1997 ANNUAL REPORT, PROVINCIAL AUDITOR: CENTRAL COLLECTION SERVICES
CONTENTS
Thursday 11 June 1998
1997 Annual Report, Provincial Auditor:
Central Collection Services
Management Board Secretariat
Ms Michelle Noble, Deputy Mnister, Management Board Secretariat
Ms Leslie Nanos, director, general business services
Mr Scott Campbell, assistant deputy minister, services division
STANDING COMMITTEE ON PUBLIC ACCOUNTS
Chair / Président
Mr Bernard Grandmaître (Ottawa East / -Est L)
Vice-Chair / Vice-Président
Mr Richard Patten (Ottawa Centre / -Centre L)
Mr Marcel Beaubien (Lambton PC)
Mr Bernard Grandmaître (Ottawa East / -Est L)
Mr Bill Grimmett (Muskoka-Georgian Bay /
Muskoka-Baie-Georgienne PC)
Mr Jean-Marc Lalonde (Prescott and Russell / Prescott et Russell L)
Ms Shelley Martel (Sudbury East / -Est ND)
Mr Richard Patten (Ottawa Centre / -Centre L)
Mr Peter L. Preston (Brant-Haldimand PC)
Mr Joseph N. Tascona (Simcoe Centre / -Centre PC)
Mr Terence H. Young (Halton Centre / -Centre PC)
Substitutions / Membres remplaçants
MR JOHN R. BAIRD (NEPEAN PC)
MR W. LEO JORDAN (LANARK-RENFREW PC)
MR MORLEY KELLS (ETOBICOKE-LAKESHORE PC)
Also taking part / Autres participants et participantes
Mr Ken Leishman, assistant Provincial Auditor
Clerk pro tem/ Greffier par intérim
Mr Todd Decker
Staff / Personnel
MS ELAINE CAMPBELL, RESEARCH OFFICER, LEGISLATIVE RESEARCH SERVICE
1997 ANNUAL REPORT, PROVINCIAL AUDITOR: CENTRAL COLLECTION SERVICES
Consideration of chapter 5, public accounts of the province, Central Collection Services.
The Chair (Mr Grandmaître): Good morning and welcome to the standing committee on public accounts. Before I introduce our witnesses, I'd like to point out that the legislative research people of Ontario are playing host to three researchers from the Legislative Assembly of the Northwest Territories. They are Douglas Pon, Robert Collinson and Nicole Camphaug. Welcome.
MANAGEMENT BOARD SECRETARIAT
The Chair: Our witnesses this morning are Michele Noble, Deputy Minister of Management Board Secretariat; Scott Campbell, assistant deputy minister, services division; and Leslie Nanos, director of general business services. Welcome to our committee this morning.
Ms Michele Noble: I believe a set of slides has been handed out to the committee members and I will be using those as a basis for some very brief opening remarks. Obviously we're here today and welcome the opportunity to meet with the committee to respond to the Provincial Auditor's report and also to bring you up to date on the status of the collection of overdue accounts owed to the province.
From the point of view of Management Board Secretariat, I think we can say that, as managers in this area, we were concerned about the activity in collections at the time the audit was under way and have been both responding to the auditor's recommendations and also taking action to improve the situation in terms of the management in this area.
Today what we'd like to do is present some data that indicate where we are in terms of the collections, the status of that based on the actions we've taken and show that at this point, in terms of the collections for 1997-98, we actually not only brought those back to the level of 1995-96 but have exceeded that in terms of what we had achieved in terms of the auditor's concerns.
Turning to the slide, "Activities Undertaken to Initiate Effective and Timely Collection," page 2, we want to indicate that the staff have been working with ministries to transfer the accounts. This was an issue that had been raised in the auditor's report and also flagged in the reports affecting the Ministry of the Attorney General and the Ministry of Education. Additional staff have been hired within the section on a temporary basis to complement internal resources; also the assignment of staff within the branch as a whole to ensure we have resources in place. In addition, part-time legal counsel has been retained to enable legal action, as appropriate, on the accounts.
As indicated in the chronology of events, which is on page 276 of the auditor's report, an RFP was issued in July 1996 for collection of Ministry of Attorney General accounts and other previously written-off tax and non-tax accounts. The contracts awarded for the overdue pilot project contained extension periods up until May and also allowed for the addition of new accounts. These contract provisions have been utilized to increase the collections activity and, specifically, they've been used to ensure that we were undertaking collection of the AG fines.
Enhancements have also been made to the computer systems, which have enabled ministries to transfer files electronically -- I think this was a point with respect to the AG -- and also to increase the ability of the collections operation to collect accounts after transfer.
To increase customer service, the branch has been working with ministry finance branches and program areas on the refinement of service level agreements. The agreements contain standards on collection activity, transfer of accounts and reporting requirements. We're just at the point where a final draft has been approved by all ministries and the agreements are expected to be in place by the end of this month. That is a result of that consultative work.
The branches worked with the Ministry of Finance and line ministries in the establishment of enhanced revenue policies to reduce the number of overdue accounts receivable for the province. There are 17 policies which have been developed and are now available on the government Internet site. They set standards for all ministries on matters such as program design related to revenue collection, settlement collections, management, credit management and full disclosure. This is essentially, in addition to working on the collection side, to try to make sure that before they're overdue, accounts receivable are better managed at the ministry level. Later this month we will be sending out an RFP to collection agencies, which will give us further action with respect to the AG accounts.
Turning now to slide 3, we have, for the next two or three slides, a set of figures for you. This one specifically presents figures to the end of the fiscal year 1997-98, which speak to where we're at in the program. The figures can be compared to those for 1995-96 and 1996-97. Amounts shown are consistent with those presented in the last paragraph on page 274 of the auditor's report, so we've set this up in that same fashion.
Looking at the second-last row of the chart, it can be seen through the actions we've taken to address the issue that we've not only returned to the value that we had in 1995-96, but also exceeded it. This is really the value of receivables collected. The auditor had flagged the concerns with respect to the 1996-97 performance last year. We collected $34.4 million.
I know that the transferred accounts from ministries has been an issue for the committee. As you can see from the last row on the table, the accounts that had not been transferred have in fact been transferred and they're now under the management of the collections group.
It should be noted that of the total that was transferred between March 1997 and March 1998, $79 million of these accounts were transferred in the last three months of the fiscal year, and at this point there would therefore not have been collection activity reflecting revenues as yet.
Moving to the next slide on page 4, it provides you with a further breakdown of the portfolio and indicates that student loans and MAG fines are the largest programs. I think that just gives you a sense of the breakdown of the portfolio as it stands today.
The next slide deals with new accounts transferred. Again this is speaking to the concern just in terms of the transfers coming from the other ministries and shows the pattern of transfers that took place during 1997-98, noting that there are some peak periods of transfers depending on the program; and again reconciling to the total.
Moving to slide 6, this breaks out the activity by month and by program. As you can see, collection activity on student loans increased significantly after the temporary staff were brought in who were mentioned. They were in place at the end of September. In addition, collection activity is related to the transferred accounts, and in the case of student loans, a substantial number of accounts were transferred in June, August, October and March. With respect to the Ministry of the Attorney General accounts, these were transferred in September and January, and collection activity subsequently increases in concert with those transfers.
Turning to slide 7, just to give you a status report on the outsourcing RFP, as you know, collections coordinates and provides the collection service on behalf of all government ministries. Since 1976, collections has utilized a combination of in-house and outsourced collection capacity. Approximately 67% of all collection activity has been conducted through contracts with private collection agencies, so the idea of outsourcing is certainly not new. At issue here is the outsourcing of the remaining third of our activity. This is based on a business plan review that has been undertaken within the ministry in terms of looking at that, as well as looking at collections and the actual activity in relation to what we feel needs to be part of the core business of the ministry.
The business case we had projected that we would be saving in the order of $1.9 million on an annual basis in terms of undertaking the collection. At this point in time the RFP was issued. There have been grievances filed with respect to the government's collective agreement and we are in the process of working through those grievances with the Grievance Settlement Board. At this point in time, because of an order of the board, therefore, the RFP has not been closed. As I said at the outset, however, what we have done in the interim is to ensure there is sufficient staff in place and in the collections branch to keep on top of and to manage the activities on an ongoing basis while we're awaiting the outcome of our discussions at the GSB.
At this point that was all I wanted to say in a manner of introduction and look forward to the discussion with the committee this morning.
The Chair: Thank you. We'll start with the government members.
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Mr Peter L. Preston (Brant-Haldimand): Just a very short question: On page 3 you were comparing 1998 to 1996, but we had $35 million transferred accounts and $25 million collected, which is about 75%, and you're comparing that with 1998, where you had $254 million transferred and $34 million collected, which is about 7%. Why are we only 10% as effective as we were in 1996?
Ms Leslie Nanos: I can mention that when you look at the transfer of the accounts, a large amount of the accounts from the Attorney General were transferred in the latter half of the year. Had they been transferred at the beginning of the year, we could have gotten perhaps another $20 million. That will be reflected in the next months that we collect.
Mr Preston: So 1999 is going to look really good.
Ms Nanos: Hopefully it will look really good for the accounts that we have, and I'm hoping we don't get any more transferred because people are not going into debt for the government.
Ms Noble: Perhaps just picking up on that comment, as we look forward to this upcoming year, there are a couple of initiatives that are going to affect the volume of accounts transferred. One is the initiative whereby the Provincial Offences Act fines collection will be transferring to municipalities. That will have an effect once that takes place because those clients will no longer be coming through our system.
Second, I mentioned in our remarks that we had been working with the Ministry of Finance and ministries to have much better activity at the accounts receivable level. What we're hoping is that this will result in fewer accounts receivables being transferred to our collection services because they've been collected at the time by the ministry directly. We will have to wait and see, but we are anticipating that there will be a decline in the level of accounts transferred to our collection services.
Mr Bill Grimmett (Muskoka-Georgian Bay): I see this as a major problem area for the government. The numbers on page 3, and when you compare the numbers on page 5 with the numbers on page 6, it's pretty obvious that we're getting further and further behind in terms of the grand total that we're collecting and that we've got on the books as receivables.
Notwithstanding your comment about the provincial offences moneys, clearly the big issue is the RFP and where we're headed from here. I imagine that a lot of this stuff is probably confidential information that you don't want to comment on today, but the grievance process is a public process, correct?
Ms Noble: That's correct.
Mr Grimmett: It doesn't seem to get a whole lot of media attention. I guess my question would be, what happens if the government fails in the grievance process? We're back to square one. It's pretty clear for anybody who's watching this process that the government's headed towards trying to outsource this because, if the information we received earlier is correct, people are moving away from the collection agency because they're looking for other work. Where are we headed with this thing? Can't we settle the grievance somehow and get on with collecting this money?
Ms Noble: We have been working through the process with the grievance board. Some of the issues have to do with timing and scheduling of hearings. I can say that the ministry has always been ready and has been prepared to sit down and try to work this through. We have had several discussions with the bargaining agent to see if we can't resolve it in a manner that both parties can agree to. At this point in time we've not succeeded in reaching that agreement, but I think I can assure the committee that from the point of view of the ministry, we are doing whatever we can to try and work that out on this particular RFP.
We have been in the process of trying to work with them, based on decisions we've had in other cases, to make amendments to the RFP in this case that would model on the jurisprudence we've received from the board. We have unfortunately as yet not been able to reach agreement with the bargaining agent, and the process itself hasn't concluded with respect to this RFP in terms of a final decision coming from the GSB itself.
In the meantime, and I think part of my remarks indicated, given that this process was taking and is taking time, we have taken action from a management perspective. I can say to the group that the staffing levels are what they had been historically. We've got staff assigned to these files. We're prepared to operate that way if necessary, and have moved forward on some of the technology improvements.
Ms Nanos: I could add that the technology improvements that were done have resulted in the automatic creation of the first letter that goes out to debtors. I can assure you that every single account, and there are over one million now that have been with CCS, has been acted on as a result of the system enhancements. A letter has gone out to every single person. So when do finally outsource, there won't be any files going over that have no activity. We will transfer them over at that state, that level of activity, so there's nothing sitting there with no action as a result of the RFP not going out.
Mr Marcel Beaubien (Lambton): I want to follow on the line of Mr Preston and Mr Grimmett. There's no doubt that I have an awful lot of concerns with what's coming in and what's coming out. In other words, I think we're losing ground.
I'd like to know what the ministry's position is. It's kind of nice to say that because of the provincial offences dollars being downloaded to municipalities, it should reduce the amount we have to collect, but I would consider that a decline by default. Basically we passed on the responsibility to municipalities, so we're not going to be responsible.
You mentioned the first letter to debtors. I was in the private sector, and accounts receivable were a major part of our business. If the money didn't come in, we didn't stay in business. I found that you could send one, two, three, four or five letters and you didn't get too much action, but if you made a call, I think people were a little more responsive to paying their debt.
Granted, I realize it is an unwieldy problem, it is a difficult ministry, because you deal with an awful lot of different types of debts and different types of people, but are you prioritizing or targeting certain aspects; for instance, the retail sales tax sector, whatever? What are you doing as a ministry in order to look at trying to rectify the problem? The problem is not getting smaller. The problem, from what you've given us here, is compounding itself. It's worse than it was in 1995, it's worse than it was in 1996, and I'd hate to see where it's going to be in the year 2000. What is the ministry doing to target certain accounts?
Ms Nanos: Right now we're targeting student loans and Ministry of the Attorney General funds in the collections management unit. But over the entire ministry there are 17 revenue policies that came into effect a few months ago -- and I agree with you that it's the accounts receivable process that needs to be firmed up, and the government agrees as well. In these 17 revenue policies, ministries are now told that you don't just sit on them until you decide they're old enough to send to central accounts; you make attempts at 30 days, 60 days, 90 days. Once they've reached 180 days, and hopefully there aren't many left, only those would go to central collections.
As you said, it's the accounts receivable that are the most important. We're hoping that as ministries beef up their accounts receivable steps, we'll eventually go out of business, because there won't be any overdue accounts; they will deal with them.
In terms of the letters, we found that just the letters going out has helped us. If you look at slide 5, the new accounts transferred, you'll see that for the student loans, as they've started to be transferred in October and a lot more in January and February -- and all we've done with the student loans, all we've been able to do, is that first letter -- we're actually almost doubling what we had when we had them in October. So as a result of just the letters going out, we've gone from half a million dollars being collected in a month to $1 million being collected in a month. It has doubled just as a result of letters going out.
Mr Beaubien: You mentioned accounts being 180 days and coming into CCS. How many staff and how much money would you spend with that particular aspect of your accounts receivable, 180 days and over? Do you have any figures on that?
Ms Nanos: On how much the government has --
Mr Beaubien: How much would the ministry spend staffingwise? How many staff would you have looking after that sector, and how much money would you spend trying to collect 180-day and older accounts?
Ms Nanos: In terms of our budget, it's $2.5 million of the total budget.
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Mr Beaubien: Roughly how much would you collect in a year?
Ms Nanos: Roughly $34 million. Our budget is $2.5 million. This year, internally, we collected $6.7 million of the $34.4 million; the rest was collected by the private collection agencies.
Mr Beaubien: Do you think we're getting money for value?
Ms Nanos: I think we're getting money for value because my budget is $2.5 million and the revenue as a result of all the activity is $34.4 million. We pay commissions to the private collection agencies, but it's a net revenue-gaining exercise.
Mr Beaubien: But if we look at the amount of money we have spent, zero to 30, 30 to 60, 60 to 90, 90 to 100, I'm sure we cannot trace how much money we spent trying to collect that money. But by the time we get over 180 days, in the private sector I'd look at an account over 180 days as having a value of zero, basically get rid of it. It's not worth my time and my effort trying to collect that money, because chances are I'm not going to collect it.
Ms Noble: If I could perhaps just comment, because we manage only the accounts after the 180 days, we do not have information here in terms of what ministries would be spending individually on the before 180 days accounts.
Mr Beaubien: But that's my point: If we spend $2.5 million to collect $6.7 million, how much money have we spent up front trying to collect it?
Ms Noble: What I'm saying is that I don't have that information here, because each individual ministry is responsible for the accounts up until the 180 days. What we did mention here this morning is that as a result of the concerns that had been noted that you don't want to be trying to collect old accounts, you want to be taking action in a timely fashion, we have in fact put in place the 17 policy statements that ministries now are responsible for working with, which directly target early action on the accounts by people in the individual ministries. The government has made ministries much more accountable for what they're doing at day 10 and day 30, so we will reduce the volume coming to us as old accounts.
The Chair: Mr Preston, one short question.
Mr Preston: Two very short ones. One is a statement. Some $6 million collected on a $2-million investment is 33% commission. We can pay less than that outside. Number two, what do you do to measure the output of your collectors, if you do have collectors?
Ms Nanos: I should clarify that the $2.5-million budget includes staff who manage the private collection agencies, so the $2.5 million is part of the $34.4 million. The $2.5 million includes our internal collectors and the staff who are there to manage the collecting activity of the PCAs, private collection agencies. So it's a $2.6-million investment for the $34.4-million recovery.
Mr Preston: We staff private collection agencies?
Ms Nanos: No, we manage their contract.
The Chair: Mr Patten, and then I'll get back to you, Mr Baird.
Mr John R. Baird (Nepean): Could I have Ms Martel's time?
The Chair: It'll cost you 30%.
Mr Richard Patten (Ottawa Centre): Good morning. Here's the way I see it: We've got receivables for all of government of about $2 billion, and you're sort of the last chance, last resort: "Good luck to you. We've given up on this, and we don't know how much we've spent," other than the time frame, I suppose, of 180 days. So you've got a hell of a job just to try to deal with that. I know you've had some difficulties in the past, and it looks like there's more activity here. It depends on schedule, it depends on time of the year and all this sort of thing.
Do you have the resources to do the job?
Ms Nanos: We have the resources to do the job we're required to do right now, while we're waiting for the outsourcing to occur. Once the outsourcing can occur, I've hired mostly temporary staff, so then we will have the resources required in a service-management capacity for a budget of only $750,000 to manage the collection of the private collection agencies. So I do believe we have the resources required.
Mr Patten: You had said, Deputy, that you would save $100 million?
Ms Noble: The estimated saving was $1.9 million in the cost of administering the collection of the revenue.
Mr Patten: The three big ministries of course are Attorney General, and presumably that's mainly the family support plan --
Ms Nanos: It's fines.
Mr Patten: What about the family support payments?
Ms Nanos: We don't handle that portfolio.
Mr Patten: What does the Ministry of Economic Development, Trade and Tourism have for repayments?
Ms Nanos: The Ontario Development Corp, the previous venture loans. That program doesn't exist any more, so once these accounts are collected, we won't have new ones.
Mr Patten: It should exist. It was a great program. We wouldn't have the high-tech sector we have in the Ottawa-Carleton area, believe me, if we hadn't had that program.
Mr Baird: It's done very well since the government --
Mr Patten: It's done very well because they got some support at a crucial time with venture capital, because no one else would provide support for them.
The Chair: Can we get back to the matter at hand and finish that question after our meeting, Mr Patten?
Mr Patten: Yes. The 17 policy statements, do you have those available?
Ms Nanos: Yes.
Mr Patten: This is a basis of negotiation with the ministries?
Ms Nanos: These are revenue policies that outline the standards that ministries must follow in terms of collecting, accounts receivable, the types of records they have to keep, when they're allowed to make settlements etc; on accounts receivable, not just the overdue ones after 180 days, but specifically what you do the minute you find out that your account hasn't been paid.
Mr Patten: Do we have copies of that?
Interjection: We will.
Mr Patten: Is this recent?
Ms Nanos: In the last few months.
Ms Noble: They've been approved within the last year. As I noted, we've put them up on the government Intranet so they're available there, or we can get copies to the committee if you wish.
Mr Patten: Overall you have a responsibility as Management Board, as I recall, to really oversee some of the approaches and the manners in which ministries will go about, in this particular instance, dealing with their receivables, so you have sort of a policy monitoring role on that score. Then you're faced with the worst job of all. If they can't do it, then they come to you and say: "Here are our worst accounts. We can't do it. You do it." So you're playing two overall roles there.
What was the original plan? You were saying that you wanted to maximize your outsourcing.
Ms Nanos: Yes.
Mr Patten: Totally?
Ms Nanos: One hundred per cent outsourcing versus the 66-33 split that occurs now.
Mr Patten: None of those people would be affected by the monitoring role or the overall role Management Board has with the other ministries?
Ms Noble: No. The policy side is separate from the collection services activity.
Mr Patten: Those are all the questions I have right now.
The Chair: Can I ask a question before I get to Mr Baird? You were saying that all receivables over 180 days are turned over to you, right?
Ms Nanos: That is what is to occur under the new policy.
The Chair: Under the new policy? Right now it's 90 or what? It's 180 days now?
Ms Nanos: Yes. The policy is 180 days now, and ministries are starting to follow that.
The Chair: The previous policy was 90 days. Am I right?
Ms Noble: No, it's been 180 days. It's been reinforced. In fact, I think one of the issues the auditor was raising was that ministries were longer than that in terms of the transfers.
Mr Ken Leishman: I believe the policy at one time was 90 days, unless I'm mistaken, but maybe it's been changed within the last year.
Ms Noble: I'm not aware that there had been a change, that the 180 represents a change, but we can check that out.
The Chair: I guess I don't have a supplementary, then.
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Mr Baird: A number of points. This is something we discussed looking at the research piece. Mr Patten mentioned the $2 billion of money owed to the government. How much of that is on income tax which is collected by the federal government, where we obviously have significantly limited, if any, opportunities to go after it? Or is that included?
Ms Noble: Is the question how much is owed as provincial income tax?
Mr Baird: That's right.
Ms Noble: We don't collect the provincial income tax.
Mr Baird: That would not be included in the $2 billion?
Ms Noble: That would not be reflected in these numbers. Provincial income tax is collected by the federal government on behalf of the province and then remitted to the finance minister.
Mr Baird: So that's not included in the numbers that you presented here?
Ms Noble: No.
Mr Baird: Mr Patten mentioned a figure of $2 billion. You were including the income tax numbers there?
Mr Patten: I don't know how it's made up. I just saw that in the auditor's report.
Mr Baird: Can we ask the auditor?
Mr Leishman: I'm sorry. My attention was diverted.
Mr Patten: Was PIT included in the $2 billion of general government receivables?
Mr Leishman: Yes.
Mr Baird: How much of that $2 billion was PIT, approximately?
Mr Leishman: I'm sorry. I don't have a volume I of public accounts with me. It would be somewhere in volume I of public accounts.
Mr Baird: I was just curious because obviously we have a limited opportunity to collect that, if any, and I would suspect close to zero opportunity to collect that because obviously it's administered by the federal government.
I want to follow up on the comments made by my colleague from Brant-Haldimand in terms of the measurement of performance of debt collection. Do you look at comparable jurisdictions or at collection agencies in general for a graduated measure of what you think it would be reasonable to expect?
Ms Nanos: We do have performance measures for the private collection agencies and we compare them with each other to see how they're doing. We've looked at private companies to see what they have, but they usually have collateral that they can get back. We can't take back a student's degree if they don't pay, and the same with fines. Most of the data available are for collections in the private industry, so they don't really relate to us.
We can compare year to year with our same accounts using different PCAs to see how they are doing compared to each other.
Mr Baird: To follow up on that point, you mentioned you couldn't repossess a student's degree, but, for example, the Royal Bank would probably try to repossess a $15,000 or $20,000 car.
Ms Nanos: That's right.
Mr Baird: The three North American automobile manufacturers offer a substantial rebate for recent graduates to buy new cars, so I suspect there's probably some overlap there if they're making a large automotive purchase.
Do you use performance measures, looking at your success tracking student loans with a private sector institution going after student loans as well?
Ms Nanos: No, we don't right now.
Mr Baird: Would that be a good idea, do you think?
Mr Scott Campbell: We do relative to the federal government in terms of the federal government also having student loans, so we compare what we do relative to what they do in terms of a performance rate, which is the issue you're raising there.
Mr Baird: My concern is that I don't think the federal government would be a standard which we would seek to -- that wouldn't be the bar that I would set.
The example that was given was student loans, where if the Ontario government is lending a student $3,000 a year and the Royal Bank is lending a student $3,000 a year, we could compare ourselves to the Royal Bank and see how we're doing with respect to collections. That's something I feel strongly about.
Mr Patten: They do better, believe me.
Mr Baird: I think the taxpayers don't mind lending students money, with a clear expectation that that money is paid back per the terms that the student agreed to when they took it out. I think the integrity of that process has to be there. When the integrity is lost, why would you pay it back?
Ms Nanos: The federal government uses private collection agencies for the collection of student loans. That's what we looked at when we were considering outsourcing. That's their practice.
Mr Baird: But as well, we could look at the Royal Bank, at a private sector organization, directly.
Mr Campbell: In terms of the business case that we looked at in doing the outsourcing and so on, we have looked at what are called performance rates in terms of private collection agencies and we have also looked at what other jurisdictions are doing; for example, the Canadian Imperial Bank of Commerce says, "If you are a private collection agency with us, your performance rate must be 30%."
We are looking at that, and when we do have an opportunity to go out, we are going to be saying to the private collection agencies, "We're going to be monitoring you relative to certain benchmarks, and if you do not achieve those benchmarks, we will actually take the accounts back from you and give them to another PCA." So we are doing that.
We have in fact had a fairly good analysis of what other organizations are doing in terms of what is called the performance rate, so we have some benchmarks to work towards. At this point in time, of course, some of this is still not decided because of the Grievance Settlement Board.
Mr Baird: You mentioned that there were performance measures for private agencies that the Management Board contracts to. Are there performance measures internally for the internal collectors?
Ms Nanos: For the internal collectors, we have standards that they have to follow in terms of conduct, and we review how much they're taking in every month. We have portfolio reports, and if one person is a lot lower, management has a meeting with them and clarifies expectations etc.
Mr Baird: How would you establish those standards of conduct for portfolio reports? Where would you put the bar? Where would you say, "This is a successful collector and this is an unsuccessful collector"? How would you establish that bar?
Ms Nanos: What we do is review them in relationship to the private collection agencies and also with each other. We have 20 people doing collections, so we can see the variability within those people.
Mr Baird: But then you compare their success to the private sector or other public sector jurisdictions?
Ms Nanos: Yes.
Mr Baird: Because obviously some are going to be much easier to collect than others. I mean, some will be pretty difficult to collect and --
Ms Nanos: Yes.
Mr Baird: Are there any measures in place with respect to the time lines of receiving collections? The assistant auditor mentioned that there's obviously the case where there's a much greater probability of collecting some or all of an overdue fine or moneys owed if it is dealt with expeditiously. Is there any time line with respect to the points of contact? You mentioned a letter at one point, which is obviously the first point of contact, and then there would be a series of others. Are there performance measures in terms of the time lines?
Ms Nanos: Yes, we have standards for our staff in terms of when they send a letter, when they follow up with a phone call, those kinds of things. For the ministries, as I said earlier, the policies are out there, but we aren't the enforcers of the policies, we're the service provider, so if ministries don't meet those time lines, I don't have any accountability to call them and say, "You haven't met your time lines." I would remind them and send them management reports.
Mr Baird: A fair point. Obviously Management Board has a dual responsibility in this regard. You mentioned the example of student loans with 65,000 or 70,000 members of the Ontario public service and then a much larger public sector. Has there been anything done to ensure that we've looked at lottery winners and a whole series of other initiatives? Are there any initiatives in place with respect to ensuring that there are no moneys owed by provincial government employees to the crown?
Ms Nanos: I know that the Ministry of Education and Training is currently talking to the section of Management Board that deals with employee payroll, but there are all of the privacy considerations in terms of employees giving their social insurance number for one purpose and then another ministry using that information they gave for another purpose, so they are clarifying all that with the privacy commissioner and working together to see if that is a doable thing.
Mr Baird: But it would be the goal, though, that if an employee of the government owed the government $10,000, we would try to collect it?
Ms Nanos: I understand the Ministry of Education and Training is trying to figure out ways of collecting from everyone who owes a student loan.
Mr Baird: But if someone were to say, "John, what's the policy of Management Board on this issue?" what would I say?
Ms Noble: What we're saying at the moment is that this is being examined in terms of what are the possibilities of doing this, but we've got the implementation issues that Leslie has mentioned, from a privacy point of view, and so at the moment there isn't a policy to collect it, because we have to look at the feasibility of doing it. What would go forward would be a consideration by Management Board itself as to whether it was going to implement a change in policy to do this, but that will only be done once we have done the research.
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Mr Baird: Great, because I think that would be something that would be welcome. As well, and this is obviously a more difficult proposition, the broader public sector -- transfer agencies, whether they be school boards or hospitals or colleges and universities or municipalities -- is obviously not in the direct sphere of Management Board in terms of a policy direction.
Ms Noble: I would just indicate that certainly on the privacy front we would likely have those similar issues.
Mr Baird: On the privacy front, was that an issue of -- you used the word "implementation," so the question is just how one would implement that, not if one wants to.
Ms Noble: No, I think what we're looking at is the ability to actually link the data without transgressing privacy limitations; in other words, the fact that we're able to identify a student who owes us money and we're able to identify an employee, the fact that information wasn't given. We have issues of people providing information for purposes, and when we obtain SIN numbers from employees, it's for particular purposes, and at the moment that has not been set up to cross-link with data for debt collection.
Consequently, those are issues I think where in other circumstances -- we think of family responsibility -- there's legislative override of that. But what we're dealing with at the moment is just the restrictions in terms of the protection of privacy legislation. That's what we have to work with. It's the question of, "Can we do it under the existing legal framework?"
Mr Baird: Great. I think that's it.
The Chair: Before we go on with Mr Beaubien, I think Mr Leishman would like to correct the record.
Mr Leishman: Mr Baird asked earlier if PIT was included in the accounts receivable, and I wanted to clarify. Yes, it is, but not from the individuals because the federal government collects PIT on behalf of the provincial government. So what is included in the accounts receivable is an estimate, as of March 31, of what is still due from the federal government for PIT.
Mr Baird: Is that correct? Is that segregated out in the auditor's report? Because I think --
Mr Leishman: It's not in the auditor's report. It might be segregated out in the public accounts, but I'm not sure of that.
Mr Baird: That would be something, just as a point of advice or thought, to make sure we do, that it is clearly segregated out, because it would be very unfair to hold the government accountable for the full collection of that when it's the federal government which is collecting it. I'm all for holding people accountable for decisions and things within their jurisdiction, but that, I would imagine, being the most significant source of revenue from the government, would be a significant part of that $2 billion.
Mr Beaubien: Let me tell you that I sympathize with you because I think you have a difficult task. I'd like to concentrate on page 4, Ministry of the Attorney General, where you show $250 million. Would that be unpaid fines mainly?
Ms Nanos: Yes.
Mr Beaubien: Why is it -- apparently with traffic fines, you lift their driver's licence -- is that normal? Is the $250 million an elevated figure or just a normal figure?
Ms Nanos I think it's pretty normal. The amounts that they are transferring us. Again it's a little higher this year because it's for past periods, but the trend seems to be similar.
Mr Beaubien: Let me ask you a hypothetical question then. When each ministry is given a budget, they operate within their budget, and the money they collect goes back into general revenue, to simplify the process. What I see, where the process is flawed is you're given the impossible account to collect, 180 days and over. I think there probably is an awful lot of duplication, because Sid probably owes the money to the Attorney General. Sid may have a bad student loan, and Sid might have made a loan with the Ministry of Economic Development, Trade and Tourism. I would imagine, from zero to 180 days, that all ministries are operating in silos. In other words, there might three or four ministries trying to get hold of Sid, the same person.
Wouldn't it be more efficient if we had this Central Collection Services agency at day one as opposed to 180 days down the road, so that if we have a number of Sids, one person could be contacting that person as opposed to three ministries trying to collect from that particular individual?
Ms Noble: I take the point. At the moment, I guess the individual ministries have the responsibility and they have their processes in place. One of the things that we are undertaking within the administrative area is that we are looking at basic transaction-type services that individual ministries each have. That would include some of the financial transactions areas. We're looking at a direction of bringing those together into what we're calling the shared services bureau where there would be common administration in certain areas.
Certainly I think the point you're raising is one that, as we proceed forward with the shared services concept and we are looking at the specific time at which we will be moving to collect together some of the financial processing transactions, the opportunity is there to look at doing that on a more integrated basis downstream.
It's certainly not that way at the moment. As I said, what we are undertaking is an initiative to look at where common administration for all ministries in certain areas makes sense. There has been agreement that we should move forward on that, so certainly that's an area that can be looked at. We are also looking at the issue of financial systems and the timing of some of that decision may not be immediate, simply because we want to do it in a timely way with improvements in the financial information systems.
Mr Beaubien: There's no doubt that it's quite popular to look at the one-window service delivery approach. Why not follow through and look at the one-window collection approach? First of all, I think the success rate would be substantially higher. I think it would make it more cost-effective and I think we would serve the taxpayers overall in a better manner. I don't think we'd have the outstanding accounts that we have today because technically what happens is that I'm sure if you did some research or some study -- you know, how often do we have ministries chasing the same culprit with no results at the end of the day? I think if we had one delivery service for collections, at the end of the day we would serve the taxpayers more effectively. That's all I have to say.
The Chair: It makes sense. On the same ministry again, of the $250 million receivable, how many of those accounts or what percentage of those accounts are, let's say, more than a year old, 18 months or two years? Do you have a breakdown of those receivables?
Ms Nanos: If you give me a few moments, I'll check for the information. I do have it here.
The Chair: Very good. In the meantime, Mr Patten.
Mr Patten: You had said that there were some guidelines on accounts receivable. Have you also looked at, which I gather you do overall anyway in your policy branch, auditing the whole program? In other words, the accountability of colleges and universities to counsel students who are applying for loans.
I've a 21-year-old daughter who just went through all this and I've got a son who's looking at this as well, and of course my recommendation is, "Don't borrow any money at all, we'll try and work this stuff out," even though they're independent and on their own. But I marvel at how many kids see the opportunity as an immediate resource without considering the long-term implications.
The requirements for the counselling and the advisers at colleges and universities -- presumably they have guidelines. Have you reviewed those kinds of guidelines and what their accountability is and that they have actually or the student has actually gone through looking at the financial implications of the responsibility of taking a loan?
Ms Noble: I think in terms of the standards we've just been referring to here, we speak to ministries about the necessity of keeping receivables in mind as they go about doing their program design. So that's one answer.
With respect to, does Management Board's review program design operational guidelines at that level of detail? Not necessarily. It would vary by program. To a large extent that kind of level of operating guideline would be for the most part the accountability of the ministry.
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Mr Patten: Yes, and I expect that. I guess the auditor might have a role in that. In other words, we can look at the after-the-fact situation which you get stuck with, but of course the other way to approach it is, right at the source, are we doing all we can do at that stage? It seems to me we can strengthen the conditions, the orientation, the review and the responsibility. I'm using the student loan program as an example. I guess the ministry is there.
Maybe the auditor's office has a responsibility to review the strength of that from the prevention point of view of minimizing the need to go after collections anyway.
Mr Jean-Marc Lalonde (Prescott and Russell): When you developed the guidelines, you said that you had 17 different points in the guidelines. Do your guidelines, or is there something that could tell the collection group or agency that as to the student loans that were in arrears, agreement could be reached with the bank? At the present time they have to do that with the bank. We know that at the present time collecting from students for their student loans, if they had to give up a few years ago and never were able to go back to school -- I have some occasions when they've had accidents and they've not back on the labour market yet because they became handicapped. The banks are still after them to pay that amount they had borrowed to complete their studies. Have you looked at this possibility when you developed the guidelines, that for the students it should be flexible?
Ms Noble: I guess there are two answers to that question. With respect to when we're in the process of collections and someone is unable to pay everything back immediately, but wants to enter into some arrangement, our people can in fact undertake those kinds of arrangements, from the point of view of where we're collecting.
With respect to does the program design of the student loan program allow for forgiveness of the loan in special circumstances, that really is a question that needs to be put to the Ministry of Education.
Mr Lalonde: That has to be put to the ministry?
Ms Noble: Yes, the Ministry of Education is responsible for the program design; in other words, what's owed and when and whether there can be forgiveness under the program itself. The end of the business we're in is where they've deemed that it is a receivable that should be collected and then, as I said, the discretion we have is to work out a payment arrangement. It's a bill that is to be collected. We do provide for some flexibility where someone is unable to pay something immediately. They can work out a payment schedule.
Mr Lalonde: But you have taken into consideration that even though the payment could be deferred, they still have to pay the interest on that.
Ms Noble: That element is part of the design of the student loan program. That's not part of the collection service.
Ms Nanos: What we do when we contact the student and find out that they have difficult circumstances is we will call the Ministry of Education -- as the deputy said, they have the ultimate say in that -- and we will say that this person is able to pay $100 a month, or they would like to have a five-month grace period and then they have employment. We will do that on every individual case and set up payment plans.
Mr Lalonde: So you would have that flexibility under the guidelines?
Ms Nanos: Yes.
Mr Lalonde: That's very good.
The Chair: In most cases, the interest is accrued.
Ms Nanos: That's right.
Mr Lalonde: The interest is still there.
The Chair: I know, it's building up.
Mr Lalonde: My last question: Ever since the government has been talking of transferring all those unpaid loans or overpayments to the individuals, Comsoc's regional offices have been going to those who have received some money from the ministry. If you take a case that is nine years old, they said they were never advised. It's a small loan of $361. They said they had never gone to that person to collect that money, but now that they have to transfer that to the collection agency, they are trying to get that money back. But they were never advised. Has this been taken into consideration too? In this case, the person is dead and it is the husband who receives that.
Ms Nanos: Yes, those situations occur when, for nine years, the government has not been able to locate the person. We've sent them out to PCAs. They have more sophisticated technology and are actually able to locate the person. It's unfortunate if they've located a person who is deceased and we didn't know that, but in many cases, it's because for nine years they've been living in different provinces and finally something has happened that they have been able to locate the person. People will say, "I didn't hear about this for nine years." That's because we haven't found them.
Mr Lalonde: That's what they said. They've never moved. They live a very short distance from my place and they came with this letter.
The Chair: Have you found an answer to my question?
Ms Nanos: Yes, I found the information.
I should start by saying that for Ministry of the Attorney General fines, I understand from the program that they are never written off, so they remain on our portfolio forever. That's why you are going to hear that there are some that date back 12 years.
The Chair: Twelve years?
Ms Nanos: Yes. Around $10 million of the $250 million are between five to nine months old; $64.7 million are between nine months and two years; $54.4 million are between two and four years. I'm sorry for the rollup of this, but we have $120.9 million that are anywhere from four to 12 years. I don't have further breakdowns.
The Chair: That's enough. Oh, God, that's terrible. What's your annual budget?
Ms Nanos: It is $2.5 million. Once we outsource it, it will be $700,000. That's what the budget will be.
The Chair: Wouldn't it be -- I'm the Chair, I'm not going to ask that question. Mr Preston, please.
Mr Preston: I may be asking the question, or maybe making the statement. I think it's very clear that it's mandatory that we get firmer guidelines for ministries, better accountability from ministry collectors, and we have to compress the time lines.
Anybody who has had anything to do with receivables in the private sector, and I'm going to echo Mr Beaubien, after 90 days your chances go down dramatically. I think we have to shorten the time lines in the ministries and make them more accountable for their money. As I suggested before, add it on to their budget, or 30% or 50% of their receivables on to their budget for next year and say: "If you collect it, it's yours. If you don't, you're out of luck." That will make ministers and deputies start collecting a lot faster.
The Chair: Mr Preston, if we were to operate this way, they wouldn't have a budget. Any response?
Mr Preston: Incentives.
The Chair: Incentives.
Mr Beaubien: You shouldn't have told me that you had accounts aged four to 12 years.
Ms Nanos: They have been worked and worked and worked, but as I said, we can't write them off. They're there forever.
Mr Beaubien: Why can't you write them off? This is absolutely ludicrous. There is no way you're going to collect these. As Mr Lalonde pointed out, these people are probably dead. Do you need a regulation change? Do you need a legislation change? What do you need in order to do this? Because that doesn't make sense. After four to 12 yeas, for God's sake, we're spending money printing this on paper. We'll never get that money. That's chasing bad money with good money, as far as I am concerned. What do we to change this?
Ms Noble: I am not familiar with what it is that would restrict the Ministry of the Attorney General from being able to write off the fines, but we can certainly take up that discussion with them.
Mr Beaubien: I certainly would like some type of reply.
Ms Noble: Yes, we will be pleased to get you an answer.
Mr Beaubien: Because I am sure you don't want to handle those types of accounts. That's a waste of your time. I sympathize with you that you're faced with collecting accounts that are --
Ms Noble: We'll be pleased to get a formal reply back to the committee as to what exactly is the explanation.
Mr Beaubien: And you'll undertake to report back to this committee?
Ms Noble: Yes, I will undertake to do so.
The Chair: Just on the Ministry of the Attorney General, Mr Beaubien?
Mr Beaubien: Yes.
The Chair: Very good.
Mr Patten: Just on Mr Beaubien's question, what is the percentage of collections in that category annually anyway?
Ms Nanos: I don't have those data.
Mr Patten: It must be pretty low, but it would be interesting if we had that information. So that can be one of our recommendations of this committee.
The Chair: We will await the report from CCS.
Thank you very much. As you can see, there is a lot of interest in your agency and we wish you well. We'll see you in 12 years, if you have resolved any of that. Thank you for appearing before us this morning.
The committee adjourned at 1142.