Finance Committee on May 23rd, 2013

[The Chair, Conservative, James Rajotte]

I call this meeting to order. This is meeting number 124 of the Standing Committee on Finance.

I want to welcome all of our witnesses here this morning.

Colleagues, we have six organizations presenting this morning.

Welcome.

We have with us from the Canadian Labour Congress, Mr. Ken Georgetti, president; from Fair Pensions for All, Mr. Tom Charette, senior policy adviser; from the Federation of Canadian Municipalities, Mr. Brock Carlton, CEO; from the Friends of Canadian Broadcasting, Mr. Ian Morrison, spokesperson; and from the Public Service Alliance of Canada, Mr. Chris Aylward, the national executive vice-president. We are expecting the Canadian Taxpayers Federation as well.

You will each have up to five minutes for your opening statements, and then we'll have questions from the members.

We will start with Mr. Georgetti.

[Kenneth V. Georgetti, President, Canadian Labour Congress]

Thank you, Mr. Rajotte and committee.

On behalf of the 3.3 million members of the Canadian Labour Congress, I want to thank you for the opportunity to present our views on Bill C-60, an act to implement certain provisions of the 2013-14 budget.

The CLC brings together workers from virtually all sectors of the Canadian economy, in all occupations, and in all parts of Canada, including those working for crown corporations. Crown corporations and their employees play a key role in providing Canadians with the services that the private sector is either unable or unwilling to provide. The 48 crown corporations falling under federal jurisdiction operate in many key sectors of the Canadian economy, including transportation, energy, agriculture, fisheries, financial services, culture, and government services. As of December 31, 2012, these entities employed 88,000 workers. Most of them are represented by members of the Canadian Labour Congress.

A crown corporation is a distinct legal entity, having a name, mandate, powers, and objectives set out by legislation or in articles of incorporation under the Canada Business Corporations Act. They are wholly owned by the state, but operate at arm's length from the government. As a result, crown corporations are set up to operate under a “corporate model”, free of “political” interference in their ongoing activities, including labour relations and the collective bargaining process.

The free collective bargaining process outlined in our Canada Labour Code, the code governing labour relations for federal crown corporations, has worked extremely well for decades. This process allows both the employees and the employers to sit down at a bargaining table, look at the needs of both parties within an organization, develop responses that satisfy both parties, and help build harmonious labour relations while achieving labour peace. These relationships have been developed over time between workers and employers in the federal sector. They're good ones, and they're underscored by the fact that almost all crown corporations end up with settlements without a labour dispute between the parties 99.7% of the time.

Unfortunately, the proposed provisions in division 17 of part 3 of Bill C-60, if passed, we fear will achieve exactly the opposite: more labour disputes. Having a third party enforcing a bargaining mandate through its presence at a bargaining table during all stages of negotiations, without an in-depth understanding of the ongoing challenges within the organizations, we say will be problematic. Furthermore, Treasury Board will have a veto on a tentative agreement. That degree of intervention by a third party will jeopardize the free collective bargaining process, allowing a third party to enact and dictate negotiations at all stages.

In fact, we fear it will freeze collective bargaining, because the employee side will wait for a decision of two parties instead of just one. Moreover, the bill specifies that Treasury Board is neither the employer nor an employer rep of the crown corporation, confirming its role as a third party without having any responsibilities over the success or failure of that process. For us, this proposed legislation will have an impact on the crown corporations' employer representatives to freely negotiate the terms and conditions of employment with crown corporation employees during the bargaining process.

The section of the bill that gives cabinet and Treasury Board the ability to impose the terms and conditions of employment on their employees without having to live with the consequences doesn't build the bargaining relationship necessary for ongoing relations after collective bargaining. It attacks the core corporate model of crown corporations by allowing political interference in the ongoing business of arm's-length organizations, such as labour relations.

We fear that this is more an aim or a focus to try to change major terms and conditions of the agreements the crown corporations presently have with their employees, and I'm sure you're going to hear cries from others about the issue of pensions and other benefit programs that sit and reside within those programs.

Anyone who has sat at the bargaining table will know that if a third party's hands are on bargaining, it will freeze the process, and most of the time the employees will wait for two decisions to be made before they go back to their membership for any ratification or support for the process. That in itself, we think, will cause more disputes to happen.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Georgetti, for your presentation.

We'll hear now from Mr. Charette.

[Tom Charette, Senior Policy Advisor, Fair Pensions for All]

Thank you, Mr. Chairman, good morning. Good morning, members of the committee, federal panellists, ladies and gentlemen.

I'm Tom Charette with Fair Pensions for All.

We support the clause 229 amendment to the act. The federal government needs to exert more control over the compensation levels and pension plans of crown corporations. The testimony to that are the bailout dollars that had to flow to those corporations in recent years.

We also support the intention of the government to ensure that crown corporation pension plans are broadly aligned with those available to federal employees. We strongly believe that government must go one step further. It must align the pension plans for both crown corporations and federal employees with plans in the broad private sector for two reasons: fairness and financial sustainability.

Let's deal with fairness first here, and these are Statistic Canada numbers. In 2011 there were nearly 17.5 million employed workers in Canada, about 20% or 3.5 million in the public sector and nearly 80%, 14 million, in the private sector. Almost all of these public sector workers have a guaranteed inflation-protected income from the first day of their employment, through retirement, and beyond the grave. Think about that.

We're not saying they have guaranteed employment, although that is virtually the case. They have guaranteed lifetime income. With a spousal benefit attached to their pensions, this income often continues beyond the grave. These pensions are in the order of $30,000, $60,000, $100,000-a-year and up. All the while, 10.5 million of Canadian workers in the private sector have no employer-sponsored pension plan at all, yet they have to contribute to the cost of these “no worries for the rest of your life” inflation-protected public sector pensions every time they pay sales taxes, income taxes, property taxes, buy a litre of gas, renew their driver's licence, etc. Is that fair?

It cannot possibly be fair for the federal government or any other government in Canada to use its power of taxation and spending to benefit what has become an economically elite group in our society. This differential treatment must be addressed. The biggest source of income inequality among Canadian seniors is determined simply by whether or not that person has worked in the public sector. The term pension apartheid really does describe the existing situation.

For sustainability, the real cost of these public sector pensions are only just now beginning to be realized. We must remember that these plans started modestly 40 years ago and reached their current form only about 10 years ago. We have really only just started to pay off on government promises to retiring public sector employees. Now, with many plans already in trouble, there are five things contributing to the perfect storm that is surrounding these plans.

One, a tsunami of baby boomers are beginning to retire. Two, public sector workers continue to retire earlier and earlier with enhanced benefits. Three, life expectancies continue to increase. Four, we've had an extended period of very low rates of return on pension plan assets. Five, the federal and provincial government finances are in shambles across the country. The municipalities are stressed and all levels of government are now ill-equipped to bailout public sector funds.

Your predecessors in government have left you saddled with a huge fairness and sustainability problem. You and your contemporaries in the provincial capitals and municipalities have three choices. One, raise taxes and continue to bailout the plans, and let the unfairness continue. Two, cut government staff and services brutally, keep bailing out the plans, and let the unfairness continue; or three, fix the root problem of the over-generous public sector pensions.

We strongly urge you to choose the latter course of action.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll move now to Mr. Carlton, for your opening statement.

[Brock Carlton, Chief Executive Officer, Federation of Canadian Municipalities]

Thank you, Mr. Chair. It's really a pleasure to be here this morning. We really appreciate the opportunity to present to this committee.

On behalf of some 2,000 members of the Federation of Canadian Municipalities, FCM, I am pleased to present our views on Bill C-60, specifically with regard to division 18 of part 3.

We at FCM believe that there is no surer way to create jobs than by strengthening our economic foundations of tomorrow and investing in municipal infrastructure. When federal, provincial, territorial and local partners all bring money and expertise to the table, no other investment goes as far.

In a world full of economic uncertainty, Canadians want to know that we're taking action to build the conditions for a competitive economy and strong communities. Canadians want to know that all orders of government are working together to make progress on particular priorities: good roads, clean water, and a shorter commute.

The new infrastructure plan announced in budget 2013 is set to renew federal funding, which is expiring in 2014. It will index the gas tax fund to protect its long-term value and provide longer-term funding for cost-shared projects. This is certainly a step in the right direction. By protecting the purchasing power of the gas tax transfer and by extending the program funding for 10 years, this budget advances the principle of long-term, predictable infrastructure funding. FCM is looking forward to getting on with the work to design the new program, to plan it, and to ensure that municipalities do not miss the construction season in 2014 that this government has committed to.

We are particularly pleased with the government's decision to review the effectiveness of its infrastructure plan within the next five years. That will be an opportunity to determine how effective the plan is in addressing its key infrastructure gaps, especially in public transit. It will also be an opportunity to decide what improvements need to be made following the implementation of new federal wastewater regulations.

What the budget did not contain was a definitive road map to erasing infrastructure deficit. FCM would like to work towards a framework for achieving this important goal in the near term. Canada's municipalities own and operate 60% of Canada's core economic infrastructure but collect just 8¢ of every tax dollar paid in Canada. This is one of the reasons why it is essential to ensure new predictable infrastructure investments, such as the indexing of the permanent gas tax fund, which will add $9 billion over 20 years.

I'd just like to give you a clear picture of why we believe investments that are predictable, like the gas tax fund, are so essential to our work and to the country. Investments that are predictable allow companies to hire new workers and plan for new equipment that is needed. They allow business decisions on where to locate or upgrade, based on planned public infrastructure. The gas tax allows for long-term planning with the flexibility for projects to be approved and funding disbursed in the same year. It also allows for the federal government to identify broad investment priorities while municipalities select the projects most needed. In addition, the injection of private investment becomes easier to consider due to the access to a predictable revenue stream. Perhaps most importantly, every region receives its fair share, which means job creation across the country and more balanced economic outcomes.

For Canadian municipalities, challenges will persist and remain a threat to Canada's economy and quality of life. These include the $20 billion price tag for meeting the new federal waste water standards, growing traffic gridlock, and inadequate public transit, as well as the challenge of adapting municipal roads, bridges, and water systems to extreme weather caused by climate change. Meeting these challenges will require further commitment by all orders of government, a framework for cooperation, better infrastructure management through measures such as sustained capacity building, and new partnerships with the private sector where they make sense and where they benefit Canadians.

An essential piece of this collaboration needs to focus on putting an end to off-loading, whether it's the result of legislation shifting unfunded responsibilities onto local governments, or municipalities having to fill the void when another government fails to fulfill its own front-line duties.

We hope that the long-term plan announced in Budget 2013 will provide all levels of government with a practical model of co-operation and that it will help break down the barriers that prevent them from providing taxpayers with the best value.

The infrastructure plan that was announced is an opportunity to expand the partnership in terms of both infrastructure and other challenges. Municipal leaders are ready to do their part.

We are pleased to have this opportunity to talk and look forward to your questions.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll now hear from Mr. Morrison, please, for five minutes.

[Ian Morrison, Spokesperson, Friends of Canadian Broadcasting]

Mr. Chair, thank you for the opportunity to appear before this committee.

Eighty-one years ago, a Conservative prime minister introduced public broadcasting in Canada. Fifty-nine years later, a Progressive Conservative prime minister updated the Broadcasting Act for the 21st century.

Clauses 228 and 229 of Bill C-60 would apply certain new provisions of the Financial Administration Act to the CBC, giving the cabinet the right to direct the Treasury Board that it must approve CBC's negotiating mandate for any collective agreement and impose any requirements on that mandate. Further, a Treasury Board employee might attend and observe the collective bargaining process. No collective bargaining could be entered into by the CBC without Treasury Board approval.

The principal financial provisions relating to the CBC are set out in the Broadcasting Act, sections 52 to 70. They reflect a decision by Parliament to treat the CBC differently from other crown agencies subject to the FAA. In particular, the FAA's direction and control provisions do not apply to the CBC. In so doing, Parliament followed recommendations by the House of Commons Standing Committee on Communications and Culture, and the government's own policy paper entitled, “Canadian Voices, Canadian Choices: A New Broadcasting Policy for Canada”. The standing committee's report expressed the nub of this issue succinctly. It said:

The CBC should remain exempt from the power of direction provisions which are applicable to other Crown corporations under the Financial Administration Act, and from other provisions which would compromise the “arm's-length” relationship of the CBC with the government.

Part III of the Broadcasting Act sets out the provisions of CBC's mandate within the Canadian broadcasting system. Each of these is outlined on page 2 of the letter of opinion by Brian MacLeod Rogers, one of Canada's most distinguished and renowned media lawyers, who is with me here today. Friends has commissioned this opinion and has tabled the letter with the clerk of your committee this morning.

Sections 35 and 52 of the Broadcasting Act are extremely clear in their direction that the CBC's editorial independence is an imperative that requires CBC to be treated differently from other crown agencies. For example, subsection 35(2) states that all the provisions of part III:

...shall be interpreted and applied so as to protect and enhance the freedom of expression and the journalistic, creative and programming independence enjoyed by the Corporation in the pursuit of its objects and in the exercise of its powers.

The Broadcasting Act's fundamental requirement that CBC must maintain an arm's-length distance from government and be protected from possible governmental interference, as well as that the public should perceive that the CBC is independent, are not reflected in the Bill C-60 proposals. Mr. Rogers' letter of opinion makes clear that there is a conflict between the carefully protected special status of the CBC under the Broadcasting Act, and the proposed provisions of the FAA that seek to impose direct control by Treasury Board on all aspects of CBC's employment relations. Mr. Rogers concludes:

After all, it is all too possible that government's levers of power, particularly its exercise of financial control, could be used in future to shape, diminish or even threaten the CBC's role as public broadcaster. Certainly, that perception by the public may be difficult to avoid, and CBC management and employees may find themselves affected in myriad and subtle ways in order to curry the government's favour or avoid its displeasure.

Mr. Rogers concludes that the inherent conflict between the two statutes will require judicial determination to reconcile the apparent conflict between them.

We recommend that the government steer clear of that morass by removing the CBC from Bill C-60, or failing that, making the clauses referencing the CBC subject to the protection from interference afforded by subsection 35(2) and section 52 of the Broadcasting Act.

Mr. Chair, the clerk has also distributed copies of a letter to the Prime Minister. The letter is signed by a number of Canada's most eminent authorities on democratic journalism and has been copied to the members of your committee. I would like to add that Bernard Derome also signed the letter last night.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Morrison.

Next we'll have Mr. Aylward, for your five-minute presentation, please.

[Chris Aylward, National Executive Vice-President, Public Service Alliance of Canada]

Thank you, Mr. Chair, and thank you, committee members, for inviting me here today to share the views of the Public Service Alliance of Canada on Bill C-60.

I had the pleasure of appearing before this committee last October on the previous budget implementation bill, one that continued cutting important public services that Canadians rely on, such as search and rescue, employment insurance, benefits and services for veterans, food inspection, border security, Canada's national parks, and scientific research, among others.

We asked the government to change the decision on these cuts because we were already seeing the negative impact they were having on Canadian families, communities, and the economy. We wanted the government to be more transparent and to start listening to Canadians before making decisions on the programs and services they rely on. I am disappointed that the latest budget implementation act did not heed these calls for caution. On the contrary, the cuts continue, and with the bill presently before the committee, the government is proposing to extend the damage to public services by adding unnecessary barriers to effective collective bargaining.

Division 17 of the latest budget implementation bill will allow Treasury Board to unilaterally interfere directly in negotiations with crown corporations and their unions. This is not a benign change but one that could have profound consequences for labour relations in crown corporations. The Public Service Alliance of Canada represents over 180,000 members. Of those members, 5,000 work at 19 different crown corporations, including hard-working Canadians at the Bank of Canada, the Canadian Council for the Arts, Canada Post Corporation, and the Royal Canadian Mint, among others.

Injecting a third party into the bargaining process isn't conducive to productive labour relations or collective bargaining. It removes effective control from the parties most directly affected, who know their workplace and the people who work there. The act will require crown corporations to get approval for their bargaining mandate from Treasury Board. It also will give Treasury Board Secretariat the authority to place one of its own employees at the bargaining table to attend and observe, and presumably report back. This will effectively put a chill on any open and frank discussions the employer and the union could have at the table. Cabinet will have the ultimate authority over whether or not to interfere in the bargaining process, which would appear to be a further consolidation of power in the hands of the Prime Minister's Office.

The legislation specifically states that while it can interfere, Treasury Board is not the employer. They will have the power to dictate the mandate for bargaining and can be in the room overseeing the bargaining, but they've washed their hands of any responsibility for having to be accountable for the implementation and responsibilities associated with the agreements or other terms and conditions of employment.

The previous budget implementation bill imposed a similar arrangement with the Canada Revenue Agency, and I speak from personal experience. The CRA and the PSAC component of the union of taxation employees, whose members work at CRA, have had a good working relationship in previous rounds of bargaining. Now, negotiations are dragging on and the absence of a new contract, coupled with the continuing cuts to jobs and services, is creating a toxic environment, one that could be avoided. Employees and the public services they provide to Canadians suffer when the labour relations climate is undermined in this way. It does not lead to more effective delivery of public services, but rather leads to increased stress and conflict in the workplace. It also brings into question the integrity of the bargaining process and raises the question: who are we really bargaining with?

The latest move affects our national museums and the CBC, among others. It could signal an end to the independence of our national cultural institutions. Is this just another way of seeking control over independent institutions that work on behalf of Canadians and not the government of the day?

I'll conclude, Mr. Chair, by saying that this new provision will just compound a worsening problem. I recommend that this committee strike division 17 from the bill and send the government a message that it should honour the collective bargaining rights of the members of the federal public service.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll begin members' questions with Ms. Nash, for five minutes, please.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Chairman, would you indicate to me at what time it would be appropriate to ask for unanimous consent to be able to ask questions in one of the rounds? I just want to signal my interest in that consensus test, but I'll wait until you have a proper moment.

[The Chair, Conservative, James Rajotte]

You can ask for it now if you wish.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

It's entirely up to you, Mr. Chair. I didn't want to interrupt the flow, but neither did I want to interject when you're running out of time.

[The Chair, Conservative, James Rajotte]

Okay.

Does Ms. May have unanimous consent to.... Ms. Nash, on this point?

[Peggy Nash, NDP, Parkdale—High Park, ON]

Mr. Chair, our committee has agreed to rules about the representation on the committee and who gets to speak when. As you know, we have very limited time. But based on your letter inviting amendments from other members of Parliament, if one of the Conservative members on the committee would like to donate their time and have this member substitute in, we would be quite willing to do that, which is of course according to our rules.

[The Chair, Conservative, James Rajotte]

You're saying that you agree only if the Conservatives gave up their time?

[Peggy Nash, NDP, Parkdale—High Park, ON]

Unless another party would like to give up their time, but those are the rules that we've all agreed to, as members of this committee.

[The Chair, Conservative, James Rajotte]

Yes, you're right. We do have a schedule in front of me that I'm obliged to follow.

Ms. McLeod, on this point?

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

I was going to say, alternatively, we would provide consent if one of the opposition members were willing to give up one of their slots. But certainly we have a very short timeframe in terms of...even all our members will not have an ability to get a question in to this particular panel. So I think if Ms. May wants to find someone who's willing to provide the slot....

[The Chair, Conservative, James Rajotte]

Okay, thank you, Ms. McLeod.

Mr. Brison, do you want to give up your slot to Ms. May?

[Scott Brison, Liberal, Kings—Hants, NS]

As a Liberal, it's instinctive for me to want to give.

[Voices]

Oh, oh!

[Scott Brison, Liberal, Kings—Hants, NS]

But as a pragmatist, I only have one round, so I'm unable to do that. But I would suggest the Conservatives who have a liberal quantity of opportunities to ask questions ought to consider this.

[The Chair, Conservative, James Rajotte]

Okay.

Ms. May, I think you've had your answer from the three parties, so I will follow the list as prescribed.

I will continue with Ms. Nash, please. Your time starts now.