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.

Speaker's Ruling

[The Acting Speaker, Conservative, 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.

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.

Strengthening Military Justice in the Defence of Canada Act

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, historically in Roman and Greek times the Spartans had terrible disciplinary measures, which I will not go into, but they were pretty grotesque. There has always been severity in the kinds of punishment meted out in our military. In many cases that was used to drive people forward in battle, to ensure that they did their duty as seen fit. However, the reality is that we are not talking about people in battle. We are talking about people who, in their everyday duties as military personnel, come into conflict with the military's rules and regulations and find themselves before a tribunal without rights that are really essential to ensuring a balance.

Later today I will be making another speech on Bill C-377 and will talk about questioning authority. That is the one thing that the military does not wish a service member to do; the military sees that as almost an offence in itself.

We have to find a way to balance a genuine, and I stress the word “genuine”, democratic and open process that is accountable within the military to those people who administer the so-called justice. The reality is that it is important that we ensure balance in this.

Bill C-377—Income Tax Act—Speaker's Ruling

[The Speaker, Conservative, Andrew Scheer]

I am now prepared to rule on the point of order raised on November 22, 2012 by the hon. member for Rosemont—La Petite-Patrie regarding the need for a royal recommendation for Bill C-377, An Act to amend the Income Tax Act (requirements for labour organizations), standing in the name of the hon. member for South Surrey—White Rock—Cloverdale.

I would like to thank the member for Rosemont—La Petite-Patrie for having raised the matter; as well as the hon. Parliamentary Secretary to the Leader of the Government in the House of Commons; the hon. House leader of the official opposition; and the members for Saint-Lambert, Cape Breton—Canso and South Surrey—White Rock—Cloverdale for their interventions.

In raising this matter, the member for Rosemont—La Petite-Patrie explained that the provisions of clause 1 of the bill would result in expenditures of public funds in a manner and for purposes not currently authorized. Specifically, he claimed that a new entity within the Canada Revenue Agency (CRA) would have to be created to administer and enforce the provisions contained in the bill, and that there would be costs incurred in setting up a new computer system to meet the requirements of the legislation. These, he concluded, would constitute “new and distinct” costs, thereby creating a need for a royal recommendation.

Similarly, the member for Cape Breton—Canso argued that the bill envisioned a new function and purpose within the CRA and as such the terms and conditions of the royal recommendation that authorizes the agency's current spending would be altered. He also suggested that Bill C-377 would regulate the internal affairs of unions and the relationships with their members, thus giving the CRA a new labour relations function.

For his part, the Parliamentary Secretary to the Leader of the Government in the House of Commons rejected these arguments, claiming instead that the authority to spend for the purposes set out in the bill would fall under the general authority of existing broader provisions of the Income Tax Act, as well as the agency's general authorities under the Canada Revenue Agency Act. He illustrated this by referring to those portions of the Income Tax Act dealing with reporting requirements for charity organizations. He also stated that, should additional funds be required, the government would seek them from Parliament through an appropriation bill covering operating expenses.

The question before us is whether the implementation of Bill C-377 would constitute a new appropriation requiring a royal recommendation, or whether the costs would be administrative in nature and would fall under the ongoing mandate of the Canada Revenue Agency.

I would like to remind the House of the conditions under which a royal recommendation is required. As the member for Rosemont—La Petite-Patrie noted in his presentation, bills which authorize new charges for purposes not anticipated in the estimates require royal recommendations. House of Commons Procedure and Practice, Second Edition, at page 833 further states:

The charge imposed by the legislation must be “new and distinct”; in other words, not covered elsewhere by some more general authorization.

The Canada Revenue Agency already has the mandate to administer various tax and benefits regimes and to manage a broad range of other programs and activities. More specifically, section 5 of the Canada Revenue Agency Act mandates the agency to support the administration and enforcement of program legislation. Furthermore, in reviewing the documentation provided by the member for Saint-Lambert, which makes reference to specific cost information provided by the CRA in response to questions from the Standing Committee on Finance, the Chair notes the references made to section 220 of the Income Tax Act, which states:

(1) The Minister shall administer and enforce this Act and the Commissioner of Revenue may exercise all the powers and perform the duties of the Minister under this Act.

(2) Such officers, clerks and employees as are necessary to administer and enforce this Act shall be appointed or employed in the manner authorized by law.

In carefully reviewing this matter, it seems to the Chair that the provisions of the bill, namely the requirements for the agency to administer new filing requirements for labour organizations and making information available to the public, may result in an increased workload or operating costs but do not require spending for a new function per se. In other words, the agency, as part of its ongoing mandate, already administers filing requirements and makes information available to the public. The requirements contained in Bill C-377 can thus be said to fall within the existing spending authorization of the agency.

In a ruling given by Speaker Milliken on February 23, 2007, which can be found at page 7261 of Debates, he stated, in relation to the then Bill C-327, An Act to amend the Broadcasting Act (reduction of violence in television broadcasts), that:

Bill C-327 may or may not result in a greater workload for the CRTC, but the activities being proposed are within its mandate. If additional staff or resources are required to perform these activities then they would be brought forward in a separate appropriation bill for Parliament’s consideration.

It appears to the Chair that a similar situation would arise should Bill C-377 be enacted and, thus, that this particular ruling is directly relevant and applicable to the current circumstance.

A second ruling by Speaker Milliken, this one on December 3, 2010, Debates page 6803, in reference to then Bill C-568, An Act to amend the Statistics Act (mandatory long-form census), is also helpful. In that ruling it was apparent to the Speaker that the proposed legislation was not adding to or expanding upon the existing mandate of Statistics Canada and, thus, that the bill in question did not require a royal recommendation.

Accordingly, the Chair rules that Bill C-377 in its current form does not require a royal recommendation to proceed through the next stages of the legislative process.

I thank hon. members for their attention.

[Mike Sullivan, NDP, York South—Weston, ON]

Will that money be as available if Bill C-377 passes? Will there be as much?

Bill C-377—Income Tax Act

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

Mr. Speaker, further to my point of order on Wednesday regarding Bill C-377, I would like to include another document for consideration, in addition to the ones I mentioned before.

There is a letter from the building trades and construction trades. If I could include this and two other documents, I will forward this to your office.

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

Mr. Speaker, last week the member for Rosemont—La Petite-Patrie suggested in his point of order that my private member's bill, Bill C-377, requires a royal recommendation before it can proceed to a third reading vote. The basis for his point of order is that the bill would impose additional spending obligations on the Canada Revenue Agency in order for it to implement my bill's requirements that labour organizations disclose financial information to the agency.

O'Brien and Bosc, at page 833, note that there are two types of bills that require a royal recommendation. The first is an appropriation act, or supply bill, which involves the expenditure of funds from the consolidated revenue fund. The second is a bill that imposes new charges for purposes not anticipated in the estimates. Under this category of bill the charges imposed by legislation are “new and distinct” and are not covered elsewhere.

It is clear from an examination of my bill that Bill C-377 does not seek funds from the public purse, nor is the bill a taxation measure. Bill C-377 can be properly characterized as a bill that would require the Canada Revenue Agency to establish some administrative procedures for the receiving of financial disclosures from labour organizations and to make these materials available to the public.

The costs that the member for Rosemont—La Petite-Patrie quoted as an estimate from the Canada Revenue Agency will not be accurate, should the amendments that I will table today in the House be adopted. In particular, my amendments would remove the requirement for cross-referencing, which is apparently a significant cost when managing databases, and it will require that all filings be electronic. Electronic reporting means no paper and therefore no need to transcribe data manually, which should ensure minimum costs in collecting and posting data. It may be argued that at most, Bill C-337 imposes an administrative obligation of the kind that many non-spending or non-taxation bills would impose on government departments when Parliament wishes to regulate some aspect of economic or social activity.

Clearly, the Canada Revenue Agency already has the administrative apparatus to receive documents and make them available on the CRA website. The argument that there would be an additional cost burden on the department may be met by referring to Speaker Milliken's ruling of October, 2003 where he held:

It is important to remember, however, that the requirement for a royal recommendation relates to the expenditure of public funds and not simply to the fact that someone, somehow or other, may be required to make an expenditure as a result of a provision in the bill.

In this ruling, Speaker Milliken held that Bill S-7, the heritage lighthouse protection act, could conceivably require the expenditure of public funds to maintain a lighthouse, but only once it had been given a heritage designation. He ruled that no royal recommendation was required.

In commenting on Speaker Milliken's ruling of October 29, 2003, O'Brien and Bosc note, on page 834, that any additional expenditures that may be incurred by a department in ensuring that a bill's objects are carried out, fall within the department's operating costs, for which an appropriation would have been obtained in the usual course.

In another ruling on February 10, 1998, Speaker Parent considered a point of order as to whether Bill S-3, an act to amend the Pension Benefit Standards Act 1985 and the Office of the Superintendent of Financial Institutions Act, required a royal recommendation because it gave the Superintendent of Financial Institutions additional supervisory powers. While conceding that the enhanced supervisory powers of the superintendent would require additional expenditures by that office, Speaker Parent noted that there was no provision for spending in the bill. The Speaker went on to rule that should an allocation of money be required an appropriations bill would be brought. He said:

Should an increase in resources be necessary as a result of these new powers, the necessary allocation of money would have to be sought by means of an appropriation bill because I was unable to find any provision for money in Bill S-3.

The factual context of Speaker Parent's February 10, 1998 ruling is analogous to the factual context with respect to Bill C-377.

Through Bill C-377, the agency would be given new responsibilities to oversee financial disclosure from labour organizations, much like the Superintendent of Financial Institutions was given new supervisory powers. The bill that extended those powers was held not to require a royal recommendation, since the allocation of money to facilitate the increased responsibilities would be achieved through an appropriation bill should that be required.

The precedents are clear and they could not be any other way. If we consider for just a moment the consequences of ignoring these decisions by past Speakers, any private member's bill that could potentially lead to the need for the allocation of resources, which would be a long list of bills, would henceforth be challengeable as needing a royal recommendation. That would mean that much private members business could not go forward without the consent of the government. Such a scenario would dramatically impact the rights of members of Parliament to introduce and to have considered a wide range of legislation.

I am confident that upon reflection even the member opposite who raised this point of order does not want to see a situation whereby the government has a virtual veto over much of what happens in private members business.

Mr. Speaker, I look forward to your ruling.

[Tom Lukiwski, Conservative, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, I do appreciate the member's attempt at brevity but I must say that it reminded of that old classic movie, Airplane from 1980, penned by Jim Abrahams and David Zucker.

What I kept thinking of when I was listening to his brief presentation was those continuous scenes where Ted Striker, the ex-army pilot who was afraid to fly would continue to tell stories to the people in the seat next to him and they would end up attempting suicide. However, I do want to thank my friend for being at least a little more brief than the official opposition House leader. I will attempt to be even briefer than my friend from the Liberal Party.

I rise to respond to last Thursday's intervention by the hon. member for Rosemont—La Petite-Patrie and yesterday's intervention by the hon. member for Saint-Lambert concerning a royal recommendation for Bill C-377, An Act to amend the Income Tax Act (requirements for labour organizations).

Bill C-377 was introduced on December 5, 2011, by the member for South Surrey—White Rock—Cloverdale and has since been read the second time and referred to the Standing Committee on Finance. The bill would amend the Income Tax Act to require labour organizations to provide financial information for public disclosure.

I would note that this bill was not identified by the Speaker as an item of concern with respect to the financial prerogative of the Crown, nor has it been the subject of an intervention by a minister of the Crown or a parliamentary secretary on behalf of one.

The hon. member for Rosemont—La Petite-Patrie argued that the provisions of the bill requiring labour organizations to submit financial information and the requirement for the Canada Revenue Agency to publish the information on a website with search tools somehow represent new and distinct charges on the treasury which are not currently authorized.

The hon. member for Saint-Lambert then added the information provided to the finance committee by the Canada Revenue Agency which provided estimates on the expected incremental costs associated with implementation.

There are procedural authorities and precedents for cases where a new royal recommendation was not required for incremental modifications to expand the operation of provisions already authorized by a royal recommendation. The hon. member for Rosemont—La Petite-Patrie cited page 833 of the second edition of the House of Commons Procedure and Practice. The most relevant portion pertaining to amending bills, such as Bill C-377, is that a royal recommendation is required for:

...bills which authorize new charges for purposes not anticipated in the estimates. The charge imposed by the legislation must be “new and distinct”; in other words, not covered elsewhere by some more general authorization.

Section 220 of the Income Tax Act provides the minister with the authority to administer and enforce the provisions of the act. Indeed, this authority was cited in the same materials provided to the finance committee which the member for Saint-Lambert cited yesterday.

In particular, subsection 220(2) provides broadly and generally that:

Such officers, clerks and employees as are necessary to administer and enforce this Act shall be appointed or employed in the manner authorized by law.

Clearly, the authority to retain any necessary staff has already been addressed by Parliament.

It may also be useful to add here that subsection 5(1) of the Canada Revenue Agency Act provides that:

The Agency is responsible for

(a) supporting the administration and enforcement of the program legislation....

Program legislation is, in turn, defined in section 2 of that act as:

....any other Act of Parliament....

(a) that the Governor in Council or Parliament authorizes the Minister, the Agency, the Commissioner or an employee of the Agency to administer or enforce, including the....the Income Tax Act....

Indeed, this broad mandate already enjoyed by the Canada Revenue Agency is addressed in response to the Liberal question 1(a) in the finance committee materials the hon. member for Saint-Lambert cited, which asked how Bill C-377 aligns with the Canada Revenue Agency's mandate.

The agency replied:

A measure introduced by Parliament that is incorporated into the Income Tax Act and falls under the responsibility of the Minister of National Revenue will be administered by the CRA. Parliament determines if a measure will be incorporated into the Income Tax Act.

In other words, the Canada Revenue Agency has already been given a broad, sweeping mandate to administer and enforce federal taxation laws. Meanwhile, other existing provisions of the Income Tax Act allow the minister to require certain persons or entities to file information for the purposes of taxation.

Specifically, for example, subsection 149(14) dealing with qualified donors provides a requirement for public foundations to

—file with the Minister both an information return and a public information return for the year in prescribed form and containing prescribed information.

In other words, the act already requires information to be submitted to the minister in a prescribed form and containing prescribed information. Therefore, this does not constitute a new function, mandate or duty for the minister or the agency.

The hon. member for Rosemont—La Petite-Patrie also argued that making the information public represented a new and distinct activity that was not currently authorized.

First, the agency has a comprehensive website which publishes lots of information and materials, so that would not be a new responsibility for the agency.

As for making information public, I would note that the Income Tax Act provides provisions now to that effect. Subsection 149(15) relates to information that may be communicated in respect of charitable organizations. It states:

—the information contained in a public information return...shall be communicated or otherwise made available to the public by the Minister in such manner as the Minister deems appropriate...the Minister may make available to the public in any manner that the Minister considers appropriate...

In other words, the act provides the minister with the authority to publish in any manner the minister considers appropriate the content of a public information return. That other information would fall within an existing mandate and duty does not, I submit, require a royal recommendation.

Turning to some precedents, on February 10, 1998, at page 3647 of the Debates, Bill S-3, an act to amend the Pension Benefits Standards Act, 1985 and the Office of the Superintendent of Financial Institutions Act, was found not to require a royal recommendation. In his ruling, Mr. Speaker Parent said, in a case where powers were expanded yet no royal recommendation was needed, that:

It seems fairly evident that the powers of the superintendent would be extended by Bill S-3. It may well be that additional expenditures would be incurred because of those enhanced powers of the superintendent. Should an increase in resources be necessary as a result of these new powers, the necessary allocation of money would have to be sought by means of an appropriation bill because I was unable to find any provision for money in Bill S-3.

The hon. member for Rosemont—La Petite-Patrie made mention of the additional tasks which would fall to the employees of the agency as well as training which might be required for the new filings. Your immediate predecessor's ruling, Mr. Speaker, at page 7261 of the Debates for February 23, 2007 on Bill C-327, an act to amend the Broadcasting Act answers this point, states:

Bill C-327 may or may not result in a greater workload for the CRTC, but the activities being proposed are within its mandate. If additional staff or resources are required to perform these activities then they would be brought forward in a separate appropriation bill for Parliament’s consideration.

More recent, on October 26, 2010, Mr. Speaker Milliken ruled concerning the need for a royal recommendation for Bill C-300, an act respecting corporate accountability for the activities of mining, oil or gas in developing countries. The bill, among other things, required the Minister of Foreign Affairs to establish a process for the examination of complaints concerning possible contraventions of the guidelines. The Speaker ruled then:

—the Chair is of the view that the examination of such complaints is not a departure from or expansion of the current ministerial mandate under the Department of Foreign Affairs and International Trade Act...Bill C-300 may put forth more stringent requirements, but it does not expand the mandate per se.

It may be that a reorganization of resources or even additional funds would be required, however, it appears these would be operational in nature.

I submit that Bill C-377 is consistent with the precedents cited in that it does not authorize a new expenditure of public funds. Rather it deals with the operation of provisions already authorized by Parliament which were accompanied by a royal recommendation at the time these provisions were enacted.

The hon. member for Rosemont—La Petite-Patrie mentioned that there was nothing set out in the recently tabled supplementary estimates (B) for this fiscal year. The hon. member for Saint-Lambert also claimed that this was confirmed in the agency's answers to finance committee.

Let us be clear. The usual practice we can expect to see unfold would be that the agency would account for its operations under Bill C-377, should it become law, in its estimates after the bill becomes law. That is a common practice with respect to any proposed legislation that has not yet been enacted. The supplementary estimates argument advanced by those hon. members is really a red herring in this entire debate.

Should Bill C-377 become law, the authority to spend for the purposes set out in the bill will be under the general authority of existing broader provisions of the Income Tax Act as well as the agency's general authorities under the Canada Revenue Agency Act. Should additional funds be required, the government would seek them from Parliament as part of the supply cycle through an appropriations bill in the ordinary manner for operating expenses.

I respectively submit that Bill C-377 does not require a royal recommendation and is properly before the House.

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

Mr. Speaker, I am rising on a different point of order. I want to recognize and commend my colleague from Skeena—Bulkley Valley on a very well referenced and articulated point of order. I hope I can only match that. I assure the House I will surpass him on the aspect of brevity.

I rise on a point of order with respect to Bill C-377, an act to amend the income tax act (requirements for labour organizations). Although my colleagues from the NDP have also risen on this matter, I am not convinced the arguments they put forward have been complete in terms of substance. As such, I want to offer further points on this matter for your consideration, Mr. Speaker.

I submit that Bill C-377's provisions to provide for reporting and public disclosure of certain financial transactions and administrative practices of labour organizations envisages a new function and purpose within the Canada Revenue Agency, or CRA. As such, the terms and conditions of the royal recommendation that authorizes CRA's current spending are being altered so that a new and distinct authorization for spending is being permanently created, which will therefore require a royal recommendation.

Past Speakers have ruled that legislation imposing additional functions on bodies funded by public money, if the functions are substantially different from their existing functions, will require a royal recommendation.

I believe that Bill C-377 will require royal recommendation for two reasons. First, the bill creates a new purpose for CRA in terms of a public reporting function that has no obligatory ties to taxation under the Income Tax Act. The bill would follow up on this additional purpose by creating what the CRA characterizes as “a comprehensive system that includes electronic processing, validations, and automatic posting to the CRA Web site”.

The Income Tax Act is concerned with the taxation of individuals, organizations and businesses. Any reporting requirements imposed on individuals and organizations are directly tied to their tax obligation or the exemption of these obligations. For example, charities can only keep their tax exempt status and donors only receive a tax receipt if the charity meets reporting requirements.

The Canada Revenue Agency is responsible for applying and interpreting the Income Tax Act in this regard. The primary goal of the agency, as Canada's tax administrator, is to ensure that taxpayers comply with their tax obligations and that Canada's tax base is protected. I want to stress that again: tax obligation.

Bill C-377 is strictly a function of publicly reporting information on one specific group of individuals, in this case labour organizations and labour trusts, outside of any direct obligations that those organizations or their members must have under the Income Tax Act. Given that it would create an additional purpose and new program requirements that would amend the Income Tax Act and modify the purpose of the CRA, the result is a new expenditure. The bill should be accompanied by a royal recommendation.

Mr. Speaker, I want to draw your attention to a Speaker's ruling in the other place on February 27, 1991 on pages 2262 through 2264 of the Journals regarding Bill S-18, an act to further the aspirations of the aboriginal peoples of Canada. The Speaker found that provisions imposing additional functions on bodies funded by public money, if the functions are substantially different from their existing functions, require royal recommendation.

The member for South Surrey—White Rock—Cloverdale and the government will no doubt argue that because labour organizations receive a public benefit, as charities do, they should be required to report as charities do.

The simple rebuttal to this argument is the fact that the reporting requirement for charities is based on a tax obligation. A charity must publicly report information in order to keep the tax exempt status it receives and the preferential tax treatment its donors enjoy. This will simply not be the case with labour organizations under Bill C-377.

To further disprove this counter-argument, I think we need to look no further than the first incarnation of Bill C-377, which was Bill C-317. The bill tied the reporting function of labour organizations to the enjoyment of the tax exempt status offered to them in paragraph (k) of subsection 149(1) of the Income Tax Act. Labour organizations not in compliance with the financial disclosure requirements outlined in Bill C-317 would lose their tax exempt status. Bill C-317 also sought to effect the tax treatment of union members if their union did not comply with its requirements by not allowing union dues to be tax deductible.

In your ruling, Mr. Speaker, on Bill C-317, which was delivered on my birthday of November 4, 2011, and found on pages 2984 to 2986 of the Debates, you said that Bill C-317 had not respected the rules of the Standing Orders because to remove a tax exemption was in effect to raise taxes, which would require a ways and means motion, which the bill did not have.

Your ruling, Mr. Speaker, disallowed that and forced the member for South Surrey—White Rock—Cloverdale to remove the parts of the bill that tied the reporting requirements to the enjoyment of tax exempt status by labour organizations and tax deductibility of dues by their members. In doing so, there is no longer any direct tie or connection to taxation or benefits received by labour organizations or their members. Labour organizations or trusts who fail to comply with the requirements of Bill C-377 will not lose their tax exempt status and their members will not lose the tax deductibility of their dues.

Bill C-377 solely becomes a simple public reporting function, which is a new function of the Income Tax Act and a new purpose for the CRA in its capacity to administer the act. As such, it should require a royal recommendation.

The second issue I want to bring to your attention, Mr. Speaker, has to do with how Bill C-377 regulates the internal affairs of unions and their relationships with their members. In essence, this is a de facto labour relations function that is completely new for CRA and duplicates the function of the Canada Industrial Relations Board.

Bill C-377 is modelled on a United States reporting regulation for American unions that falls under the Labor-Management Reporting and Disclosure Act of 1959. This act legislates labour relations. It promotes labour union and labour management transparency through reporting and disclosure requirements for labour unions and their officials. This act is administered by the Office of Labor-Management Standards within the United States Department of Labor, not the Internal Revenue Service.

The reporting requirements in Bill C-377 were copied from the reporting requirements of the most detailed and onerous reporting form from the Office of Labor-Management Standards, Form LM-2. Specifically, the bill copies the revisions to the reporting regulations that were introduced on January 21, 2009, by the U.S. Department of Labor and later rescinded on October 13, 2009.

Mr. Speaker, I will provide you with a copy of the final rule for both actions, which was posted on the U.S. Federal Register, so you can see how this legislation is a copy of the U.S. labour relations regulations.

The Disclosure Act of 1959 requires the public disclosure of union financial reports. In fact, the public disclosure is through an online, searchable database known as the electronic labor organization reporting system, the same type of electronic system proposed by the bill.

Bill C-377 is, in effect, a replication of U.S. labor relations law and regulations, specifically the department of labor regulations for the labor-management reporting and disclosure act of 1959.

The Canada Labour Code currently includes a section that deals with union financial transparency and accountability. It requires unions to disclose financial statements to members on request, or to the Industrial Relations Board to enable members to view that information. Part of their function is to regulate labour organizations.

The finance committee received a number of submissions on this bill. One submission was from Le Syndicat de professionnelles et professionnels du gouvernement du Québec. It included a legal opinion that argued that the bill was concerning labour relations. Although the argument was for an entirely different matter, I believe the substance concerning labour relations was sound, and it would be of assistance to you, Mr. Speaker, in your decision.

The predominant purpose of this bill, as promoted by the member for South Surrey—White Rock—Cloverdale, is to increase the transparency and accountability of labour organizations. During second reading, the member stated:

With the passage of the bill, the public would be empowered to gauge the effectiveness, financial integrity and health of any labour union.

The bill's summary states:

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

The degree of detailed information this bill requires is far broader in scope than any other requirement on any other entity that is publicly disclosed by the government. This is clearly an attempt to monitor and regulate the activities of labour organizations. This is especially clear when the bill requires the detailed time and expenditures that labour organizations spend on non-labour relations activities, such as political activities and lobbying.

Mr. Speaker, I want to draw your attention to a previous Speaker's ruling on October 20, 2006, and found on page 4039 of the Debates regarding Bill C-286, An Act to amend the Witness Protection Program Act (protection of spouses whose life is in danger) The bill proposed to expand the witness protection program to include persons whose lives were in danger because of acts committed against them by their spouses. The Speaker explained that the bill proposed:

...a protection that does not currently exist under the witness protection program. In doing so, the bill proposes to carry out an entirely new function.

As a new function, such an activity is not covered by the terms of any existing appropriation. ... New functions or activities must be accompanied by a new royal recommendation.

The government and the member for South Surrey—White Rock—Cloverdale may argue that the function proposed by Bill C-377 is the same function the CRA performs with respect to Charities Directorate or other tax exempt organizations. Although it is true that the processes and infrastructure required may be similar, the function and purpose for those processes are very much different.

Mr. Speaker, I draw your attention to the Speaker's ruling on November 8, 2006, and found on pages 4905 and 4906 of the Debates regarding Bill C-279, An Act to amend the DNA Identification Act (establishment of indexes). I believe the particulars on this issue have a lot of similarities in the case at hand and would deny this counter-argument.

Bill C-279 would have created a new purpose for the DNA Identification Act and established new indices in the DNA data bank, similar in context to the new database that would be created under this bill for unions. The Speaker explained there was an addition of a new purpose to the DNA Identification Act which was to identify missing persons via their DNA profiles. Again, this is similar to Bill C-377 that wishes to impose reporting requirements on another tax exempt organization under section 114 of the Income Tax Act.

In that ruling, the Speaker stated, “Amending legislation that proposes a distinctly new purpose must be accompanied by a further royal recommendation”. The Speaker's ruling on Bill C-279 clearly shows that just because a process, in that case the collecting of the DNA, and the infrastructure needed, meaning a database, are the same as the current function of an act, it is still considered a new function and purpose that gives rise to the requirement of a royal recommendation.

Mr. Speaker, whether you look at the detailed requirements of the bill, its summary, the testimony of government witnesses who spoke about how this would regulate unions or just read the statements made by the member for South Surrey—White Rock—Cloverdale, clearly regulating labour relations is the dominant nature of this bill. No such labour relations function exists at the CRA currently. Therefore, this bill would create a new purpose, a new function and/or an activity at CRA that would require a royal recommendation.

Unlike its failed predecessor Bill C-317, the reporting requirements and the public disclosure imposed by Bill C-377 in no way is linked to the imposition or levitation of taxes, levies or tariffs. Instead, this bill seeks to use the powers of the Income Tax Act to solely provide public information that would constitute a new function or activity. In addition, the bill would clearly create a new labour relations function at the CRA that not only does not exist presently but duplicates this function that is already happening at the Canada Industrial Relations Board.

Because this bill would create a new function and purpose at the CRA, I respectfully submit that Bill C-377 should require a royal recommendation.

[Sadia Groguhé, NDP, Saint-Lambert, QC]

Mr. Speaker, I rise on a point of order with respect to Bill C-377, An Act to amend the Income Tax Act (requirements for labour organizations), introduced by the hon. member for South Surrey—White Rock—Cloverdale.

My hon. colleague from Rosemont—La Petite-Patrie has already risen in this House to bring to your attention the fact that this bill requires royal recommendation in order to pass. My colleague's arguments were all very clear and perfectly illustrated the NDP's concerns regarding the implications of this bill. I am raising this issue once again here today because some new information has become available to MPs, and I feel I must bring it to your attention as well.

Indeed, and as my colleague from Rosemont—La Petite-Patrie already mentioned, the Canada Revenue Agency received an order from the Standing Committee on Finance to answer some questions regarding new and distinct funds that will result from Bill C-377 if it is passed. Those answers were sent to the members of the Standing Committee on Finance yesterday. I will submit the document containing those answers following my speech.

First of all, the Canada Revenue Agency confirmed that the new and distinct funds that will result from Bill C-377 were not included in the most recent supplementary estimates, as is always the case with private members' business.

The Canada Revenue Agency also confirmed that this bill will result in expenditures that are not currently authorized by legislation. In response to the third question, the agency said that Bill C-377 amends the Income Tax Act to give the minister authority over these new expenditures.

My colleague from Rosemont—La Petite-Patrie also pointed out that clause 1(4) of the bill, which requires the minister to make the information collected available to the public, will also result in new expenditures. The Canada Revenue Agency confirmed this in the answers forwarded to us.

The answer we received today from the agency is that, “Changes will be made to the CRA website to fulfill the requirements of the bill.”

The agency even provided an estimate of the costs resulting from system changes. For the Canada Revenue Agency, the estimated incremental costs arising from the required system changes, including changes to the Canada Revenue Agency website, are $8.5 million for 70 full-time employees in the first two years and $1 million in subsequent years for nine full-time employees.

These costs represent new expenditures because the Canada Revenue Agency is not currently committed to disclosing the information, as required by the bill. The answers obtained also refute the argument of this bill's sponsor to the effect that the agency is already doing similar work as part of the charities program.

In fact, the agency confirmed that it is not currently committed to disclose such an exhaustive amount of information as required under Bill C-377. This is what the agency had to say in this regard:

The Charities Directorate does not provide partial information to the public. The directorate gathers only the minimum amount of transactional information from registered charities, and not all that information is disclosed.

I would like to close by sharing some information obtained from the agency that says a lot about the new and distinct costs associated with Bill C-377. As it is now worded, the bill requires the implementation of an entire system that includes electronic processing, validations and automatic posting to the Canada Revenue Agency's website. The estimated incremental cost for the Canada Revenue Agency is $10.6 million for the first two years, including 91 full-time employees, and $2.1 million for each consecutive year, including 21 full-time employees. These costs are attributable mainly to information cross-referencing requirements.

It is important to note that these are the estimated costs for 1,000 respondents, but Bill C-377 is written in such a way that it includes all labour organizations and trusts, which represents close to 25,000 tax filers. The costs incurred would therefore be 25 times higher than these estimates.

I believe that it is now clear that Bill C-377 requires a royal recommendation in order to be voted on at third reading since the exorbitant costs that would be incurred by cross-referencing the large amounts of information gathered by the Canada Revenue Agency are new and distinct.

In order to make it easier for you to examine this important issue, Mr. Speaker, I will make the answers obtained from the Canada Revenue Agency available to you. I would like to thank you for the attention you will give to this important matter.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

That is what Stephen Harper said in January 2011. So I find it hard to understand how a Conservative member can run completely counter to the vision and perspective stated by his own Prime Minister.

With regard to unnecessary costs, the players' association wrote as follows:

As members of the Committee are likely aware, today's low interest rates and fragile world economy have made managing a pension fund and ensuring that adequate benefits are delivered to members more difficult than ever before. Bill C-377 represents additional and unnecessary costs to these plans, and will make the provision of benefits all the more difficult to deliver. Furthermore, it will make the cost of setting up and managing a pension plan more onerous, and this will lead to less plans being instituted by private employers.

The amount of disclosure that is mandated by the Bill is very significant. The Fund has assets of approximately $53 million, and each year, the fund's investment managers enter into thousands of transactions in excess of $5,000. Requiring that each of these transactions be disclosed, along with the name and address of the payer and payee, the purpose of and description of the transaction and the amount that has been paid or received is completely inappropriate and will lead to significant cost. We can see no justification for providing this information to the Canadian public, and we certainly do not see how it relates to increasing the transparency and accountability of unions.

Pension plans require professionals such as investment managers, actuaries, accountants and lawyers in order to function. The nature of the disclosure that is required by Bill C-377 will make it more difficult for pension plans to attract and retain top professional advisors.

This is also a cost and it also has an impact on the pension plans of millions of workers. It will become more difficult to attract qualified people as a result of the obstacles and unnecessary and irritating forms that they are trying to put in place on the other side. I continue:

These individuals may be reticent to accept the position with a pension plan if they know that their fees will be disclosed, along with their name and address, to the entire population of Canada.

Furthermore, investment managers closely guard their investment choices, and will not want those choices to be made publicly available.

I have some very important evidence on this point that committee members should hear. I am going to share it with you soon.

The confidentiality of these choices is part of their competitive advantage. If the investment choices made by the fund's investment managers are not kept confidential and investments in excess of $5,000 must be published, it could negatively impact the performance of the Fund, as these decisions would be public and open to imitation by competitors and could be taken advantage of by counterparties to the transaction. No pension fund in Canada, including those for public servants, is subject to having its investment decisions published on a public website.

As regards the impact on pension fund managers, there is some very interesting information here from Mr. Anderson, who is President of the Multi-Employer Benefit Plan Council of Canada. He wrote a letter to the Hon. Jim Flaherty (Minister of Finance) about the bill before us today. That letter is in English, and I apologize in advance once again if I hurt anyone's ears. I am quoting Bill Anderson:

We are writing in regards to Bill C-377, a private member's bill concerning amendments to the Income Tax Act in regards to labour organizations.

Our organization, the Multi-Employer Benefit Plan Council of Canada (MEBCO), was established in 1992 as a not-for-profit, federal non-share capital corporation. MEBCO's mandate is to represent the interests of Canadian multi-employer pension and benefit plans with provincial and federal governments regarding proposed or existing legislation and other policies affecting such plans.

This is the heart of the matter.

MEBCO’s volunteer Board of Directors is responsible for identifying issues that impact upon multi-employer plans and developing strategies to address those issues. They are elected from all professions and disciplines involved in multi-employer plans, including union and employer trustees, professional third-party administrators, non-profit and in house administrators, actuaries, benefit consultants, lawyers and chartered accountants.

On October 3, 2011, Bill C-317, an earlier version of Bill C-377, was put before the House of Commons...

It changed to C-377, and, Mr. Anderson said,

Unfortunately, despite Mr. Hiebert having this opportunity to amend the bill

after C-317

aspects remain which we believe will have a detrimental and unjustified impact on pension and benefit plans. We have previously written to you about our concerns, and we are doing so again in order to reiterate the importance of rejecting Bill C-377. MEBCO believes that the Bill goes far beyond the intended objective and would impose enormous costs and other implications for many private and—

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

Thank you, Mr. Chair.

The orders of the day refer to clause-by-clause consideration of Bill C-377. What the member is now doing is basically preventing or depriving members from reviewing the clauses that the member, Brian Jean, has introduced. There are a number of amendments, which I support—surprise, surprise—that address the very concerns that Mr. Boulerice is now commenting on.

I have to emphasize that by commenting on them, he's actually misleading the public. These proceedings are televised, and he's repeated a number of times in the last hour and a half that he's had the floor that there are all kinds of negative consequences associated with Bill C-377, yet in truthfulness he has not at all admitted or at least even consented to the fact that the amendments, which he's aware of, that were tabled last Friday by Mr. Jean actually address these very concerns that he's speaking to right now.

For example, the amendments clarify that registered pension plans, health benefit plans, and other plans do not have to file information. They clarify that registered benefit payments to individuals like he was just referring to will not be disclosed. The amendments remove home addresses from filing requirements. They limit which salaries and business transactions are disclosed.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

I am entirely convinced of that. I was at not all casting doubt on your listening ability, which has been put to the test in recent weeks.

Some questions about costs are indeed related to the administration of Bill C-377. The Canada Revenue Agency tells us it will cost $10.6 million to administer the bill in the first two years and $2.1 million ongoing for the following years. These figures are valid for approximately 1,000 union organizations or labour organizations. By comparison, the treatment of charities costs $33 million a year and requires 300 federal public servants to work full time on this matter to review the evaluations and reports of all charities in receipt of tax benefits.

I would like to introduce a new point in the discussion. This is not the only question the Canada Revenue Agency answered in the information it sent us today. On the contrary, a second question was asked, and it is very interesting and relevant: Have the costs of administering the requirements of this bill been included in the estimates presented to the House of Commons? The answer is no.

The Canada Revenue Agency tells us that the point of order I raised with the Speaker of the House of Commons last week does seem founded since the estimates include no budget item or vote for the administration of this new expenditure.

Sometimes, and this has happened in the past, the implementation of new ways of verifying things or recording certain information or certain items ultimately resulted in much higher costs than those initially forecasted. We therefore have a legitimate fear that this may be the case with Bill C-377, particularly when we consider that it is not 1,000 union organizations that will be affected by this bill, but rather 25,000.

When you examine all the answers the Canada Revenue Agency sent us today, there is absolutely no reason to be reassured by or comfortable with this bill. Instead we fear there will be an excessive and unnecessary increase in red tape and in the number of forms to complete for organizations that simply have better things to do, whether it be providing service to their members or increasing their members' assets. This burden will be imposed not only on the union organizations as such, but also trusts and pension funds, which will also be affected by this. They must make investments. They do not have the time or money to take in their members' pension contributions and then complete the paperwork that this bill would inevitably create.

I am going to cite an open letter that I wrote on this matter and that was published in the National Post. Please pardon my terrible accent in English. If we are going to talk about money, about costs and impacts, let's talk about the impact that will be felt on our economy. The title of my letter was:

“Targeting unions is hurting the financial markets”.

It continues:

Canada's economy is in a fragile state. Just last week, the IMF lowered its forecast for global growth due to ongoing instabilities in the United States and the Euro Zone, as well as the slowdown of the Chinese economy. Meanwhile, TD Bank lowered its estimates for economic growth here in Canada for 2012, and is projecting only modest growth for 2013 and 2014.

You would figure that in times like these, the federal government would be cautious in the legislation that it supports. But sadly, the Conservatives' partisan instincts have taken precedence.

Take bill C-377 for example. On its surface, it aims to bring transparency to union finances. Yet, to achieve this aim, the Conservatives could be imposing a massive clampdown on our financial markets and costing business—both big and small—millions in lost revenue.

Most private member's bills live and die in obscurity, as they have no chance of passing. C-377, however, appears to have the blessing of both the Prime Minister and the Finance Minister

—but these days they don't get along a lot—

and could become law by the end of the year.

Essentially, this Conservative bill would require any labour organization, including pension funds and health plans, to publicly disclose all aspects of any expenditure over $5,000. The bill does this by prying open business contracts and causing the confidential details to be posted on the Canadian Revenue Agency’s website. This includes everything from office rental and photocopier leases to consulting, legal and financial services. This would force businesses to either turn down valuable customers or have their entire business model disrupted.

The potential damage of this Conservative bill is even more dangerous when it comes to the financial markets. The reporting requirement applies to all market transactions by union pension funds and any firms managing their assets. These pension plans make up the second largest source of investment capital in Canada, after chartered banks, with assets of over $1-trillion dollars. Amongst these assets are significant amounts of Canadian stocks, bonds and real estate.

Beyond imposing obvious difficulties associated with reporting all transactions on billions of dollars in financial assets, the bill likely will lock pension funds out of engaging in private-equity deals. This will drastically reduce the flow of Canadian dollars into such deals, decrease Canadian ownership, and hurt the bottom line of Canadians’ pensions.

The reporting requirements also will create a massive bureaucracy for all involved. For a mid-sized pension fund covering several thousand workers, C-377 would mean over 11,000 financial transactions would need to be reported a year. For the largest pension funds, this could run into the millions.

Putting aside the economic impact, this bill would represent a massive invasion of privacy, as pension funds that come from union plans will be forced to report the name and address of hundreds of thousands of pensioners to the government every year. That, too, will also be made public.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you very much, Mr. Chair.

I will continue, and since we have colleagues here who want figures, I will take the liberty of repeating them.

According to the Canada Revenue Agency, it will only cost $10.6 million to implement Bill C-377. We received that information this morning.

It's $10.6 million for the first two years. I really want to be sure that you understand my numbers.

[The Chair, Conservative, James Rajotte]

With respect to your point of order, Mr. Adler, as you know and as I've mentioned before and as has been defined by many speakers, relevance is defined very broadly. Further to that, the motion itself is fairly broad:

That this Committee, pursuant to S. O. 97.1, recommends that the House of Commons do not proceed further with Bill C-377, An Act to amend the Income Tax Act (requirements for labour organizations), in order to protect the integrity of the government's budget framework.

That is a very broad motion. It's very difficult for me, as the chair. I would say that Mr. Boulerice may be testing the bounds of relevance, but I can't declare any of his comments not relevant.

We'll go back to Monsieur Boulerice, s'il vous plaît.