Bill C-377 (Historical)

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

This enactment amends the Income Tax Act to require that labour organizations provide financial information to the Minister for public disclosure.

[Aaron Wudrick]

I would say on Bill 377, and the issue which seems to centre around the granularity and detail of disclosure, could we not simply move toward a level that would put people at ease in terms of the information not being so commercially sensitive?

[John Mortimer]

Bill 377 was going to bring that all out into the open. If you look at the SR and ED interpretation bulletins and the case law of the CRA, what you see is that the time that people spent was assessed by the CRA in terms of whether or not it complied with that part of the tax act.

When people leave their day job where they should be pursuing grievances and bargaining, and they go out and they work on a campaign, or they go out and do something that is unrelated to that employee's workplace, that would not qualify under the Income Tax Act of Canada as a tax deductible due for the paying of the salary of that person.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

You suggested that the transparency brought by Bill C-377 would act as a deterrent to unlawful activities. What do you base that assumption on?

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

What I would say in response to the testimony I've heard is that it went above and beyond that. For example, when you look at what charities are required to file so they can account, as you said previously, the document is probably about half of that, from what I've seen, for a regular charity. When I saw the document that was a sample of what Bill C-377 requires, it was ten times this length. The legislation clearly goes above and beyond what is generally accepted.

My next question—

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Okay, so you like unions.

Mr. Wudrick, with respect to the filing of the compilation—the requirement under Bill C-377—a couple of weeks ago we had Professor John Logan of San Francisco State University. He talked about the amount of detail that went into the filing under Bill C-377, or of a report like it. We previously had a thick document that showed the current requirements under Bill C-377 for unions to file. His point was that staff were spending more time compiling the information than they were doing their duties.

Do you have any comments with respect to the requirements, which go above and beyond anything I've seen under Bill C-377?

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

Yes, you encourage that. Okay.

Mr. Mortimer, I'd like to ask you a question, and in the interests of time, could you just answer yes or no to this one, because I have a couple more that follow.

Do you want the government or private members to introduce legislation similar to Bill C-377 for organizations like yours and the ones you mentioned as being on your board—Merit, CFIB, Conseil du patronat du Québec, Retail Council of Canada, and the Canadian Restaurant & Foodservices Association?

Yes or no, would you like to have similar legislation to Bill C-377 implemented for organizations such as yours?

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

So, in the case of groups such as Merit, CFIB, and LabourWatch, which are receiving a tax benefit that is comparable, you would say that you would support their having the same requirements as were required under Bill C-377?

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

My first few questions are for Mr. Wudrick.

Many supporters of Bill C-377 are employer groups, such as Merit, CFIB, and LabourWatch. They are tax-exempt, non-profit organizations that are funded by members' dues that are tax-deductible, costing the taxpayers millions of dollars per year in lost tax revenues. Merit, which is viewed as one of the chief architects behind the bill, had VIP access to the previous PMO and ministers' offices, influencing the policy on Bill C-377.

Do you believe these organizations should have to publicly disclose their financials in a similar way to what is required under Bill C-377?

[Sheri Benson, NDP, Saskatoon West, SK]

I'm sorry. Just let me clarify.

I'm talking about employers, not unions. I'm talking about private industry; that because of their participation in training funds, in trusts, in pensions, in benefits, such information would be disclosed to their competitors as a result of the bill that is in front of us that we're trying to repeal, Bill C-377.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Thank you to the presenters. This is certainly interesting discussion.

Mr. Mortimer, former senator Hugh Segal says that Bill C-377 was an expression of contempt for the working men and women in trade unions. What are your comments on that?

[John Mortimer]

It was both French unions and the government that came together to ensure disclosure. I would draw parallels back to what happened in America when you essentially had a left of centre party, the Democrats, who backed what then senator John F. Kennedy did, because, the equivalent of the day to Mr. Yussuff, the head of the American Federation of Labor, George Meany, advocated the goldfish bowl theory, which was that unions would be better in every respect if the light of day were shed on their activities.

There was a certain amount of support in that period of time in America amongst the most prominent union leaders for what John F. Kennedy did. That has not been here. We have learned from the American government website about illegal activities of Canada's unions involving other political parties in this country because we were able to read in there about donations they made to political parties. For example, when UFCW 1518 in Saskatchewan gave money to the New Democratic Party.

I think it's tragic what's happening here. The current Prime Minister, as a member of Parliament and as a party leader, spoke for pay at union executive meetings across this country before reaching the Prime Minister's Office. He made it clear to those union executives what he was going to do. Bill C-4 delivers.

During the hearings on Bill C-377 and Bill C-525, there were plenty of submissions to read. When I was to appear here before, it was cancelled due to events in the House; there was no submission there other than mine.

I would ask the Minister of Labour, what consultation took place when you met shortly after you got your mandate letter with leaders in this country behind closed doors and told them in no uncertain terms that you would move one bill to take down Bill-525 and Bill-377, full stop, end of discussion? It was a very blunt meeting, I'm told, by people who attended it. This is not consultation. This is favours to Canada's union bosses plain and simple, and workers and taxpayers are the ones who lose.

[John Mortimer, President, Canadian LabourWatch Association]

Honourable members, please look at appendix A of our submission. The current web page of the largest Canadian local of the Labourers' International Union says this about union cards:

Don't sign anything! You do not have to sign anything. Don't be tricked into signing something “to get more information”.... It's just a sneaky way to get a...[card signed].

The horse's mouth speaketh the truth. Union organizers lie.

Employees might be told the card is just to get more information or just to get a vote, but in card check jurisdictions, unionization is the goal and the result of this trickery.

The Minister of Labour, union leaders, academics, and labour boards point to the low number of rulings about such union tactics. The three most relevant reasons are as follows.

For decades, labour boards have ruled that card-signing tactics are not the employer's business. In 2005 the Canadian board stated: “Any disquiet about undue influence or coercion into signing... should be brought to the Board's attention by the employees themselves.” Unions have plenty of talented professionals and outside labour lawyers, funded by their $4 billion to $5 billion in revenue, to challenge employers and competing unions, but with labour boards telling employers to sit down and shut up, it's simply not credible that employees have any practical ability to file charges against unions and miss work to show up and litigate them, let alone to afford a lawyer instead.

Sadly, labour board rulings allow unions to lie to unsuspecting workers. One board ruled that a fraud against an employee is not a fraud against the board and did nothing about it.

Then there is outright card fraud. We got a small peak at the underbelly of a union's tactics in British Columbia via the Purdys case, in which the union was caught, but only years later, for forging employee signatures onto cards.

Is there a political party in this country that has not experienced real problems with card-based membership drives ahead of nomination meetings? Does any of your parties call a membership card a vote? All unions that I know of run their internal affairs with votes and not with cards.

In 1977, Nova Scotia's workers became the first Canadians to get legislated access to a bulwark of workplace democracy, a statutorily guaranteed secret ballot vote, which this bill steals back from federally regulated Canadians.

Appendix C includes a table summarizing the key provisions of Canada's 11 private sector labour codes. Every year in the seven vote jurisdictions, in government-run elections, workers still have been unionized. Even in Nova Scotia, after 37 years of workplace democracy—news flash!—unions have not disappeared. Labour relations have not been set back to the age of the Flintstones there in comparison with card check jurisdictions.

Voting is criticized for reducing the rate of new unionizations. Of course it does so, because votes reflect what informed employees making a government-protected private choice actually want. Getting unionized by trickery, as the labourers' union points out to its members, in a situation in which workers have no real means of litigating and proving the outcome—that is going to be the federal reality for Canadians, if Bill C-4 is not amended or pulled back by the Trudeau government. Stealing the vote from the weakest party, the party that is not at the table with FETCO and the Canadian Labour Congress, and giving the card check back to Canada's executive suite of union leaders is simply wrong and undemocratic. As the Labourers Union rightly implies, a card is not a vote.

Shifting gears. it is very troubling that Bill C-4 is a single bill that also amends the Income Tax Act to take away financial disclosure. MP Hiebert modelled his Income Tax Act of Canada amendments on the American system, which some Canadian unions already comply with. That U.S. law started as the Kennedy-Ervin bill. Yes, none other than Democratic Senator John F. Kennedy and his brother Bobby led the charge at a Senate committee and as President Kennedy implemented the legislation he had championed in the Senate.

Our submission has extensive and accurate content on financial disclosure to factually correct the complete misrepresentations by numerous labour leaders about the state of union disclosure and privacy law in Canada.

Our submission includes proof that workers have had to fight unions over years in the legal system to get even minimal disclosure—proof that there is nothing for taxpayers and watchdogs to hold government of the day accountable to enforce the existing union dues tax deductibility provisions of the Income Tax Act. That is what Bill C-377 was set to finally enable for Canada's now even more-indebted taxpayers.

If you look at appendix E, you will see that across Canada's 11 provinces and three territories and the federal jurisdiction, there are some 32 labour codes—32. Only 10, less than one-third, have any provisions at all dealing with financial disclosure. Nine of those 10 only mandate disclosure to actual union members. Under nine of these codes, unionized employees, who must pay dues as a condition of employment or be fired from their jobs, are not entitled to a shred of financial disclosure at law. Only one of 32 labour codes covers those types of dues payers. There is nothing required under those 32 codes for taxpayers.

In our submission we have the actual wording that will show you how little those provisions actually provide.

Union leaders, and those aiding and abetting their huge campaign to hide from taxpayers and dues payers, have led you to believe that they all disclose, that they must disclose. One union leader wrote that labour boards keep financial statements on file, for the asking. Plain and simple: not one labour board collects and keeps them. That was another lie.

The CRA can go back seven years in our tax returns, but labour boards have repeatedly denied access beyond the most recent fiscal year when a union refused to expose, took union dues, and fought the workers at the labour board and won to keep the prior years secret.

Let's make this even more real. Appendix B in our submission is the cover page from a 2014 petition to a local of the PSAC from workers of the federal government looking for detailed disclosure. As of last week, since 2014, Robyn Bensonhas been silent.

The labour code of these employees is the Public Service Labour Relations Act of Canada. It is one of the 22 labour codes out of 32 that has not a single disclosure requirement for those workers to get access to what's going on at PSAC.

Under the 10, the mere 31% that have limited provisions, I have never read a labour board ruling that ordered any detail. Labour boards just order an income statement, maybe a balance sheet—two pieces of paper—for a $90 million union. That's not disclosure.

The most important topic, finally, that we address relates to the range of assertions that these Income Tax Act provisions had no Income Tax Act purpose. We respectfully disagree. Appendix I contains our very detailed analysis of the act, CRA interpretation bulletins, and Tax Court case law.

Two provisions of the Income Tax Act, paragraph 8(5)(c) and subsection 8(5), read like this: Dues are not deductible to the extent levied for any purpose not directly related to the ordinary operating expenses of the union.

We simply do not know, as taxpayers in this country, if it's $100 million being inappropriately spent, or $1 billion inappropriately spent.

Finally, Bill C-4 should be split in two. Respectfully, for this committee, I do not understand it, as a Canadian, to be constituted to serve Canadians as an Income Tax Act expert. The truth is that Bill C-4 is a form of omnibus legislation moving forward in a rush that reverses achievements of the last Parliament for taxpayers and workers as a political strategy to pay back the union executives who helped this government win its last election.

[Filomena Tassi, Liberal, Hamilton West—Ancaster—Dundas, ON]

FETCO said that even though they believed in the spirit of Bill C-525, they knew it was flawed because it was done through private members' business. Do you think that the code should be changed to address replacement workers using private members' legislation, like the legislation the Conservatives moved with Bill C-525 and Bill C-377?

[Michael Mazzuca]

Registered pension plans were exempt through some amendments, but they were one of the very few instances of an exemption. Other items, such as retirement compensation arrangements, training benefits—all of those—were not exempt.

The definition of a labour trust under Bill C-377 was broad enough to include any fund that had union members in it. That's a pretty broad definition. Union members participate in many funds, many of which are not even connected to a trade union, and all of those would have potentially been caught by Bill C-377.

[Michael Mazzuca]

It's not a likelihood, but I think a certainty. We know that it was already being challenged; I believe that was in Alberta. I think that if Bill C-4 were not moving forward, there would be a number of other challenges. A number of provinces had also let it be known that they would potentially challenge it as well. Those aspects of Bill C-377 would be dragged out through the courts for many years.