Bill C-2 (39th Parliament, 1st Session) Committee on May 29th, 2006

[The Chair, Conservative, David Tilson]

I'd like to call the meeting to order.

Good afternoon, ladies and gentlemen.

This is the Legislative Committee on Bill C-2, An Act providing for conflict of interest rules, restrictions on election financing and measures respecting administrative transparency, oversight and accountability.

Our first witness, our first guest, this afternoon is Teri A. Kirk, who is the vice-president, government relations and public policy, Imagine Canada.

Good afternoon, Ms. Kirk.

You have a few moments to make some preliminary comments, and then members of the caucuses will, I expect, have some questions for you. Welcome to the committee and thank you for coming.

[Teri Kirk, Vice-President, Public Policy and Government Relations, Imagine Canada]

Thank you, Mr. Chairman, members of the committee.

My name is Teri Kirk and I am the Vice-President, Government Relations and Public Policy, Imagine Canada. I am pleased to make this submission on behalf of Imagine Canada and the 13 other agencies listed on page one.

Our purpose in so doing is to draw the committee's attention to the sector's views on the impact of Part I of the bill which concerns the administration of grants and contributions, as well as of Part 3, which concerns the contracting process.

I'm going to divide my comments into three parts. I'd like to start with a brief overview of the community non-profit sector and of Imagine Canada. I'd then like to address four issues in the bill that are of interest to our sector: grants and contributions, procurement, sector infrastructure, and a government accountability framework for the sector. Finally, I'd like to take a minute to express the sector's appreciation for several recent initiatives.

The community non-profit sector is quite large and complex. Included in your materials is a pictogram; the sector is often depicted as a pyramid. You'll see that at the top of the pyramid there are about 161,000 incorporated organizations in the sector; 80,000 are non-profits, and another 80,000 are registered charities. The difference is that registered charities can issue tax receipts for donations. There are close to another one million unincorporated organizations existing in Canada at any particular time. They rise up to support victims of crime, for example, or to host events in communities. Forming the base of the community non-profit sector, there are about six and a half million Canadians who volunteer their time, representing about 30% of Canadians.

I've also included a breakdown of the types of activities the sector participates in. I'm sure that individuals around the table are very active in their communities and will find this of interest. You'll note that about 50% of the organizations forming the community non-profit sector are involved in sport, religion, and the delivery of social services. You get a sense of the size of the sector when you see that hospitals, universities, and colleges together represent only 1% of the sector, whereas organizations delivering social services are about twelve times the size of our national hospitals, universities, and colleges. In terms of its economic strength, the sector employs over two million Canadians. In terms of paid employment, this makes it larger than the manufacturing sector, and it accounts for about 7.8% of GDP.

Imagine Canada is the largest intermediary organization in the sector and has over 1,100 members. It was created about two years ago as the result of a merger of the Canadian Centre for Philanthropy and the Coalition of National Voluntary Organizations to provide one strong national voice for the sector.

Imagine Canada is a bit unique within the community non-profit sector in that it works closely with business and government as well as the sector itself to support community-based organizations. It works with business through our imagine caring companies program. This is a program whereby companies commit to giving 1% of their earnings before taxes back into the community. All of Canada's large banks and the leaders in the oil and gas sector such as EnCana, and leaders in telecom such as Bell Canada, are involved in the program. As you can imagine, committing 1% of their pre-tax earnings into the sector represents a very significant amount of money.

Let me turn now to the four issues in the bill that I'd like to bring to your attention. The first relates to grants and contributions under part 1 of the bill. I would just like to underscore the extent to which the flow of Gs and Cs are of paramount importance to the sector. Federal government grants and contributions are frequently the single largest source of funding for many of these organizations, and across the board they account for 7% of all funding into charities and non-profit corporations.

The web of rules associated with compliance under federal Gs and Cs unduly strains the capacity of these organizations and imposes an administrative burden that is often wholly disproportionate to the amount of the grant or contribution or the capacity of a typical recipient organization to comply with. Examples of this are legion.

We support the government's commitment to recalibrate the administrative demands under the federal G and C processes and to focus more on outcomes, and we support the striking of the blue ribbon task force under the accountability action plan.

With respect to procurement, the sector supports the inclusion of fairness, openness, and transparency in respect of procurement under part 5 of the act, but we echo the views of umbrella groups representing small and medium-sized enterprises in expressing concern that the proposed consolidation of the government's purchasing power will tend to result in contracting practices that greatly favour large enterprises over small and medium-sized businesses and small and medium-sized organizations. We are concerned that indeed such a level of consolidation might in fact breach the fairness principles to be enshrined in the act.

The third point relates to what I've called sector infrastructure. That is really the capacity of organizations to sustain themselves over time and to undertake activities such as long-range planning, facilities maintenance, investment in information technologies, and even paying directors and officers insurance to attract the boards and to carry out the community service programs that are at the heart of what the community expects them to do.

While we very much applaud the efforts to streamline the flow of grants and contributions, to ensure that the principles of fairness are maintained under procurement, and to see that small and medium-sized enterprises and organizations are reflected, these really represent improvements or fixes to current funding regimes that have become very short term and constrained and do not address the long-term stable funding needs of the sector. The result has been a very continual erosion of sector infrastructure.

We are asking that government consider, in addressing grants and contributions, that the need for longer-term and more stable funding models must apply.

We recognize that long-term funding for our sector is probably beyond the scope of the Federal Accountability Act and the action plan of this committee, but I will include some recommendations at the end of my comments about some alternative measures we would ask the committee to consider.

Finally, I would like to raise the merits of a government accountability framework vis-à-vis this sector. In 2001, efforts were made along that line; the government and the sector signed the accord between the Government of Canada and the voluntary sector, which led, in turn, to the adoption of two codes of good practice: a code on funding and a code on policy dialogue. Together these three documents form an effective government accountability framework for our sector.

Nevertheless, the documents were voluntary in nature. Service Canada serves as an example of one that has very much taken up and observed this accountability framework, whereas other departments have virtually no knowledge of, or real willingness to comply with, the accord and codes.

So we are asking that this government reassert its commitment to an accountability framework between the government and the sector. We think it can be quite easily done by taking the existing accord and codes and perhaps updating them somewhat as required, and reissuing them as part of the accountability action plan.

Let me conclude my comments with two compliments and several recommendations. We'd like to compliment the Government of Canada on its striking of a blue ribbon task force on grants and contributions under the action plan and on the enshrining of the principle of fairness in respect of procurement under the act.

Our recommendations are as follows: in respect of grants and contributions, we recommend that the Government of Canada recalibrate the burdensome impact on the community non-profit sector of the web of rules embedded in the federal grants and contributions process and refocus on outcomes that are more consistent with the sector's mandate to its donors, to its volunteers, and to the communities that depend on them.

We would ask that the government ensure implementation of the recommendations in the Auditor General's most recent report of May 2006. In chapter 6 of that report she addressed the need for streamlining of grants and contributions.

Finally, we would ask that the government empower the blue ribbon task force to broadly address the need for long-term funding as well as fixes to the grants and contributions process.

On procurement, we recommend that the government enshrine the fairness, openness, and transparency provisions, but be cognizant of potential inconsistency in consolidating procurement and whether that is consistent with the principles of fairness vis-à-vis SMEs and SMOs.

On sector infrastructure, we encourage the committee to put forward some recommendations that the issue of longer-term and more stable funding is required if we're going to have a vibrant community non-profit sector. We do have one of the strongest sectors in the world, but it has been very significantly eroded over the last decade with the erosion of long-term funding models.

Recommendations that you may wish to consider include striking a parliamentary committee with a mandate to look at the long-term funding issues; establishing an endowed national foundation, similar to perhaps the Wild Rose Foundation in Alberta or the Ontario Trillium Foundation, that could supplement the grants, contributions, and contracts regime with a national infrastructure funding program for the sector; implementing the Auditor General's report; and ensuring that the blue ribbon task force mandate is sufficiently large to address the longer-term funding issues.

Finally, as to the government accountability framework, we ask that the government adopt the accord between the Government of Canada and the two codes of good practice, and reissue them on behalf of the Government of Canada as a whole, as part of Treasury Board guidelines.

Those are all my comments. I welcome any questions you may have.

[The Chair, Conservative, David Tilson]

Thank you, Ms. Kirk. You've given us a very detailed package, and I know members of the committee will have some questions.

The first person is Mr. Owen.

[Stephen Owen, Liberal, Vancouver Quadra, BC]

Thank you very much for your presentation.

When the Auditor General appeared before us a couple of weeks ago, she commented on the provision in the Accountability Act that would extend the jurisdiction of her office effectively into the voluntary sector dealing with grants and contributions to government. I'd like to get your view on that. She was a little concerned about it from a resource point of view--consistent with comments she made in the past on concern about the amount of reporting that first nations have to do, that we ensure this is a streamlined process and doesn't just add further burden to a complex system.

So I'd like to get your view on whether the reach of her office would extend into the voluntary sector--if that is troublesome, or how that would combine with streamlining the reports you have to give.

I'm also very interested in your views on long-term funding. It can be multiple-year funding, but it can also be funding against certain criteria that are assessed annually but well before a termination date--sort of an evergreen funding process that could be confirmed with enough lead time, so people could plan properly and, if necessary, give proper notice to employees and such, which is always a very difficult thing when you're funding year to year.

I'd like to get your views, and a little more on that funding timing issue.

[Teri Kirk]

Thank you.

In respect to the Auditor General, we clearly support the need for the Government of Canada to have a strong audit function in respect to auditing its own practices. I think the concern of the sector is that we're already, frankly, subject to multiple audits under the grants and contributions processes. Sometimes the grants are multi-departmental: there may be a Heritage Canada component that supports volunteerism, for example; or there may be an Industry Canada program that supports consumer protection. With these very small organizations, it's helpful to understand that 46% of them have under five employees and their ability to sustain multiple audits is part of the problem and not really part of the solution we would see. So our representations are about fewer administrative demands on the organizations so that they can focus more on helping people in the communities and not have the personnel who are trained to do that filling out forms in the office all day.

In terms of long-term funding, this is a really a very critical issue for our sector. For many of you who are active in your communities and have served on these boards, you will understand that the human resources cycle you refer to is an in-and-out-the-door policy; grants end and three months later they get restarted again and people have to be terminated and rehired. It does interfere with the ability of these organizations to have effective human resources planning.

There are five or six areas where the lack of long-term funding really impacts on these organizations. I'll give you one very practical example. It's in the area of insurance. By definition, organizations in our communities that are out there delivering summer camps to disabled children or providing shelters for battered spouses and for homeless people are doing high-risk things with a high-risk clientele, and they're not able to do that unless they can have insurance to cover their staff and their volunteers. With liability insurance rates rising by 25% and none of the grants and contributions and contracts necessarily including provision for insurance, it becomes impossible for many of these organizations to carry out the very services that we would like them to in dealing with higher-risk clientele.

The same applies to directors' and officers' insurance. In order to be a not-for-profit corporation or a charity, you must have a board of directors. If I approach any of you about coming onto the board of an organization and advise you that there's no liability insurance and that you will be personally liable for any acts or omissions of that organization, or any of its staff, the likely response of most individuals is they are not going to serve on that board. This is one of the repercussions of the lack of infrastructure funding and long-term funding, that the organizations have trouble attracting the qualified people to their board who they need in order to comply with their legal obligations.

[The Chair, Conservative, David Tilson]

Ms. Lavallée.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Good day, Ms. Kirk. I'm pleased to meet you. Before I get to the crux of the issue, I would like you to clarify a few things for me.

First of all, you have drawn up a nice table giving a breakdown by activity sector. Do you have a similar breakdown for your agencies by province? For example, how many of your agencies operate in Quebec?

[Teri Kirk]

Thank you very much for your question.

Data is in fact available with respect to the province. We do like to collect a significant amount of data.

It's one of the things with long-term funding that we would like to have, an improved capacity to collect data. I can tell you in general that levels of volunteerism in Quebec are a little bit lower, frankly, than in the country as a whole. It seems to be perhaps that government is a little bit more involved in delivery of services more directly and tends to employ people more to do things that in other parts of Canada are done by voluntary organizations. So there is a slight difference, and I'd be pleased to follow up with you on some of the data.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Could you tell me approximately how many agencies are members of Imagine Canada and what percentage of them are from Quebec?

[Teri Kirk]

Imagine Canada has approximately 1,100 member agencies, 12% of which come from Quebec. Overall, there are about 200,000 agencies operating in this sector, over 20% of them from Quebec.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

The Government of Quebec has made available to community agencies a broad spectrum of grant programs that are very well managed. In fact, Quebec is known for its range of social, sport and recreation organizations, as well as for its diverse development initiatives. Community agencies offer many social services. Community life in Quebec is truly quite developed.

Given that social services fall under provincial jurisdiction, we feel that the same holds true for community agencies. In view of what the Government of Quebec has to offer, I fail to see what kind of federal grant program you could provide. In fact, to my way of thinking, the few programs that are available are not very useful.

[Teri Kirk]

At the provincial level, grants are service oriented, while at the national level, they are more policy oriented. Insurance is one example. We are working with Heritage Canada to develop a national policy on insurance accessibility. However, at the provincial level, more specific programs are in place. Overall, we get approximately 30% of our funding from the provinces, and approximately 70% from the federal government.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

It's clear in my mind that helping community agencies such as yours is a provincial government responsibility. I'm trying to see the connection between your presentation and Bill C-2. I feel the link is very tenuous. You seem to be more concerned about your agency's lack of long-term funding.

What is the connection between our study of Bill C-2 and the request by your agencies for long-term funding?

[Teri Kirk]

Any area can be both a federal and a provincial responsibility.

For example, with respect to small and medium-sized enterprises, is that a subject of provincial jurisdiction? Perhaps, but we have in the federal government a lot of national policies and programs to deal with almost every sector of the economy, at Industry Canada and so on.

The not-for-profit community sector is a very large sector--it's larger than the manufacturing sector in terms of paid employment--and includes hospitals, universities, colleges, health organizations, and is a very critical aspect of a vibrant country. Canadians identify our charities and voluntary organizations as the number one contributor to quality of life in Canada. So we do need a national policy and national assistance to maintain our community organizations in Canada.

[The Chair, Conservative, David Tilson]

Thank you.

Mr. Martin.

[Pat Martin, NDP, Winnipeg Centre, MB]

Thank you, Chair.

Thank you, Mrs. Kirk. It's nice to see you.

I do certainly take your point that social work, if you can call it that, doesn't lend itself to administration by grant to grant to grant. I certainly know of some of those smaller organizations, non-profits, with maybe five people, where one person is pretty much full-time applying for grants, filling out forms, applying for next year's funding, etc. It really isn't practical.

When did you start to notice this trend away from stable, long-term funding towards the program-by-program funding that we see so typically today?

[Teri Kirk]

It's quite detailed, frankly, in the submission, but generally speaking, it began occurring when there was tremendous concern across Canada in both federal and provincial governments about deficit reduction. It was an area, then, where long-term funding was basically cut and it was moved to very short-term project-based, heavily audited--

[Pat Martin, NDP, Winnipeg Centre, MB]

So really, you could say it was part of the program review that the Liberals undertook in the 1990s, etc.

[Teri Kirk]

Exactly right.

It dates back to about 1992, in that period, and it occurred at both federal and provincial levels, really irrespective of the nature of the government. It was really part of the deficit reduction era, when there was a tremendous, as we would suggest, over-correction and move toward all of this highly unstable financing that simply creates a tremendous waste of energy and a diversion from the core functions of serving Canadians in their communities.

[Pat Martin, NDP, Winnipeg Centre, MB]

That's a very good way of putting it.

Is there anything about Bill C-2 that gives you cause to believe it may exacerbate that problem? It's certainly the main motif of your brief, or your presentation today. Is there anything we can do within Bill C-2 to address that, or is there anything you are particularly concerned about in Bill C-2 that we may want to trim?

[Teri Kirk]

Thank you for asking that.

We feel supportive of the bill. Really, the two issues that are of concern are the enshrining of the fairness principle...and we think that's a very good thing to do, but again, we just want to draw to your attention that there seems to be an initiative going on in government, independent of the bill, to consolidate the purchasing power and consolidate procurement exercises. So we do support the provisions in the bill there.

Again, the issues with respect to Gs and Cs are really under the action plan and not the bill, and are with the blue ribbon task force. We think it's an excellent task force. We're pleased to see the representation on the task force and we hope the work of the task force will be implemented in the new year.

[Pat Martin, NDP, Winnipeg Centre, MB]

I'm not quite clear on how the procurement changes will affect non-profit organizations like yours. Why would that have an effect on you?

[Teri Kirk]

As I said, our sector receives about 7% of funding from government. Around half of that is in the form of grants and contributions and the other half is in the form of contracts for services. Our organizations, like United Way, Volunteer Canada, or John Howard Society of Canada , apply through MERX, like small and medium organizations, to deliver contracts, and frankly, Canadians indicate that they prefer charitable organizations. They trust them more than government to deliver these services in their communities. So SMOs, as we sometimes call them, are quite comparable to small and medium enterprises now in applying for contracts and becoming service delivery agents for government. Therefore, policies that tend to create long-term, ten-year vendors of record that favour large enterprises would make it virtually impossible for our smaller community organizations to apply.

[Pat Martin, NDP, Winnipeg Centre, MB]

Thank you.

[The Chair, Conservative, David Tilson]

Go ahead, Mr. Poilievre.