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—