Vol. 148, No. 14 — July 2, 2014
SOR/2014-169 June 20, 2014
IMMIGRATION AND REFUGEE PROTECTION ACT
Regulations Amending the Immigration and Refugee Protection Regulations
P.C. 2014-839 June 20, 2014
His Excellency the Governor General in Council, on the recommendation of the Minister of Citizenship and Immigration, pursuant to subsection 5(1) and section 89 (see footnote a) of the Immigration and Refugee Protection Act (see footnote b), makes the annexed Regulations Amending the Immigration and Refugee Protection Regulations.
REGULATIONS AMENDING THE IMMIGRATION AND REFUGEE PROTECTION REGULATIONS
1. (1) Subsection 315.2(1) of the Immigration and Refugee Protection Regulations (see footnote 1) is replaced by the following:
Fee — $1,000
315.2 (1) A fee of $1,000 is payable for the provision of services in relation to an opinion from the Department of Employment and Social Development that is requested by an employer or group of employers under subsection 203(2) for each offer of employment in respect of which the request is made.
(2) Paragraph 315.2(5)(c) of the Regulations is repealed.
COMING INTO FORCE
2. These Regulations come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues: The cost of administering the Temporary Foreign Worker Program (TFWP) has increased since the initial introduction of processing fee on July 31, 2013. In addition, despite being truly seasonal and temporary, positions in feed lot services are not currently exempted from the processing fee, as is the case for primary agriculture.
Description: The Immigration and Refugee Protection Regulations (IRPR or the Regulations) have been amended to increase the fee to $1,000 for each position for which a Labour Market Impact Assessment (LMIA) [formerly referred to as a Labour Market Opinion] is requested. Requested positions on LMIA applications under the Seasonal Agricultural Worker Program and for other primary agricultural occupations continue to be exempt from the fee. The provision of feed lot services have been included as part of this exemption.
Cost-benefit statement: The amendments are expected to result in a net present value to Canadians of $504.8 million over 10 years. The present value of total benefits is estimated to be $669.2 million over the same period, while the present value of total costs was calculated to be $164.3 million. Overall, the additional funds made available to the Government of Canada as a result of the fee will significantly outweigh the costs incurred by employers to pay for the fee.
“One-for-One” Rule and small business lens: The “One-for-One” Rule and small business lens do not apply to these amendments, as there is no change in administrative or compliance costs to business.
The Temporary Foreign Worker Program (TFWP) helps employers address their immediate skills and labour needs when qualified Canadians and permanent residents are not available.
The TFWP is jointly administered by Employment and Social Development Canada (ESDC) and Citizenship and Immigration Canada (CIC), under the authorities of the Immigration and Refugee Protection Act (IRPA) and the Regulations. Employers who wish to hire a temporary foreign worker (TFW) through the TFWP must request an LMIA (multiple TFW positions can be included on a single LMIA). ESDC assesses requests from employers seeking to hire TFWs and issues an LMIA letter stating whether the TFW is likely to have a positive, neutral, or negative effect on the Canadian labour market. CIC is responsible for issuing a work permit to the TFW, which authorizes the worker to work in Canada.
CIC currently charges a fee of $155 to workers when they submit a work permit application. This fee is intended to cover a portion of the costs to all federal institutions involved in the assessment of work permits, namely CIC, Canada Border Services Agency, Canadian Security Intelligence Service, and the Royal Canadian Mounted Police.
When assessing an employer’s request to hire a TFW, ESDC generally considers available labour market information for the region and for the occupation to determine whether a labour shortage exists, whether the wage offered to the TFW is consistent with the prevailing wage rate for the occupation, whether the working conditions meet generally acceptable Canadian standards, and whether the employer has made reasonable efforts to hire or train Canadians. ESDC also assesses the genuineness of the employer and the job offer, as well as the employer’s past compliance on wages and working conditions before an LMIA is issued.
On July 31, 2013, ESDC began charging employers $275 per requested TFW position on LMIA applications. The fee resulted in a 48% decline in requested TFW positions and generated $18.7 million in revenue (see footnote 2) which has been deposited into the Consolidated Revenue Fund.
Since the fee came into force, ESDC has made significant changes to strengthen the LMIA process and enhance program compliance, which has increased the true unit cost of assessing a requested TFW position. As a result, a fee of $275 no longer reflects the costs of providing services in relation to an LMIA (i.e. the cost of administering the TFWP).
Furthermore, despite the provision of feed lot services being performed within the boundaries of the farm and closely aligned with primary agriculture, they were not defined as such when the fee was introduced in 2013.
The objectives of the amendments are to ensure that employers continue to bear the full cost of assessing LMIAs — not taxpayers — since they directly benefit from the service. The amendments also ensure that LMIA applications for positions in feed lot services are treated the same as other positions in the primary agriculture sector.
The amendments establish an increase in the LMIA fee of $725 from $275 to $1,000 per requested position which has been determined to recover full cost of services provided.
In addition, the provision of feed lot services will be considered part of primary agriculture, which will exempt these occupations from the fee.
Coming into force
The amendments come into force on the date of registration. All requested positions on LMIA applications received as of that date will be subject to a fee of $1,000.
Regulatory and non-regulatory options considered
The following option was considered:
ESDC considered not pursuing regulatory amendments and continuing to administer the TFWP at the previous fee of $275. However, this option would not meet the objectives of ensuring that employers bear the full cost of the LMIA assessment and allowing the Government of Canada to recover the cost of administering the TFWP. Taxpayers would continue to subsidize the provision of this service to employers.
Benefits and costs
The following analysis provides an overview of the costs and benefits to stakeholders of the regulatory amendments to amend the fee for the assessment of each position on an LMIA application and program compliance activities to support the hiring of TFWs from $275 to $1,000. It is estimated that the amendments will result in a net present value to Canadians of $504.8 million from 2014–15 to 2023–24.
The table below highlights the benefits and costs, factoring in a discount rate of 7% per year as recommended by the Treasury Board of Canada Secretariat. Prices were held constant using a rate of inflation of 1.9% (estimated from Statistics Canada’s Consumer Price Index), using fiscal year 2014–15 as the base period.
|Cost-benefit statement||Base Year* 2014–2015 (non-discounted)||Final Year 2023–2024 (non-discounted)||Total (PV) (discounted)||Annual Equivalent (discounted)|
|A. Quantified impacts $ (Price year: 2014–15)|
|Benefits||Stakeholder||$ millions||$ millions||$ millions||$ millions|
|Benefits to Canadians|
|More funds available to the Government of Canada: revenue from the fee||Canadian taxpayers||$19.2||$24.0||$164.3||$23.4|
|More funds available to the Government of Canada: reduced workload to process TFW requests||Canadian taxpayers||$71.9||$71.9||$504.8||$71.9|
|Costs||Stakeholder||$ millions||$ millions||$ millions||$ millions|
|Costs to industry|
|Additional costs of applying for TFWs||Employers of TFWs||$19.2||$24.0||$164.3||$23.4|
|Total net benefit||$71.9||$71.9||$504.8||$71.9|
|B. Quantified impacts in non-dollars|
|There are no quantified impacts in non-dollars terms.|
|C. Qualitative impacts|
|1. Canadians and permanent residents may experience a slight increase in employment if employers react to the increase in the fee by exerting greater efforts to recruit and train Canadians in lieu of applying for TFWs. The impact would be the greatest in regions/industries with high unemployment, where TFWs may be employed in positions that could have been filled by Canadians or permanent residents.|
|1. Consumers may have to pay slightly more for goods and services if businesses pass the additional costs of the fee onto consumers by raising their prices.|
|2. Immigration consultants may experience reduced business if volumes of requested positions on LMIA applications decrease as a result of increasing the fee. These consultants often charge employers a fee for requesting LMIAs to ensure that the employer meets program requirements.|
|3. Canadians in some areas of the country may experience a loss in economic activity if employers seek fewer TFWs as a result of the increased fee. Many employers feel that the option to recruit TFWs has allowed them to expand their businesses and broaden their hours of operation that would not have been possible without TFWs. If the increased fee dissuades some of these employers from recruiting TFWs where workers are not available domestically, they may choose to not expand their business.|
|*Because fee will be implemented in June 2014, the base year of 2014–15 only counts as a partial year (80% of the 12-month period).|
Explanation of the baseline scenario
- — In 2013–14, ESDC processed a total of 146 108 requested TFW positions on LMIA applications, excluding occupations in primary agriculture.
- — For 2014–15, a number of program changes will restrict access to TFWs under the baseline scenario such that, for the purposes of this analysis, it is estimated that the volume of requested TFW positions on LMIA applications will decrease by 16 041 from 146 108 in 2013–14, to 130 067 in 2014–15, and on an ongoing basis.
- — Due to the significant increase in program costs to implement these activities, it is expected that it will cost ESDC approximately $1,000 per position. Because the TFWP is not funded for this amount, employers would experience significantly longer LMIA assessment times.
Explanation of the regulated scenario
- — ESDC estimates that the amendments would result in an incremental decrease in requested TFW positions on LMIA applications from 130 067 to 59 802 in 2014–15, and an ongoing incremental reduction in positions of 70 265.
- — The additional revenue from the increase in the LMIA fee is expected to be $19.2 million in 2014–15, and $24.0 million on an ongoing basis. Impacts in 2014–15 are 20% below ongoing impacts, due to the mid-year timing of coming into force.
Determination of the amount of the fee
- — The revised LMIA fee was determined by dividing total planned program spending in 2014–15 by the expected volume of requested TFW positions on LMIA applications in the same fiscal year.
- — Total planned program spending in 2014–15 is expected to be $61.2 million.
- — These costs were divided by the expected volume of requested positions on LMIA applications of 59 802, resulting in a fee of $1,000, on a cost-recovery basis.
The following information provides a detailed explanation of the assumptions and framework that determined each stakeholder impact.
Funding made available for other public services
Before the LMIA fee was revised, the cost to employers for each offer of employment (i.e. position) in respect to which an LMIA request is submitted was $275. The increase of the LMIA fee to $1,000 requires employers to pay an additional $725 for each TFW position requested on the LMIA. These additional costs cover the same program activities that were performed in the past (the assessment of LMIAs by Service Canada, providing policy and operational guidance by ESDC, and administering monitoring and compliance verification) in addition to program enhancements that ensure employers are considering Canadians before they turn to TFWs.
The amount made available for other public services for Canadians is equivalent to the additional revenue collected from the fee, plus the reduction in LMIA assessment costs resulting from the reduction in the number of TFW requests resulting from the introduction of a fee. The additional revenue from the fee was determined by multiplying the number of expected positions for which a TFW would be requested by the additional amount of the fee for each position ($725). The reduced assessment costs were determined by calculating the difference between expected volume in TFW requests in the baseline scenario (130 067 in 2014–15) and the regulated scenario (59 802 in the same year) and multiplying that difference (70 266) by the fee per requested TFW position ($1,000).
As a result, the total funding made available to the Government of Canada for services to Canadians in the first year was estimated to be $19.2 million and about $24.0 million on average over the next 10 years.
The present value of the total additional funding for other public services over the 10-year period was estimated to be $504.8 million. It should be noted that throughout this analysis, the 2014–15 impact was reduced by 20% to account for the fact that the LMIA fee was revised in June 2014, in the middle of the 2014–15 fiscal year.
Costs to employers
The framework and assumptions surrounding the costs to employers is identical to that of the revenue collected from the LMIA fee. Employer costs were determined by multiplying the number of forecasted requested TFW positions by the fee of $1,000. Employers will not incur any administrative burden to pay the additional fee amount.
Based on these assumptions, the present value of the total costs borne by employers was estimated to be $164.3 million. Again, the 2014–15 impact was reduced by a factor of 20% to account for mid-fiscal year implementation.
The “One-for-One” Rule does not apply to these amendments, as they will not change the administrative costs to business.
These amendments will not require any additional documentation.
Small business lens
The small business lens does not apply, as there are no incremental compliance or administration costs. The revised fee would, however, result in increased costs for all businesses that apply for LMIAs, including small businesses.
ESDC and CIC have been collaborating on an ongoing review of the TFWP to ensure that Canadians and permanent residents are considered for available jobs before employers turn to TFWs. As part of the review, ESDC and CIC have engaged a wide range of stakeholders in consultations about, among other items, the increase in the LMIA fee.
On May 15, 2014, the Minister of ESDC held roundtable consultations with TFWP stakeholders, including employer and labour groups. As part of these consultations, the Minister discussed augmenting the LMIA fee to better reflect the true cost of administering the LMIA process, including compliance verification and inspections. Stakeholders did not specifically object to the idea of revising the fee.
The amendments increase the fee of assessing TFW requests on LMIAs from $275 to $1,000. The fee is reflective of approximately 100% of ESDC’s costs to administer the TFWP (including monitoring and compliance verification). The revised fee will ensure that the cost of administering the TFWP continues to be borne by employers who seek to hire TFWs, rather than by Canadian taxpayers.
Many other countries require employers to pay fees to hire a TFW. The fee for assessment of LMIAs in Canada is comparable to the fees for hiring a TFW in the United States, the United Kingdom and Australia, as compared in the table below. Canada’s fee may be different from other traditional immigration countries for a number of reasons, including different processing practices, program costs, policy objectives and/or legislation governing the charging of fees.
|International comparison of temporary foreign worker user fees|
|Country||Fees charged to employers||Total in Canadian dollars*||Comments|
|Canada||Fee per position on the LMIA: $1,000||$1,000||The fee is paid per position.|
|Australia||Sponsorship fee: $420 (AUD)
Long Stay Activity: $170
|Long Stay Activity: $594
|The sponsorship fee is paid per application. The nomination fee is paid per position.|
|United Kingdom||Sponsorship license fee: £536
Certificate of sponsorship fees:
Tier 2 (Skilled workers with long-term job offers): £184
Tier 5 (Skilled temporary workers): £14
|Tier 2: $1,314
Tier 5: $1,004
|The sponsorship license fee is paid per application. The certificate of sponsorship fee is paid per position.
Additional fees may apply depending on the stream and size of the firm.
|United States||H1-B (Specialty occupations)
Fee depends on firm size
$325.00 (Petition Fee)
$500.00 (Fraud Prevention and
$750.00–$1,500 (American Competitiveness and Workplace Improvement Act Fee)
$2,000 (Fee for requesting 50 or more guest workers)
|H1-B: $1,716–$4,712||The filing fee is paid per application. The fraud prevention and detection fee is paid per position.
Premium processing is also available at an additional $1,225.00 (USD) or $1,335 (CND).
|H2-B (Temporary non-agricultural workers)
$325.00 (Petition Fee)
$150.00 (Fraud Prevention and Detection Fee)
|*Bank of Canada’s currency converter (June 2, 2014)|
When the fee came into force on July 31, 2013, the definition of primary agriculture did not include feed lot services. Including the provision of feed lot services under the definition of primary agriculture will better align these occupations with similar occupations currently under the primary agriculture definition which have similar job duties and are located on the farm. Including feed lot services under this exemption is also consistent with the international definition of primary agriculture.
Implementation, enforcement and service standards
These amendments come into force on the date of registration and the fee applies to each requested position on an LMIA application that supports the hiring of TFWs as of that date. ESDC and Service Canada are responsible for the implementation of the fee.
Refunds will only be available if a fee was collected in error (i.e. an incorrect fee amount was processed). There will not be refunds in the event of a negative LMIA since the fee covers the process to assess an application and not the outcome.
ESDC intends to develop and publish national service standards for the assessment of LMIAs.
Privacy Impact Assessment
The TFWP Privacy Impact Assessment (PIA) was divided into two phases in order to meet the timelines associated with the implementation of program changes. Phase I of the TFWP PIA was completed in October 2013, and Phase II was completed in April 2014. A summary of both PIAs will be made available on the ESDC Web site.
To support the implementation of the fee, information will be published on the ESDC Web site, and on the TFWP Web Service to notify employers of the coming-into-force date and the process for payment of the fee.
Performance measurement and evaluation
In accordance with Treasury Board of Canada Secretariat guidelines, ESDC and CIC are required to jointly evaluate the TFWP every five years to assess issues related to the relevance and performance of the program, as well as its design and implementation. As part of the next TFWP evaluation, administrative data along with other lines of evidence will be used to measure the impact of the fee for LMIA assessments, including reassessing the fee amount to ensure that it continues to maximize cost recovery while not exceeding the cost for providing the service.
An evaluation of TFWP will commence in 2016–17 and will be completed in 2017–18.
Colin Spencer James
Policy and Program Design Division
Temporary Foreign Worker Directorate
Skills and Employment Branch
Employment and Social Development Canada
140 Promenade du Portage, Phase IV, 4th Floor