Industry Committee on March 5th, 2009

[Roger Charland]

No.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Bouchard.

Mr. Warkentin.

[Chris Warkentin, Conservative, Peace River, AB]

Thank you, Mr. Chair.

Thank you, Minister, for coming today to testify before our committee on this important piece of legislation.

As you know, I've been actively pursuing the responsibility, along with my government colleagues, of reducing the required paper work across government, as you are with the paper burden on the small-business sector specifically. I know this fits into a portion of that response. We're going to continue to work with all businesses, including the not-for-profits, to reduce their compliance burden.

I'm wondering if you might explain to us how much this will reduce the paperwork burden for these groups, and how this plays into that initiative.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Thank you for the question.

As you know, the government committed to reducing the paper burden on business by 20% by November 2008. There were some intervening events, shall we say, but we expect to be able to confirm shortly that the threshold has been reached. This act is part of that.

Businesses can now file electronically, which will certainly cut down on paper work. It also reduces the number of filings that various categories of not-for-profits have to make. As we were just discussing with your colleague, the audit levels have been reduced for some not-for-profits. So there are a number of filings and paper work that are going to be reduced by this act.

I'm just going to ask Wayne to give you a little bit more detail on that, because he probably has a list in his head, which I don't.

[Wayne Lennon]

As the minister said, the filings can be handled electronically. Communications between the corporation and its members can be handled electronically, if the corporation and the members so desire. There's nothing in the act that compels them to do that, but it does permit it. For instance, sending information on financial statements or notices of meeting can be handled pretty much any way the corporation wants. Indeed, members' meetings can be handled electronically in their entirety, if the technology so permits and the corporation and the members want to do it that way.

Simply by those measures alone, the amount of paper flow will be reduced and certainly the costs substantially reduced.

[Chris Warkentin, Conservative, Peace River, AB]

I know that a reduction in red tape for these groups is included in this effort. But these groups are soliciting money, in many cases, from Canadians. So it is important that we ensure there's accountability of these groups, especially the ones that are soliciting funds. I guess this concern is always broached when we talk about reducing paperwork and red tape for these groups.

Can we be assured of accountability, and can we be assured that the people who are being solicited by these groups can be protected, or will be protected, even though there is a reduction in red tape and paperwork?

[Wayne Lennon]

Under the current law, soliciting corporations, and all corporations, are required to have their financial statements audited, but they're not required to give them to members; they only have to give them a summary or a statement of the financial situation of the corporation.

So what this act does is require that the financial statements go to members, so that members will be able to oversee the activities of their corporation.

Plus the financial statements of soliciting corporations—not non-soliciting corporations, but anyone who gets money from the government or the public—will have to be filed with Corporations Canada. So there's an oversight rule there.

And the act won't change any of the filing requirements or any of the legal or regulatory requirements of the Canada Revenue Agency. So whatever mechanisms or remedies they have in place will remain intact; it has no effect on them whatsoever.

[Chris Warkentin, Conservative, Peace River, AB]

Minister, whenever the issue of not-for-profit groups comes up, there is a concern on the part of faith-based not-for-profit groups that the tenets of their faith won't be compromised by any changes in the legislation. Has this been addressed? Do you believe these issues have been addressed within this legislation, and do you believe that the tenets of the faith many groups subscribe to won't be compromised by this legislation?

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Yes. As you can imagine, that was a fairly vigorous area of the consultations. But the stakeholders are satisfied with the resolution. For the most part, religious bodies will be treated in exactly the same manner as other corporations that are subject to the legislation.

The one exception is that there will be a protection in the form of a faith-based defence to ensure religious bodies are free to follow the tenets of their religion in pursuit of the corporation's objectives. The faith-based defence would allow the corporation to make decisions. If they're challenged and the defence is based on a tenet of faith, that would allow the decision to be made. That does protect religious bodies. I think in the consultations we've had good feedback from that resolution.

[Chris Warkentin, Conservative, Peace River, AB]

Thank you.

We addressed the changes in technology that have come into existence, specifically with regard to computers and electronically passing information back and forth. I'm wondering if there is any consideration of future technologies and how they may be incorporated into this legislation, or if in fact any future changes within technological advances were contemplated. Were there any groups with suggestions or ideas in that vein?

[Wayne Lennon]

The act is pretty open-ended; it doesn't restrict any method of communication. It does allow the corporations itself to choose the method of communication with the government. As technology evolves, they can use whatever mechanisms are available to them. It's not restrictive in that way.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Lennon. Thank you, Mr. Warkentin.

Mr. Masse.

I believe Mr. Masse and I are the two members on this committee who were looking at this bill two Parliaments ago. It's a bit like Groundhog Day here.

[Some hon. members]

Oh, oh!

[Brian Masse, NDP, Windsor West, ON]

Or whack-a-mole.

[Some hon. members]

Oh, oh!

[Brian Masse, NDP, Windsor West, ON]

No, I'm just kidding.

Minister, do you have a copy of your comments? I missed the opening. I apologize for that; I was late. Do we have a copy?

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

No, I'm sorry. We didn't distribute them, but I'm certainly happy to provide you with a copy.

[Brian Masse, NDP, Windsor West, ON]

Okay, or I can get the blues.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

They're brilliantly executed, I have to tell you.

[Brian Masse, NDP, Windsor West, ON]

I'm sure they are.

If I ask a question that you might have covered, I apologize for being here late. I want to make sure I indicated that.

Subclause 23(2) of the bill deals with the provision of lists. I'd like to hear from you with regard to the issues over privacy. The do-not-call list, for example, was a way to try to help Canadians, but in the end it breached their privacy in many respects. The concern I have with this legislation, and I'd like to hear the response, is that the membership lists could be breached easier than in the past, for example, with regard to the Red Cross, and other groups, because every member will be entitled to access and so forth.

Perhaps I can hear from you with regard to how we protect membership lists from becoming public. What member information would be disclosed and what wouldn't? Is there a way to prosecute those who might, for example, join a not-for-profit, or an organization, and then misappropriate those lists for other types of practices, other than the intended use for that organization?

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Mr. Masse raises a very important point.

Actually, it's little known, colleagues, but under the current act anybody can obtain the list of the members of a not-for-profit corporation. This new act will provide more protection in that regard.

The new act circumscribes who can access a membership list, which is not the case now. Only members, and only in limited circumstances, and “debt obligation holders” as defined in the act, will have access to the membership lists. People who want to look at the list will have to execute a statutory declaration or an affidavit affirming that they meet the requirements of the act and that they will only use the information for purposes permitted in the act. But membership lists will no longer be available to the general public.

In addition, there are some very stiff penalties. I don't know if you remember, but the original penalty was only $5,000. That has now been increased to $25,000 and a maximum of six months in jail, because of concerns that perhaps you yourself have raised. That's a pretty strong incentive for people not to breach privacy.

[Brian Masse, NDP, Windsor West, ON]

That's important, I think, given the lessons of what's happened with the do-not-call registry. That's why I was just a little bit concerned to make sure that those provisions will be in there.

Actually, back of this review process I used to work for the Association for Persons with Physical Disabilities, also the Multicultural Council of Windsor-Essex County and Community Living Mississauga, and as part of the not-for-profit sector we were part of the original discussions related to the genesis of this bill. But what we were talking about back then as a higher priority was more supports for long-term sustainable funding, recognition of volunteer hours, and elements like that. Why has the government chosen not to bring forth some of those elements, as opposed to, quite frankly, a new 170-page Robert's Rules of Order?

It does have some merits in it, and there are some complications too, but why is this done in isolation? I'd just like to know that, because the not-for-profit sector right now is really stretched. What I'm worried about as we enter this are the organizations like Lions Clubs and all the Royal Canadian Legions. How do they implement this, and what provisions has the government provided to do training for those organizations?

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

I alluded to this in my remarks, but basically there is a huge range of not-for-profits, and you mentioned some of them in your question.

The bill does not try to address every aspect of every not-for-profit. It sets up a broad framework in which all not-for-profits operate. It tries to be as general as it can, and lets the not-for-profit itself deal with some of the policy issues that may or may not benefit one more than it would another not-for-profit.

So the areas you mentioned--such as training, stable funding--are really separate policy areas from this incorporation regime. They would have to be addressed. I'm sure you'll help government address them in a vigorous way, in a separate way, because it's not the purpose of the act to address those issues where they impact specific not-for-profits.

[Brian Masse, NDP, Windsor West, ON]

I can appreciate that, but here's where the trouble is in terms of where I see things going. Ironically, as we've lowered our tax rate, right now our charities and organizations have actually gotten less of a tax return for the people who donate. That's just tied to our legislation. So we've actually been reducing the lower income in terms of giving in Canada over the last number of years, because it's tied right to the Income Tax Act.

What's happened is that as we've lowered the lower bracket, we've actually disallowed charitable giving return to citizens and actually clamped down a little bit. It's a small amount of money, but it sends a signal to them that we haven't provided any type of benefit in terms of a stimulus. In terms of the effect, it's 8% of the Canadian economy when you look at the universities, the colleges, all of those that are actually a part of this. They're not receiving anything in the stimulus budget, specifically the not-for-profits themselves.

So what I worry about is what is your government or your department willing to do to help train those smaller and medium-sized organizations that are really...? Right now, a lot of them are either collapsing or they're having problems with donations. They're going to have to seek administrative support for this. Some of the work in here will probably require some technical things, changes in their actual administration processes. I believe they're going to need some legal assistance in this. Where are they going to get that type of support to be able to implement this new bill?

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Well, Siobhan just raised the same issue, and the answer is the same. The transition actually is not going to cost the not-for-profits. The information that will be required in the transition will be sent out by the director of corporations to everyone so they know exactly what's required. It's not going to be an onerous process.

Is there anything you'd like to add to that, Wayne? It really is designed to be as simple and costless as possible.