Bill C-377 (Historical)

An Act to amend the Income Tax Act (requirements for labour organizations)

The House proceeded to the consideration of Bill C-377, An Act to amend the Income Tax Act (requirements for labour organizations), as reported (without amendment) from the committee.

Speaker's Ruling

[The Acting Speaker, Barry Devolin]

There are five motions standing on the notice paper for the report stage of the member for South Surrey—White Rock—Cloverdale's Bill C-377, An Act to amend the Income Tax Act (requirements for labour organizations).

While it is not usual for the Chair to provide reasons for the selection of report stage motions, in this case it has been decided to do so given that the Speaker has received written submissions from the hon. members for South Surrey—White Rock—Cloverdale and Cape Breton—Canso, outlining exceptional circumstances surrounding the committee consideration of the bill.

As members know, consistent with the note to Standing Order 76.1(5), the Chair would not normally select motions that could have been presented in committee.

In the present case, however, there appears to be extenuating circumstances. The hon. members who have submitted motions at report stage were in attendance at the meeting scheduled for the clause-by-clause consideration of the bill by the Standing Committee on Finance. In addition, they had both submitted motions in advance of this meeting and these had been circulated to all members of the committee. At first glance, it would therefore appear that the amendments submitted by these members could have been proposed during the committee consideration of the bill.

In his submission, the member for South Surrey—White Rock—Cloverdale explained the efforts that were made to ensure that the committee would actually begin the clause-by-clause study of the bill as scheduled in order to complete consideration of the bill within the prescribed deadlines attached to it. He reported that these efforts were unsuccessful and, as a result, there was no opportunity to propose amendments in committee.

The Chair has been met with this kind of circumstance before. On September 20, 2010, in the Debates on page 4,069, Speaker Milliken ruled on a case where the member for Scarborough—Guildwood faced a similar situation in relation to his Bill C-300, an act respecting corporate accountability for the activities of mining, oil or gas in developing countries. In that case, the Speaker selected report stage motions for debate because it had been established that the member had made clear attempts to have the clause-by-clause study take place so that amendments could be considered by the committee.

Similarly, in the case before us today, the Chair has carefully reviewed the sequence of events as well as the written submissions from the members for South Surrey—White Rock—Cloverdale and Cape Breton—Canso and is satisfied that these motions could not be presented during the committee consideration of the bill.

Accordingly, Motions Nos. 1 to 5 have been selected for debate at report stage. They will be grouped for debate and voted upon according to the voting patterns available at the table.

I shall now propose Motions Nos. 1 to 5 to the House.

Motions in Amendment

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

moved:

Motion No. 1

That Bill C-377, in Clause 1, be amended by replacing line 20 on page 1 with the following:

“labour organization is a signatory and also includes activities associated with advice, commentary or advocacy provided by an employer organization in respect of labour relations activities, collective bargaining, employment standards, occupational health and safety, the regulation of trades, apprenticeship, the organization of work or any other workplace matter.”

Motion No. 2

That Bill C-377, in Clause 1, be amended

(a) by replacing line 8 on page 1 with the following:

““labour organization”

includes (a) a labour society

(b) by replacing line 14 on page 1 with the following:

“committee or joint board of such organizations; and

(b) an employer organization, whether or not it has responsibilities related to collective bargaining, such as a federation of employers, a contractors’ organization, a group that provides benefits to the employees of a member employer, a research agency involved in any type of research related to labour relations activities and, without limiting the generality of the foregoing, a corporate vehicle such as a society, corporation, foundation, joint council or board.”

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

moved:

Motion No. 3

That Bill C-377, in Clause 1, be amended by:

(a) replacing lines 1 to 7 on page 2 with the following:

“(2) Every labour organization and every labour trust shall, by way of electronic filing (as defined in subsection 150.1(1)) and within six months from the end of each fiscal period, file with the Minister an information return for the year, in prescribed form and containing prescribed information.

(3) The information return referred to”

(b) replacing lines 26 to 31 on page 2 with the following:

“assets—with all transactions and all disbursements, the cumulative value of which in respect of a particular payer or payee for the period is greater than $5,000, shown as separate entries along with the name of the payer and payee and setting out for each of those transactions and disbursements its purpose and description and the specific amount that has been paid or received, or that is to be paid or received, and including”

(c) replacing lines 33 to 35 on page 2 with the following:

“(ii) a statement of loans exceeding $250 receivable from officers, employees, members or businesses,”

(d) replacing line 4 on page 3 with the following:

“to officers, directors and trustees, to employees with compensation over $100,000 and to persons in positions of authority who would reasonably be expected to have, in the ordinary course, access to material information about the business, operations, assets or revenue of the labour organization or labour trust, including”

(e) replacing lines 11 to 14 on page 3 with the following:

“consideration provided,

(vii.1) a statement with a reasonable estimate of the percentage of time dedicated by persons referred to in subparagraph (vii) to each of political activities, lobbying activities and other non-labour relations activities,

(viii) a statement with the aggregate amount of disbursements to”

(f) replacing lines 22 to 25 on page 3 with the following:

“provided,

“(viii.1) a statement with a reasonable estimate of the percentage of time dedicated by persons referred to in subparagraph (viii) to each of political activities, lobbying activities and other non-labour relations activities,

(ix) a statement with the aggregate amount of disbursements on”

(g) replacing lines 33 to 40 on page 3 with the following:

“(xiii) a statement with the aggregate amount of disbursements on administration,

(xiv) a statement with the aggregate amount of disbursements on general overhead,

(xv) a statement with the aggregate amount of disbursements on organizing activities,

(xvi) statement with the aggregate amount of disbursements on collective bargaining activities,”

(h) replacing lines 1 and 2 on page 4 with the following:

“(xix) a statement with the aggregate amount of disbursements on legal activities, excluding information protected by solicitor-client privilege,

(xix.1) a statement of disbursements (other than disbursements included in a statement referred to in any of subparagraphs (iv), (vii), (viii) and (ix) to (xix)) on all activities other than those that are primarily carried on for members of the labour organization or labour trust, excluding information protected by solicitor-client privilege, and”

(i) replacing lines 4 to 13 on page 4 with the following:

“(c) a statement for the fiscal period listing the sales of investments and fixed assets to, and the purchases of investments and fixed assets from, non-arm’s length parties, including for each property a description of the property and its cost, book value and sale price;

(d) a statement for the fiscal period listing all other transactions with non-arm’s length parties; and

(e) in the case of a labour organization or”

(j) replacing line 29 on page 4 with the following:

“contained in the information return”

(k) replacing lines 33 to 35 on page 4 with the following:

“Internet site in a searchable format.

(5) For greater certainty, a disbursement referred to in any of subparagraphs (3)(b)(viii) to (xx) includes a disbursement made through a third party or contractor.

(6) Subsection (2) does not apply to

(a) a labour-sponsored venture capital corporation; and

(b) a labour trust the activities and operations of which are limited exclusively to the administration, management or investments of a deferred profit sharing plan, an employee life and health trust, a group sickness or accident insurance plan, a group term life insurance policy, a private health services plan, a registered pension plan or a supplementary unemployment benefit plan.

(7) Subsection (3) does not require the reporting of

(a) information, regarding disbursements and transactions of, or the value of investments held by, a labour trust (other than a trust described in paragraph (6)(b)), that is limited exclusively to the direct expenditures or transactions by the labour trust in respect of a plan, trust or policy described in paragraph (6)(b);

(b) the address of a person in respect of whom paragraph (3)(b) applies; or

(c) the name of a payer or payee in respect of a statement referred to in any of subparagraphs (3)(b)(i), (v), (ix), (xiii) to (xvi) and (xix).”

Motion No. 4

That Bill C-377, in Clause 2, be amended by replacing line 5 on page 5 with the following:

“comply with that section, to a maximum of $25,000.”

Motion No. 5

That Bill C-377, in Clause 3, be amended by replacing lines 6 to 8 on page 5 with the following:

“3. This Act applies in respect of fiscal periods that begin after the day that is six months after the day on which this Act is assented to.”

[Irwin Cotler, Liberal, Mount Royal, QC]

Mr. Speaker, I rise on a point of order. I seek the consent of the House for the following motion, which is particularly timely: That, in the opinion of the House, the government should designate the December 10 each year as national speak no evil day, where parliamentarians and citizens are called upon to partake in a day for the promotion of mutual respect and public civility, deploring (a) the increasing incidents and intensity of assault of an abusive speech in parliamentary discourse and debate and (b) the decline in civility and the corruption of public discourse.

[The Acting Speaker, Barry Devolin]

Does the hon. member for Mount Royal have the unanimous consent of the House to move the motion?

[Some hon. members]

Agreed.

No.

[Paul Calandra, Conservative, Oak Ridges—Markham, ON]

Mr. Speaker, I rise on a point of order. I understand the bells had started ringing earlier and we did not actually proceed to a vote. Could you explain why we did not proceed to a vote after the bells?

[The Acting Speaker, Barry Devolin]

The hon. parliamentary secretary asked why the vote was suspended at 1:30 p.m. It was because the time for government orders had expired and moving to adjourn the debate had become redundant at that point.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Mr. Speaker, I am not sure I heard you clearly. Did government orders terminate at the regular time?

[The Acting Speaker, Barry Devolin]

Government orders expired at 1:30 p.m., which is the regular time on a Friday.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Mr. Speaker, it is a pleasure to rise today to address report stage of my private member's Bill C-377 and the amendments I tabled to improve the bill.

I want to thank you for allowing my amendments to stand. It was disappointing to see the shameful tactics of the NDP members at the finance committee attempting to shut down debate and prevent these amendments from coming forward. This bill reflects the transparency that 83% of Canadians say they want to see from labour organizations. Nevertheless, the parliamentary process is robust and despite the NDP's efforts to prevent improvements to Bill C-377 for the benefit of labour organizations and all Canadians, the amendments I proposed are moving forward again.

There are a number of benefits to my amendments, and before I mention each of the individual changes in the bill, I will highlight a few major areas of improvement in particular.

First, there are several amendments that address the issue of privacy. Over the course of the last year I heard from a number of groups and individuals concerned about how various aspects of the bill might affect them. In particular, my amendments eliminate any uncertainty about reporting requirements for pension plans, health benefit plans and other regulated plans. They will not be required to report under Bill C-377 and neither will benefit payments to individuals from such registered plans. Let me be clear that it was never my intent that registered pension plans or health insurance plans report, or that the pension or health benefit payments that workers or their families receive be published. Regardless, the amendments before the House offer greater clarity that the regulated plans listed in the amendment will not report, and neither will payments from those plans to individuals be reportable under Bill C-377.

I have also removed home addresses from the reporting requirements. This change was especially important to those who serve in labour organizations, particularly for the police. I appreciate the input I received from the Canadian Police Association on the importance of this change.

Additionally, union employees earning less than $100,000 annually will not be identified unless they are in a position of authority. The $100,000 reporting requirement reflects similar legislation that has long existed in Canada, such as Ontario's sunshine legislation for the public service.

The second major area of change is that of cost savings to government. The opposition has been making much of the Canada Revenue Agency's report to the finance committee estimating the costs of implementing Bill C-377. Of course, those cost estimates were based on an unamended Bill C-377.

I have determined that significant cost savings will be achieved by the removal of the requirement that searches of union disclosure data be subject to cross-referencing, and by the requirement that all filings be electronic, therefore eliminating paper filings. Apparently cross-referencing is a feature that can substantially increase the cost of developing databases. While some government websites certainly offer this feature and it might become standard on such sites in years to come, I am not interested in driving up costs for the CRA just to have this feature at this time. Of course, requiring paperless filings can easily be seen as a way of ensuring savings. There will be no need for clerical help to transcribe filings into a usable electronic format and the CRA can take the filing data and post it on its website easily.

These two changes will reduce the CRA's costs substantially. Indeed, the CRA has confirmed that the estimated start-up costs of implementing Bill C-377 with my amendments will be less than one-quarter of what they would have been, and the ongoing costs will be less than half of what it previously estimated.

A third area of change that my amendments would foster is in what will be reported. There are two significant changes here. The first is that less reporting will be required of unions' core labour relations activities. Instead of providing details of spending over $5,000 on such activities as organizing or collective bargaining, an aggregate figure will only need to be reported. This reduction in the level of reporting detail required should lower the cost to labour organizations of complying with Bill C-377.

Second, for transactions where there is a potential for a conflict of interest, a so-called related party transaction, there will be full reporting on the details of those transactions. An example of a related party transaction might be when a labour organization buys a parcel of land from one of its directors. Bill C-377 does not comment on the appropriateness of such a transaction. It merely requires that it be reported. I believe everyone will agree that full transparency is called for when it comes to related party transactions.

I would like to address a few issues that have been raised by critics of the bill during its committee consideration and elsewhere.

First, critics have asked why the general public should be able to see the financials of unions they are not members of or contributing dues to. As we know, labour organizations operate tax free and their members receive full income tax deductibility for their dues and payments and receive their strike pay tax free. The deductibility of dues alone costs the federal treasury in the range of a half a billion dollars a year. I believe there is a genuine public purpose served by requiring financial transparency in all institutions that receive a substantial public benefit. It exists in government, crown corporations, charities and most recently on native reserves. Now we are extending transparency to another set of institutions that enjoy public benefits, that being labour organizations.

Second, critics have said that a $1,000 a day fine seems designed to punish labour organizations. Compliance with Bill C-377 will not be an onerous burden, but there has to be a deterrent for non-compliance, as the official opposition already implicitly recognizes. In the present Parliament, Bill C-205, in the name of the NDP MP for Hamilton Mountain, seeks to impose a fine of $1,000 per day for non-compliance with the new section of the Canada Labour Code. This is the precise amount of the fine in my bill. The NDP cannot have it both ways.

Third, critics have suggested that other than tax-free status, labour organizations do not actually receive any special subsidies or public dollars. Rather it is their members who do. While it is correct that many of the benefits accorded to labour organizations under the Income Tax Act, such as the deductibility of dues, are indirect rather than direct benefits, the effect is still the same. The benefits were created to support and maintain labour organizations.

The same is true of charities. Charities also do not receive public dollars or special subsidies. Instead, a direct tax benefit is given to donors. That benefit was clearly created for the purpose of supporting and maintaining charities. Just as it is legitimate to ask charities to publicly disclose how they spend the money that is ultimately derived from this public benefit, it is just as legitimate to ask labour organizations to do the same.

Fourth, a few have suggested that Bill C-377 would place unions at a disadvantage in labour negotiations, given that management would know details about the union's finances and its ability to sustain a strike. However, it is obvious that the willingness of workers to withdraw their labour in a bargaining dispute is based on far more important considerations than simply the amount of cash in the strike pay fund. The fact is, American and British unions, and for that matter a good number of Canadian unions which are already required to report in the U.S., have lived with financial transparency for a long time and it does not appear to have affected their ability to bargain effectively.

Another criticism sometimes levelled against Bill C-377 is that the list of financial items would be larger than required of charities. It is true that the list of statements that they would file is longer, but it simply recognizes the fact that labour organizations are more complex and administer a wide range of funds for activities, such as training, education and so on.

Finally, some critics have said that it is unconstitutional. They say that the bill nominally amends the Income Tax Act, but its real purpose is to regulate labour organizations, which is sometimes a provincial matter. That is simply inaccurate. The bill does not regulate labour organizations and does not tell them how to spend their money. In requiring labour organizations to file a report, my bill does not even require an audit. The bill would amend a federal statute, namely the Income Tax Act. The bill is only concerned with matters that already fall under the Income Tax Act that have long been constitutional. I would refer critics to the existing sections of the Income Tax Act and to the fact that charities have done so for 35 years and no one doubts that it is constitutional.

I hope all members will consider how the amendments I have put forward will improve Bill C-377 and support these amendments when the bill comes up for a vote.

[The Acting Speaker, Barry Devolin]

Resuming debate.

In order to participate, members must be sitting in their own seats. Is the hon. member for York Centre rising on debate?

The hon. member for York Centre.

[Mark Adler, Conservative, York Centre, ON]

Mr. Speaker, I appreciate the opportunity to speak in favour of today's important pro-worker legislation.

[The Acting Speaker, Barry Devolin]

There is a point of order.

The hon. member for Ottawa Centre.