First of all, I would like to thank the Standing Committee on Finance for sending an invitation to the Montreal Economic Institute.
I would like to say a few words about our institute. The Montreal Economic Institute is an organization dedicated to research and economic education. We are an independent, non-partisan and not-for-profit organization. We do not accept any government funding.
A year ago, we published a research paper called The Financing and Transparency of Unions, co-authored by Louis Fortin, Michel Kelly-Gagnon and myself.
That is the basis for my presentation today. I will touch on three points. I will start with the general principle, followed by a major distinction concerning professional associations and, finally, I will give you some concrete examples.
First, in terms of the general principle, we support the idea of increased financial transparency of labour organizations on the basis of the general principle that with compulsory financing comes a moral obligation of transparency, contrary to voluntary financing. Only the government can legitimately impose financial obligations on its citizens and that is how it finances public organizations. Private organizations must persuade their clients, associations must attract members and charity organizations must collect donations. That is all done voluntarily.
Unions are the only private organizations that do not rely on voluntary funding. Laws and court decisions grants them powers that are quite unusual. In short, the Rand formula gives them the equivalent of a power to tax. So the general principle seeks to ensure that, in addition to the power to tax, unions demonstrate increased transparency to the public. That is at the heart of Bill C-377.
In terms of unions and professional associations, it is true that, from one angle, the situation of unions is somewhat similar to that of professional associations. For example, to practise medicine, law or other professions, you are required to pay dues to that type of association. However, there is a major difference that should be pointed out. Professional associations are set up by governments to protect the public, whereas unions are set up by their own members to defend their own interests. Professional dues paid to an association are used to finance a service that serves the public interest, whereas union dues finance a private organization that serves the specific interests of its members. That is commendable, but it is not the same thing as a professional association.
Let me give you a few concrete examples. Beyond the general principle, there are concrete problems that Bill C-377 seeks to address. I will give you a few examples.
In December 2010, it was revealed that the Fraternité inter-provinciale des ouvriers en électricité had made a loan of $5 million to Tony Accurso, a construction magnate at the centre of various allegations, found guilty of fraud and formally charged of corruption and breach of trust. It is highly problematic that a union was able to conduct those types of transactions hidden from view.
In September 2011, Le Devoir revealed that labour organizations were buying advertising space at the convention of the New Democratic Party, possibly violating political parties financing rules. The NDP has since returned these sums. The interesting point in this matter is that the journalist, Hélène Buzzetti, figured out the existence of those transactions by using publicly available information on the website of the department of labour, in the United States, even though it concerned Canadian labour organizations and a Canadian political party.
The difference is that the United States has higher transparency standards for labour organizations than Canada.