Carney's plan for digital government could find savings, but just as many headaches 

OTTAWA — The federal government says its new online system for collecting import duties is a step forward for business because it streamlines the entire process.

But for Marsha Sikma, a flower farmer in southwestern Ontario who imports thousands of dollars’ worth of peony bulbs every year, the Canada Border Services Agency’s new system has so far mostly just streamlined her frustration.

Sikma, owner of MGS Florals Inc., about 25 kilometres south of Woodstock, Ont., says the government’s old, mostly paper-based system seemed to work fine, with her import broker taking care of most of the red tape. The new online system, CBSA’s Assessment and Revenue Management (CARM) has left her trying to sort through a 10-page memo in her new portal and an import tax bill of $2,494.27.

CARM had been optional since being launched in October, but is now mandatory for importers as of May 20.

These are headaches you don’t need when you’re trying to run a 17-acre farm and managing a seasonal staff of up to 16. The most frustrating part, she says, was trying to get through to somebody on the phone without the system hanging up.

“It just seems very difficult to get through to the right person,” said Sikma. “As a small business, we don’t have time to deal with that type of thing.”

Despite those apparent frustrations, that type of online thing is exactly what all levels of government should be doing more of, technology industry officials and digital government advocates say. Investments in electronic government, artificial intelligence (AI) and other digital services can improve the efficiency and accessibility of everything from disaster response and fraud detection to voting and obtaining licences, permits and benefits, they say.

But better services are only part of it. More digital should also mean savings for taxpayers at all levels of government, as Prime Minister Mark Carney argued during the election.

On Wednesday, Carney released a single mandate letter for all his ministers and specifically mentioned using AI “at scale” to help make the government more efficient.

“Government itself must become much more productive by deploying AI at scale, by focusing on results over spending, and by using scarce tax dollars to catalyze multiples of private investment,” the letter reads .

Viet Vu, the manager of economic research at the Dais, a Toronto-based think tank within Toronto Metropolitan University (TMU), said investments in digital services could save Ottawa between 10 and 15 per cent — or between about $50 billion and $75 billion a year — on all federal government’s expenses. Provincial and municipal governments could also reap a windfall if the digital investments are savvy.

“Absolutely, there’s the potential for savings,” said Vu.

Those savings could be particularly important after years of debt accumulation and government expansion, particularly at the federal level. Carney has made it clear that he intends to make cuts — or at least trim the rate of expenditure growth — and eventually reduce the deficit.

Carney isn’t putting specific numbers yet on costs or possible savings, but he seems to agree that investments in digital government are needed. During his first press conference after the recent federal election, the new prime minister said Ottawa will invest in technology to boost productivity as part of the effort to balance the operating or day-to-day budget over the next three years.

And then last week, Carney sent another strong signal in his interest in more digital or e-government by appointing new Toronto MP and former broadcaster Evan Solomon as Canada’s first cabinet minister specifically responsible for artificial intelligence and digital innovation.

The task won’t be easy. Transforming the digital side of an organization with 367,772 employees and dozens of separate electronic sign-in points will not occur overnight. And for Solomon, a rookie MP and politician, being handed the steering wheel in the midst of an AI revolution may be particularly daunting.

Vu, from the Toronto think tank, said the new cabinet faces three significant challenges in turning things around at the federal level: attracting top AI talent to work in government when the private sector market for their services is very strong; changing the internal digital culture in government so that it’s user-focused; and improving Canadians’ digital access.

Canada’s track record on making good use of e-government tools is mixed, trending more towards poor in recent years.

An international leader in e-government during the early days of the internet, the federal government in particular excelled both in its internal use of the Internet and making its existing information available online. Ottawa was also quick to launch a portal that gathered the requests of citizens, businesses and even non-Canadians.

But progress has apparently slowed dramatically in recent years, perhaps in part from the fallout from new-tech scandals involving the Phoenix pay system and, more recently, the ArriveCan app.

While Accenture no longer conducts its e-government study, a report last year from Canada’s auditor general noted that two-thirds of the IT systems within federal departments were in poor health, including some that are responsible for important services such as employment insurance.

In the most recent United Nations e-government development index, widely viewed as the most comprehensive scorecard of its kind, Canada fell to 47th place globally in 2024, from third in 2010.

“We used to be very good,” said Vu.

According to a 2023 report from the Dais, the TMU think tank, less than one-quarter of federal government services are available online end-to-end, while a meagre 61 per cent of them meet the government’s own digital services standards.

Ottawa was seen as doing very well under pressure in providing online information and services during the pandemic. But Vu said the federal government should do better in providing decisions, applications and other information online and making logins and authentication easier and more secure.

Janice Horne, federal account leader with EY’s government and public sector operation, said the federal government’s online performance could improve dramatically if the entire system started with a single digital “front door” for each citizen.

A report last year by the auditor general found that the federal government uses up to 90 separate sign-in portals managed by individual departments and agencies.

E-government specialists say it doesn’t have to be that way.

In 2023, British Columbia launched a new, comprehensive digital plan and residents now access most provincial data and services — from student loan applications to health care — through a single portal, using their BC Services Card.

If the focus is on easy entry and use, EY’s Horne says, e-government and AI have the potential to transform public service work and the workplace. “I think it’s all very possible.”

The federal government says it’s already taken steps in using AI in productive ways:

The Department of Immigration, Refugee and Citizenship uses AI-based models to triage applications for temporary or permanent residence. Those models have already been used to improve the processing time and help officers focus on more complex cases for more than 7 million applications.

Agriculture and Agri-Food Canada’s AgPal helps farmers and agri-businesses find information about more than 400 federal, provincial, and municipal programs and services, along with market intelligence and research.

Shared Services Canada is experimenting with a multilingual conversational chatbot, CANChat, to support drafting, editing, researching, summarizing, and information and data management and analysis.

Transport Canada’s Pre-load Air Cargo Targeting (PACT) program uses AI to screen air shipments before takeoff to flag those that could contain concealed threats. The department says it’s led to a tenfold increase in the number of shipments screened per hour and increased coverage from six percent to 100 percent of both passenger and cargo flights.

CBSA’s new online tax collection system (CARM), which Sikma found frustrating, is another step towards digitizing government.

Mike Leahy, a director general in the department’s commercial and trade branch, said the new system is more efficient because, among other things, it allows import taxes to be calculated electronically and immediately, creates an ongoing file for more than 157,000 Canadian businesses, and can more easily be amended to deal with errors or policy changes.

Leahy said the new system is working well, although he acknowledged that the changeover has not been as easy for smaller businesses, such as Sikma’s flower farm.

CARM replaced a 35-year-old, mostly paper-based system just in time to deal with Donald Trump’s erratic trade policies. “The clock was ticking,” said Leahy of the old system.

Corinne Pohlmann, executive vice-president for advocacy for the Canadian Federation of Independent Business (CFIB), says governments should take advantage of AI and other digital tools to do things better but should also try to do more with less.

Pohlmann said the new online import system may not be a step forward for small business owners. The new online system requires importers to put up bonds or use their credit cards if they want immediate release of their goods, unlike the old system, while the forms are now longer and more onerous, she added.

Many small businesses, such as restaurants, manufacturers or flower farms, don’t have more time or money for paperwork, whether it’s electronic or not. “Just because something is digitized doesn’t mean that it’s less onerous,” Pohlmann said.

So where to from here?

For Solomon, the new AI minister, and Mélanie Joly, the new industry minister, and others involved in setting up Canada’s plan for AI, e-government and other digital change, the destination may appear clearer than the path forward.

And with change comes challenges. Governments will also need to deal with a host of tricky matters, such as security and privacy concerns, online hate and apps and other services affiliated with state-owned enterprises based in China and elsewhere.

The potential benefits of more e-government and AI services are tempting, but it’s unclear how tolerant Canadians will be if the negatives from digital change start to pile up. The main negative will likely include job losses as some coders, factory workers, call centre workers and others could be replaced.

In the case of Sikma and many small business owners, the gains will need to clearly outweigh the costs.

“It’s just kind of a headache,” the frustrated Ontario flower farmer said of CBSA’s new importing system. “It’s just another thing.”

National Post

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