Mr. Speaker, it is a pleasure today to speak to Bill C-470, which was introduced at first reading on October 29, 2009, by the member for Mississauga East—Cooksville. The bill itself is very short. It would amend several subsections of section 149.1 of the Income Tax Act.
These amendments would enable the minister to revoke the registration of a charitable organization, public foundation or private foundation if any of its employees receive compensation in excess of $250,000. Bill C-470 clarifies that compensation includes not only salaries, but also “wages, commissions, bonuses, fees and honoraria, plus the value of taxable and non-taxable benefits”.
Lastly, Bill C-470 enables the minister to make public the names and salaries of the five highest-paid employees in each organization registered as a charity, as part of the annual listing of charities in accordance with section 149.1 of the Income Tax Act.
I would now like to describe the circumstances that led to this bill. On October 1, 2009, the SickKids Foundation made headlines when it was reported that its president collected a severance package valued at $2.7 million. A debate ensued on the huge salaries paid to charity executives, what constitutes fair compensation, and whether these salaries are in line with such organizations' missions.
In Quebec, a series of articles was published in les affaires in 2008 calling into question the salaries of top executives at a number of charities. The title of the series was “Philanthropy: worthy causes, whopping salaries”. Naturally, the articles made a lot of people skeptical about how donations to these organizations are being used and may have a negative effect on future fundraising efforts for charities as a whole.
The author of these articles explained how surprised the average Quebecker was to learn that such a significant portion of donations and other amounts received by charitable organizations is spent on salaries, including those of the directors of these organizations. According to the figures declared to Revenue Canada in 2007, 55% of the revenues at Moisson Montréal was spent on salaries, 44% at Mira Foundation, 38% at Fondation québécoise du cancer, 35% at Sun Youth Organization, 31% at Leucan and 60% at Le Bon Dieu dans la rue.
This was also surprising to experts in the field. For example, the CEO of Bolduc, Nolet, Primeau & Associates, a philanthropic management company, stated that when salaries are as high as 30% or 40% of all revenues, there is a problem.
According to these articles, the average salary of directors of charitable organizations in Quebec was $125,000. These high salaries surprised not only the public, but also the experts, who thought they were much too high. Even more disturbing than the high salaries was the silence or reluctance of some major organizations to reveal the salaries of their directors.
This made the public even more doubtful about the legitimacy of these salaries. There is a lack of real safeguards, and there have been concerns that these salaries could get out of control and end up comparable to the salaries of American charitable organizations, which had an average salary of $410,000 in 2007. These salaries have been skyrocketing in recent years. In Canada, they increased by 17% last year alone, and there was a 44% increase between 1999 and 2008, according to the annual survey of benefits and compensation published by the Canadian Society of Association Executives.
However, the Bloc Québécois knows how essential it is for charities to be able to continue hiring qualified managers.
Bill C-470 would require that the names of the five highest-paid employees in each charity be published. The Bloc Québécois understands the underlying principle of transparency in this initiative, but it is worried about the privacy of these organizations' administrators. Perhaps the requirement of publishing these names should be removed from the bill.
Quebec charities with executives who earn an average of $125,000 a year will have some room to manoeuvre when it comes to salary increases. By respecting a $250,000 ceiling, these organizations will be able to recruit and retain qualified applicants.
But what about the salaries of executives in larger Canadian charities? Numerous factors need to be taken into consideration: the size of the organization in terms of its revenue, expenses and staff; the complexity of the regulatory environment in which the organization works; and the number of departments and government organizations it deals with.
Of course, these factors affect each organization differently. We cannot determine a realistic salary ceiling without considering these factors and taking into account the changing needs of the organizations as well as the domestic and international market.
The heads of several Canadian charities are already being paid over $300,000, which seems reasonable, considering the size of the organizations they manage.
Also, the number of Canadian charities is quite remarkable: 161,000 in all. In Laval alone, where I am from, there are 383 registered charities, including childcare centres, community centres, volunteer associations, regional recycling depots, private schools, the Laval symphony orchestra and the Laval health and social services centre, a Government of Quebec organization. All of those organizations are registered under the Income Tax Act.
So it would be very difficult to establish a salary cap for such a diverse group of charities and organizations whose volunteer elements are not necessarily obvious.
Given that the Quebec and provincial governments have full jurisdiction over the charitable sector, we must ensure that Bill C-470, in its current form, does not infringe on Quebec's areas of jurisdiction.
Furthermore, given that any charitable organization that wishes to register in Quebec must first be registered with the CRA, we must ensure that Bill C-470 fits in with Revenu Québec's provisions in that regard.
In any case, the Bloc Québécois is in favour of the principle of Bill C-470, which is why we will support it at second reading, so we may examine it in committee.
The Bloc Québécois recognizes the importance of charitable organizations in Quebec society. In order for these organizations to be able to pursue their charitable missions, it is important to maintain their credibility and the public's trust in them.
Nevertheless, the bill's impact on all charities must be thoroughly reviewed in order to ensure that these organizations can continue recruiting qualified staff despite the limitations this bill would impose.