Finance Committee on Oct. 25th, 2012

[Michael Mazzuca]

With respect to pension and benefits, I think we've heard some suggestions that there should be amendments. I've heard both that the matters of benefits should not be made public and also that they should be exempted. It's the CBA's position that the bill should not apply to pension plans, health and welfare plans, and other benefit funds that provide benefits to plan members. These types of plans obviously have an enormous number of transactions over $5,000, and there would therefore be an enormous burden on those plans to report and similarly an enormous burden on the CRA to receive those reports.

Fourth, there is the matter of costs. I think there is a significant cost because of the very detailed reporting. The bill requires the reporting of all transactions. The ones that are enumerated are simply inclusive. Again, we believe that would impose burdens of cost on both the trade unions and the funds.

[The Chair, Conservative, James Rajotte]

Thank you very much.

We'll now hear from the Canadian Labour Congress, please.

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

Thank you, Chair.

We're deeply concerned about this private member's bill and its many disturbing provisions. We're so concerned that we think this legislation should be withdrawn. I'll briefly touch on some of our objections, all of which are detailed in our submission to the committee.

We strongly believe that Mr. Hiebert's unnecessary bill would create more bureaucratic red tape that will be very expensive for our government, pension plans, investment managers, health and benefit plans, and labour organizations to administer. It will significantly intrude on the privacy of a large number of our members, as well as on the privacy of many other individuals who are not union members and on the privacy of their families.

We also believe it's unconstitutional and that it offends both federal and provincial privacy laws. Despite our differences, as Bob Blakely said, we've successfully worked with the government on a wide range of issues, and not once in my career of 30 years has a government minister or a representative raised concerns about accountability with us—not once. When Mr. Hiebert introduced his bill, he told reporters that he had not received a single complaint from a union member that he or she could not get financial information from their union. There's a good reason for that.

In the six provinces and the federal government where there this legislation is governing the provision of financial information to union members, there were in 2010-11 a grand total of six complaints filed with labour boards, all of which were resolved. This represents six complaints out of 4.2 million union members in Canada.

The reporting requirements in Mr. Hiebert's bill will intrude right into the medicine cabinet of many Canadian families. His bill flies in the face of long-held conservative principles of less intrusion by government, budget reduction, and less bureaucracy. I think it's ironic that this very government got rid of the long form census on the basis of intrusion into an individual's privacy—asking how many toilets you have in your house—yet this bill does exactly that in a much more intrusive manner.

This is why, Chairman, dozens of pension plan managers, investment fund managers, and benefit plan administrators have advised us that they oppose this legislation. To implement Mr. Hiebert's bill, the government will have to invest in costly systems—not uncostly systems, but costly systems—capable of processing tens of thousands individual reports containing thousands of separate transactions.

Who is promoting this bill and where is the support coming from? Why do they want the information that this bill provides? Who is behind it? You don't have to look hard to see Merit Canada, an organization that does not even release the names of its board members and that has four lobbyists on the Hill today lobbying on this bill. There's the Canadian Federation of Independent Business, which is, I might add, a non-profit organization just like us that issues tax receipts for its members' fees. There's the National Citizens Coalition, which holds no annual general membership meetings and provides no financial statements to its members. There's LabourWatch and the Canadian Taxpayers Federation. These are all the same people wearing two or three hats at the same time. They work very hard to destroy what we've accomplished. We know these groups.

The few MPs promoting this bill don't like us. They have a track record to indicate and prove that fact, but it's important to note that none of these organizations, which enjoy tax-free status and lobby the government on an ongoing basis, are very transparent at all. Not a single one of them would agree to share the information publicly, yet they want you to gather that from us. In fact, Merit Canada was until recently in violation of the legislation requiring it to report to the industry minister himself.

There are going to be a lot of unintended victims of this bill: people who are on disability plans, a person in the same benefit plan as a union member, businesses, commercial enterprises that have contracts with us. All of them will have private information posted on a public database. This is information employers cannot obtain from plan carriers because of privacy legislation.

In summary, this bill is seriously flawed legislation that is unnecessary. It's bureaucratic, it's discriminatory, and, I might add again, it's unconstitutional. I strongly encourage you to review the wide range of organizations opposing this legislation.

In conclusion, if there is a real concern about the deductibility of professional fees and union dues or tax receipts issued by non-profit organizations, I'd like to reiterate my wish that the government discuss it directly with all sectors of Canadian society that are treated similarly and equally under the Income Tax Act. Then, working together, it may be possible to come to a reasonable solution regardless of our views on specific issues.

I do need to add, Mr. Chair and committee members, with respect, that how we deploy our financial and staff resources is frankly none of your business. Our members have told us they don't want their bosses to have access to this information in order to use it against them.

Our policies and our budgets are set by our owners. We call them “members”; they're shareholders in the private sector. We're democratic, our conventions are open to the public, we're transparent to our members, and our decision-making is not the business of the government, our bosses, or anti-union organizations.

This private member's bill will set terribly bad policy if it's adopted, and I urge you to reject it.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from the Canadian Taxpayers Federation, please.

[Gregory Thomas, Federal and Ontario Director, Canadian Taxpayers Federation]

Thank you, Mr. Chairman.

My name is Gregory Thomas. I am the federal director of the Canadian Taxpayers Federation, representing 79,000 supporters across Canada. We are Canada's oldest and largest voice for smaller government, more accountability, and lower taxes.

We appreciate the invitation here today.

Our organization supports this legislation. We believe that similar legislation has been in place for charities for many years. The vast amount of tax relief afforded to labour organizations in the form of tax deductibility for union dues, tax-free status for core operations of labour organizations, and tax-free strike pay creates a public policy interest in having disclosure.

Our organization has a long and vigorous history of stepping on the toes of government in the interest of disclosure, governments of all stripes. We've locked horns with government members over the issue of whether golf green fees should be deductible; we say they shouldn't be. It's the same for hockey tickets: we're against it. We're against corporate welfare. We're against pork-barrelling. We try to be consistent, and in the course of our trying to be consistent, people sometimes get a misguided view of where our organization sits, but we take a principled stance in support of the spirit of this legislation.

With regard to the details, we're obviously out of our depth. We don't have a vast army of lawyers and specialists. On the notion that this bill is at risk of a charter challenge, this is Canada. Our jaywalking laws have been subject to a charter challenge. The only bill that's not at risk of a charter challenge is one that's never been passed.

[Robert Blakely]

That's a good point, actually.

[The Chair, Conservative, James Rajotte]

Order. It's Mr. Thomas' time.

[Gregory Thomas]

We salute the spirit of the House of Commons in providing private members with the opportunity for legislation, over the last couple of decades, thanks to the outrage of groups like ours that see private members not given the independence they deserve and not being able to bring independent ideas to the House.

This bill received the support of a majority of members of the House to get it to committee stage. At the time, many of the members who voted for, and possibly even against, the bill indicated that they wanted to see what would come out of the committee, so I think to deride an independent member who gets a bill to committee stage for sloppy drafting undermines the spirit of private members' legislation. I'd be very cautious about that. That's what committees are for.

What legislation has brought the Canadian Labour Congress, the Canadian Federation of Independent Business, the building trades, and the Taxpayers Federation around the same table to have an open discussion? How often do we get a voice like this?

I don't think you can, on the one hand, condemn omnibus legislation and that style of legislation—which we certainly do—and at the same time take issue with a private member bringing a bill, getting it past second reading, and bringing it to committee. I think this is what parliamentary democracy is all about. I think this gives all members on all sides of the House an opportunity to have an influence on the process, and also an opportunity to Canadians from all walks of life.

We endorse this process. We endorse the legislation in spirit, and we appreciate your giving us this opportunity to participate today.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from Professor Logan, from San Francisco State University.

Professor Logan, please go ahead with your five-minute opening statement.

[Dr. John Logan]

Thanks very much, Mr. Chair, and thank you to the members of the committee.

I'm director of labour and employment studies at San Francisco State University. I'm going to talk about the U.S. experience with this type of legislation.

I would like to mention that I don't believe the U.S. is the centre of the universe. I was born in the U.K. Before coming back to California I taught for nine years in the department of management at the London School of Economics. I did graduate work in Canada, but here I think the U.S. experience is very instructive and gives rise to serious concerns about both the cost and the benefits of this type of legislation.

I would like very briefly to make three points. First, I believe very strongly in union transparency and accountability; however, what we have seen in the U.S., particularly under the last Bush administration, which introduced the detailed financial reporting that this bill is based upon, was not real transparency. It was an attempt to politicize regulatory enforcement in the name of transparency.

Second, contrary to what has been stated before, I think there's absolutely incontrovertible evidence that the costs of these new regulations for both government and for unions are very substantial, and I will come back to that point.

Third and finally, I think there's no evidence whatsoever that these detailed financial statements have provided any useful service to ordinary union members. I think the only groups that have used them were the very groups that were pushing for them in the first place, and those have been groups that have a political agenda to weaken unions and to use this information against unions, albeit often in a misleading and distorted way.

First of all, in terms of the attempt to politicize regulatory enforcement in the name of transparency, as has been said about the Canadian legislation, there's absolutely no evidence ordinary union members were pushing for these detailed financial disclosures in the United States. However, there's considerable evidence that groups with a separate political agenda to weaken unions were the very ones were pushing for it, and I'll simply quote from one politician, Newt Gingrich, whom I'm sure you are familiar with. He said that a future Republican administration must impose increased financial reporting requirements. He said, “It will weaken our opponents and encourage our allies”. That's exactly what the Bush administration did in 2000 when it came to power.

The costs associated with these new reporting requirements are very substantial. The costs to the government in terms of processing these forms are a minimum of $6.5 million per year. These figures are from the Federal Register from the Department of Labor. This is under a system in which we have had 60 years of experience. The division of the Department of Labor that does this has been established all that time, and we know how to do this, so if you're talking about establishing an entirely new division and using government resources to train unions in how to comply with the reporting, there's reason to believe it will be significantly more than that.

In the United States about 29,000 labour organizations file these reports. They only apply to private sector unions, not to wholly public sector organizations, as I believe is the case in Canada.

Importantly, the major cost is the filing of the so-called LM-2 forms, which require the itemizing of expenditures of $5,000 or more. In the U.S. these apply only to labour organizations with revenues over $250,000 per year. We have much simpler forms for smaller organizations. There's a separate form for organizations with revenues between $10,000 and $250,000 a year and a separate form for organizations with revenues under $10,000 a year.

This is not the case in Canada. In Canada everyone will be submitting the more detailed forms, and this is what incurs the costs, both to government and to the unions.

The costs to the unions are very substantial. The Department of Labor estimates the cost of complying with the LM-2 forms, which are the types that are under consideration with this bill, to be $116 million in the first year, $83 million in the second year, $82 million in the third year, and so on.

We also have a very extensive academic survey conducted by scholars at Cornell University and Pennsylvania State University of over 100 national and international unions in the United States. In my submitted comments, I'll summarize the findings.

Simply, one of the findings is—

[The Chair, Conservative, James Rajotte]

Professor Logan, I'm sorry to interrupt. Could you briefly wrap up, please?

[Dr. John Logan]

I have one final thing: it is that 83% of unions reported that staff members were required to spend more time on compliance and less time on other duties.

In sum, I would say, when you ask who has benefited, more burdensome reporting requirements have not benefited the public interest. They have not exposed cases of corruption or made union officials more accountable to their members. They haven't advanced the cause of transparency. However, they have wasted public money and they have politicized regulatory enforcement in the United States.

I'd be happy to answer in more detail questions about any of these issues.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear the opening statement from the Canadian Federation of Independent Business, please.

[Daniel Kelly]

Thanks very much for the opportunity. I'm Dan Kelly, the president of CFIB.

I'm here to speak in favour of this piece of legislation and to give you a little bit of an understanding of how this would work from our perspective.

There's been a lot of discussion about whether what's good for the goose is good for the gander—whether groups that are not-for-profit associations, advocacy groups for taxpayers, small business owners, or business owners of any sort should be subject to the same kinds of provisions. However, there is one important principle, one important difference that needs to be spoken about with respect to this legislation that targets unions and the spending of unions, and that is the voluntary nature of membership fees.

We in most associations, and certainly in my association, have completely voluntary membership fees. If a member of ours, a small business owner and a member of CFIB, at any given point in time feels that my spending, our spending, is inappropriate or has questions or doubts about that in any way, they can quit the next day.

In Canada, because of the Rand formula, that is impossible. You are required by law to pay union dues whether or not you want to be a member.

I accept that most union members likely want to belong to the union and support the union that they're a part of. I don't take any issue with that. However, I will say that because legislation in Canada, legislation that is largely unprecedented in the world these days, gives unions massive powers to collect dues from those who may not wish to belong, then additional sets of responsibilities should be taken to address them to ensure that those—perhaps few—members who don't want to belong and don't want to pay dues are able to get as much information as they can to inform their thinking about the organization they are funding.

We have 109,000 members across Canada. All of them are completely voluntary. We are a non-partisan organization, we work with all political parties at all times, we don't endorse candidates in any fashion, and we don't accept government funding. I'm really pleased to hear that some of our organized labour colleagues are joining our call for reduced red tape and paperwork, but I have to note that it is largely the first time I've ever heard this. Most of the time most organized labour organizations are pushing for additional regulation, additional red tape for business on a day-to-day basis.

Somehow Canadians have convinced themselves that we are in the mainstream of union legislation around the world, that Canada is perhaps somewhere between the U.S. and Europe, but nowhere in Europe right now are employees who work in a unionized environment required to pay union dues. In Canada they are. Again, with that, additional responsibilities are due to the union members and to the public by an additional level of disclosure.

We do have a suggestion, though. If a union is uncomfortable with this legislation, perhaps there could be an exemption made for those unions that decide to make their union memberships and union dues voluntary. Perhaps then they wouldn't need to be subject to this additional standard. If that were able to be changed, certainly we would support that.

Thanks very much.

[The Chair, Conservative, James Rajotte]

Thank you for your opening statement.

We'll begin members' questions with Monsieur Caron. Vous disposez de cinq minutes.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much.

In his opening comments and his questions to the sponsor of this bill, my colleague mentioned that the bill is badly written. That is my reaction to the bill too and to the number of amendments that we are being asked to write in order to correct the deficiencies in its five pages.

By the way, it bears mentioning that this is the second version of the bill because the first was rejected. What we are being asked to do, in fact, is not to review or study this bill, but to rewrite it entirely for the hon. member.

Mr. Mazzuca, were you here for Mr. Hiebert's presentation?

[Michael Mazzuca]

Yes.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Do you feel that I am exaggerating in what I am saying? In terms of the bill as tabled and the list of amendments we have been presented with, is the issue really the very substance of the bill?

[Michael Mazzuca]

If I may, one of our biggest concerns with the bill, and we have a few, is with respect to its extremely broad definition of labour trusts. We've already heard several times this afternoon that it includes a number of entities, which may or may not have been the intention of this bill. The way it's drafted, it includes pension funds that have any unionized members, health and welfare trusts, supplementary unemployment insurance benefits, training funds, etc. Taken in its black-and-white wording, it would also include provincial workers' compensation funds, because they have unionized members in them.

It's clear that to address these issues, the bill would have to be significantly revamped and redrafted. It's for that reason that the CBA, rather than suggesting specific amendments, has suggested that the bill not be passed.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

So you are pointing out that the original bill raised questions of privacy.

In my opinion, the hon. member has clearly demonstrated that there are some quite major shortcomings and has asked us, the committee, to rewrite the bill so as to get round the privacy issues as much as possible.

You are basically telling us that the issue is a fundamental one and that, given the way in which the bill is drafted and the way in which the committee works, it is really impossible to save this bill in terms of the fundamental issue of privacy.

[Michael Mazzuca]

With respect to the issues of privacy, I think there's clearly an issue on the side of pension, health, and welfare plans that needs to be addressed. Requiring somebody's pension benefits or prescription drug benefits to be posted on a public website would run afoul of Canadian privacy laws and Canadian privacy concerns.

One of the other fundamental issues with respect to the reporting required under the bill is its breadth. It doesn't have a number of enumerated items that need to be disclosed. The way the bill is currently drafted, those enumerated items are simply examples of items that need to be disclosed. The way the bill is drafted, it states that any transactions, in aggregate, of over $5,000 need to be reported, and then it lists the items that are included.

We think that because of those fundamental issues, it really needs to be pulled back.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you. I have one last question for you.

Do I have 45 seconds for that?

[The Chair, Conservative, James Rajotte]

One minute.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

One minute. Great.

According to Mr. Hiebert, one main reason why this bill has been introduced is that union dues are tax-deductible. So the organization should be more transparent.

Mr. Blakely tells us that there is a double standard because medical and professional organizations are not covered by this bill. Mr. Kelly tells us that it is quite normal because union dues are mandatory.

What is your opinion?

[Robert Blakely]

Well—