Earthquakes, explosions and mudslides blew a hole in Foreign Affairs' budget for consular services to Canadians last year, creating the first deficit since the evacuation of Canadians from Lebanon five years ago.
The department posted a $5.2-million deficit in 2010-2011 for the consular services provided by its diplomatic missions, including help for Canadians hit by an earthquake in Haiti and by an explosion at a Mexican resort.
The department is required to recoup the cost of consular services through a general levy on each passport issued to Canadians, currently $25 for each adult.
But the levy revenue is not keeping up with costs, increasing pressure on the department to hike the fee — just as Passport Canada is proposing to significantly raise the basic cost of its new ePassports, which debut next year.
Foreign Affairs has racked up consular-affairs deficits in three of the last six years, the largest in 2006-2007 when it was forced to absorb most of the cost of evacuating Canadians from Lebanon in the summer.
The Finance Department has pegged the government-wide cost of the July 2006 Lebanese evacuation at $94 million. Some $60 million of that had to be absorbed by Foreign Affairs' consular-affairs budget.
The consular account is currently running a $30-million cumulative deficit, says an internal Foreign Affairs report.
And the number is poised to rise as the government introduces 10-year ePassports, double the validity period of the current five-year documents, but with the $25 consular fee unchanged. That effectively cuts the consular fee in half for Canadians who apply for the longer 10-year validity.
“The analysis reveals a cumulative deficit of $30.3 million for the Consular Program,” says the document from August this year, obtained by The Canadian Press under the Access to Information Act.
“Passport Canada is planning to introduce the e-passport with both a 5-year and a 10-year validity, starting in 2012. In the short-term, it has been proposed to maintain the consular fee unchanged at $25 for both these passports.”
“Therefore, anticipated revenues, and consequently program surpluses-deficits in the long-term, will fluctuate significantly based on the actual take-up rate of the 10 year passport.”
The report notes it cost about $94 million to provide consular services abroad in 2010-2011, the second-highest total on record after 2006-2007, the year that included the large Lebanese evacuation charges. Meanwhile, revenues fell as fewer Canadians applied for passports — likely because there had been an earlier surge to comply with the U.S. Western Hemisphere Travel Initiative, which required passports to be shown at the Canada-U.S. border beginning in June 2009.
The consular service fee of $25 was introduced in October 1995, at a time when the Liberal government was hiking fees and cutting services to wrestle down a massive federal deficit.
The current Tory government finds itself in a similar predicament, looking for government-wide cuts to balance its deficit-burdened budget by 2015.
In May 2008, the auditor general of Canada, Sheila Fraser, castigated Foreign Affairs for its fuzzy math when it justified the $25 fee as consistent with the actual costs of consular services. Ms. Fraser suggested a true accounting would likely show that Foreign Affairs was racking up surpluses.
The department re-examined and revised its accounting methods to come up with the current formula. But instead of racking up surpluses, as Fraser suspected, Foreign Affairs is facing deficits, indicating the fee is too low.
Meanwhile, Passport Canada is proposing to increase its fee for a five-year adult passport by $33 starting in 2013, along with other increases. That would bring the full cost to $120 from the current $87, with the current $25 consular fee included. The 10-year passport would cost $160, also including the $25 consular fee.
About 10,400 Canadians were helped abroad in 37 crises or emergencies in 2010, including mudslides in Peru and a Nov. 14 blast at a resort near Cancun that killed five Canadian tourists.
In 2009, the department responded to only 16 such incidents.
“2010 was an exceptional year for natural disasters and other distressing events,” Diane Ablonczy, minister of state for consular affairs, said last month.
A spokesman for Foreign Affairs was not immediately available for comment.
More than 14,000 Canadians were evacuated from Lebanon in 2006 after Hezbollah militants conducted a raid into Israel, and Israeli forces responded with air attacks and limited ground incursions into Lebanon.