The Canadian government charges a fee in the price of applying for an adult passport that is higher than the costs to provide that service, the auditor general's report has found.

User fees that exceed the cost of providing the service could be declared unlawful in court and may have to be paid back by the government as a result, said the report, released by Sheila Fraser on Tuesday.

A number of other government departments also face risks by not knowing the cost or value of the goods or services they provide for the fees they charge, the report found.

In 2006-07, the federal government took in $1.9 billion in revenues from 220 fees that either:

• recover part or all of the cost to the government of providing a good, service or use of a facility such as use of a campsite in a federal park;
• provide a return to Canadians for a right or privilege to use publicly owned or managed resources, such as a commercial fishing licence

By law, the fees charged in these cases cannot exceed the cost of providing the service or the fair value of the right or privilege.

However, the report found that the $25 consular fee included in Canadian adults' passport applications took in more than the cost of providing consular services in three out of the past five years.

The auditor general's office calculated that the surplus reached $25.3 million in 2005-06. Foreign Affairs and International Trade Canada calculated it was only $13.3 million, as it used different figures for the amount of time spent on passport-related issues abroad.

The consular fee has been including the costs of activities performed on behalf of other government organizations that weren't included in the original approval of the fee, the report found.

However, Foreign Affairs and International Trade Canada argued that based on its own numbers, the amount collected from the consular services fee in the past five years was less than the cost of providing consular services. That was because of the high cost of evacuating Canadians from Lebanon in 2006-07.

The department said it is reviewing all aspects of its consular program, including the consular charge, as part of an overall plan to boost consular services.

In total, the auditor general's report looked at 13 fees from five departments and one agency. It found that some of these organizations, such as Parks Canada, did base their fees on a calculation of the costs and values, Fraser said.

"However, others do not know the cost of what they are providing for the fee," she added in a statement.

Her report notes that fee payers are now challenging the validity of such charges in the courts.

For example, in January 2007, the Supreme Court of Canada ruled that the province of New Brunswick must repay an alcohol user fee to a group of night-club owners who challenged it, after the tariff was deemed unrelated to the cost of regulating the licences involved.

"In the future, any other fee found to be unlawful may need to be repaid," the report added.