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.

[Dan Ruimy, Liberal, Pitt Meadows—Maple Ridge, BC]

I didn't get enough.

Well, thank you again.

I'm still stuck on this Charter of Rights thing and on constitutionality. We're in Canada, so I think it's appropriate.

Mr. Mazzuca, in the event that Bill C-4 were not being proposed, what do you think would be the likelihood of a constitutional challenge to Bill C-377?

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Can I then ask a follow up-question to that? I don't have much time; I'm sorry to interrupt.

We've heard comments from Mr. Mazzuca and you...I don't know whether you said to completely repeal the other bills or to support Bill C-4, but why not support a measure of accountability that might change Bill C-377 or Bill C-525 rather than discard them entirely? Why not at least support some amendments to the existing legislation to make it more workable?

If accountability is desired, as I'm sure we could agree, why not just amend the current legislation rather than throw it out in its entirety?

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

I just wanted to read a quote that speaks to some of the commentary by the panellists about the constitutionality of this particular Bill C-377 and Bill C-5 as well.

I was a member of Parliament when this was going through our caucus. Some weren't supportive of it; many were. I remember the proponent of Bill C-377 specifically coming and talking to us about what it would take for us to be more supportive of this particular legislation that he had moved, and amendments to it were allowed to proceed.

Understanding what the process was—and I saw it with my own two eyes—I saw how practical it really was. There really was a back and forth. I met with numerous union representatives in my office to talk about their concerns about the bill. I heard comments back that the amendments would address their concerns. Nothing was perfect; some were supportive of it. As a former union member myself, I was supportive of accountability for unions because I think it's necessary.

I just want to talk about the private members' bill process, the way it is. It goes through a process, I wouldn't necessarily say it's a strict process, but a process of constitutionality, and the bill essentially has to meet certain criteria before it's even allowed to come to the floor of the House. This bill passed that test and that particular vetting.

I'm going to also read a quote from retired Supreme Court Justice Michel Bastarache, who is a pretty good authority on Canadian law. It reads:

I conclude that, if Bill C-377 is enacted into law, it would likely be upheld by the courts as a valid enactment of Federal Parliament’s power over taxation under section 91(3) of the Constitution Act, 1867.… As long as the pith and substance or matter of Bill C-377 is related to taxation, the law is a valid enactment of Parliament’s powers.... Because Bill C-377 does not attempt to regulate the activities of labour organizations or determine how they spend their money, it is unlikely that a court would find that it limits freedom of association under section 2(d) of the Charter.

What are your thoughts about that quote, Mr. Mazzuca?

[Michael Mazzuca]

Well, we primarily felt that it was a violation of the freedom of association and freedom of expression because it required an inordinate amount of disclosure from unions regarding their political activity, which we've heard a fair bit about. Also, the unions operate in a bargaining situation, and if one side in the bargaining process has to disclose a lot more information than the other, it certainly puts one side at a disadvantage in that bargaining. We felt there was a violation of both freedom of association and freedom of expression that could only be justified under section 1 of the charter if there were a legitimate reason. Again, as you've heard from others, as well as me, if you looked at Bill C-377, it was not apparent what kind of justification there was for those violations.

[Michael Mazzuca]

I certainly can't speak to what their intentions were.

What I can say is that we made submissions to the House committee and appeared before the Senate twice. In fact, we gave very detailed submissions in opposition to the bill. We also stated that if the bill were to proceed, here was a list of the types of labour trusts that should be exempt to make sure that the ambit of the bill was curtailed. All I can say is that we made those submissions and they certainly were not heeded.

[Hassan Yussuff]

The previous government very much touted their desire to cut red tape and not to impose a cost on Canadians. It was a mystery to me why they would be tabling legislation that would require more red tape and thousands of pieces of paper to be filed by unions in complying with the law.

More importantly, of course, for the CRA to meet the requirements of the law and to provide the information publicly on the website would cost the government millions of dollars. I think you may remember that former finance minister Jim Flaherty came out and said it was going to cost the government millions of dollars, only for the government to get mad at him and him to revise his estimate and say that it would not be that much after all. We never did find out what the true cost would be of putting all of the requirements in Bill C-377 on a public website.

[Daniel Therrien]

I talked about them during my opening remarks.

Bill C-377 requires labour organizations to disclose information that is considered to be among the most sensitive—information on the political activities of union members. A person's political activities, including those of a union member, clearly constitutes very sensitive information. The reasons for disclosing such information publicly have to be compelling and the necessity to do so must be justified. In our view, the bills did not set out proper justification for requiring labour organizations and their executives to disclose their political activities or views. That is, by far, the most sensitive type of information.

The bill also required the disclosure of certain financial information, including wages and salaries, and contracts over a certain amount, as my colleague from the Canadian Bar Association pointed out earlier. The main issue was the requirement imposed on union executives to disclose their political activities.

[Yves Robillard, Liberal, Marc-Aurèle-Fortin, QC]

Are you, as the Privacy Commissioner of Canada, concerned by the fact that Bill C-377 requires labour organizations and labour trusts to disclose certain information to the Minister of National Revenue?

If so, would you mind describing those concerns for us?

[Daniel Therrien]

My role is to advise parliamentarians on the consequences that legislative measures can have on privacy. I do not have an opinion on the activities of labour organizations, specifically, but, like my predecessor, I have maintained all along that the provisions contained in Bill C-377 and its previous incarnations, went too far by imposing a public disclosure requirement. They were unreasonable and infringed on privacy rights.

[Yves Robillard, Liberal, Marc-Aurèle-Fortin, QC]

Mr. Therrien, I asked the Minister of Employment, Workforce Development and Labour this question last month. I asked her how the passage of Bill C-377 would hinder the privacy of unions and unionized employees. Allow me to explain.

Some groups, including the Canadian Labour Congress, the Barreau du Québec, and the Canadian Bar Association, were of the view that the disclosure requirements in Bill C-377 violated the Canadian Charter of Rights and Freedoms. They argued that the disclosure requirements hindered union activities and put the union at a disadvantage at the bargaining table, in relation to the employer, in contravention of the freedom of association guaranteed under section 2 of the charter.

Are you concerned that the reporting requirements could hinder the internal administration of powerful labour organizations or force unions to disclose information that could disadvantage them during collective bargaining?

[Yves Robillard, Liberal, Marc-Aurèle-Fortin, QC]

You have been on the job since 2014. Since then, have you gotten the sense that the various concerns over Bill C-525 and Bill C-377 were taken into account?

[Michael Mazzuca]

I can respond, first of all, to the public aspect.

It's true that the federal government and several provinces have disclosure of salary legislation, but Bill C-377 was the first instance of legislation requiring a private organization to disclose salaries. No other private industry is subject to that kind of disclosure.

With respect to the union dues and the union dues' paying members, again the Canada Labour Code and most provinces have labour legislation requiring disclosure of financial information by the union to its members. The CBA certainly supports transparency. We believe that the members are entitled to that type of transparency, but that type of legislation is already there. There was no necessity to insert another layer of more public disclosure on the public website through the Income Tax Act.

[Hassan Yussuff, President, Canadian Labour Congress]

Thank you for the opportunity to appear before you today.

The Canadian Labour Congress, of course, is the single largest democratic and popular organization in this country. It speaks on national issues on behalf of 3.3 million workers. It represents more than 50 national and international unions in Canada. The Canadian Labour Congress strongly, of course, supports Bill C-4, restoring balance, fairness, and stability to federal labour relations.

From the beginning, the CLC opposed Bill C-377 and Bill C-525 as flawed, ideologically motivated legislation. These private members' bills represented a fundamental and a dangerous attack on the rights and freedoms of working people in Canada to organize unions free from outside interference. These bills were developed without consultation with the labour movement. They threatened to polarize federal labour relations and fundamentally tip the balance between employers and unions.

Historically, changes to the federal labour relations regime have been incremental, based on careful study and research, and developed through extensive consultation with unions and employers. Bills C-377 and C-525 were the complete opposite. Bill C-377 was drafted and introduced without consultation with unions. The bill lacked any credible labour relations or public policy rationale. Bill C-377's purpose was to single out, interfere with, and weaken the unions.

No public company, registered charity, or non-profit organization has to disclose confidential or extremely detailed information, only unions. None of the organizations whose members can deduct professional fees, such as bar associations, medical associations, engineers and, of course accountants, were targeted, only unions.

Seven provinces and numerous constitutional experts warned that Bill C-377 interfered with provincial jurisdiction over labour relations. Experts in constitutional law pointed out that the bill violated the rights of workers under the Charter of Rights. Conservative senators warned of the serious risk to personal privacy and to thousands of individuals unintentionally put at risk by the bill, and so on.

Unions routinely issuing financial reports to their members in nearly all jurisdictions in Canada have laws entitling members to financial statements.

Bill C-377 would have cost taxpayers millions of dollars to spy on and/or punish unions. This is purely for the benefit of union-busting employers and the anti-union crusaders.

Bill C-377 was flawed as an offensive attack on unions and the constitutional rights of working people. We commend the new government in Canada for repealing it.

Bill C-525 was also drafted without consultation and without convincing justification. FETCO, the association of large employers under federal jurisdiction, did not claim there were problems with automatic card check certification. FETCO did not identify any problems with card check certification before or even during the debate on Bill C-525. Blaine Calkins, the sponsor of Bill C-525, justified the bill by referring to union intimidation in organizing drives and the mountain of complaints that end up at the labour relations board. In fact, most cases of intimidation and unfair labour practice during the certification process across Canada involve employers. Eliminating automatic card certification and imposing mandatory voting have nothing to do—

[Daniel Therrien, Privacy Commissioner of Canada, Office of the Privacy Commissioner of Canada]

Mr. Chair and committee members, thank you for inviting me to speak with you regarding Bill C-4.

In May 2015, I appeared before the Standing Senate Committee on Legal and Constitutional Affairs to comment on some of the legislative enactments of Bill C-377, which the bill before you now proposes to repeal. Namely, those provisions imposed certain public disclosure requirements upon unions under the Income Tax Act. Before that, my predecessor appeared before a House committee in 2012 and a Senate committee in 2013 on the same issue. As during my last appearance, I will keep my remarks at a fairly high level.

Firstly, as a matter of general government policy, I fully support efforts to encourage transparency and accountability, including for unions. These are fundamental organizational principles of good governance, and they underpin effective and robust democratic institutions. But transparency is not an end unto itself; it cannot be an absolute objective to the exclusion of other considerations such as privacy. Transparency efforts must be carefully balanced with the need to protect the personal information of individuals.

It was the aim of Bill C-377 to render operations of union organizations transparent and therefore more accountable. This was to be achieved by requiring publication of individual employee compensation over $100,000; details of all transactions and disbursements for which the cumulative value in respect of a particular payer or payee was greater than $5,000, including third parties; and the percentage of time spent by certain individuals on political activities and lobbying and non-union activities.

In my remarks before the Senate on the proposal, I expressed doubt that true accountability for union members required publication of such extensive personal information to the general public through the website of the Canada Revenue Agency. The vast majority of unions already have financial statements that are internally available to their members and in many cases publicly posted on their websites. However, these statements containing financial information are usually in aggregate form and seem to achieve their intended purpose without having to name specific individuals.

As I have emphasized in other venues, most recently before the House ethics committee, political activity can be and for many people is a very sensitive and personal matter. Publicly listing specific individuals along with their political and lobbying activities is, in my view, overreaching.

Likewise, publicly naming individual payers and payees, often third parties, associated with transactions involving cumulative value over $5000 seems disproportionately intrusive from a privacy perspective.

Finally, as for shining light on the compensation levels of a union's highest-paid officers, there are several ways this can be achieved in practice without having to legislatively require disclosure of specific salaries of named individuals. While several provinces require that detailed reports of a union's spending be made available upon request, these measures have stopped short of publishing the names and earnings of individuals. Similarly in France, for example, unions publish annual financial statements—that is, assets, liabilities, loans, etc.—but they contain no personal information.

In short, I am supportive of the legislation before you that will revoke these more problematic aspects.

I would be pleased to answer any questions you may have.

Thank you.

[Michael Mazzuca, Executive Member, National Pensions and Benefits Law Section, Canadian Bar Association]

Thank you.

Mr. Chair, vice-chairs, and honourable committee members, I'm pleased to be here today on behalf of the Canadian Bar Association.

The Canadian Bar Association is a national association representing approximately 36,000 members of the legal profession. Our primary objectives include improvements in the law and the administration of justice. It is through this lens that we have prepared our written submissions and appear here today.

Our written submission was prepared jointly by the privacy and access law section of the CBA, the constitutional and human rights law section, and the pension and benefits law section, which I am from.

Our written submissions and our comments today are focused solely on the clauses of Bill C-4 that repeal the former Bill C-377. Those are clauses 12 and 13 of Bill C-4.

The CBA has previously expressed a number of concerns with respect to Bill C-377, both in our written submissions and in appearances before the House of Commons finance committee, the Senate banking, trade, and commerce committee, and the Senate legal and constitutional affairs committee. I am a past chair of the pension and benefits law section, and I was the one who appeared on behalf of the Canadian Bar Association at each of those committee hearings.

As I've said, the CBA supports the provisions of Bill C-4 that repeal Bill C-377, which inserted into the Income Tax Act extensive reporting requirements for labour organizations and labour trusts. The CBA remains of the opinion that Bill C-377 was fundamentally flawed and it triggered serious concerns from a privacy, constitutional law, and pension law perspective.

I'll leave it to my colleagues to speak more at length about this, but from a privacy point of view, the disclosure of salaries and wages of employees and contractors of independently governed organizations went well beyond what previously existed, or what has previously existed, in Canadian law, and was inconsistent with the privacy protections embodied in numerous privacy policies and constitutional jurisprudence in Canada.

To the extent that Bill C-377 would have required particularized disclosure, it obliged disclosure of personal information that is normally considered amongst the most sensitive, such as financial information and information about political activities and political beliefs. In particular, from our legal profession's perspective, the CBA was concerned, as it was throughout the process with Bill C-377, that appropriate provisions were not made for information that's usually protected by solicitor-client privilege.

Solicitor-client privilege has been called a fundamental civil right, one which the Supreme Court of Canada has said must be protected by stringent norms in order that it remains as close to absolute as possible. There were minor exemptions for solicitor-client privilege in the final version of Bill C-377, but legal advice can be provided in a number of different transactions and contacts. The overriding concern the CBA had was that the bill in its entirety did not make provision for the protection of solicitor-client privilege.

The CBA believes Bill C-377 lacked an appropriate balance between any legitimate public goals and the respect for private interests protected by law.

From a constitutional law perspective, we believe that Bill C-377 was certainly open to challenge under both paragraph 2(b), freedom of expression, and paragraph 2(d), freedom of association, of the Charter of Rights and Freedoms. We know, in fact, that it already was subject to a legal challenge, I believe in Alberta.

In particular, the requirements that a labour organization file a statement detailing its disbursements for political activities, lobbying activities, organizing activities, and collective bargaining activities, we believe, could have been found to be unconstitutional, counter to the charter's protections of freedom of expression and freedom of association.

We also believe that section 149.01 of the Income Tax Act, which was inserted by Bill C-377, interfered with the internal administration and operations of a union, which the constitutionally protected freedom of association precludes unless the government interference qualifies as a reasonable limitation upon associational rights. In that regard, it was unclear to the Canadian Bar Association exactly what the justification was for these severe infringements.

In a recent case, the Supreme Court of Canada said that the charter protects a union's ability to communicate and persuade the public of its cause, and that impairing its ability to freely express itself as it sees appropriate would be an unjustified infringement on section 2(b) protected rights.

Just as the Supreme Court of Canada has affirmed that section 2(b) of the charter protects a union's freedom of expression, it must also protect its freedom not to express.

Let me conclude on the pension and benefits concerns. Our concerns stem from the fact that Bill C-377 was broadly drafted and applied to labour organizations and labour trusts. The definition of “labour trust” was so broad that it included any fund in which a union member was a beneficiary. As we know, a great variety of types of benefits may be offered to employees and union members, and the small list of exemptions contained in Bill C-377 was not sufficiently broad. The list of exempted plans in the bill failed to encompass things such as charities, non-profit organizations, RCAs or retirement compensation arrangements, education and training initiatives, and mixed-purpose benefit plans. A plan that provided death benefits, for example, would have to disclose information about individuals who receive such benefits.

As a result of these concerns, the CBA is fully in support of the provisions of Bill C-4 repealing those provisions of Bill C-377.

Thank you.