Finance Committee on June 2nd, 2015

[The Chair, Conservative, James Rajotte]

I call this meeting to order.

This is meeting number 84 of the Standing Committee on Finance. Pursuant to the order of reference of Monday, May 25, 2015, we are continuing our study of Bill C-59, an Act to implement certain provisions of the budget tabled in Parliament on April 21, 2015 and other measures.

Colleagues, we're very pleased to have with us here this morning a number of guests. First of all, from the Canadian Alliance of Student Associations we have their executive director, Mr. Jonathan Champagne. From the Canadian Intern Association we have their president, Ms. Claire Seaborn. From Dewart Gleason LLP we have a partner, Mr. Tim Gleason. From the Federally Regulated Employers—Transportation and Communications we have the executive director, Mr. John Farrell. From Music Canada we have the president and CEO, Mr. Graham Henderson. And from the Office of the Information Commissioner of Canada we have two guests, the information commissioner herself, Madame Suzanne Legault. Je vous souhaite la bienvenue au comité. And we have the general counsel, Madame Nancy Bélanger. Je vous souhaite également la bienvenue.

You will each have five minutes for your opening statement. Then we'll have questions from members.

We'll begin with Mr. Champagne, please.

[Jonathan Champagne, Executive Director, Canadian Alliance of Student Associations]

Thank you.

Good morning, Mr. Chair, honourable committee members, fellow witnesses, and members of the gallery.

The educational landscape in Canada has changed significantly over the last number of years. Students and employers may differ in their expectations of post-secondary education, but both agree on employability as an increasingly important outcome.

In response to these changes, students and institutions are making work-integrated learning an integral part of their educational experience. The expansive sphere of co-ops, internships, job placements, and so forth are indicative of changes that are occurring in the post-secondary sector. Students and young people today want the opportunity to graduate not only with knowledge from the classroom, but also experience in the field. Both students and employers recognize the value in having this experience, as it eases the transition into the workforce.

The Canadian Alliance of Student Associations is an advocate for ensuring that students and young people are protected and treated fairly in the workplace. We have been active on this file for some time, but most recently with Ms. Laurin Liu's private member's bill, and we were vocal opponents of the ill-advised remarks by Bank of Canada Governor Poloz.

CASA has worked with both the government and the opposition to support the protection of young Canadians. That is why we are pleased to see the government take action in Budget 2015 with a proposal to amend the Canada Labour Code to better protect interns. This and the additional budgetary measure of eliminating income tax on money earned in-study as part of the Canada student loans assessment are steps that demonstrate that the government sees supporting young people in work and study as a priority.

Certainly we can all agree on the importance of ensuring that students and young people are protected from abuse and exploitation while in the workplace. They must be treated fairly and, in the case of interns, be able to gain necessary experience to use in a future career.

With that said, CASA believes that the proposed amendment to the Canada Labour Code being put forward lacks clarity and still leaves interns vulnerable to exploitation and possible abuse. Requiring that interns be protected with basic health and safety standards goes without question. These changes alone, though, do not go far enough, and further steps are required to ensure that all interns are sufficiently protected. The proposed amendments do not provide interns with the same rights and protections as other federally regulated employees. Recognizing that interns have unique needs that would require exceptions, we believe that the greatest level of protection would be achieved by classifying them in the Canada Labour Code as employees.

Looking through the lens of public policy, the proposed amendments fall short of achieving the comprehensive protection that interns require. If the goal is to protect interns, then we should give them the same rights as employees under the labour code while carefully recognizing the exceptions that are unique to these internships. Why create more ambiguity and confusion when a simple alternative is available?

Without additional provisions, there are a number of areas under the proposed legislation in which interns may be vulnerable to exploitation from employers.

There is potential for interns and federally regulated industries to be in the position of having their work not be recognized or compensated, whether in the form of pay, academic credit, or some sort of certification. Instead, interns may be left with nothing to show for their time.

Secondly, with no limits on the number of consecutive internships, there's a concern that students or young people may find themselves in cycles of internships of either unpaid or low-paid work.

Thirdly, while the number of hours per work period is limited, because interns are not employees there is no limit to the number of hours in a day or week that an intern may have to work, and no overtime compensation if they do work additional hours.

[The Chair, Conservative, James Rajotte]

You have one minute left.

[Jonathan Champagne]

I want to make clear that for CASA and our members, this is not a partisan issue but a matter of good policy and fairness.

Some actors in the private sector have shown their willingness to take advantage of current regulatory ambiguity and to create positions that are dangerous, exploitative, or not beneficial to youth.

While some progress has been made in improving conditions, there is a strong case for government intervention to put an end to these practices. We are pleased that this issue is being discussed and believe it is an indication of how important students and young people are in today's workforce. We believe it is possible to find the right balance between protecting interns and ensuring that we don't limit valuable learning opportunities.

Thank you for your time, and I look forward to your questions.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from Ms. Seaborn please.

[Claire Seaborn, President, Canadian Intern Association]

Good morning.

My name is Claire Seaborn and I'm the president of the Canadian Intern Association and a recent graduate of University of Ottawa law school. We're here to discuss the amendments to the Canada Labour Code proposed in division 7 of the budget bill.

First of all, I would like to congratulate the government on the amendment that would provide unpaid workers, including students, with occupational health and safety protections under part II of the code. This is an important advance for young and other vulnerable workers who currently do not receive these protections.

Today I will focus on two issues.

First, the proposed amendments do not cover unpaid workers under several Canada Labour Code provisions, including protections related to hours of work, work-related illness or injury, sexual harassment, and the filing of complaints. We recommend some very straightforward amendments to provide basic workplace protections for unpaid interns and students.

Second, the proposed amendments create an exception that allows federally regulated employers to take on workers for four to 12 months without pay, even where the position is not associated with a school program. We recommend that unpaid internships in the federal sector should be allowed only if they're associated with an accredited educational institution. I'll take the next few minutes to expand on these recommendations, and I'm also happy to elaborate during questions.

Division 7 of the budget bill seeks to regulate unpaid interns and students in the federal sector. The proposed amendments use selective exceptions that target Canada's most vulnerable, precarious, and marginalized workers. While the proposed amendments provide health and safety protections, they fail to include unpaid workers in protections under part 3 of the code, including those related to hours of work under division I, work-related illness and injury under division XIII, sexual harassment under division XV.1, and the filing of Canada labour program complaints under division XVI. A simple modification to the existing bill would extend these protections to unpaid interns and students. In particular, things like the tragic deaths of Andy Ferguson in Alberta and Aaron Murray in Ontario would be directly addressed by the hours-of-work protections.

Our second recommendation is that allowing four- to 12-month unpaid internships not associated with educational institutions is the wrong approach. The result is that a university student could work a summer job for a courier company without pay followed the next summer by working for a national news organization without pay only to graduate and find themselves working for one of Canada's banks or airlines, again, for several months without pay. This exemption creates an endless cycle of unpaid labour in which employers are able to extract work from young people while providing little training and no remuneration.

Further, interns are not just young Canadians; they're also immigrants, mothers re-entering the workforce, and workers trying to find a new career after an injury. Currently, interns are considered employees under the code, even if they are receiving some training. These exemptions would legalize unpaid work for the first time for Canada's largest and often most profitable employers and undermine the minimum wage. The exemption is also couched in a set of conditions that are vague and unenforceable, which will lead to inconsistent employer compliance.

Tim Gleason will be expanding on the common-law definition of employees and why interns are in fact considered to be employees.

Educational institutions such as high schools, colleges, universities, and professional programs are in the best position to ensure that interns and students receive beneficial training, to make sure they have avenues for complaints, to ensure that they will not replace entry-level employees, and to make sure they can access student loan programs.

We recommend that the exemption for four- to 12-month unpaid internships be removed and the exemption for internships associated with educational institutions be maintained.

[The Chair, Conservative, James Rajotte]

You have one minute left.

[Claire Seaborn]

Finally, I'll reiterate two points that I've made before this committee in the past. First, there's a huge lack of data on the prevalence of internships and the characteristics of interns in Canada, which is a barrier to effective policy-making. The Canada labour program, Statistics Canada, and the Canada Revenue Agency should begin collecting data. To address illegal unpaid work, these departments also need to adopt proactive enforcement strategies.

Thank you for inviting us to appear before the committee.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from Mr. Gleason, please.

[Tim Gleason, Partner, Dewart Gleason LLP]

Thank you.

This is a debate about who should and should not be paid for their work. It's in the context of a statute intended to protect the rights of employees, especially the most vulnerable workers in Canada. It's a debate that affects mostly young people and people who, for whatever reason, are compelled to offer their services free to employers. These are workers. That's not part of the debate.

The legal definition of employee is rooted in control. This is the justification for the protection of employees in law. Law always seeks to be justified and you must justify what you do with this statute. Because employers control the working lives of people, and because working people are dependent and vulnerable in that relationship, the law provides for the protection of basic rights of employees.

If the justification for protection is control and vulnerability, what are the justifications for being excluded from these protections? Independent contractors are the most common exclusion in law. The common law excludes them from the definition of employee because there is no control and no dependence. Therefore, in theory, there is no need for protection.

On the other hand, we accept that interns, for example, should be protected from unsafe work places in part 3 of the code. Why is that? It's because the employer controls the work place and because interns are dependent and vulnerable. These are the justifications for the legal protections of employees and the same justification is applied in part 3 of the code.

The statute you are considering today does two significant things for our group of young people. It expressly includes them as employees for purposes of health and safety protections, and it expressly excludes them for purposes of other basic protections. We need to ask ourselves why.

There's no argument that unpaid workers should be forced to tolerate unsafe workplaces. That would be an indefensible position. They're in the same relationship with employers as other workers, in that they are subject to control, vulnerable, and dependent. So what then are the justifications for excluding them from part 3 protections?

Part 3 protections can be grouped into four categories. The first three appear to be no brainers, and it's unclear why interns would be excluded from them, including protection against excessive hours of work, guarantees of certain time off, protection against unjust dismissal, and protection against sexual harassment. It would be indefensible to exclude interns from these protections. Yet this statute purports to do so, unless some regulation makes those protections apply to them.

That leaves minimum wages. This is the one that causes most of the problems for us. It's because interns, by contract, have bargained to provide free work, and free work is illegal. So these amendments to the code purport to carve out interns from all of the protections I just read to you, and from protection against free work.

What justification is there for this? We do not permit other employees to bargain below minimum standards and minimum wages. We determine that a just society cannot do that, at least since the 1948 Universal Declaration of Human Rights.

Permitting employers to capitalize on the desperation of vulnerable workers is something we have rejected. When you stir into that mix unemployment, with youth unemployment at double the national average, in an economy where precarious work has become alarmingly normal, that desperation, which is the object of the code, is more ominous than ever. Our young people are more vulnerable than they've ever been. They're willing to go to work for free without basic protections of their human dignity for the slight prospect of gainful employment in the future. This is desperation, and this is what part 3 of the code exists for.

I ask you again to ask yourselves, what justification is there for excluding our young people from these protections?

If I have a moment, I would like to finish with a quote from the 2006 Arthurs Commission report titled “Fairness at Work”, which examined the Canada Labour Code. In particular, in one section Professor Arthurs examined studies and arguments against minimum wages, and found those arguments to be inadequate. He nevertheless concluded: In the end, however, the argument over a national minimum wage is not about politics or economics. It is about decency. Just as we reject most forms of child labour on ethical grounds, whatever their economic attractions, we recoil from the notion that in an affluent society like ours, good hardworking people should have to live in abject poverty.

I would say to you today, similarly, that decency should prevent us from excluding this group of vulnerable young workers from the protections we have long held to be necessary for all working people.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

Mr. Farrell, please, for yours.

[John Farrell, Executive Director, Federally Regulated Employers - Transportation and Communications (FETCO)]

Thank you, Chair.

My name is John Farrell. I am the executive director of the Federally Regulated Employers—Transportation and Communications. FETCO represents most of the major federally regulated employers in Canada. A list of FETCO members is attached to appendix A of my written presentation, which I believe the clerk will be able to provide you with later.

We are pleased to provide our views on the provisions of the budget implementation act regarding the proposed revisions to the Canada Labour Code covering the engagement of interns by companies operating in the federal jurisdiction.

FETCO members believe internships are a very important way to improve employment prospects and outcomes for Canadians seeking employment. Internships add value by providing practical workplace experience to complement an individual's education or life and working experiences and preparedness for future employment. Internships will allow educators and companies to connect and create a better ongoing understanding of each others' requirements to improve employment prospects for Canadians. They assist persons seeking new opportunities to get valuable work experience.

FETCO members believe that interns should be treated fairly. The primary objective of engaging interns is to improve the development of the individual for the sake of the individual.

When FETCO was advised that the government was considering legislation regarding interns in January of this year, we decided to survey our members to better determine the extent to which interns are engaged by member companies.

We learned the following. About 80% of FETCO members have some form of internship programs. About 83% of FETCO members that engage interns do so through formal co-op arrangements with recognized educational institutions. About 42% of FETCO members also have ad hoc internship arrangements that are often shorter in duration and less structured than formal co-op programs. Some interns are paid and others are not. In the federal jurisdiction and the companies that participate in FETCO, most of the interns are paid.

So the arrangements that apply to interns vary from company to company, and we would agree that we don't believe there's enough data to understand the full extent to which interns are used across the country, which is why we undertook to do our own study of our own members.

Let's turn to the analysis of the proposed legislation.

The proposed amendments to part II of the Canada Labour Code provide interns with full occupational health and safety protection. FETCO fully supports this requirement. However, we believe that they already had protection, and employers already had an obligation under the general duty provisions of the code to protect the health and safety of all persons attending at the employers' premises or operations. Nevertheless, we have no objection to including specific coverage under part II of the code.

The proposed legislation also introduces provisions to clarify the circumstances when interns can be unpaid. The first case would be when the internship is part of a program provided by a recognized secondary or post-secondary educational institution or vocational school. We agree with this provision.

The second would be if the internship meets a certain set of six criteria. I won't recite the criteria—I think they're clear in the bill—but we believe these provisions make sense because they will provide an opportunity to determine with some clarity under what circumstances interns will be treated.

With respect to establishing a time limit that an internship cannot exceed, either four months of full-time employment or the equivalent over a 12-month period—

[The Chair, Conservative, James Rajotte]

You have one minute left.

[John Farrell]

—we recommend that internships be permitted to last for a full 12 months. This will allow a greater opportunity for an intern to get more in-depth experience where it would be beneficial to do so.

The bill provides for regulations to be made for certain labour standards to apply to unpaid interns under part 3 of the Canada Labour Code. FETCO agrees that further consultation to better understand the arrangements for current interns is necessary so that appropriate employment standards provisions can be adopted.

We support consultation with stakeholders.

We caution that the provisions of part 3 that apply to interns should focus on basic workplace protections, such as hours of work and leave without pay for illness and bereavement.

Interns are not employees but they have the right to be treated fairly, and an appropriate balance is required. Overregulation of interns may lead to the unintended consequence of a reduction in existing internship programs.

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Farrell.

We'll go to Mr. Henderson, please.

[Graham Henderson, President and Chief Executive Officer, Music Canada]

Thank you to the Standing Committee on Finance; the chair, Mr. Rajotte; and members for inviting me here today.

I'm Graham Henderson and I'm the president of Music Canada, a trade association that represents Sony Music Entertainment, Universal Music, and Warner Music Canada.

I'm here today specifically to thank the government and the members of the opposition who have publicly supported this amendment that extends copyright in recorded music from 50 years to 70 years. Prime Minister Harper and the Government of Canada have demonstrated a real understanding of music's importance to the Canadian economy. Thank you.

The legislation that is the subject of this committee implements term extension for sound recordings in a manner that adequately addresses the needs of the music industry. A term of copyright for sound recordings of 70 years or more has become the global standard. Over 60 countries worldwide protect copyright in sound recordings for a term of 70 years or longer from the time of recording, and there is no reason whatsoever that Canadian artists should be limited compared to artists in other countries.

Currently an artist records and releases a song. Without this amendment, 50 years later anyone in Canada can use that recording for any purpose without compensating the recording artist. Unlike the songwriter, who is protected until 50 years after his or her death, the recording artist can see others profit off their recording by selling it or using it in a commercial without compensation or seeking the permission of the artist. A recording that is made in the early years of a long life means that 50 years later those same artists could still be actively working and trying to make a living off their recordings. This is the situation many recording artists find themselves in today, and this is why this amendment is so important to us.

You have my brief in front of you. Therefore, you have the examples of Leonard Cohen and Buffy Sainte-Marie. Another artist, Paul Anka, born here in Ottawa, has iconic works like Put Your Head on My Shoulder, produced in 1964, which have already fallen out of copyright protection and into the public domain. This is not in the public interest. It does not benefit the creators or their investors and will have an adverse impact on the Canadian economy.

Other iconic Canadian recordings by artists such as Gordon Lightfoot, The Guess Who, Anne Murray, and April Wine, to name just a few, would soon fall into the public domain if this amendment to the Copyright Act is not passed. This would mean that artists would not have exclusive control over their recordings made during their lifetime. They wouldn't control who copies their recordings, who uses them, who distributes them, or who gets paid for them.

A term of copyright protection of 70 years will allow older artists to continue to receive revenue into their mature years. For younger artists, additional profits derived by rights holders from older recordings will be reinvested in developing artists, and they too can look forward to a time in their lives when protection will extend to them.

The music industry is second to none in terms of reinvesting in new talent, with over 28% of the revenue reinvested in 2014. As IFPI's latest “Investing in Music” report illustrates, this is a greater percentage of revenue than pharmaceutical, biotech, computer software, or high-tech hardware industries each invest in R and D.

This measure may be a small part of the Copyright Act, but it is a big deal for artists and the music industry. We have quotes from 24 artists on the Music Canada website that speak to how much they need and appreciate this small piece of legislation and what a big impact it will have on their lives. I'd like to share a couple of them.

The Arkells, who are a young rock band from Hamilton, have said this: As a Canadian band, we appreciate that our government recognizes the cultural and economic value in musical recordings, and has protected that value by extending the copyright term of those involved in producing these records.

Anne Murray has said:

I applaud the efforts of our Government to extend the copyright protection term for our recording artists. It is only fair that they continue to reap the rewards of their creative works well into their dotage, when they need it most.

I won't read all of them.

We are extraordinarily grateful for this amendment. The music industry has had many challenges over the last 15 years. Global recorded music industry revenues have decreased by 70% when you take into account factors such as inflation, but we are vigorously embracing the new digital realities and we are determined to thrive in this environment.

Term extension for sound recordings is one thing that will help make a difference and I hope I can answer any questions the committee may have on this aspect of the budget implementation bill.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Henderson.

Ms. Legault, you may begin your presentation.

[Suzanne Legault, Information Commissioner of Canada, Office of the Information Commissioner of Canada]

Thank you, Mr. Chair.

Honourable members, I have been invited to discuss division 18 of Bill C-59, specifically clauses 230 and 231. This division amends the Ending the Long-gun Registry Act, or the ELRA, to exclude the operation of the Access to Information Act retroactive to October 25, 2011, the date on which the ELRA was first introduced in Parliament.

To assist parliamentarians in understanding the impact of these provisions, I tabled a special report on May 14, entitled “Investigation into an access to information request for the long-gun registry”. I have also outlined the relevant facts in the timeline you have in front of you.

Given the limited time I have, I won't repeat these facts. I'll simply note that ELRA became law in April 2012. To this day, ELRA does not oust the application of the Access to Information Act. Pursuant to section 4 of the Access to Information Act, the act applies notwithstanding any other act of Parliament.

As you know, Mr. Chair, I have some very serious concerns with division 18 of Bill C-59.

First, division 18 will effectively make the Access To Information Act not applicable retroactive to October 25, 2011, even before the coming into force of ELRA. You must ask yourselves why?

Second, division 18 shields from the application of the Access To Information Act a broader scope of records than ELRA ever did. It covers not just the records in the long-gun registry, as ELRA does, but any records with respect to the destruction of those records. This probably means that no one will be able to request information about whether the RCMP has really deleted their own information from the registry or about how much the destruction of the registry cost Canadian taxpayers. Indeed, no one will be able to find out what transpired in relation to the destruction of the records at issue in my investigation. This is above and beyond what was ever considered by Parliament in 2012 in ELRA. You must ask yourselves why?

Third, if division 18 is adopted, it would nullify the request at issue in my investigation; nullify the complaint made to my office; nullify the entire investigation, including the production orders for documents—some 30,000 records—and examinations of witnesses under oath and the transcripts; nullify my recommendations to the Minister of Public Safety and my referral to the Attorney General of Canada; nullify my existing application to the Federal Court on behalf of the requester; nullify the possible police investigation by the OPP; nullify all potential administrative, civil, or criminal liability of any of the actors involved and essentially nullify the requester's rights in this case. You must ask yourselves why?

These proposed changes, Mr. Chair, would retroactively quash Canadians' rights of access and the government's obligations under the Access To Information Act, retroactively to a time where, in fact, ELRA did not exist. It will, effectively, Mr. Chair, erase history.

Mr. Chair, division 18, of Bill C-59 cannot be considered to be an attempt to close a loophole. It can only be an attempt to create a black hole.

Given the fundamental importance of the right of access to information and the rule of law in Canada, I would urge this committee to remove division 18 and clauses 230 and 231 from this bill.

With that, I would be pleased to answer your questions.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

Colleagues, we will do six-minute rounds. I'll ask you to keep very tight to that timeline and allow enough time for witnesses to answer.

We'll start with Mr. Cullen, please.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

Thank you to all our witnesses today. I'll keep my questions as brief as I can.

Ms. Seaborn and Mr. Champagne, if I look at the last comment from Mr. Farrell, there's a bit of a suggestion that perhaps if we protect interns, under that third part of the labour code, against excessive hours of work, sexual harassment, and arbitrary dismissal, it may in fact reduce the internship opportunities available for young Canadians. Is this a concern for either of you?

Perhaps, Ms. Seaborn, you can start.

[Claire Seaborn]

I'm not concerned that providing basic workplace protection would decrease the number of experiences for young Canadians in the workplace. I think it's employers' responsibility to be training young workers, and the interns themselves will find ways to make those positions available.

The kinds of amendments we're discussing today, including sexual harassment protections and hours of work, are basic workplace protections. These are not the sorts of protections that should deter employers from taking on interns.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Champagne.

[Jonathan Champagne]

If the proposed regulations or proposed amendments to put workplace safety standards in place with regard to hours, protections against unjust dismissal, or sexual harassment are too burdensome for an employer to have to protect its interns, then I think we have to look a little more broadly and organizations have to look at their business practices to figure out why those would be in place.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Okay. Thank you very much, both of you.

Ms. Seaborn, you've helped raise this issue to national significance. I think it's important. There's obviously a shifting context, as has been talked about, in the employment market that young Canadians in particular face. Keeping internships up to some sort of modern and acceptable standard has not seemed to be of interest to the government.

Mr. Gleason, I think making this an issue of decency is important as well.

Madam Legault, I want to turn to you for a moment. I think you've given us an important piece today on the timeline of what has happened. Have we seen this before in Canadian law?

[Suzanne Legault]

I haven't seen it.