The Canada Revenue Agency as Separate Employer: Anomaly or Model for the Future?

By Brown, David C. G. | Canadian Public Administration, December 2009 | Go to article overview

The Canada Revenue Agency as Separate Employer: Anomaly or Model for the Future?


Brown, David C. G., Canadian Public Administration


The transformation of Revenue Canada on 1 November 1999 to become the Canada Customs and Revenue Agency (CCRA) (1) was the high-water mark of the "alternative service delivery" (ASD) movement of the 1990s. With over 40,000 employees, the agency operates on the scale of the larger provincial public services and is one of the few national institutions that act on behalf of or through the federal and all the provincial and territorial governments. It has been the locus of a unique experiment in public-sector governance and one of the most ambitious initiatives in public-sector human resources management reform.

The basic premise of the ASD model is that replacing central public-service controls with customized governance and management arrangements can lead to improvements in the efficiency and quality of public programs and services (d'Ombrain 2000: 92-93; Ford and Zussman 1997: 6). In a labour-intensive organization such as Revenue Canada, a central feature of the move to agency status was the establishment of a new, separate employer human resources regime designed to meet the requirements of its revenue collection functions and its employees. The regime addressed critiques of human resources management in the mainstream public service and has had an influence on the latter's more recent evolution. The agency move removed over one-fifth of the public-service population, but it has not, on the face of it, significantly undermined the concept of a unified public service.

Reviews for the move to agency have generally been favourable (Brown and Barclay 2003; Brown and Murphy 2004; Canada, Office of the Auditor General 2008; Canada, Parliament, House of Commons, Standing Committee on Finance 2006; Canada Revenue Agency 2005). Tax collection in Canada, as in all OECD countries, is based on the voluntary compliance of taxpayers, and a core premise has been that taxpayers who feel that the tax code is fair in its design and justly administered are more likely to pay their taxes willingly and honestly (Adolino and Blake 2001: 184, 187-207). Canada Revenue Agency has been assiduous in measuring client satisfaction and consulting stakeholders, and this largely favourable picture has been a central feature of its annual reports to Parliament. The changes in organizational governance and in human resources management are seen as major contributory factors (Canada Revenue Agency 2005: 52).

Several questions arise. The move to ASD agency status was not universally supported, notably in the central agencies (Brown and Barclay 2003: 40-41) and unions, so the decision to take this step needs to be explained. It is also useful to consider the factors that shaped implementation of a new human resources management environment in a large organization whose mandate, senior management and workforce were unchanged. A frequently asked question is whether separate employer status and associated degrees of institutional freedom accorded to CCRA were in fact necessary. A third line of inquiry is whether the circumstances of CCRA were unique or whether there are lessons for wider application.

Nicholas d'Ombrain raises two other points that are woven through this discussion. The first is to ask how easy it is in fact to detach management of an individual institution from central control, especially in areas affecting wage settlements and the fiscal environment (2000: 120); the second is to question whether an inherently coercive and multipurpose function of state such as tax collection is in fact suited to the ASD model (147).

This article begins by looking at the decision to create Canada Custom and Revenue Agency. It then discusses the development and implementation of the CCRA governance model and the separate employer human resources regime. The following sections analyse the elements of that regime, as implemented on the agency's "Day 1," and the underlying critique of human resources management in the mainstream public service, concluding with a discussion of more recent developments. …

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