Information & Ethics Committee on April 29th, 2013

[The Chair, NDP, Pierre-Luc Dusseault]

Good afternoon and welcome to the 76th meeting of the Standing Committee on Access to Information, Privacy and Ethics.

I would like to thank the witnesses who have come today, that is the Commissioner of Lobbying, Ms. Shepherd, who is appearing on the main estimates 2013-2014, vote 45 under Treasury Board. She is accompanied by Mr. Bergen and Mr. Leblanc.

There will be 10 minutes for opening statements. Committee members will then have an opportunity to put questions to the commissioner.

Without any further delay, Mrs. Shepherd, you have the floor.

[Karen Shepherd, Commissioner of Lobbying, Office of the Commissioner of Lobbying]

Good afternoon, Mr. Chairman and members of the committee.

I am pleased to be here today to discuss the main estimates for the Office of the Commissioner of Lobbying. I would also like to take the opportunity to highlight some of the recent accomplishments of my office and outline my priorities for this fiscal year.

I am joined by Deputy Commissioner René Leblanc, and Mr. Bruce Bergen, senior counsel.

The total for the 2013-14 main estimates for my office is $4.4 million. It is made up of $4 million, comprising the salary envelope and other operating expenditures, as well as $0.4 million for the employee benefits plan. I have no discretion regarding the employee benefits plan, which is a statutory vote; therefore, I have $4 million to deliver my mandate. I have a complement of 28 employees.

Even though the reference level for my office has remained constant since I became commissioner in July 2008, we absorbed the impact of the cost containment measures announced in Budget 2010. The cost containment measures meant that my office had to absorb the growth in salary costs from the ratification of collective agreements for the last three years. This has put pressure on my budget, particularly on the salary envelope. In addition, starting this year, my budget is now reduced by 5% as a result of Budget 2012.

The Registry of Lobbyists is at the core of the regime for ensuring the transparency of lobbying activities. Currently, there are more than 5,000 registered lobbyists. The registry contains information on about 3,000 active registrations. These figures have remained fairly stable since 2008.

A budget of $812,000, including salaries for seven full-time employees, is dedicated to maintaining the registry, providing guidance and technical support to registrants, and responding to inquiries.

During my last appearance on the main estimates in 2012, I explained how I would implement a 5% reduction in my budget. I mentioned to this committee that I would first defer development of the lobbyists registration system and, second, hire a system specialist to reduce my dependency on system consultants. This explains that a full-time employee was added to this program although this year's budget has decreased. Although system development will be deferred, essential maintenance work will continue. I have full confidence that the registry will continue to meet the needs both of Canadians and of lobbyists in ensuring transparency of lobbying activities.

Considerable work was done last year to upgrade key features of the system, focusing in particular on search and reporting capabilities. These features were launched in September 2012 and in February 2013. Users have told us that it is now a lot easier to mine the wealth of information that resides in the registry.

In 2012-13, an internal audit of the lobbyists registration system was conducted to examine the management controls and practices of the system. The scope of the audit included a range of activities: the governance of the system, the registration and reporting processes, registration staff training, and IT security. The audit concluded that appropriate measures were in place to support the lobbyists registration system. This means that the information provided by lobbyists is accurately captured in a timely and reliable manner.

Opportunities for improvements were found in the management of IT services in support of the registry, and this will be my focus in 2013-14. Our policies, directives, and procedures regarding IT management will be reviewed and revised as required. This will ensure that the integrity of the system will continue to be protected as we move forward. Moreover, the system documentation will be reviewed and updated, and a process will be established to ensure the documentation remains current in the future.

Let me now turn to education and research, which is another key component of my mandate.

The Lobbying Act is a fairly complex piece of legislation. The time and resources I invest in outreach are essential to fostering compliance. I allocate $810,000 of my annual budget to public education activities, including salaries for seven full-time employees.

In 2012-2013, my staff and I met with more than 900 individuals, including lobbyists, public office holders, as well as parliamentarians and their staff.

Interestingly, I am frequently asked to address academics and students for various Canadian post-secondary institutions who want to know more about our regime and its impact on transparency.

During the last fiscal year my office started reaching out actively to new registrants. When a lobbyist registers for the first time with my office, a registration adviser contacts the new registrant to provide personal assistance and offer guidance and training on the registration system. This approach resulted in increased efficiency and accuracy when inputting the requested information into the system. It is also an excellent way to ensure greater awareness of requirements of the Lobbying Act, which translates into better compliance.

In addition to administering the act, I am also responsible for ensuring compliance with the Lobbyists’ Code of Conduct. The code is important because it ensures that lobbying is done with the highest ethical standards. The lobbying legislation has been reviewed several times in the last decade, yet the code has remained unchanged since it was instituted in 1997.

The act states that I shall develop a lobbyists’ code of conduct. Based on my experience in administering the code, I felt it was time to review the code to ensure that it was clear for the lobbyists who must be in compliance with it. I plan on launching a consultation this fall to help inform my review of the Lobbyists’ Code of Conduct. Next year will be dedicated to sharing the results of the consultation and to proposing amendments, if any, to the code. I plan to consult with stakeholders on any amendments. I will keep the committee members informed as the process is progressing.

I would like to now turn to my office's compliance function.

Review and investigation activities are allocated $1.1 million including salaries for the equivalent of eight full-time employees. This year, I submitted two reports on investigation for tabling in Parliament. I also continue to refer files to the RCMP when I have reasonable grounds to believe that a breach of the act has occurred. For the first time since the coming into force of the Lobbying Act, charges have recently been laid against an individual for a breach of the act.

Overall, the number of administrative reviews that I close continues to keep pace with the number that I open. When I became Commissioner on July 2, 2008, I inherited a caseload of 40 administrative review files and six investigation files. I have dealt with all of but two of them. Since becoming Commissioner, I have initiated 101 administrative review files and completed 105.

During 2012-13, a new approach was developed by my office to determine the priority level of each file. The new process is designed to help manage the workload in the office and to estimate file completion dates. As new cases are opened, the priority standing of existing cases is reassessed, based on a range of factors, with a view to avoiding any given file becoming too old. The objective is to ensure that priority cases are dealt with in a timely manner and to reduce the inventory of older files.

In addition, in the coming year it is my intention to develop a more strategic approach to compliance verification. The current compliance monitoring practices will be improved by introducing a risk-based approach that includes in-depth analyses of registration behaviours within selected areas of the economy, or related to specific issues. This will assist in determining where resources need to be allocated in terms of either education or compliance.

Internal services are allocated about $1.7 million, including salaries of six full-time employees. Given the small size of my office, my approach is to acquire the majority of internal services from other organizations.

The service arrangements I have put in place are working well. They provide me with access to the broad range of expertise I need in corporate services to meet my accountabilities as deputy head, at an affordable cost.

Work was done to establish a program evaluation function over the last year. My office will continue to implement this program in the coming year. It is a critical component in my ability to offer further evidence of the effectiveness of our activities. This will also help me to identify where further improvement can be made in order to become even more effective.

As you may know from my presentation, I have managed to put in place the appropriate structure to mitigate the impact of the budget reduction on my ability to deliver on my mandate. As I mentioned at last year's appearance on main estimates, my office is a lean organization. My focus is on the priorities necessary to deliver on my mandate, which I have outlined in my opening remarks. Should the government decide to make changes to the Lobbying Act in the coming year, I will need to adjust my priorities accordingly.

I am looking forward to the activities and opportunities that this year will bring.

Mr. Chair, this concludes my remarks. I look forward to answering any questions you and the committee members may have.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you very much for your opening statement.

I will now give the floor to Mr. Angus for seven minutes.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you, Mr. Chair.

Thank you, Madam Shepherd, for again gracing our committee with your presence. We have enormous respect for the work you do. We understand that you do this on a tight budget that seems to get tighter all the time.

I'm interested in the issue of the compliance function and whether or not, in the important work you do, you have the tools you require, both financially and legislatively.

[Karen Shepherd]

In terms of resources, this year I'm spending $1.1 million. That includes the funds for a director, four investigators, and a compliance officer. The strategic operating review done in 2011 shows that this is sufficient for managing the caseload, and I see that from the progress we're making in terms of keeping pace with the files while managing to deal with the old ones.

In terms of the tools, I would say yes. What I've mentioned in regard to review of the legislation of the act, what would facilitate the latter would be having the ability to administer administrative monetary penalties, showing a continuum of compliance measures for the different breaches of either the act or the code.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

The AMPs seem to work well in other jurisdictions where they're being used, in ensuring that people understand the importance of registering and following the rules. Am I not correct?

[Karen Shepherd]

The two provinces in Canada that have the ability to issue administrative monetary penalties are Alberta and B.C. To date, I don't believe that Alberta has issued any, but B.C. has, and I would say yes.

[Charlie Angus, NDP, Timmins—James Bay, ON]

You've mentioned with regard to the RCMP that it's the first time that charges have been laid. When we looked at the statutory review of the act, one of the things that was of concern to us was the issue that if you begin an investigation and then it's taken over by the RCMP, your investigation is suspended.

Yet up until the charging of Mr. Bruce Carson with influence peddling on July 27, 2012, the RCMP had never followed through on any single investigation. We felt that was a problem. I don't know what stage the work is at in dealing with Mr. Carson, but if the RCMP doesn't follow up, is that the end of the road for you?

[Karen Shepherd]

When I refer a file to the RCMP, it's because I have reasonable grounds to do so. If the RCMP chooses not to proceed, which they have done in a number of cases that I've sent over, then I can look at a file when it comes back and determine whether I have sufficient grounds to continue with a Lobbyists' Code of Conduct investigation, which I have done and have tabled reports to Parliament on.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

On the statutory review that was done by this committee last year, what is your view of our recommendations, and what is your view of the response you've heard from government?

[Karen Shepherd]

I was very pleased with what I saw come out of the committee. It seemed to quite accurately consider the recommendations I had put forward and to be based on what was heard from other witnesses.

In terms of the government's response, as well, I think it quite seriously considered all of the things that had been put forward. They said an outright yes, I guess, in a couple of cases, with clear intent to follow through on others, and some are under further consideration.

In all cases, I think, any of the changes that are being looked at will strengthen the act in terms of increased transparency and perhaps enforcement powers.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Do you have ongoing consultations with the government about implementing the recommendations, or was that just an initial response? Are you planning on meeting with them?

[Karen Shepherd]

In terms of the independence of the office, what I would expect is that because I'm the administrator of the act, I will be consulted as to what will actually transpire in terms of how much time it might take me to, for example, make changes to the registration system, in order to do some of the changes that the government may intend to do, or how much it might cost.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

On page 7 of the report on your plans and priorities, you've identified, as one of the priorities, the need to take this more strategic approach for compliance verifications.

Can you give us a better understanding of the need for this approach? What are you looking at doing?

[Karen Shepherd]

Right now when we open...we do what I call “media monitoring”. We also do further analysis to determine for organizations, for example, where, maybe after a little bit of analysis, we determine maybe they should be sent an advisory letter to let them know that there is an act, and so they can make determinations. We also will open administrative reviews or investigations based on either complaints or what we see in the media.

Those are reactive measures. The idea was to ask how we can be more proactive. For example, can we look at particular sectors of the economy? With the wealth of information that exists in the registry, and looking at the information to compare and contrast, let's say, with companies of a particular sector, are there any patterns? Is there something we want to maybe issue letters about or follow up on, to see if we can get better compliance in terms of disclosure? Or are there emerging issues that might be coming up in terms of policies or programs? Also, are the groups that we are expecting to be registered actually registered?

So it's just being a little bit more proactive and trying to ensure compliance.

[Charlie Angus, NDP, Timmins—James Bay, ON]

You had cost containment measures in 2010, and you're facing it again. As you say, salaries still have to go up, and there are the other issues you still have to deal with.

Maybe I'm throwing you a softball here, but given the amount of 5,000-plus lobbyists, if we're going to actually be able to ensure that government is clean and that back doors are not being opened to friends, do you have the resources you need to do that job fully?

[Karen Shepherd]

When I did the strategic operating review, it did indicate that I had a lean organization but that I had the right resources and competencies. In areas where I didn't, that's why I made, as I announced last year, the difficult decision to cut two positions in order to hire...and I've now hired that capacity.

If things stay.... I can't afford to be cut further. As I mentioned, I think being cut further would affect my ability to deliver on the mandate.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you.

Mr. Angus, your seven minutes are up.

I will now give the floor to Mr. Butt for seven minutes.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Thank you very much, Mr. Chair.

Thank you, Commissioner, and your colleagues, for being here today and for giving us as a committee a better sense, I think, of the role that your office is playing and the challenges that you are facing.

I see in the main estimates that all but $430,000 of your authorities are voted. Can you explain what the $430,000 is? Was that the employee benefits and so on that you were referring to in your opening?

[Karen Shepherd]

Yes.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Okay. So that's statutorily mandated. I mean, that's obviously what has to be paid for the benefit plans for each of the 28, I think you said, you had....

[Karen Shepherd]

I have a complement of 28 FTEs, yes.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

I think you also said that seven of those are dedicated to what you would call the “public education” aspects of your office.

Can you give me a little bit more detail? What are those seven individuals within the organization doing on a day-to-day basis? What is their specific role versus the other 21 who are there, who have, I assume, positions that are driven more by compliance and administration? Perhaps you could give me a better sense of what their role is in your office.

[Karen Shepherd]

Sure. In terms of those seven, what's interesting for reporting purposes is that it's part of the program alignment architecture, which is done for reporting purposes.

The actual individuals consist of a senior communications officer, a senior policy analyst, and a policy analyst. The rest of the component is actually made up of part of the time of other individuals within the office, time that is dedicated to that particular function. For example, it consists of a portion of my time and my deputy's time, which helps to make up the remaining part of that.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Do you see it as the role of your office that you are to proactively get out and educate? Or are you relying on these 5,000 lobbyists who are part of this system to make sure that they're making sure they know what the rules are, what the dos and don'ts and the compliance requirements are?

Are you playing a more proactive role to get to them to make sure they are complying? We want to assume that most people want to play by the rules. They want to know what the rules are and they want to be clear on them so that nobody is getting caught up in a situation that they shouldn't be caught up in. Is it a role where you're proactively reaching out into the lobbyist community, or are you waiting for the phone to ring and then just answering a question that somebody might have?