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Pay up…please? Debt agents struggle to recoup cash for feds

By Peter Mazereeuw      

A handful of government institutions didn't get a penny from debt collectors working on their behalf, while others received just a fraction of one per cent of the outstanding money—minus fees.

Treasury Board President Scott Brison. Government institutions are prohibited by the Treasury Board from asking private collection agencies to go after money owed by federal employees—such as those accidentally overpaid in the Phoenix pay system debacle. Canadians owe hundreds of millions in criminal fines, mortgage debts, and other charges to the federal government. The Hill Times photograph by Jake Wright
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Private debt collectors recovered less than seven per cent of the money they were tasked with tracking down for the federal government between late 2015 and December of last year, with some institutions getting back nothing at all, according to documents made public by the government.

Collection agencies clawed back about $23-million in total of nearly $344-million owed by companies and individuals to various government departments and agencies between the time the Liberal cabinet was sworn in on Nov. 4 and Dec. 6 of last year.

Seven federal institutions that hired agencies didn’t see a penny collected on their behalf during that time, out of a total of $1.5-million owed to them.

The performance of private debt collectors used by the government was made public in a document tabled in the House after the winter break. 

Federal bodies all follow the same Treasury Board guidelines for collecting money owed. Many don’t use private collection agencies, and most of those that do try to recover debts themselves, or ask the Canada Revenue Agency to help them do so, before sending the accounts to private collection agencies.

Government institutions are prohibited by the Treasury Board from asking private collection agencies to go after money owed by federal employees—such as those accidentally overpaid in the Phoenix pay system debacle—other government departments or agencies, foreign governments, governmental bodies such as the UN, or debts under appeal or litigation. The debts the government asks private collection agencies to recoup belong to both businesses and individuals.

Most departments and agencies only paid the debt collectors for their work if they were able to recover money. Federal departments paid out more than $1.8-million to debt collectors during the period under scrutiny.

Criminal fines, mortgage debts barely recovered; oil, gas companies won’t pay environmental fees

Most of the debt assigned to collection agencies came from two institutions: the Public Prosecution Service of Canada (PPSC), at $153-million, and the Canada Mortgage and Housing Corporation (CMHC), at $164-million. The PPSC got back just 0.3 per cent of the debt between November 2015 and December of last year, while the CMHC got back about 3.3 per cent.  

The PPSC is responsible for collecting criminal fines levied on Canadians. The organization was responsible for collecting that money on its own up until February of last year, when it made a decision to move 75 per cent of the debt it was owed to a single private collection agency—Partners in Credit Inc. of Markham, Ont. That company declined to comment when reached by The Hill Times.

The transfer of files, training, and meetings delayed the start of the company’s efforts to reel in those debts, PPSC spokesperson Nathalie Houle wrote in an emailed statement.

Furthermore, “many very old and large fines for which the offender was not locatable were sent to Partners in Credit for recovery; these would be extremely difficult to recover,” wrote Ms. Houle.

The CMHC goes after debts that occur when someone sells their house, but the sale price isn’t enough to cover their mortgage owed to the bank.

“The recoveries process is challenging and collecting on a debt is often difficult. Individuals who owe a debt do not want to be found and take steps to conceal their identity. These challenges are not unique to CMHC or our contractor agencies, rather, they are faced by the industry at large,” wrote spokesperson Jonathan Rotondo in an emailed statement, adding the CMHC uses three collection agencies.

Collection agents working for Natural Resources Canada were unable to recover any of the $495,000 owed to the department by two oil and gas companies that haven’t paid mandatory Environmental Studies Research Fund fees associated with offshore exploration licences, according to the department. The department didn’t respond by deadline when asked the names of the companies.

Those fees are used to fund research on environmental and social impacts of oil and gas exploration in Canada’s frontier lands.

Fisheries reels in overdue fees

Collection agencies working for Global Affairs Canada, Parks Canada, the National Energy Board, the CRTC, the Canadian Environmental Assessment Agency, and the Public Health Agency of Canada also did not recover any debt during that time period.

Collectors for Global Affairs Canada had trouble recovering the debts because the department assigned them cases of debtors for whom it no longer had any contact information, and had “exhausted all possible internal avenues,” backlogged to 2013, according to departmental spokesperson Michael O’Shaughnessy.

On the flip side, collectors for Fisheries and Oceans Canada recovered more than 92 per cent of the $17.9-million owed to the department. That money was primarily from unpaid Marine Navigation Services Fees, a charge commercial vessels operating in Canadian waters must pay to the Canadian Coast Guard, and the success rate is due to an unusual arrangement in which companies, often shipping companies, collect those fees from individual vessel owners and flip them to the department. As such, those who owe the fees are typically willing and able to pay them as a matter of routine.

All of the $12,468 owed to the National Arts Centre Corporation was collected, while the CFIA got more than 47 per cent, and the CBC more than 17 per cent—all minus fees.



Who recovered the most? Private debt agency returns by institution

Institution Debt assigned Debt recovered Percentage recovered
DFO/Coast Guard $17,873,428.82 $16,522,731.29 92.4
Export Development Canada $7,230,858.00 $739,402.00 10.2
Public Prosecution Service Canada $152,664,266.93 $385,835.57 0.3
CMHC $163,652,603.00 $5,369,668.62 3.3
CBC $106,684.00 $18,722.00 17.5
NAC Corporation $12,469.32 12469.32 100
Health Canada $609,777.00 $8,455.00 1.4
CFIA $13,774.55 $6,529.63 47.4
Nuclear Safety Commission $25,884.00 $658.25 2.5
CRTC $145,000.00 $0 0
CEAA $473,825.38 $0 0
Parks Canada $3,557.64 $0 0
Global Affairs $171,335.88 $0 0
Natural Resources $494,977.51 $0 0
National Energy Board $129,000.00 $0 0
Public Health Agency $41,235.00 $0 0

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