Evidence of meeting #95 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was c-377.
A video is available from Parliament.
3:30 p.m.
Conservative
3:30 p.m.
NDP
Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC
Mr. Chair, I would like to put a motion before the members of the committee.
3:30 p.m.
Conservative
The Chair Conservative James Rajotte
Let me just do the orders of the day; then I'll go right to you.
November 26th, 2012 / 3:30 p.m.
Conservative
The Chair Conservative James Rajotte
This is the 95th meeting of the Standing Committee on Finance. The orders of the day, pursuant to the order of reference of Wednesday, March 14, 2012, are for clause-by-clause consideration of Bill C-377, An Act to amend the Income Tax Act (requirements for labour organizations).
You have the floor, Mr. Boulerice.
3:30 p.m.
NDP
Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC
Thank you very much, Mr. Chair.
The motion I am submitting to committee members reads as follows:
That this Committee, pursuant to S.O. 97.1, recommends that the House of Commons do not proceed further with Bill C-377, An Act to amend the Income Tax Act (requirements for labour organizations) in order to protect the integrity of the government's budget framework.
And when the motion is adopted, I will move that the Chair report the motion to the House.
I have enough copies to distribute to committee members. They are obviously in both official languages. I could hand them over to the clerk.
I believe we want to focus on the substance, on the merits of the question. We have received information that our own committee requested from the Canada Revenue Agency and that, to a large degree, justifies the motion. That information, which concerns the estimate of costs related to the implementation and administration of Bill C-377, was distributed to us by the clerk this morning. It contains some very interesting items.
I think it provides quite an eloquent answer to the first question we asked about the costs to administer the bill. The answer we have received reads as follows:
The CRA prepared cost estimates for the administration of the Bill based on an estimated reporting population of fewer than 1,000 entities (i.e. separate reporting requirements are not expected to be imposed on each local associated with a labour organization if the pertinent information is collected by the organization for the purposes of meeting the requirements of the bill).
We are not sure about this assessment, but we will come back to it.
It continues as follows:
As currently worded, the bill involves the implementation of a comprehensive system that includes electronic processing, validations, and automatic posting to the CRA Web site. The estimated incremental cost to the CRA would be $10.6M (including 91 FTEs) over the first two years and $2.1M ongoing (including 21 FTEs). These costs are mostly attributable to the requirement for the cross-referencing of data.
These requirements are set forth in the bill.
Mr. Chair, the NDP's intent is to subject this committee to the same budgetary discipline measures as the Treasury Board is attempting to impose on all public services. We are looking at an estimated cost of more than $10 million over two years and recurring annual costs of $2 million. Under the framework provided by the House of Commons Standing Orders, are we still dealing with a private member's bill?
On this point, I will recall the point of order I had the pleasure of making in this House last Thursday. I asked the Speaker of the House of Commons to verify whether it is true, as provided by Standing Order 79, that the House may not adopt an appropriation bill if it is not accompanied by a royal recommendation, which is clearly not yet the case.
I would like to emphasize that the Canada Revenue Agency's estimate of costs was based on fewer than 1,000 entities. In other words, fewer than 1,000 reports or organizations would result in costs of $10 million for the first two years alone, as well as additional costs of $2 million a year. However, according to our estimates, there would not be 1,000 reports or 1,000 organizations covered by the bill, but rather several thousands of organizations. We believe instead that the number of organizations would be 25,000.
We can easily conceive that the $10-million figure would be 25 times greater, which would mean $250 million for the bill's administration in the first two years. I say that because, like some of my colleagues, I am fortunate to come from a union movement background. I was responsible for communications at the Quebec branch of the Canadian Union of Public Employees, which had 535 locals, and that was just in Quebec. We are not talking about locals or local unions of the Steelworkers or the Communications, Energy and Paperworkers Union of Canada, the Canadian Auto Workers or other unions that do not belong to the FTQ or the CLC but are independent or affiliated with organizations such as the CSN in Quebec.
In that case, an estimate of the cost based on only 1,000 entities does not seem to correspond to what the bill would actually cost. This question is of course subject to debate, since we want discussions on the topic to be constructive. We think the cost would be much higher. Furthermore, the question whether this is consistent with the characteristics of a private member's bill has not been resolved. In the second edition of House of Commons Procedure and Practice, O'Brien and Bosc state that two types of bills confer parliamentary authority to spend and that both would therefore require a royal recommendation.
Bill C-377 is of the second type and is therefore a bill that authorizes new charges for purposes not anticipated in the estimates. O'Brien and Bosc specifically state that the charge imposed by legislation must be new and distinct. In other words, it must not be covered elsewhere by some more general authorization. New subsection 149.01(4) of the Income Tax Act, as it appears in Bill C-377, requires that the information contained in the public information return referred to in subsection 149.01(2) shall be made available to the public by the minister, including publication on the departmental Internet site in a format that allows for word searches to be performed and for cross-referencing of data.
We can see from the Canada Revenue Agency's answer that consideration was given in the estimate to the costs that this would represent for Canadian taxpayers. These provisions of Bill C-377 therefore require an expenditure of public funds in a manner and for purposes not currently authorized. This therefore means that these are new and distinct funds that must be authorized in order to give the Canada Revenue Agency the means to manage this work, which would also be new and distinct.
Even in the most recent supplementary estimates, which were tabled a few weeks ago and which I had the pleasure to examine as part of my previous duties, nothing suggests that the costs associated with the work this bill requires have been included. Consequently, they have not been anticipated. In view of the answer the Canada Revenue Agency gave us this morning in response to requests by our parliamentary committee, we must therefore view them as new and unanticipated charges.
I am trying to see how this bill could be considered as having symbolic or political consequences, as would be the case if a bill were being introduced to change the name of a national park or to organize a celebration in honour of certain persons. On the contrary, we are dealing with a bill that would result in new, unanticipated and unauthorized costs. Consequently, in the view of the official opposition, this poses a problem.
I would remind my colleagues and Conservative friends that, in times of fiscal austerity, we wonder how the Canada Revenue Agency would be able to find new funding to process new data and discharge this administrative burden being imposed on it. Let us not forget that we are making savage, draconian cutbacks to public services as a whole.
The government is headed in two directions at the same time. On the one hand, it says it will cut spending by 5% to 10% to balance the budget, although we do not know when that will happen. On the other hand, it has decided to examine the books of thousands of labour organizations, trusts and pension funds. It has chosen to be nit-picking and to create red tape. It will have to hire new officials, which will cost taxpayers millions of dollars. How can you do both and still make ends meet? This is a difficult position to defend. Most of the time, you try to be consistent.
Why spend millions of taxpayer dollars to obtain useless information that the members of labour organizations across the country already have? We wonder where the public interest lies in this effort, which vastly exceeds the scope of a private member's bill. The Canada Revenue Agency has received no instructions from the chief statistician and has never had to manage this kind of process for labour organizations. In the debate on second reading of Bill C-377, the bill's sponsor suggested that the provisions included in this legislative measure are similar to those that have been in place for charities since 1977.
Mr. Speaker, let us compare apples with apples, not with oranges or bananas. The information being required of charities and processed by the Canada Revenue Agency is absolutely nothing like the information that would be required of unions and organizations affiliated with or linked to unions, as provided by Bill C-377. There is absolutely no comparison. The program for charities requires them to disclose much less information and communicate much less data. Let us draw a parallel with the answers we received this morning. This program costs more than $33 million annually and involves 300 full-time employees.
Is Bill C-377 the solution we have come up with to save the positions of federal employees and to give them work examining the financial reports of labour organizations? I do not believe that is part of the Conservative government's Economic Action Plan.
If Bill C-377 is adopted, the Canada Revenue Agency will have to create a new section, which will add a whole new, complex layer of government bureaucracy and red tape. Bill C-377 will require a new entity to be established to implement and administer those provisions. Furthermore, the bill is worded in such a way that it includes all labour organizations and labour trusts, which, in our view, do indeed represent approximately 25,000 filers.
Costs will obviously be incurred to train union officers because they will be unfamiliar with the new forms, but, more particularly, other costs will be involved in processing the reports from those 25,000 filers. None of those costs is included in the costs anticipated by the Canada Revenue Agency. Once again, these will be new and distinct costs. Based on the passage cited earlier and the interpretation in O'Brien and Bosc, if that condition is met, a bill must be accompanied by a royal recommendation.
I am pleased that we can talk about the cost of this bill today because the imposition of needless expense should not be the priority of this committee, the House or us legislators. It meets no need. As you will recall, witnesses came and told us that, out of 4.1 million unionized workers, 6 complained in 1 year about the difficulty involved in obtaining certain information from their labour organization. So, as they say, if it isn't broken, don't fix it.
I would like to take a little time to focus on this problem, on the fact that this is a costly solution to a non-problem. That is why this motion is entirely legitimate and should be part of our discussion today.
I would like to cite a brief by the CSN concerning the fact that labour organizations already have an obligation to be transparent and to disclose information to their members. It says here:
Unions in Quebec and Canada are subject to a variety of legislation that gives them not only rights, but also responsibilities and obligations. Most labour laws require that strike votes be taken by secret ballot, and collective agreements must be ratified by a union's members. Section 47.1 of the Quebec Labour Code provides that a labour organization “must disclose its financial statements to its members every year.” That is interesting.
Let us remember that they are the ones who pay union dues. They are the main parties concerned by this matter. A labour organization must also remit a copy of its financial statements free of charge to any member who requests it.
Section 110 of the Canada Labour Code provides that a trade union "shall, forthwith on the request of any of its members, provide the member, free of charge, with a copy of a financial statement of its affairs."
It specifies that this must be a copy of the financial statements for the last fiscal year and must contain sufficient detail to disclose "accurately the financial condition and operations of the trade union."
These are admittedly quite detailed and clear obligations that call into question the very necessity of Bill C-377, which we have been debating for some weeks now, including today.
The information is all the more important to note, and the CSN recalls that this financial disclosure obligation also exists in Ontario, British Columbia, Manitoba, New Brunswick, Nova Scotia and Newfoundland and Labrador. That is a lot of people, a lot of workers who are protected and to whom their union's financial information will be available, either at a general meeting or at a member's request, if that member feels he or she would gain some advantage from details or information.
That is why the CSN reminds us that this bill sets forth statutory requirements based on false premises. No problem!
The CSN's brief also states:
Unions are democratic, transparent organizations and are representative of the members, to whom they must account. In our opinion, Bill C-377 represents unwarranted, petty interference in the affairs of a labour organization. What the government should be doing is working cooperatively with employers and unions to develop strong strategies for economic development...
What we have here is a bill that is not designed to develop our economy or employment. Its purpose is to increase the amount of red tape, create more bureaucracy, generate new forms and ensure that we keep government officials busy dealing with information to which union members already have access and which is protected by the laws of our country and by our labour codes.
The sponsor of the bill, according to the CSN, falsely contends that it is justified by the fact that unions are subsidized by taxpayers, since union members are able to deduct their dues from their taxable income. It must be understood that this deduction is claimed under the Income Tax Act, which allows every Canadian taxpayer who is a member of a professional association such as medical associations, bar associations and engineering societies to deduct their membership fees from their taxable income. To justify the bill, the Conservative member also said that he based his bill's requirements respecting publication of the financial information of labour organizations on similar provisions that have long been in the Income Tax Act.
This is another strange statement. The information required of charities is much less detailed and more highly aggregated. This bill would require unions to provide even more detailed information than current legislation requires of companies, charities or professional organizations, which are not at all concerned here. It is somewhat strange that only labour organizations are targeted, when the obligation to pay dues and the fact that taxpayers receive a tax credit for dues paid to the Ordre des ingénieurs du Québec or the Canadian Bar Association is based on the same logic. However, this is not the only problem that this project raises.
Several people have told us some very interesting things about the privacy issues in this matter. Commissioner Jennifer Stoddart informed us of her concerns about the fact that the names and perhaps addresses of certain beneficiaries of pension funds or supplementary insurance plans would have to be made public. That raised questions in our minds about how we wanted to treat our municipal employees and employees of organizations that produce energy in this country. Is it necessary to know that a firefighter or police officer is on short-term sick leave or disability leave and is receiving benefits from the company that manages his or her insurance plan? These kinds of things undermine those people's privacy, and, in addition, in the case of police officers, such information can also cause problems for their own safety and that of their families.
I believe this is an intrusion into the privacy of people who, as unionized workers, receive certain benefits negotiated with their employer. I do not see why parts of the private lives of those people should be made public. The Conservative government generally says it wants to protect freedoms, whereas this bill of a back-bench member of Parliament does not protect people's privacy or freedom at all but rather puts them in a kind of straightjacket, while the government trains a big eye and a telescope on what they are doing, how they spend and what benefits they receive. Their names and addresses will be disclosed as a result of that.
Some people raised a number of questions on this matter. As you will recall, the Privacy Commissioner's testimony was very interesting, but she was not the only person who said this. I remember that representatives of the Canadian Bar Association also talked to us about privacy issues and submitted some quite explicit documents to us. I will take the liberty of citing a few passages from them. The first sentence that I am going to quote is highly relevant. And we have not received an interesting response on this question. The Canadian Bar Association wrote, and I quote:
As a threshold statement, it is unclear what issue or perceived problem the Bill is intended to address. The Bill mandates greater public disclosure of details of the financial operations of labour unions, and limitations on their political and lobbying activities using mechanisms that could be problematic from a constitutional and a privacy perspective.
I will come back to the constitutional issues involved. I have the legal opinion of a labour law professor at the Department of Industrial Relations of Laval University which will be very enlightening on the constitutional problems raised by Bill C-377.
The Canadian Bar Association also emphasized the following:
The CBA Sections have serious reservations about the Bill from a procedural point of view. The Bill could have a pronounced impact on the operations of labour unions, yet these processes are embedded in amendments to the Income Tax Act. In our view, it is inappropriate for operational restrictions to be brought forward as amendments to taxation legislation.
Like the Privacy Commissioner, the Canadian Bar Association people have concerns about this issue.
They also said the following:
Bill C-377 lists financial disclosure procedures that would be required by “every labour organization and labour trust.” It is unclear whether the requirements to disclose salaries and benefits paid to officers, directors, trustees, employees and contractors would require particularized disclosure or global disclosure of all payments in these categories. To the extent that the Bill would require particularized disclosure, it obliges disclosure of personal information which is normally considered among the most sensitive—financial information and information about political activities or political beliefs. The ambiguity in the language in section 149.01(3)(b)(vii) is of concern, because it is not clear whether the statement of time spent on political activities must be particularized. Even if more generalized disclosure is envisaged, for smaller organizations this could result in a direct privacy impact because it may be obvious to whom the information relates. The basket clause at 149.01(3)(b)(xx) authorizing further statements to be required by regulation (“any other prescribed statements”) raises the specter that additional disclosure requirements may be imposed by regulation. Without further clarity on the underlying problem the Bill is intended to address, the Bill lacks an appropriate balance between any legitimate public goals and respect for privacy interests protected by law. The Bill appears to directly target activities protected by the Canadian Charter of Rights and Freedoms by requiring disclosure of time spent on political activity. Privacy is recognized as a fundamental constitutional right under Canadian law, and this Bill has the potential to invite constitutional challenge and litigation.
The Canadian Bar Association also believes that costs are a problem.
We will come back to this new information that we received from the Canada Revenue Agency this morning. We are talking about $10.6 million for the first two years and only 1,000 organizations that would be affected.
The Canadian Bar Association also stated the following:Federal and provincial labour legislation already imposes obligations on labour unions to publish or make available regular financial statements to their members, and some of those obligations are quite extensive. Labour organizations operate for the benefit of their membership and in this way more closely resemble that of a closed corporation. The governance and transparency of the organization should be a matter of general concern to its membership, not the public at large.
The governance and transparency of organizations should be a matter of general interest to members first and foremost. It is they who pay dues, who receive the financial reports, who confer on democratically elected representatives the mandate to represent them and to direct their negotiations, union obligations and the information and awareness campaigns they must conduct. The principals are the workers themselves, who pay union dues. It is thus toward them—and the Canadian Bar Association reminds us of this fact—that there must be an obligation of transparency, not toward the general public. Otherwise, the scope of this rule will be extended to apply to all organizations that enjoy some tax benefit granted by the federal government.
However, I dare believe that my Conservative friends would not go so far as to apply it to all private sector companies that receive a reduction or tax credit, to all families receiving a tax credit or to all individuals who receive a tax credit for professional dues. All those people would thus have to be accountable for the way in which they spend their money and make all their financial returns public. That would cause a kind of massive bureaucratic rather than legislative problem. The Canadian Bar Association further notes:
The additional cost of administration to meet the Bill's requirement would be significant. Unions could be forced to raise dues or reduce services to their members.
Let us remember that the objective of a labour organization is first of all to defend the interests of its members, but also to move society forward so that it is more just. While a union may spend money to complete forms, it may not use that money to protect health and safety, provide better working conditions or negotiate clauses on work-life balance. If the goal is to use an administrative process to impose a straightjacket on unions and to hit them so hard they will be incapable of discharging their primary obligation, which is to provide services to their members, that will be a problem for us. That would be tantamount to perverting the very existence, the primary mandate of labour organizations, of the labour movement in Quebec and Canada. In the 20th century, that movement managed to improve the working conditions of Canadian and Quebec workers.
I will come back to this later. However, I am personally convinced that the very existence of a middle class in this country is largely due to the good work done by the labour organizations to ensure, for example, that the working day is no longer 14 hours long but has been reduced to 8 hours, that we have a minimum wage in this country and that we have regulations so that people can work in decent conditions from a health and safety standpoint.
It therefore runs counter to the interests of the public and all workers to compel labour organizations by legislative means to devote time, energy and resources to something frivolous, futile and absolutely unproductive in the economic development of our country. This does not create jobs but does saddle us with additional public officials who will have to deal with red tape all year in order to manage thousands and thousands of transactions over $5,000.
From the standpoint of the pensions and benefits that people receive from their labour organizations or affiliates—I am thinking of pension funds—the bill seems excessive, according to the Canadian Bar Association. The association tells us that, if the purpose of the bill is to improve union transparency, it does not make sense that it will compel the disclosure of information as required by Bill C-377.
However, the violation of privacy is not the only concern for citizens and workers. There are others as well. They are not at all resolved by the potential amendments that we could discuss. I am thinking of the problem of secrecy. This is not secrecy for individuals, but rather commercial secrecy.
The bill requires unions to disclose information on companies or businesses with which they do business. So just imagine the situation. Let us consider an advertising business that is engaged in marketing placement. Let us consider a legal office or simply a local labour organization's paper or printer supplier. Every contract greater than $5,000 will have to be disclosed publicly.
This is strategic information for those businesses that, in their competitors' eyes, would disclose the benefits they afford the labour organization, the benefits they can give and the prices they offer for the products and services they will supply. One therefore wonders what company, with some competition or competitors in its market, will be sane enough to say that it will continue doing business with the regional council of such and such a union or with a particular local when it knows perfectly well that all its industrial secrets will be in the public domain.
4 p.m.
Conservative
4 p.m.
Conservative
Mark Adler Conservative York Centre, ON
The member's motion talks about the apparent costs of Bill C-377, and I would like to say that the member is talking about everything but the costs. He should just stick to the relevant aspect of his motion and speak to the costs that he's claiming, which are in his motion.
He's not being relevant and is wasting the time of the committee.
4 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you, Mr. Adler.
Do you seek the floor on this point of order, Mr. Mai?
4 p.m.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
It's on Mr. Adler's point of order.
I think my colleague mentioned that initially, when he spoke about the costs. What he's doing right now....
What my colleague is doing now is really talking about all the consequences that this has and about the direct connection with costs. My colleague mentioned the costs that CRA mentioned. He also mentioned the problems the Canadian Bar Association raised with respect to costs. I am listening to my colleague and he is still talking about all the costs associated with the implementation of this bill.
Consequently, he is simply explaining all the connections with costs and the increase that represents. The connection is made. We have it in the introduction. We can still see it, and I believe he has not finished because many costs will have an impact.
I remind my colleague that, when we arrived here today, it was after receiving the report that the Canada Revenue Agency had provided. This is a report that we received before arriving here today. So it is normal for my colleague to continue talking about the implications of those costs.
I would also emphasize another point. It was mentioned in the House that you are a very good chair. I know you are fair. I know that you have always had the kindness in this committee to listen to the views we had to express and that you have always been prepared to accept comments from both sides.
Consequently, I thank you and I expect you will continue to proceed in the same manner and to manage this committee as you usually do.
4 p.m.
Conservative
The Chair Conservative James Rajotte
Okay, merci.
I do have three more. I'm ready to rule on the point of order, though.
To the three, I have Mr. Marston, then Mr. Martin, and then Mr. Adler.
Go ahead, Mr. Marston, please.
4 p.m.
NDP
Wayne Marston NDP Hamilton East—Stoney Creek, ON
Well, before you rule on the point, my colleague here has framed it very well.
The fact is that this bill, in the form that we've seen it come before us, raises many questions. It was so flawed when it got to us initially that even the government members had to step back from it. They had to step back with their own caucus members to frame that discussion, to put that discussion before us here today in the context of where we're at now.
We're facing, I understand, some government amendments to the bill, but the fact of the matter is that the bill, in our opinion, is extensively flawed. My friend here is doing the best he can to demonstrate that, within the context and within the frame of what's being delivered to us here today.
4 p.m.
Conservative
4 p.m.
NDP
Pat Martin NDP Winnipeg Centre, MB
Mr. Chair, yes, I will speak briefly to the point of order.
As a fellow chair of a parliamentary committee, I just hope you will take into consideration, in making your ruling, that when a member of Parliament raises relevance as the point of order, precedent has it that this opens a whole can of worms. In fact, members should move relevance as a point of order very, very rarely and very gingerly. I come from the ginger group, Mr. Adler.
4 p.m.
Voices
Oh, oh!
4 p.m.
NDP
Pat Martin NDP Winnipeg Centre, MB
I can only surmise that Mr. Adler maybe didn't have his earplug in place for his translation and he may be suffering from the same problem I'm having with the information sent to us by the CRA in terms of translation.
Now, as a unilingual anglophone from Manitoba, I'm having a difficult time even following what the CRA's recommendations to us were, or the information given, because it was circulated in one official language, not two. Now, this is a problem, but if Mr. Adler can't see the relevance of the points that my colleague is making in order to protect the integrity of the government's budget framework, he would also have to argue against the relevance of the Minister of Labour ordering strikers back to work even before they go on strike because it's better for the economy. If the broad language of my colleague's motion is offensive to the member, then so too should the actions of the Minister of Labour be offensive when she cites the economy to run roughshod over the rights of working people to withhold their services in a legal strike situation.
I only raise this, Mr. Chairman, to remind you, with all due respect, that in our hands is placed a sacred trust, as chairs of parliamentary committees, to uphold due process and parliamentary procedure because that fine construct that is the Westminster parliamentary system collapses if we don't honour and respect process.
A mischief nuisance of relevance to interrupt my colleague's pattern of thought in developing the motion that he put forward, which was in order—
4:05 p.m.
NDP
Pat Martin NDP Winnipeg Centre, MB
Mr. Chairman, I put these remarks forward only as guidance to help you in your deliberation as to the relevance—
4:05 p.m.
Some hon. members
Oh, oh!
4:05 p.m.
NDP
Pat Martin NDP Winnipeg Centre, MB
—of my colleague's point of order on relevance, with all due respect.
4:05 p.m.
Conservative
4:05 p.m.
Conservative
Mark Adler Conservative York Centre, ON
The member's comments are about as relevant as reading the telephone book.
Clearly, the member talks about the costs. I haven't heard one number mentioned so far. I'd like to know more about these costs that he's claiming to—
4:05 p.m.
Conservative
Mark Adler Conservative York Centre, ON
Pardon me for speaking while the member's trying to interrupt me.
Mr. Chair, I'd like to hear some numbers, some hard facts from the member, and not just rambling and tying up the time of the committee.
The member talks about the integrity of Parliament. Well, we're witnessing a clear abuse of parliamentary procedure right here. If the member talks about the apparent costs that this bill is going to be imposing, I'd like to see some of those costs. If he could distribute those to the committee members, that would even be better.