed by passport applicants.
Passport Canada has succeeded in maintaining its operations over the past years by effectively streamlining business processes and finding efficiencies. The organization must now increase its fees so that it can cover costs and expenditures, maintain existing security standards, keep pace with technological advancements and continue to provide excellent client service.
Passport Canada was mandated to adopt the electronic passport, or ePassport, through the Government of Canada's National Security Policy. The announcement that Canada would be adopting a higher-security ePassport with a 10-year validity period was made in the 2008 federal budget and reiterated in the March 2010 Speech from the Throne.
Today, approximately 95 countries issue ePassports, including all other G8 nations. Not deploying the ePassport would mean that the Canadian passport would be more vulnerable to fraud compared to the passports of other countries.
The fee-for-service proposal was developed based on the results of significant consultations. The consultations were conducted in several stages and were consistent with the requirements of the User Fees Act. Consultations were undertaken with the Canadian public, as well as key stakeholder organizations.
Passport Canada's goal is to offer the 10-year ePassport at the lowest fee possible while ensuring that sufficient revenues are generated to deliver its mandate over a 10-year business cycle. Surpluses and deficits will occur from year to year; however, these will balance out over the business cycle.
Reporting to Parliament through the Minister of Foreign Affairs, Passport Canada derives its mandate from the Canadian Passport Order and is responsible for the issuing, revoking, withholding, recovery and use of Canadian passports. The Passport Services Fees Regulations made pursuant to the Financial Administration Act prescribe fees for various passport services. Passport Canada finances its operations entirely from the fees charged for passports and other travel documents.
As part of the Government of Canada's 2004 National Security Policy, Passport Canada was given the mandate of adopting the electronic passport, or ePassport. In the federal budget of 2008, it was announced that Canada would be adopting a higher-security ePassport with a 10-year validity period. This commitment was reiterated in the Speech from the Throne of March 3, 2010.
As a full cost-recovery organization, Passport Canada must ensure that it generates sufficient revenues to meet its mandate. Aside from a small $2 adjustment to reflect increased shipping costs in 2005, passport fees have not changed since 2001. The current fee structure hinders Passport Canada's ability to cover costs and expenditures while maintaining existing security and service standards, and makes implementing enhancements such as the ePassport financially impossible. Passport Canada must secure a fee increase to introduce the 10-year ePassport, keep pace with technological advancements, and maintain its current level of service.
This proposal was developed and is now being tabled in compliance with the requirements of the User Fees Act. Under this Act, federal government departments that wish to make changes to fees must go through a process that involves public consultations, complaints resolution and parliamentary review.
Rationale for a new fee and service structure
Passport Canada must increase its fees. As a cost-recovery organization, it must have the means to keep pace with advances in technology and international standards and recommended practices, such as the International Civil Aviation Organization (ICAO) standards on travel document security.
Passport Canada needs sufficient funding to:
- deliver on the federal government's commitment to adopt the ePassport;
- invest in the latest technologies;
- fight identity fraud;
- facilitate travel for Canadians; and
- continue to provide excellent client service.
The Office of the Auditor General and the Public Accounts Committee of the Parliament of Canada have emphasized that Passport Canada must have the means to keep abreast of new technologies in the field of travel document security.
The Public Accounts Committee recommended that: "Passport Canada review the adequacy of its current funding arrangement in light of rising costs associated with the need to develop, install, and operate new security technologies and that it use this review as a basis for discussions with Foreign Affairs Canada regarding potential changes to its funding policy. The review should examine the possibility of issuing passport renewals for 10-year periods."
‐ Report from the Committee on Public Accounts, May 2006
"The financial stability of Passport Canada affects both its ability to provide an efficient and effective service, as well as its ability to undertake long-term, costly projects, such as the e-Passport, which will enhance the security of passports. There is a danger that Passport Canada will be forced to focus its limited financial capacity on service issues and thereby neglect major investments in security initiatives."
‐ Report of the Committee on Public Accounts, March 2008
Streamlining business processes and finding efficiencies have enabled Passport Canada to maintain its operations over the past years. However, the current fee structure impedes the organization's ability to continue to cover costs and expenditures while maintaining existing security and service standards and makes implementing enhancements (such as the ePassport) financially impossible. Although Passport Canada has exercised prudent management of its costs, the organization has been in deficit since 2008-2009. There are several causes for this financial situation:
- a fee structure that has not changed since 2001 (the 2001 fee increase was established to sustain the organization for a 5-year business cycle);
- a rigid fixed cost structure necessary for program delivery;
- the growing complexity of the business;
- the need to comply with governmental requirements;
- costs associated with the implementation of the ePassport; and
- the need to modernize infrastructure.
The ePassport, which looks like a regular passport book but includes an embedded electronic chip, has already been adopted by approximately 95 countries, including all other G8 nations. The ePassport will help combat identity fraud, as it is more resistant to tampering and the chip includes a security feature that confirms the issuing country. The ePassport will also help ensure that Canadians continue to enjoy visa-free international travel to many countries. It will have a positive impact on travel safety and help maintain Canada's reputation for issuing one of the world's most respected passports.
Beyond the ePassport, Passport Canada will need to continue to make investments to stay at the forefront of such technologies. What's more, Passport Canada remains committed to maintaining high levels of client satisfaction.
Consulting Canadians and stakeholders
In the spring of 2010, Passport Canada undertook phase 1 of the User Fees Act process, which consisted of public consultations on current service offerings and on ways to improve services going forward. The organization undertook consultations with its key stakeholders and also with the Canadian public at large.
Extensive communications were carried out to ensure that Canadians were aware of the consultation process. A news release was issued inviting Canadians to provide input on current and future service offerings. Briefings were held for Members of Parliament and their staff. Bookmarks referring to Passport Canada's consultations website were inserted into each new passport delivered.
Input was sought through:
- three round table sessions with key stakeholders (i.e. consumer groups, business and trade groups, travel and tourism groups);
- an online questionnaire on passport services, through which over 7,200 responses were received; and
- a letter campaign to 75 other non-government stakeholders.
These consultations resulted in five main findings:
- Strong support for the introduction of the 5- and 10-year ePassport with great importance assigned to the need to follow international practices and stay at the fore of passport security.
- Some Canadians had questions and concerns about the privacy implications of the ePassport.
- Canadians are generally satisfied with Passport Canada's service offering.
- Support for keeping the passport price as low as possible through other sources of funding and money-saving initiatives.
- Canadians living outside of Canada were particularly interested in the consultations.
The consultations showed that most Canadians were highly supportive of the 10-year validity option. This viewpoint has been consistently corroborated through market research.
What's more, a resounding majority of Canadians assigned importance to increasing passport security by combating forgery, identity fraud and tampering. Once its technology and new security features were explained, most Canadians expressed favourable views of the ePassport, citing the need to comply with international practices and to stay at the fore of passport security.
Those who opposed or had reservations with respect to the ePassport sought guarantees from Passport Canada against the potential for surreptitious reading of the information found on the electronic chip by unauthorized parties. Canadians also need to be reassured of the limited use of the information found on the new ePassport by the Government of Canada and foreign governments. The Passport Canada website was modified during the consultation period to include key information aimed at alleviating and demystifying the most common concerns raised about the ePassport.
During the consultations, Passport Canada tested some pricing strategy scenarios. Participants shared many suggestions for keeping the price of the passport as low as possible. As a result of the consultations, Passport Canada proposes charging fees for certain administrative services that are currently offered for free, including the replacement of a lost or stolen travel document, as well as file transfers between Passport Canada offices. While Canadians were in favour of maintaining reduced fees for children, there was little support for reducing fees for other groups, such as veterans or seniors.
Furthermore, Canadians have overwhelmingly positive perceptions of Passport Canada's current services. However, a variety of suggestions for improvements were proposed. Canadians living outside of Canada were more likely to suggest service improvements, including improved access to services and faster turnaround times.
Moving forward, input and ideas gathered from Canadians during the User Fees Act process will help shape the way the passport program is delivered in the future. The first priority is to implement the ePassport across the country. Once this key milestone is achieved, Passport Canada's investment in modernization will include continuing to strive to make the organization as efficient as possible, while maintaining a high level of client service in a cost-recovery context.
Passport Canada also conducted an impact assessment as part of the User Fees Act process. The impact assessment highlighted market research showing that Canadians rate security features and visa-free access to other countries as the most important factors in obtaining a passport. In addition, market research shows that current passport holders consider the price of the passport to be of low concern to them when applying for or renewing their passports.
Developing the fee-for-service proposal
Market research results and the input from phase 1 were used to help design the updated service offering and fee proposal.
In developing the fee-for-service proposal, Passport Canada was directed by two guiding principles: ensuring that Passport Canada secures enough resources to sustain itself over a 10-year business cycle, and keeping the fee for the 10-year ePassport as low as possible. The organization aims to do this while continuing to improve the security of the passport, staying ahead of technology and international standards, and maintaining excellent levels of client service.
In accordance with the User Fees Act, Passport Canada used the input from its consultations to help design an updated service offering and fee structure. For instance, Canadians supported maintaining reduced fees for children. Therefore, children's reduced fees will be maintained.
Passport Canada must continue to incorporate new security features based on ICAO standards and recommendations. The consultations revealed that Canadians support the continued modernization of the passport program, which led the organization to include a modernization fund as a portion of the passport fee.
Canadians also supported controlled and reasonable periodic fee increases based on a formula applied at specific intervals. To remain self-sustaining over the long term, Passport Canada has modified its fee adjustment formulas to more accurately reflect the external costs it faces that are outside of its control, such as international freight costs and costs associated with the intake of applications via partners, such as Service Canada.
Canadians will be paying less per year of validity for the new 10-year ePassport than they currently do for the 5-year non-electronic passport. Market research indicates that about 80 percent of Canadians who currently have a passport or who intend to apply for one within the year would opt for the 10-year ePassport at the proposed fee. The 5-year validity ePassport provides Canadians with a lower upfront cost option, which is also useful for frequent travellers. Passport Canada's monthly passport demand survey results indicate that just over 10 percent of Canadians would prefer the 5-year ePassport at the revised fee.
Please consult the Public Consultations Findings Report for more information. The results of market research carried out to support the consultations under the User Fees Act can be found are in the Publications section of our website.
Passport Canada's approach to phase 2 of the User Fees Act process was similar to efforts made during the consultations that occurred in the spring of 2010. The consultations were publicly announced through a press release and visitors to Passport Canada's website were invited to submit their input about the proposal. Additionally, stakeholders that had been contacted during phase 1 were contacted again and invited to submit their input on the proposal. These stakeholders included the Consumers' Association of Canada, the Canadian Snowbirds Association, the Association of Canadian Travel Agencies, the Canadian Federation of Independent Business, provincial governments, and other federal departments.The fee-for-service proposal was published on November 10, 2011. Canadians were given the opportunity to provide their input until November 25 inclusively. The public therefore had 15 days to submit comments, questions and complaints about the fee proposal.
Passport Canada's dedicated consultations webpage had a fairly high level of traffic between November 10 and November 25; there were over 7,400 visitors to the consultations homepage.
Media interest was minimal. Four media calls were received and articles were featured by four small media outlets. There was also one mention on NRJ 94.3 FM radio. Media interest had been higher prior to that point, with articles reporting that the price of the ePassport could be as high as $225.
During phase 2, Passport Canada received input (submitted by email) from 56 Canadians. The majority of the complaints focused on the fees.
Twenty-seven of the emails received were generally opposed to the fee increase. Passport Canada's response highlighted that, in addition to the new longer validity period, the annual cost of the 10-year ePassport is less than for the current 5-year non-electronic passport.
Eight emails were received regarding the proposed discontinuation of the 48-page passport. Passport Canada reiterated the justification for the elimination of this product and explained that following the adoption of the 36-page ePassport, the organization will assess whether there is sufficient demand to develop an alternative product or service for frequent travelers.
After the end of the input period, as mandated by the User Fees Act, Passport Canada had until January 3, 2012 to respond to the input received, and complainants also had until that date to submit requests for an independent advisory panel. Passport Canada responded to all input by December 16, 2011. No requests for independent advisory panels were received.
|Theme||Number of emails|
|Proposed fee increases (including requests for lower fees in certain groups)||27|
|Discontinuation of the frequent traveller passport (48 page)||8|
|Proposed outside of Canada fees||5|
|Discontinuation of the infant passport (children under 3)||1|
|Other issues outside the scope of the consultations (transgender, RFID chip, general feedback, modernization suggestions, timing of the implementation)||9|
No modifications were made to the fee-for-service proposal based on input received.
Further information concerning the input received during the course of phase 2 can be found in the Report on Passport Canada's Consultations Regarding the Fee-for-Service Proposal.
Passport Canada's fee-for-service proposal
Passport Canada's fee-for-service proposal focuses on the timely implementation of the 10-year ePassport. The proposal demonstrates how the fee structure will be updated to ensure that Canada's passport program is adequately funded into the future.
Passport Canada's fee-for-service proposal establishes new fees for all travel documents and passport services. Adults will have the option of a 5- or 10-year ePassport for both first-time applications and renewals, while children's ePassports will be issued for a maximum of five years. Passport Canada will continue to price children's travel documents at 60 percent of the adult equivalent.
In order for Passport Canada to fully comply with the United Nations Convention Relating to the Status of Refugees, the organization modified its November 2011 proposal by reducing the proposed fees for Refugee Travel Documents from $135 to $95 for adults and from $81 to $57 for children.
Passport Canada proposes a fee for five administrative services, four of which were previously offered for free. These are:
- Replacement of lost and stolen passports.
- File transfers at the client's request. A file transfer fee will apply when a client who has submitted a passport application then decides, after the fact, that he/she would like his/her passport to be delivered through a different service channel (by mail or through a regional office) or to a different location.
- Certified true copies. This consists of official certification, dated and sealed, by Passport Canada that the copy is true and authentic.
- Retention of a valid passport. The retention of a valid passport fee will apply when a client with a valid passport has a demonstrated need to keep his/her current passport while his/her application for a replacement passport is being processed.
- The addition of a special stamp or observation.
Pending parliamentary review and completion of the regulatory process, the new fee structure will take effect in 2013, when national implementation of the ePassport is complete.
|Travel document or service||Current fee||With consular feeFootnote 1||Proposed fee||With consular fee|
|Passports: Applications made in Canada|
|5-year passport (or less)||C$62||C$87||C$95||C$120|
|Passports: Applications made outside of Canada|
|5-year passport (or less)||US: C$72|
|Children's passport||US: C$37|
|Expedited services in Canada (in addition to the regular passport fee)|
|1-day service (urgent)||C$70||--||C$110||--|
|Express service (2-9 days)||C$30||--||C$50||--|
|Pick-up (day 10)||C$10||--||C$20||--|
|Same day, out of regular hours of service||C$220||--||C$335||--|
|Expedited services outside of Canada|
|Emergency travel document (one trip)||C$6||C$31||C$50||C$75|
|Children's emergency travel document (one trip)||C$6||--||C$30||--|
|Temporary passport (linked to regular passport application)||C$70||--||C$110||--|
|Travel documents for non-Canadians|
|Certificate of identity||C$102||C$127||C$235||C$260|
|Children's certificate of identity||C$37||--||C$141||--|
|Refugee travel document||C$62||C$87||C$95||C$120|
|Children's refugee travel document||C$37||--||C$57||--|
|Addition of a special stamp or observation (at applicant's request)||C$12||--||C$45||--|
|Certified true copies (up to three copies)||C$0||--||C$45||--|
|Replacement of lost or stolen passport or other travel document (in addition to passport fee)||C$0||--||C$45||--|
|File transfers (between offices in Canada)||C$0||--||C$45||--|
|Retention of valid passport or other travel document||C$0||--||C$45||--|
Passport Canada continues to achieve very high levels of customer satisfaction. The organization is committed to maintaining this accomplishment as it implements the new fee and service structure and into the future.
Passport Canada has two main service channels: in person and mail-in. Clients can receive services in person through a network of 34 Passport Canada regional offices and 200 receiving agents at participating Service Canada and Canada Post locations. Over 95 percent of Canadians live within 100 kilometres of a passport point of service. Applications may also be made through the mail.
The service commitment to Canadians is to process passport applications received in person at regional offices within two weeks (10 working days) and to process applications received through receiving agents and through the mail from within Canada or the United States within four weeks (20 working days). In 2010–2011, Passport Canada continued to strengthen its delivery performance, with over 99 percent of clients receiving their passport on time or earlier. These processing times apply only to properly completed applications. They do not include time required for postal delivery, complex verifications and security checks, or status/citizenship verifications. There will be one change to processing times for applications made abroad, which will be aligned with the processing times for similar service channels in Canada.
Passport Canada will formalize service standards for the processing times for all items found in the proposed new fee structure. Under the User Fees Act, Passport Canada is accountable to Parliament for its service standards and performance. The organization will report on these processing times on an annual basis through the Department of Foreign Affairs and International Trade's Departmental Performance Report. If the organization misses its stated service standards by more than 10 percent, it will be required to reduce its fees by a percentage equivalent to the unachieved performance up to a maximum of 50 percent.
|Service||Current processing times||Proposed processing times||Performance measurement|
|Services in Canada|
|Passport application in person||10 business days||90% of complete applications are processed within announced processing times|
|Passport application by mail||20 business days|
|Passport application via receiving agent||20 business days|
|Urgent service||Next 24 hours (business day)|
|Express service||2 to 9 business days|
|Pick-up service||10 business days|
|Same day out of regular hours of service||Same day|
|Services outside of Canada|
|Regular passport application||15 business days (abroad)|
20 business days (in the US)
|20 business days||90% of complete applications are processed within announced processing times|
|Temporary passport||Case by case, less than 15 business days||Less than 20 business days|
|Emergency travel document||Case by case||Less than 20 business days|
|Services for non-Canadians in Canada|
|Certificate of identity||Case by case||20 business days||90% of complete applications are processed within announced processing times|
|Refugee travel document||Case by case||20 business days|
|Applications to replace lost/stolen travel document||No service standard||Same as processing time for the associated travel document||90% of complete applications are processed within announced processing times|
|File transfers||3 business days|
|Addition of a special stamp/observation||If request is made: Along with a travel document application: same as processing time for the associated travel document; |
After a travel document has been issued: 10 business days
|Certified true copy||10 business days|
|Retention of valid passport or other travel document||Same as processing time for the associated travel document|
Costs and revenues
Passport Canada operates on a cost-recovery basis. By introducing a 10-year ePassport, the organization must transition from a 5- to a 10-year business cycle. Therefore, when developing the proposed fees, the cost of the entire passport program over the 10-year period was considered. Costs were calculated using forecasts of the number of applications Passport Canada expects to receive over 10 years. Surpluses and deficits are expected from year to year due to volume fluctuations; however, these will balance out over the business cycle.
The proposed fees were determined using activity-based management methodology, which is recognized by industry and government alike for providing the necessary information to facilitate strategic and management decisions that improve efficiency and ensure value for Canadians.
|Fiscal year||2013- 2014||2014- 2015||2015- 2016||2016- 2017||2017- 2018||2018- 2019||2019- 2020||2020- 2021||2021- 2022||2022- 2023||Total over 10 years|
*Based on data from August 2011, following the ePassport contract award in June 2011.
Based on the above, Passport Canada will break even over the 10-year business cycle.
The following chart provides a breakdown of the costs that the 10-year ePassport fee covers, based on projected volumes.
|Categories||Operational costs (adjusted for inflation)||ePassport technology||New and ongoing investments||Auxiliary products and services||Loan repayment||Consular services (not kept by Passport Canada)|
The operational costs over the 10-year cycle represent the costs related to the issuance of the passport, including salaries, facilities, security processes and entitlement decisions, printing and mail-out, as well as client service points. The ePassport technology component is isolated to demonstrate its impact on the fee. The new and ongoing investment fund addresses the recommendations of the Office of the Auditor General and the Public Accounts Committee. It is an investment component that will ensure the organization has the means to update and modernize the way it does business, continue to improve upon the security of the passport itself, and maintain a high level of client service.
The 10-year ePassport will become Passport Canada's main source of revenue. This means that it must absorb some of the costs of products and services that are not fully cost-recovery, such as children's travel documents, refugee travel documents and certificates of identity. Starting in 2013–2014, Passport Canada will begin to repay money borrowed from the federal government to fund the implementation of ePassport.
Passport Canada's fee-for-service proposal compares favourably with other countries in terms of both fees and service delivery. However, different passport issuance processes, geography and governance systems make a direct comparison difficult. These elements have an effect on the service channels, processing times, business model and fee structure that each country's passport-issuing authority (PIA) adopts. Passport Canada is one of the only PIAs to operate on a full cost-recovery basis, for instance. However, there are enough similarities among the countries reviewed to provide a meaningful comparison with Canada's system.
As per the User Fees Act, Passport Canada compared its proposed services and fees against countries with similar passport-issuing services: Australia, New Zealand, the United Kingdom and the United States. These countries make up the Five Nations Passport Group, which is an international forum for cooperation among passport issuers to share best practices and discuss innovations related to the development of passport policies, products and practices.
|Service||United Kingdom||United States||New Zealand||Australia||Canada (proposed)|
|Validity period||10 years||10 years||5 years||10 years||10 and 5 years|
|Regular adult fee||£77.50|
|Children's fees (approximate % of cost of adult passport)||£49|
|Fee per year of validity||£7.75|
|Domestic processing times|
|Passport application in person||2 weeks||4 to 6 weeks||2 weeks||2 weeks||10 business days|
|Passport application by mail||3 weeks||4 to 6 weeks||2 weeks||2 weeks||20 business days|
|Passport application via receiving agent||2 weeks||4 to 6 weeks||N/A||2 weeks||20 business days|
|Urgent service||4 hours||5 days||3 days||2 days||Next 24 hours (business day)|
|Express service||1 week||2 to 3 weeks||N/A||N/A||2 to 9 business days|
|Pick-up service||N/A||N/A||N/A||N/A||10 business days|
|Same day out of regular hours of service||Yes (only in London)||No||Yes||No||Yes|
|Processing times abroad|
|Regular passport||4 to 6 weeks||1 week||2 weeks||2 weeks||20 business days|
|Temporary passport||Case by case||Case by case||N/A||Case by case||Less than 20 business days|
|Emergency travel document||Case by case||Case by case||Case by case||Case by case||Less than 20 business days|
|Processing times for non-citizens|
|Certificate of identity||70% within 4 weeks||N/A||Minimum 4 weeks||N/A||20 business days|
|Refugee travel document||98% within 4 weeks||N/A||Minimum 4 weeks||N/A||20 business days|
All foreign currency mentioned in this table was converted into Canadian dollars using Bank of Canada average exchange rates for the six-month period beginning in March 2011 and ending in August 2011.
For more information, please consult the International comparison of passport-issuing authorities.
As indicated by the Office of the Auditor General and the Public Accounts Committee of the Parliament of Canada, Passport Canada needs to update its fee structure. As a cost-recovery organization, it must generate sufficient revenues to deliver its mandate regarding passport security and client service, keep pace with internationals standards and introduce the ePassport.
The new fees reflect the general costs of the passport program and were determined using the activity-based management methodology. In terms of both fees and service delivery, Passport Canada's fee-for-service proposal compares favourably internationally.
Passport Canada consulted individual Canadians and key stakeholder groups extensively, as per the requirements of the User Fees Act. This enabled the organization to develop a comprehensive fee-for-service proposal that benefits not only passport holders, but all Canadians.
Passport Canada's impact assessment notes that the proposed fee changes will have a positive impact for the government, Canadians and passport holders. The proposed new fee structure will:
- better reflect actual costs;
- position the organization for innovative service delivery;
- strengthen security; and
- help Passport Canada respond to future challenges.
Once the proposal has been reviewed by parliamentarians, Passport Canada will proceed with an amendment to the Passport Services Fees Regulations. The new fees will come into effect in 2013, when the implementation of the 5- and 10-year ePassport is complete.
- Footnote 1
A $25 consular fee per travel document is collected by Passport Canada on behalf of the Department of Foreign Affairs and International Trade Canada to support the consular program at Canadian government offices abroad. The funds collected do not go to Passport Canada and the organization has no authority over the amount or use of this fee.
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