House of Commons Hansard #150 of the 35th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was public.


Young Offenders ActGovernment Orders

12:50 p.m.

The Deputy Speaker

The next question is on Motion No. 7. All those in favour of the motion will please say yea.

Young Offenders ActGovernment Orders

12:50 p.m.

Some hon. members


Young Offenders ActGovernment Orders

12:50 p.m.

The Deputy Speaker

All those opposed will please say nay.

Young Offenders ActGovernment Orders

12:50 p.m.

Some hon. members


Young Offenders ActGovernment Orders

12:50 p.m.

The Deputy Speaker

In my opinion the yeas have it.

Young Offenders ActGovernment Orders

12:50 p.m.

An hon. member

On division.

(Motion agreed to.)

Young Offenders ActGovernment Orders

12:50 p.m.

The Deputy Speaker

Normally at this time the House would proceed to the taking of deferred divisions on report stage of the bill. However, pursuant to Standing Order 45(6), the recorded divisions will stand deferred until Monday, February 13 at6.30 p.m.

Young Offenders ActGovernment Orders

12:50 p.m.


Don Boudria Liberal Glengarry—Prescott—Russell, ON

Mr. Speaker, I believe if you were to seek it you would find unanimous consent to further defer that vote from Monday at the time of adjournment until Tuesday at 5.30 p.m.

Young Offenders ActGovernment Orders

12:50 p.m.

The Deputy Speaker

Does the House give unanimous consent to this motion?

Young Offenders ActGovernment Orders

12:50 p.m.

Some hon. members


(Motion agreed to.)

Agriculture And Agri-Food Administrative Monetary Penalties ActGovernment Orders

February 10th, 1995 / 12:50 p.m.

Mount Royal Québec


Sheila Finestone Liberalfor the Minister of Agriculture and Agri-Food

moved that Bill C-61, an act to to establish a system of administrative monetary penalties for the enforcement of the Canada Agricultural Products Act, the Feeds Act, the Fertilizers Act, the Health of Animals Act, the Meat Inspection Act, the Pest Control Products Act, the Plant Protection Act and the Seeds Act, be read the second time and referred to a committee.

Agriculture And Agri-Food Administrative Monetary Penalties ActGovernment Orders

12:50 p.m.

Prince Edward—Hastings Ontario


Lyle Vanclief LiberalParliamentary Secretary to Minister of Agriculture and Agri-food

Mr. Speaker, the government has tabled Bill C-61 introducing the Agriculture and Agri-Food Administrative Monetary Penalties Act, a major component of our program to reform enforcement of the regulatory system for agriculture and agri-food products.

This bill introduces an option to enforce agriculture regulations outside the courts when domestic or imported products do not measure up to Canada's excellenct standards for health, safety and quality. A system that allows for equal treatment of domestic and imported products has been requested by the industry.

The administrative monetary penalty system, AMPS, would allow government officials to issue monetary penalties for most breaches of eight federal statutes and regulations under those acts in cases involving both domestic and imported products instead of proceeding through the criminal justice system as has been the case in the past.

The use of the criminal justice system would be reserved for serious breaches warranting high fines, a criminal record and the possibility of imprisonment. The move is in keeping with the government's overall plan. This overall plan will include that we ensure our high standards, apply those standards consistently to both domestic and imported products, increase the rate of compliance and perform our important regulatory function in a more efficient and cost effective manner.

The administrative monetary penalty system means precisely what it says. Monetary penalties will be imposed for violations under eight acts and their regulations, including the Canada Agricultural Products Act, the Feeds Act, the Fertilizer Act, the Health of Animals Act, the Meat Inspection Act, the Pest Control Products Act, the Plant Protection Act and the Seeds Act.

The system we are proposing today was developed in conjunction with the Department of Justice through the regulatory compliance project, a cross government initiative looking at alternatives to criminal prosecution of regulatory violations. The Minister of Agriculture and Agri-food and I are acutely aware that food safety and quality have been and must continue to be our top priority.

Our reputation for safety, quality and the competitiveness of Canadian products is vital to our domestic consumers. It gives producers and processors a critical advantage in the international marketplace. Doing a better job as regulators means protecting that reputation both at home and abroad. That is tied to our overall government commitment to jobs and growth by making the most out of liberalized world trade.

A year ago this government made a number of commitments to the people of Canada. I am pleased to say that within our first year of office we have made a great amount of headway on a number of fronts. Improving the regulatory system is one of those areas.

In reforming the way we enforce regulations we have asked some basic questions. Does what we do now make sense practically and economically? How could we do a better job of regulating? What does the industry want? What about consumers and what about our international obligations?

Under the present conditions penalties for regulatory offences are dealt with under criminal law. That means they are prosecuted in the courts. This is costly. It can cause delays and means that strict requirements of criminal procedure must be followed. This places a considerable pressure on our limited resources.

As a regulatory department we are not dealing with crimes in the order of murder, theft and assault. We are dealing with regulatory contraventions that fall outside true criminal law such as misleading labelling of food products, improper sanitation procedures in food processing and failure to follow market requirements for federal inspection or for packaging.

This legislation, AMPS, will allow us to treat most of these regulatory violations outside criminal courts in a manner that requires less formal procedures and lower costs for proceedings. It will allow us to allocate our scarce resources to uses with the highest value.

This legislation is far more efficient than prosecution, as it allows for the settlement of penalties without going through a hearing process. It is also a much fairer process for violators, as it removes the criminal stigma with these violations.

The use of the administrative monetary penalty system would widen the array of options available to the department in responding to non-compliance. We now prosecute essentially in situations of serious non-compliance such as actions that introduce a foreign disease or a pest into the country. Those are the main areas in which we follow the present process because of the cost and time involved.

A suitable alternative to prosecution that provides suitable deterrents to non-compliance is needed for effective regulatory enforcement. AMPS is such a system.

AMPS would provide the government with a much needed method of enforcing compliance with our regulations. The United States uses a monetary penalty system for exporters, yet we have not had this option to ensure that imports meet our standards in Canada. The United States department of agriculture and most other regulatory agencies in the United States use a system of monetary penalty.

Currently we have federal inspectors in plants and establishments in Canada and we generally have effective enforcement options in these situations to deal with non-compliant products. We can seize and detain the product in establishments or stop the processing line until the product is brought into compliance. For imported products these options are not possible. However, the monetary penalty system would give us an effective response to non-compliance in the market of these products.

The system would allow for the use of consistent enforcement practices against importers and domestic companies marketing products that do not meet Canadian health, Canadian safety or Canadian quality standards. Consistency of consequences for non-compliance combined with a greater rate of compliance increases the competitiveness of Canada's agri-food sector.

The recommendation to move to an administrative system came out of the department's regulatory review, where industry associations pointed out the need for active enforcement of domestic standards to imported products. They want a level playing field. This system would lead to equitable enforcement of regulations for domestic and imported products. Further consultation with the agri-food industry would take place in the development of regulations for the system.

The system emphasizes compliance, not punishment. In general, warnings would be issued before an administrative monetary penalty is proposed. In those situations where a penalty has been imposed, the system would allow officials with the Department of Agriculture and Agri-Food to negotiate solutions with companies when the product violates an act or a regulation. Penalties may be reduced or indeed waived if corrective actions such as processing modifications, staff training, the purchase of new equipment or whatever it takes to ensure future compliance, are made by the industry.

This kind of immediate corrective action results in a better product. It also results in improved health and safety and, in the end, more effective enforcement. Negotiated solutions to non-compliance are not now available.

With the monetary policy system being administrative in nature, it would replace most prosecutions and decriminalize violations of the various acts, as there is not a possibility of obtaining a criminal record or of being imprisoned. The system represents a further step toward decriminalizing our regulatory violations. We would retain the right to prosecute offences committed with intent that have the potential to cause significant harm. As well, we would ensure the effective regulation of health, safety and quality of both domestic and imported products.

The system would also allow us to issue tickets at ports of entry to Canada and allow us to issue those tickets for minor violations committed by the travelling public that try to illegally bring meat or meat products or plants or plant products into Canada.

The problem of that type of thing happening has the potential to be serious because of the possibility of introducing plant or animal diseases into the country. For example, the introduction of foot and mouth disease a number of years ago resulted in millions of dollars in damages and costs for its control and eradication. The current system based on prosecution before the courts is generally inappropriate for these violations unless significant harm is done.

Along with an education component developed by the department to increase awareness of important requirements called "Beware and Declare", we expect the monetary penalty system to solve the problem efficiently and effectively.

Through these initiatives major airlines will be showing travellers coming into the country a video on the restrictions surrounding the importation of agriculture and agri-food products and the possibility of receiving a penalty if they attempt to bring meat or plant products into the country without declaring them.

The use of the monetary penalty is not a new concept in the federal regulatory system. The AMPS being proposed in the bill borrows on the system used by Transport Canada to regulate activities under the Aeronautics Act as does Human Resources Development Canada for enforcement under the Unemployment Insurance Act. Other departments are as well considering a system for use in their regulatory areas.

Under the administrative monetary penalty system we expect a higher rate of compliance simply because the system is flexible, faster, fairer, and sends a clear message on what the response to non-compliance will be. We believe the system makes sense as we move toward a partnership with industry and as we shift many of our inspection activities away from hands on inspection and move more toward a monitoring role.

New enforcement options are needed to address this shift in responsibility as industry will take on a greater ownership of ensuring that agri-food products are in compliance with regulations.

The administrative monetary penalty system provides alternatives to both overly strict and weak enforcement. As I said earlier, our main enforcement options at the present time are to seize and detain a product and to prosecute. In addition, we can suspend and cancel licences, deregister plants and withdraw services. Because these last three options stop business operations either temporarily or permanently, we have used these sanctions sparingly and only as a last resort. As well these sanctions are not available for imported products.

A monetary penalty would generally be considered appropriate when the violation posed actual or potential risk of harm to health or safety and would cause economic harm or is a threat to the environment.

Administrative monetary penalties would be imposed on the basis of absolute liability, that is the penalty could be imposed without proving intent or negligence. The concept of absolute liability is appropriate to the administrative enforcement of regulations with modest levels for penalties and no threat of imprisonment.

We expect to begin implementation with penalties that will be broken into three basic levels ranging from $50 to $6,000 depending on the severity of the offence. The proposed legislation, however, would allow us to set maximum penalties at $15,000. This built-in flexibility would help to accommodate future increase that might be due to inflation and other causes.

The amount of the penalties could be adjusted higher or lower based on several mitigating or aggravating criteria, including seriousness of the violation, the compliance record, the degree of intent to commit a violation, the amount of harm done including harm to health and safety and economic and environmental harm.

As part of the system a review process would be set up to give an opportunity to be heard to those who believe they did not commit a violation. That review would be carried out by an appropriate government official, or a violator could request a hearing before an independent tribunal with recourse to the Federal Court of Canada as the final level of review.

Again in keeping with the emphasis on compliance, not punishment, the proposed act would authorize officials to enter into negotiations, if requested by the offenders, for the amount of penalties and for concluding compliance agreements. Under the compliance agreements, fines can be reduced or waived if the industry takes the necessary steps to ensure future compliance.

As well, under this system fines will be reduced by 50 per cent for offenders who pay the fine within the time prescribed by regulations without asking for a review. Doing a better job of regulating makes sense for the consumer, for the industry and for government.

The administrative monetary penalty system would provide for a quick response to most non-compliance situations. Combined with other enforcement measures, this should have the effect of improving compliance with the regulations. In turn this is expected to reduce the government's exposure to liability resulting from the underenforcement of statutes and regulations.

To conclude I would like to say that to introduce this system initially requires the passage of this omnibus legislation that would amend the eight acts I listed earlier. Implementation of the administrative monetary penalty system is an important step in our overall plan. It is important in order to improve the agriculture and agri-food inspection system. It is important to apply our standards of high quality, high health and high safety equally to products coming into the country and to products produced in Canada. It is important to stop the travelling public from bringing in illegal plants, animals or products made of plants and animals, and to bring an overall greater sense of fairness and expediency to the enforcement of regulations.

We are working in close co-operation with the industry. We are adapting to the changing business environment. We are finding different ways of doing business that do not compromise on the world renowned standards of excellence in Canada.

I recommend members of the House approve Bill C-61 as expeditiously as possible.

Agriculture And Agri-Food Administrative Monetary Penalties ActGovernment Orders

1:10 p.m.


Jean-Guy Chrétien Bloc Frontenac, QC

Mr. Speaker, I welcome this opportunity to speak to Bill C-61, immediately after the presentation by the hon. member for Prince Edward-Hastings, especially since the hon. member, until quite recently, operated a big farm in his own riding and is an expert on the subject.

The purpose of the bill before the House today is to provide enforcement options to deal with persons who violate certain laws that regulate health standards and the quality of agricultural products sold in Canada and, of course, Quebec.

This legislation, as we just pointed out, will affect eight acts and their regulations, including the Canada Agricultural Prod-

ucts Act, the Meat Inspection Act, the Fertilizer Act and the Health of Animals Act. With Bill C-61, the government establishes what are referred to as AMPS. AMPS stands for administrative monetary penalties system. Throughout this debate, when we refer to AMPS, that is what we mean. The purpose of Bill C-61 is to extend the range of enforcement options available in legislation administered by the Food Production and Inspection Branch.

Under this system, an inspector from the Department of Agriculture and Agri-Food will be able to impose penalties when regulations are violated. This procedure would obviate the need for going to court, so this is also a matter of alleviating the burden on the judiciary system.

After reading the Auditor General's comments on inspection procedures, it is clear changes were necessary. I realize that these changes are not directly related to the changes recommended in the Auditor General's report, but this may be a first step.

I may remind the House that in his latest report, the Auditor General of Canada pointed out that resources were being wasted as a result of the incredible confusion with respect to inspection standards. A document from the Food Production and Inspection Branch tells us that the government expects to cut $44 million in this sector over five years, including $22 million in the next budget, which the minister will be bringing down a few weeks from now. After the by-election in Brome-Missisquoi, of course.

It would be worthwhile knowing the savings, which my colleague from Prince Edward-Hastings did not mention, the amount of the savings generated by this new approach and whether these savings are included in the cuts mentioned earlier.

We must be very careful to avoid imposing drastic cuts that could affect the quality of inspection services. At the risk of digressing briefly from the context of the bill we are currently considering, that is Bill C-61, I will take the liberty of adding that I have received a lot of mail from small meat-packing firms concerned about possibly having to pay inspection costs themselves.

The members of the Bloc quebecois will be keeping a close watch, at the appropriate time, to ensure the government does not dump the costs onto small businesses. That is the end of my brief digression, Mr. Speaker.

The fact remains that the AMP system provides for the imposition of fines, but through an administrative process. An AMP cannot lead to either a criminal record or imprisonment. The main objective of the system is to ensure compliance with the law, it appears. It is not intended to impose heavy fines as the result of an offence.

The system invites negotiation much more than severe penalties. In fact, to my understanding, it provides an alternative to public officials who must ensure compliance with legislation. The principle is clear: the intention is to reduce the number of legal proceedings and to provide more satisfactory solutions to carrying out the law.

Representatives from the agricultural sector have already pointed out that overly excessive fines were sometimes imposed for offences and that officials sometimes had to simply overlook certain mistakes. The flexibility of the AMPs could lessen the problem.

What Bill C-61 provides that is new is an alternative solution for the offender. Once an individual is found guilty, he has a number of options open to him. He can contest his guilt with the minister within a prescribed time frame and under certain terms of the regulations. If, on the other hand, he accepts the guilty verdict and pays the fine, the amount of the fine is automatically cut in half.

In our system of justice, the presumption of innocence is a fundamental right. By giving the offender this option, the accused is in effect threatened with having to go to trial and having to hire a lawyer to defend himself, with all that entails. He is simply told to pay up and be quiet. We oppose this principle which would require the less affluent to admit their guilt even though they would like to proclaim their innocence. The implementation of this measure could create a dangerous precedent.

I would like to compare this possibility to a personal experience of mine. I was stopped by an officer of the Sureté du Québec; I was certainly at fault, driving at 141 km per hour. The officer said, very kindly, "Sir, you were doing 141 but we will say 135, that will save you this much, you will save that much".

Once he gave me the ticket, I of course wrote out the cheque as soon as I got home and sent it off right away and, in so doing, admitted my guilt. As another example, one of my friends was once ticketed in a different but similar situation, for failing to come to a stop, although he was sure he had stopped properly.

He decided to plead not guilty but he too, poor fellow, should have written out a cheque as I did to get some peace of mind. He had to appear three times in court in Thetford Mines. The first time, the case was postponed because the judge was not in a good mood. The second time, the officer failed to appear. He had informed the court, but there had not been enough time to inform my friend; the third time, he won.

Yes, he won, but the money he saved did not make up for the costs incurred since he missed nearly three full days of work, not to mention his travel expenses and what he paid for his defence.

So, you see, I am more or less convinced that many of our fellow citizens will simply pay, even if they are not at fault, they will pay immediately to receive the 50 per cent reduction. What a deal!

You know that for a $2,000 fine, the fine is reduced by 50 per cent if paid in cash. So, for that reason, I strongly suspect that many people will pay forthwith to avoid costs which, in my opinion, would be much greater. It is a basic right and it must still be respected. As the hon. members opposite have said so well, we live in the world's most democratic country, so we must not let this wonderful democracy run wild, even though it sometimes seems, in my opinion anyway, to only hobble along in some cases.

Therefore, we are against the principle which obliges the less well-off to admit their guilt, even though they would rather claim their innocence. Applying this measure could set a dangerous precedent because the other available option, if the fine is $2,000 or more, is to reach an agreement with the minister. Applying this alternative solution is simple. If the minister accepts-the decision is discretionary-offenders can considerably reduce or even cancel their fines if corrective measures are taken to comply with the regulations in the future, that is individuals or businesses will see their fines reduced by $1 for each $2 they invest to improve their methods, businesses, ways of doing things or working, whether they buy new equipment or give new training to their employees.

Therefore, for each $2 invested in their businesses, $1 is taken off of their fines. This means that for each investment made to comply with the department's regulations, their fines are regularly reduced by 50 per cent. Thus offenders are able to negotiate their sentences. Our judicial system does not lend itself, in my opinion, to this kind of negotiation. When people make mistakes, they must bear the consequences.

This method constitutes a form of economic discrimination in the sense that individuals and businesses with bursting wallets will barely feel the impact of the sanctions, while people who are innocent, but have less financial means at their disposal, could pay bigger fines than their rich neighbours, sometimes for lesser violations.

We also have no idea of how the offenders' compliance costs will be estimated, or of what will happen if suppliers inflate prices. If we want to give businesses incentives to invest, let us do it through tax programs or through other means, not by negotiating sentences.

Another thing that bothers me is the power given to the minister and, by extension, to his employees. The minister will use his own employees to ensure compliance instead of the courts. They will be the masters of the destiny of those who have committed violations. They decide if there has been a violation, label it as minor, serious, or very serious, set the amount of the penalty, decide on the cases in which the tribunal may intervene and approve or reject compliance agreements. It seems to me that this is being done and that it could be detrimental and could lead to the obvious risk of political interference, not to say barefaced patronage.

These officials will have full authority to determine whether or not there has been a violation, and if so, the degree of fault. Who will decide if the fine is $2,000 for a minor infraction, $10,000 for a serious infraction or $15,000 for a very serious infraction? The decision-making process is therefore decentralized and the minister claims that the regulations remove any risk of arbitrary decisions. Because they are seen by the department as essential to an equitable application of penalties, it goes without saying that a draft of the regulations must be made available to the members of the committee studying this bill.

I am also somewhat bothered by the independence of the tribunal responsible for hearing the complaints of those named in notices of violation and for reviewing the decisions made by the minister or his officials. This reminds me, if I may digress again, of the meeting last week of the 19 Quebec Liberal members with the president of the CBC to discuss coverage of the referendum campaign in Quebec. It is terrible, Mr. Speaker, the political interference of this government in information. When we speak of democracy in a country such as ours, the first thing this should call to mind is the right to accurate, truthful and unbiased information. When a Liberal party caucus meets with the president, it is not to tell him: Cover the referendum, but do not slant it in favour of the Yes side, slant it in our favour because we are the ones who pay you, who set your budget and who will reappoint you to your position. And, for that matter, we are the ones who appointed you to it in the first place.

I also heard in the fall in this House that the minister of heritage had written to a quasi-judicial body, the CRTC, which reports through his department. The minister had written so that one of his constituents could obtain a licence. And the Prime Minister excused him by saying that he was not alone, that eight other ministers had written-

Agriculture And Agri-Food Administrative Monetary Penalties ActGovernment Orders

1:25 p.m.

The Deputy Speaker

I am very sorry, but the time set aside for government orders has expired. The hon. member can continue next time.

It being 1.30 p.m., the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.

Charitable And Non-Profit Organization Director Remuneration Disclosure ActPrivate Members' Business

1:25 p.m.


John Bryden Liberal Hamilton—Wentworth, ON

moved that Bill C-244, an act to require charitable and non-profit organizations that receive public funds to declare the remuneration of their directors and senior officers, be read the second time and referred to a committee.

Mr. Speaker, it is an honour and pleasure to rise today to speak on behalf of Bill C-224, an act that would require charitable and non-profit organizations to declare once a year the salaries and benefits of their directors and senior officers.

This is a votable bill. If passed into law it will have a profound effect on all Canadians. It is a first step in bringing public accountability to a huge sector of the Canadian economy that has never been under meaningful public supervision.

I am speaking of the not for profit sector, the charities and non-profit organizations that pay no taxes and yet account for at least $120 billion in revenues and expenditures each year, about one-sixth of Canada's gross domestic product. Let me repeat, $120 billion, a sixth of GDP.

Incredible though it may seem, Canada has had few rules of public accountability governing this huge sector of the economy. The financial affairs of charities are but thinly disclosed to the public while those of non-profit organizations are entirely beyond public scrutiny. Even though charities and non-profit organizations are funded directly or indirectly by the taxpayer, they have been allowed to operate at whatever level of secrecy they choose.

Oh, yes, they will argue, they have to keep books. They have to be prepared for an audit by Revenue Canada. However there are 70,000 charities and 60,000 plus non-profit organizations. What are the chances of a spot audit? Even if an organization is audited, the Income Tax Act forbids public disclosure of the financial details or the results of the examination. The public has no right to know even when a charity or non-profit organization is discovered to have failed to keep the public trust, neither right nor opportunity.

This is a situation that has gone on forever. The potential for abuse is huge. The scope of the likely waste is difficult to comprehend. If only one-quarter of this $120 billion is being frittered away, soaked up in excessive salaries, improper contracts or bureaucratic inefficiencies, then Canadians are losing $30 billion annually, which becomes $30 billion out of the economy.

No wonder Canada has a debt and deficit crisis. I must say it never made sense to me that Canada, with all its resources and given its fine entrepreneurial spirit, should be in the cellar with Italy in terms of debt among the G-7 nations. Now it does.

No nation can possibly let an economic sector worth one-sixth of its GDP run along without scrutiny, without public accountability and not run up serious bills. And not have the financial crisis that Canada now faces.

There is irony here. As the finance minister casts around for spending cuts and savings crucial to the budget soon to be tabled, he looks in every corner of the rest of the economy; consumers, corporations, social programs, the public service and so on. He does not look at charities and non-profit organizations. Is there no waste here, no savings? Of course there are. I can only guess at the reason why charities and non-profit organizations have not yet come under the deficit reduction microscope.

It may well be because there has been no decent financial overview of the not for profit sector. It has literally been a case of out of sight, out of mind, for a generation of finance ministers.

No doubt this is true of non-profit organizations. There were 60,000 of them in 1986 and up until two years ago they did not have to file an annual financial information return equivalent to that required of charities. They only had to file as incorporated companies or trusts. If they were neither, they did not have to file at all.

Consequently, as the Auditor General stated in 1990, Revenue Canada "has no effective check on the right to enjoy tax exempt status". He could have stated further that the public, private citizens, journalists and even members of Parliament have no opportunity whatsoever to see how they manage their affairs.

However, thanks to the information returns required of charities, though very inadequate in terms of public disclosure, we can at least glimpse the huge dimensions of Canada's charity industry. I would like to refer my colleagues to an excellent paper, "A Portrait of Canada's Charities" which was produced by the Centre of Philanthropy, based on a study of 1993 charity returns.

Briefly, here are some of its findings. Canada has 70,000 charities through which $86 billion passed in 1993 for 12 per cent to 13 per cent of GDP. This amount is equal to the GDP of the entire province of British Columbia and considerably more than the entire agricultural sector. Forty billion dollars was paid out by charities in salaries and benefits-a huge sum.

Government funding of charities amounted to $49 billion in 1993, slightly more than half of all the charities' revenues. Hospitals and teaching institutions received 58 per cent of all

revenues, or about $50 billion. By contrast churches received only 6 per cent of revenues or about $5 billion.

Here is the problem. Anyone can find out how much a minister of a church is making for 6 per cent of the charity take. But it is usually impossible, right across this country, to find out the salary of a hospital or university president for 58 per cent of the charity take.

Why not? Hospitals and universities are all fully funded directly or indirectly by the taxpayer. Why does the taxpayer not have the right to know how much of his hard earned tax dollar is being spent on the salaries of their chief administrators? Why not?

The answer is, and I am sure that 90 per cent of Canadians will agree, that the taxpayer should know. We do have the right. If you are paying the bill you have a fundamental right to know how your money is being spent. That is a given. That is what Bill C-224 addresses.

It would require every not for profit organization to file a statutory declaration showing the total remuneration and benefits received by all directors and senior officers of charities and non-profit organizations. The minister of revenue would then make this information available to anyone who wanted it.

This I should add is no less than what is required now by publicly traded companies in Canada. If for profit companies are required to provide this kind of disclosure to shareholders, why should not charities and non-profit organizations do the same thing for their shareholders, the taxpayers of Canada?

It seems so reasonable, so obvious, so morally right. The fact is, however, that hospitals for instance have often ferociously defended the secrecy of their books and denied absolutely, even to members of their own governing boards, details on the salaries paid their top administrators. Indeed, trying to find out how most hospitals run themselves is akin to trying to assess the administrative practices of the government in Beijing from city hall in Thunder Bay. Most hospital board meetings are held in camera. The public and press are excluded.

This is all the more mystifying in that governments at all levels are told that hospitals are hurting, that beds must be cut back unless funding is sustained or even increased. Yet not even the politicians deliberating the problem of health care spending are entitled to know how much a hospital president is making. Why not?

Some might argue that the current charity information return already provides enough information about remuneration. It does not. It only requires totals and sadly, some charities filling out the form step around the spirit of openness.

For example, the charity return asks for the "total remuneration paid to employees who are executive officers, directors or trustees of the charity". Then it asks for the total number of people involved, which invites division of that number to get the average per individual.

Alas, often the trustees of charities are unpaid. Therefore the number you are dividing by is inflated and the average remuneration appears far lower than it actually is for key administrators.

Sadder still is the fact that many charities simply skip the remuneration lines altogether. The Canadian Cancer Society of Ontario reports paying over $8 million in salaries and then leaves the following lines on executive remuneration blank. Therefore we do not even get totals.

This practice is common. Any random sampling of annual charity returns will come up with many where the remuneration lines are not filled out. There is obviously an unwillingness by many charities to provide this elementary information. They get away with it because there is no penalty for their omissions short of revoking their charity status. There is no adequate screening of the filled out forms either. Errors abound and some must be deliberate.

Bill C-224 partially plugs this loophole. The legislation provides a penalty for the failure to disclose. A fine of up to 50 per cent of the funds received from government is a law that has teeth. Perhaps that sounds tough but in fact legislators in the United States have been tearing their hair and trying to bring to task not for profit organizations that have been giving executives excessive compensation.

The lifting of charitable status is too slow, the ways of concealing excessive compensation too intricate. I have to add that the United States is years ahead of Canada in trying to tackle this problem.

How bad is it? In the United States the information returns of both non-profit and charities are available to the public. There too, they have this phenomenon of organizations skipping the lines pertaining to executive remuneration. Prodding by the Internal Revenue Service has disclosed salaries exceeding one million dollars annually, $300,000 or $400,000 is not unusual.

This is undoubtedly happening in Canada as well. Our charity information returns are primitive in the detail they require in comparison to those of the Americans. The Canadian public, citizens, journalists or politicians cannot even see the returns of non-profit organizations. While these are available to every American on demand at the office of the non-profit organization, the equivalent information in Canada is denied to Canadians.

While my remarks have tended to focus on charities it is only because there is at least some public information on them. There is nothing on non-profit organizations. Nothing at all.

Revenue Canada is not even sure how many there are. The only figure I could obtain, 60,000, is nine years old and nobody-I mean nobody-knows how much money flows through them yearly. If it is even half that of charities, that is $40 billion. I suggest that that figure is conservative. I suggest that it could be considerably more. I suggest the combined figure that I have been using, $120 billion, is also conservative.

Last week I received a visitor at my constituency office in Hamilton-Wentworth riding. He was from Manitoba and while on business in Toronto he drove over to meet me because he had read in his local paper that I was investigating the not for profit industries.

He told me that he headed a for profit company in the business of recycling building materials. He said that he was being killed by a non-profit organization in the same business which enjoyed a competitive advantage because it did not pay taxes.

That same week, I received a call from the president of a Toronto union local representing jail workers. His problem was with a non-profit organization hired by the provincial government to manage group homes for youths convicted under the Young Offenders Act. The union wanted access to the company's financial statements for the purposes of negotiating a collective agreement. Denied. A non-profit organization does not have to disclose financial details to anyone. Secrecy is absolute, no matter how the taxpayer's dollar is being spent, and so it goes.

The real problem is that we do not know the net negative effect non-profit organizations are having on the economy. That many exist purely to pay inflated salaries to their principal officers there is no doubt. In doing so, with the advantage of not having to pay taxes, are they forcing out of business legitimate for-profit enterprises which would pay taxes? How damaging to a free market economy is a plethora of businesses which only have to compete sufficiently to line the pockets of their executives rather than sufficiently to show a profit to pay shareholders? How much of Canada's deficit is rooted in non-profit companies doing barely enough and no more?

There is only one quick way to get at this issue: require non-profit organizations to declare the remuneration of their principal officers, as Bill C-224 proposes, and the benefits as well.

MPs are often accused of having a too rich pension plan. I agree that is so and that it should be brought into line with industry. Tax exempt charities and non-profit organizations are dependent upon the taxpayer too, no less so than MPs. What kind of pensions do their executive officers get? Chances are given that this information has never been available, many of their pension plans would make current MP pensions look starved and stingy.

Just as the public demands accountability of its politicians, so it should demand accountability of those organizations dependent upon public and governmental generosity. There is no excuse for secrecy when tax dollars are being spent, directly or indirectly.

Finally, it is clear that the entire $120 billion not for profit sector is urgently in need of review and oversight. However, a problem of such magnitude cannot be solved overnight.

Nevertheless, something must be done immediately because the loss to the economy is undoubtedly enormous. The floodlight of public scrutiny must be brought to bear as quickly as possible. That is the intention of Bill C-224. It cannot cure in a stroke an industry that has been allowed to function unsupervised for decades but it can bring into sharp relief the fundamental nature of the problem. By forcing into daylight those executive salaries and benefits which are obviously excessive, it can show the greed.

Charitable And Non-Profit Organization Director Remuneration Disclosure ActPrivate Members' Business

1:45 p.m.


Roger Pomerleau Bloc Anjou—Rivière-Des-Prairies, QC

Mr. Speaker, first of all, I would like to thank my hon. colleague for his speech, which I thought was rather well researched and skilfully crafted.

I wish to tell him that members of the Bloc Quebecois are not against this bill but would like to discuss it more thoroughly. I want to take this opportunity to add my two cents' worth to the discussion.

Today's debate is on Bill C-224, an act to require charitable and non-profit organizations that receive public funds to report the remuneration of their directors and senior officers, which was introduced by my hon. colleague, the hon. member for Hamilton-Wentworth.

This bill would require charitable and non-profit organizations that receive, directly or indirectly, any payment from the public funds of Canada to report the remuneration and benefits received by their directors and senior officers. My Bloc colleagues and I think that the objective of this bill deserves our support.

It would be appropriate, in the name of openness, to require organizations receiving funds from the federal government or the public to disclose the remuneration and benefits provided to their directors and senior officers. Canadians would thus be able to ensure that public funds used to support charitable organizations do not end up in the pockets of those who administer these organizations, as we have seen recently at all levels.

As a donor, the federal government would be entitled to require that the remuneration and benefits received by the directors and senior officers of non-profit organizations, at least those supported by the government, be made public.

We support the principle of this bill for another reason: it will always be difficult to assess with accuracy the voluntary sec-

tor's contribution to Canadian society until we find out the number of paid employees and their salaries, as well as the size of the infrastructure in place to facilitate the work done by volunteers.

In these difficult times, understandably, volunteer work and donations are more needed than ever. This is due to the fact that voluntary organizations face an ever-growing demand for programs and services, on the one hand, and a reduction in government assistance and stiffer competition for private funds, on the other hand.

We must recognize that volunteer work is an essential element of society as well as a way of life and social duty. It is a democratic gesture which plays a very important role in the life of the community and compensates, as I just explained, for the government's gradual withdrawal from a number of sectors.

However, the situation is more complex as regards non-profit volunteer organizations, since they include various national, provincial and municipal organizations which are active in sectors as diverse as health, social services, the environment, justice, education, international assistance to name but a few.

I have some concerns regarding this bill. First, as my hon. colleague mentioned, line 16 in clause 3 reads as follows: "-receives, directly or indirectly". That wording is very general and could include a vast number of non-profit organizations which think they have nothing to do with the federal government, or with direct funding from Canadian taxpayers.

For example, a university research fund receiving money from a provincial government would or could be affected by this bill, since money received could indirectly come from federal-provincial transfers. Consequently, that research fund would have to disclose the salaries of its managers or directors.

As well, would an organization like the Knights of Columbus in a small town be subject to this bill, since the vast majority of such small charitable and non-profit organizations rely on public donations and therefore on public money?

I am concerned that the objective of this bill might be altered by the means used to achieve it. I fear that this bill might be stalled because it is too ambitious and could generate a lot of red tape.

This bill put forward by my colleague is commendable, its purpose being to eliminate as much as possible frauds committed by administrators and directors of non-profit organizations who take money from the Canadian public and use it more for themselves than for the great causes they claim to defend.

In order to respect the spirit of this bill, I think that we need to look more closely at its scope. We cannot treat in the same fashion organizations that are responsible and those that some people use to their own financial advantage, as can be seen occasionally.

We must also make a distinction between most small non-profit or charitable organizations and those that have large budgets. What constitutes a large budget, $50,000, $100,000? We do not know exactly. We need to have statistics on this and discuss the issue.

We must also make a distinction between a person who works hard all year long for a cause he or she believes in and who receives, for example, $40,000 a year as executive director and another person who would receive the same amount of money to organize, for example, a fund-raising campaign lasting two months. A mere report to the minister cannot make the difference between these two cases.

There is also a problem of confidentiality, of course, when a person's employment revenues are disclosed without the job description or the length of employment being known. For all these reasons, I think that the scope of this bill has to be limited.

First of all, only the organizations receiving directly any payment from the federal government and major non-profit or charitable organizations would have, for example, to file along with their annual reports a statement of income and salaries specifying the major positions and the remuneration of their incumbents.

With this proposal, there will be no need to create more bureaucracy, since companies already have to produce an annual report to which the income and salaries annex could be added, as would be the case for some charitable or non-profit organizations that meet criteria which, I think, still have to be defined.

Hence, the remuneration and benefits of the directors and managers of all major non-profit organizations would be disclosed, which is the purpose of this bill, and the financial institutions minister would be able to answer any legitimate inquiry.

Knowing full well that the hon. member for Hamilton-Wentworth is acting in the interest of the Canadian population, for which he must be commended, we would be prepared to support the principle of the bill if we could amend it to abolish some of the pointless conditions it prescribes for the vast majority of non-profit organizations whose staff receive little or no remuneration and to avoid creating another useless level of bureaucracy.

Finally, I would like to take this opportunity to thank all the volunteers in Canada as well as in Quebec, who work day in and day out to promote a cause they believe in.

Charitable And Non-Profit Organization Director Remuneration Disclosure ActPrivate Members' Business

1:55 p.m.


Daphne Jennings Reform Mission—Coquitlam, BC

Mr. Speaker, it gives me great pleasure to rise today to speak in

support of Bill C-224, a private member's bill presented by the hon. member for Hamilton-Wentworth.

I hope the journalists who cover the proceedings of the House of Commons note that we as members are not always at each other's throats. If the public only watches Question Period and if Question Period is the only parliamentary proceeding that hits the nightly news, a wrong impression of how this House operates can and I submit has developed in the minds of Canadians.

There have been numerous occasions in this Parliament setting it apart from the previous Parliament when members have agreed on the disposition of various subjects. When a good idea is presented it deserves support. This is the view of how the House of Commons should work which my party has tried to get across since all members convened here a little more than a year ago.

While we have not always been successful, politics by its very nature being partisan, I believe we have on many occasions raised the level of debate in the Chamber through mutual co-operation on a number of issues.

The private member's bill presented by my friend from Hamilton-Wentworth deals with an important issue in a way which deserves our support.

This bill proposes that charitable and non-profit organizations that receive public funds be required to declare the remuneration received by their directors and senior officers.

In supporting this bill I want to make it crystal clear that the Reform Party for the most part supports the work of charitable and non-profit organizations in Canada. The Reform Party supports the work of the voluntary sector in Canada. I would like to point out along with the previous speaker of the Bloc that I too thank all of the volunteers across Canada, many of whom give many hours and are not always thanked as they should be.

We recognize the need for volunteers in many organizations and we respect the right of these organizations to exist and to carry out their functions.

However, what we are against, and this is the reason we support this bill, is these organizations not being accountable. If these organizations receive taxpayers' dollars then every penny of every dollar received should be accounted for.

I do not think it will come as a great surprise to many that Reform policy goes further than this bill. It is the policy of my party that no funds should be given by the government to any charitable or non-profit organization. It should be the responsibility of the organization to fund itself. If there is a need or a perceived reason for the existence of an organization then it should be able to sustain itself without the need for government handouts.

I also want to point out here that in my riding over the last year I have been donating 10 per cent of my salary, not because I think MPs are not paid enough or are paid too much, but because I think it was an opportunity for me to show people within my riding that if we are interested in a particular community project or a service group or a food bank then we can show others that it is up to us in the community to support those things.

Reflecting back on the last 15 years it seems to me that with the advent of the charter of rights and freedoms Canada gradually has become a society dominated by special interest groups, each group advocating what it deems to be a worthwhile cause. We all know to each of us the things we are involved in seem more worthwhile than what someone else is doing and it is an understandable feeling.

More often than not these groups receive seed money from some level of government. Because the federal government historically has the most money to give out, most of these organizations end up receiving some handout from the federal treasury.

The problem with this procedure is that the dependence on government grants begins and carries on. It becomes difficult for the organization to function without federal money. For political reasons it becomes difficult for a government, any government, to eliminate that funding.

It is the opinion of my party and it is my personal opinion as well that we can no longer afford to fund these organizations either totally or partially. If there is a good reason for the existence of the organization there should be a good reason for people to support it financially. However as long as these grants continue it is the least we as legislators can do to ensure that there is accountability.

It is shocking to think that not for profit organizations are not required to disclose individual salaries. While I am not condemning any of these organizations, surely the public should know if the reason there is no profit is because a great deal of the money received was spent on salaries or spent on programs. There should be no ambiguity.

The only way to eliminate this ambiguity is for these organizations to report fully on their disposition of funds received. It should, as my friend opposite suggests, be broken down so that there can be no misinterpretation as to which of the organization's programs were funded and how much each particular individual in the organization received as a salary or a bonus.

Full and complete disclosure should also have a chilling effect on any organization that uses the bulk of the contributions it receives on salaries. Perhaps the mere fact that salaries have to be publicly declared may result in more money being put into the programs.

The amounts of money we are dealing with here are not insubstantial. This whole sector of the economy comprises about 70,000 charities, as was mentioned earlier, which spent $82 billion in 1993. There are also 40,000 plus non-profit organizations which probably spent an amount proportional to the amount spent by the charities.

The annual returns required by Revenue Canada are not made public with respect to not for profit organizations. It is important that salaries be disclosed in these organizations because the amount shown will indicate if excessive profits are spent or simply eliminated through the payment of high salaries.

While the public and financial information returns of charities have been available since 1977 they are not policed by Revenue Canada for accuracy or completeness and contain little financial detail. Public accountability requires us to do better than this. The public should be able to know who gets how much.

I believe this bill accomplishes this goal. I am pleased to note that by the wording of this bill all not for profit organizations are affected. Even those administered by the provinces are affected. Therefore, hospitals, universities, research organizations, training schools and other institutions which receive federal funds will be subject to disclosure.

This bill is a good first step in dealing with the issue, however it is only a first step. It is important for us, perhaps in a committee of this House, to review the conditions precedent for having an organization declared to be a charity or not for profit organization. In other words, we should review the conditions an organization has to meet to receive the tax exempt status and to give tax receipts for donations.

Perhaps we may conclude that only organizations which pay their own way should have this status. If they receive a government grant then they pay tax. Such a review could focus on the role and value of purely volunteer organizations in our society, organizations that use all of the money donated to them for programs rather than for salaries.

On the question of grants and contributions by the federal government to these groups, I stated the firm policy of my party earlier. These grants and contributions are to cease.

In my position as the Reform Party's critic for literacy, I have suggested this to my party and will be suggesting it to the minister responsible for literacy, the government leader in the Senate. Most if not all of the literacy budget is distributed in the form of grants or contributions to charitable or not for profit organizations which are involved in the literacy business. These are organizations which encourage literacy through adult training, raise awareness of the problems of illiteracy, or perhaps are involved in family counselling where illiteracy is an issue.

Those are all worthwhile goals. However, it is my contention that they can be achieved without dipping into the public purse. Let us face it ladies and gentlemen, today we have no more money in the public purse.

Private enterprise, the business community, which stands to benefit the most from a high level of literacy should assume the task of training. It should assume this burden because business will reap the benefits.

I have also suggested that in order to treat these literacy organizations in a humane fashion, funding will be phased out over three years. Yes, no government funding to any of these organizations is my ultimate goal, but I appreciate the work done by my colleague for Hamilton-Wentworth. His ideas on this matter of salary disclosure deserve our support and Bill C-224 deserves the support of this House.

Charitable And Non-Profit Organization Director Remuneration Disclosure ActPrivate Members' Business

2:05 p.m.


Carolyn Parrish Liberal Mississauga West, ON

Mr. Speaker, I have the pleasure today to second and to speak in support of Bill C-224, an act to require charitable and non-profit groups receiving public funds to declare the remuneration of their directors and senior officers.

This bill is the first important step toward reforming Canada's not for profit sector. With the implementation of C-224 all organizations with charitable or non-profit status receiving public funding by direct grants, government transfers or by tax exemption will be required to publicly disclose the amount of the salaries and benefits paid to their principal officers.

This bill is about accountability. It is about allowing these collectively funded organizations and agencies to be scrutinized not only by government but also by the public. It sets the same standard of accountability for not for profit organizations as those set for individuals, businesses and government.

When government funds individuals and businesses, rules and regulations are in place to ensure accountability. Why should the rules be different for not for profit organizations? In difficult economic times all precautions must be taken to ensure sparse public funds are allocated according to real need.

The issue is of utmost importance given the absolute necessity to control government spending today. We are forced to re-evaluate the role of government in society generally. Now more than ever we must closely scrutinize recipients of all public funds.

There are two distinct advantages to achieving charitable status in Canada. Once an organization is registered it is exempt from paying income tax. Registration also allows the organization to issue official donation receipts which donors then claim as income tax credits. This results in a reduction of tax revenues to the government.

Currently, registered charities, including private and public foundations and charitable organizations are required to file a registered charity information return with the department of revenue. These returns are also available for public release as per section 149(1) of the Income Tax Act.

Section D of the return asks how much remuneration is paid to employees, executive officers, directors and trustees. The question of how many people are paid from the total regular employees remuneration is not asked. As long as the organization files a return, even though it be incomplete, it retains its charitable status. There is no penalty if required information is missing.

The member for Hamilton-Wentworth's November 1994 report concerning special interest group funding contains returns from selected charitable organizations. Of these, only 50 per cent specified the number of executives or their salaries. The other half implied they had no executive officers, directors or trustees and therefore did not have to specify how much money was allocated for their salaries.

One wonders how an organization such as the Canadian Council on Smoking and Health claiming receipts of almost $1 million and employee salaries of close to $400,000 can function without directors or executives.

By simply including all salaries in the figures paid out to regular employees, organizations avoid having to identify or reveal executive salaries. The current charity information return does not require detailed information about remuneration. Canadians who are hard pressed to donate a simple $25 to a charity may be appalled to find its executive director receives half a million dollars in salary.

While the Income Tax Act requires charities to use at least 80 per cent of individual donations on charitable activities, it does not mention what proportion of a government grant should be used in this way. Moreover, when a charity is 80 to 90 per cent government funded the current rules leave an enormous gap.

The situation is even worse for non-profit organizations. They are generally not taxable. While non-profit organizations cannot issue official tax receipts, they receive direct funding from the government by way of grants and transfers and indirect funding in the form of tax exemptions.

Currently, non-profit organizations are required to file a non-profit organization information return with Revenue Canada detailing their financial information. Not every non-profit organization is required to file a return. Only those having revenue exceeding $10,000 per year or having assets of more than $200,000. Only 4,960 of an estimated $40,000 non-profit organizations filed a return in 1993. Under the Privacy Act and section 241 of the Income Tax Act all of this information remains confidential.

A non-profit organization has absolutely no public accountability. There is no way for any member of the public or the government to adequately assess the financial operations of these organizations. MPs are asked to approve grants for organizations in their own constituencies having little idea where that money is actually going. I have personally withheld cheques from organizations in my constituency that have failed to provide me with adequate financial information.

Bill C-224 requires a detailed public breakdown of all salaries for all charitable and non-profit organizations. This would eliminate a prime area of potential abuse in a largely unaccountable sector.

The Consumers' Association of Canada lists three sources of income on its information return with government grants totalling almost $900,000, more than 70 per cent of its total revenues. This organization pays one executive officer $96,000 a year. At least it reports this information. Most do not.

We can no longer allow any publicly funded organization to remain outside financial scrutiny. Given the state of the government's finances, the present situation is totally unacceptable.

There are more than 66,000 registered charities in Canada, a number which increases by 4,000 annually. We do not know exactly how many non-profit organizations truly exist.

The Canadian Centre for Philanthropy reports approximately $86 billion passed through registered charities in 1993, 13 per cent of Canada's gross domestic product and equal to the entire GDP of British Columbia. We can safely say that together charities and non-profit organizations account for more than $100 billion in cash flow. They pay out approximately $40 billion in salaries to 3.2 million people or 9 per cent of the Canadian labour force.

Registered charities alone receive approximately 56 per cent of their revenue directly from various levels of government, $49 billion annually; $5.5 billion comes from the federal government in direct grants and transfers and $600 million in forgone tax revenue, over $6 billion in total per year.

In our quest to control government spending, not for profit organizations cannot be ignored. Accountability in terms of salaries paid out by government funded agencies is the essential first step proposed in this bill.

Other important recommendations in the bill also need to be considered. The Income Tax Act must be amended to allow public access to the financial statements of non-profit organizations. Revenue Canada must scrutinize more closely the activities of registered charities.

Applicants for government funding should be required to waive certain protections offered by the Access to Information and Privacy Acts. Organizations should not receive significant government funding without having had their annual statements reviewed and approved by the granting authorities.

All of these recommendations establish accountability. Current financial conditions demand close scrutiny of all groups receiving government funding. This bill is only the tip of the iceberg, a small but necessary step in reforming the way we handle Canada's non-profit sector.

In the U.S., charitable and non-profit organizations must file returns with the IRS which are available for public inspection. Information must be filed by both charitable and non-profit organizations, unlike the Canadian policy which keeps the returns of non-profit organizations confidential.

The U.S. form is much more comprehensive and detailed. One section asks for the names, addresses, compensation, benefits and expense allowances of officers, directors and key employees. If any receive annual compensation of more than an aggregate $100,000 an additional schedule must be attached. The organizations are thus held directly accountable to the public.

We publicly fund charitable and non-profit organizations in Canada which engage in activities unrelated to their charitable status. Some participate in blatantly political activities by donating funds to political parties.

The Canadian Labour Congress was given a grant of over $3.6 million in 1993 for its labour education program. The CLC contributes none of its own revenues to this program yet was able to give over $1 million to the New Democratic Party in that same year.

The definitions of charitable activities are vague and open to abuse. Activities in the public interest and those of special interest are not clearly defined. As for non-profit organizations there are very few guidelines. Some of these organizations such as the Canadian Ethnocultural Council receive up to 80 per cent of their revenue from sustained government funding. Many could not survive without direct annual funding from the government. We are talking about $49 billion in government funding each year. We must get our act together.

I ask all hon. members to vote for the bill as a first step in addressing a situation that both the public and the legitimate not for profit sector should welcome. The taxpayer has a right to evaluate the spending priorities of recipients of government grants. Legitimate not for profit organizations have an interest in knowing that both government and private funding is allocated to those who need and deserve it most.

Charitable And Non-Profit Organization Director Remuneration Disclosure ActPrivate Members' Business

2:15 p.m.


Ian Murray Liberal Lanark—Carleton, ON

Mr. Speaker, I want to begin by congratulating my hon. colleague from Hamilton-Wentworth on the effort he has put into studying the subject of the accountability of non-profit organizations. This debate is about accountability. It should in no way be perceived as an attack on the numerous organizations that are making a real contribution to public policy.

At the same time it is appropriate to reconsider the necessity of government support for many not for profit organizations. I do not buy the argument that government funding is required to give a voice to people who would otherwise not be heard. Instead I believe the process has usurped the role of members of Parliament who are elected to speak for their constituents.

A look at the appointment diaries of MPs will demonstrate very quickly that it is not the rich and powerful who come to see us with their problems and concerns. Rather it is those who have come up against the giant bureaucracy that is modern government and have been stymied or frustrated by the experience. It is people who want a solution to their individual problems and would be unlikely to turn to another bureaucracy in the form of a not for profit organization to take up their case. That is a primary role of a member of Parliament: to act as an advocate for those who feel they do not have a voice.

On the broader question of consultation it is difficult to argue that governments do not consult. More often than not we are accused of consulting ad nauseam, to the detriment of action. Politicians are extremely conscious of the need to involve all stakeholders in any discussion of public policy. A look at the makeup of any advisory body on questions of wide interest will confirm this point. Membership is carefully structured to reflect linguistic, cultural, gender and consumer interests.

From time to time an issue will generate considerable public interest. Citizens will want to be involved in the policy process and will join with like-minded Canadians to galvanize public opinion and encourage governments to act. That kind of activity is perfectly legitimate and helpful.

The history of such grassroots activism suggests that politicians do respond. Sometimes whole new government departments are created, examples being environment and consumer affairs. However too often those departments begin to see their constituencies not as the people of Canada but as the interest groups that establish permanent organizations. Long after the public has decided that the original reasons their activism have been responded to, the not for profit organizations continue to exist as a mirror bureaucracy often supported by taxpayers. An

almost symbiotic relationship develops between the organization and the governmental body, and the natural inertia that exists in government organizations discourages change in that type of relationship.

It is only when fiscal pressures force a review of program spending that a reassessment takes place. We have reached or surpassed that point today. Government can no longer justify funding special interest groups that cannot demonstrate their legitimacy through self-sustaining financing. This is not only my view but also the view of many of my constituents who have spoken to me about what they expect to see in the budget.

For the first time in many years governments are being forced to make politically tough decisions about expenditures that have a real impact on people's lives. In the last budget we announced the closure of military bases that had contributed substantially to the welfare of whole communities. That was a tough decision but one that should have been made years ago. We are now about to ask Canadians to sacrifice even more, as we recognize that the deficit is the single overwhelming problem we face. As part of that exercise a number of government programs will be cut, resulting in significant job loss in the federal public service.

I mentioned earlier that many causes promoted by special interest groups have their own champions within government. I do not believe we should be cutting public service jobs if we are not prepared to reduce or eliminate funding to those extra governmental groups that mirror government programs and initiatives.

Another problem associated with special interest funding relates to the lack of control elected officials have over the process. Although politicians bear the brunt of public criticism and are justifiably held accountable for the expenditure of public funds, the real control of patronage rests within the bureaucracy.

Ministers cannot possibly pay close attention to every grant and contribution dispensed by their departments. Once budgets and guidelines are set, it is also seen as inappropriate for politicians to become involved in the disbursement of public money.

Public servants are sensitive to political considerations and this can lead to funding only for those organizations that are deemed politically correct. It becomes impossible to criticize such expenditures without being labelled as inappropriately biased.

The problem for members of Parliament is that it is usually not worth risking the disapprobation of powerful voices among the media and special interest groups. Taxpayers' dollars continue to be directed to organizations that may enjoy the support of only a small minority of the public.

The amount of money involved is staggering. Approximately $4 billion is directed to not for profit organizations in the form of unconditional grants. Another $3 billion takes the form of contributions for which accountability is demanded.

It should offend taxpayers that organizations which depend in any measure on public financing, no matter how noble the cause, can escape the normal accountability expected of any other private or public enterprise. This situation only invites abuse.

It should also concern Canadians that their members of Parliament have no right or ability to review how that public money is spent. Canadians are very tolerant. We are proud that so many of our fellow citizens involve themselves freely in organizations that exist to better the lives of others.

However we also believe any organization that claims to have the support of a large percentage of the population should be able to demonstrate the support with corresponding levels of membership and financial support. That is how one demonstrates legitimacy.

Unfortunately the availability of public funding for special interest groups has spawned many institutions that cannot meet that test and could not continue to exist if they were forced to depend on their membership and public appeals for support.

Again the motivation and objectives behind these groups may sound compelling, but we are living in an era of hard choices that will continue for many years to come.

My colleague from Hamilton-Wentworth has brought to our attention a number of examples of how federal grants are allocated which would, I am sure, surprise and upset many of my constituents. I would like to single out one in particular because it raises a number of questions. My colleague from Mississauga has already referred to it. Over the past 10 years the Canadian Labour Congress has received $41,370,247 from the federal government. This funding results from a 1977 labour education agreement with the government.

The CLC educational services program includes three courses on occupational safety. The subjects taught in the other 32 courses include techniques of organized labour activism, collective bargaining, grievance procedure, shop steward responsibilities, something called facing management and labour law.

I am not arguing that those are inappropriate subjects for union education. I do contend the Canadian taxpayer should not be funding the program with an average of $83,672 per person in pay and benefits for the office and teaching staff involved when we are facing cuts in other programs that will mean real hardship for many individuals.

A more troubling aspect of public funding for the CLC relates to its involvement in federal election financing. In the 1993 federal election the CLC donated $1,509,810 to the New Democratic Party. That was by far the largest contribution from any single source to a political party.

The taxpayer paid again when Elections Canada matched that contribution as provided by law dollar for dollar. Whether or not the CLC can argue it administers separate funds for education and political action, it is inappropriate for any organization that receives direct government funding to make political contributions. I would apply that rule to private industry as well.

This debate is important for a number of reasons. First, it is unlikely that many Canadians are aware of how much public money is channelled to special interest groups. Second, they should be made aware of the need for accountability by those organizations. Finally at a time of real fiscal restraint, it is important that all non-essential spending be put under the spotlight and justified.

I am pleased to support Bill C-224 and I am confident that it will have the support of a great majority of Canadians.

Charitable And Non-Profit Organization Director Remuneration Disclosure ActPrivate Members' Business

2:20 p.m.


Alex Shepherd Liberal Durham, ON

Mr. Speaker, I am very happy to enter into debate on the very worthwhile bill being presented by my colleague from Hamilton-Wentworth.

People throughout the country are telling us that they do not want any more taxes. Taxes take various forms. They take the form of writing cheques on April 30 but they take other forms as well. Every time somebody receives a tax deduction for a charitable donation it is a form of taxation. It means that person did not have to pay tax on that transaction. He received an exemption for it. In a sense, between taxpayers there is a transfer of resources from one taxpayer to another.

People are asking us for greater visibility and accountability in government programs. One of my own initiatives, to be presented in a private member's bill later this year, is to basically try to focus on how much government programs cost and taking them one step further to how much they are costing each individual taxpayer in this country.

Therefore, it is with great pleasure that I stand in support of Bill C-224.

The financial community has long regarded accountability as being very important. Public corporations in this country publicly trading shares are required to report the remuneration of their top executives. The hon. member is asking for nothing unusual. It is only something that should have been put in legislation years ago.

One of my hon. colleagues from the Bloc mentioned that it is possibly too wide in scope and possibly applies to organizations that do not receive federal government funding. I do not really think that is the purpose. If there is a non-profit organization or a registered charity people want visibility whether governments have funded it one way or the other. Therefore, I do not think the scope is too broad. I think this could be something useful for all government agencies and for the public in general to have access to information.

Non-profit and charitable organizations do not have a profit motive or the necessary overburden for efficiency. In a free market economy, a capitalist system, obviously companies have to make a profit or they die, they go into bankruptcy and become insolvent. The whole concept of those organizations is how they are going to meet the payroll.

When I was in private practice running my own businesses every day I wondered how I was going to make the payroll. That was a big feature of my daily life. If I did not meet the payroll I would suddenly be out of business.

These organizations obviously have to meet the payroll but they also do not have the incentive to have to make a profit. This by itself creates inefficiency if there is not a constant focus on the results of the organization. Most non-profit and charitable organizations have a different focus. They are not trying to make a buck. They have a specific and worthwhile function they are trying to achieve. However, without having the restraints required of turning a profit or being efficient they will have a tendency over their history to build in inefficiencies. The greatest inefficiency is in the area of wages.

If we allow these organizations to simply set their own wage structure there will always be non-profit organizations demanding more money just by the nature of the way they are established. There is no requirement to be efficient.

I think the member has brought forward a very worthwhile bill that will give these organizations an advantage to make them more efficient because people will have the visibility of how much people were remunerated. The question is whether it is reasonable remuneration.

In conclusion, I certainly congratulate the member for Hamilton-Wentworth for his very valuable contribution today and I certainly support it. I would respectfully request that all the parties of the House support this very worthwhile legislation.

Charitable And Non-Profit Organization Director Remuneration Disclosure ActPrivate Members' Business

2:25 p.m.

The Deputy Speaker

May we call it 2.30 p.m.?

Charitable And Non-Profit Organization Director Remuneration Disclosure ActPrivate Members' Business

2:25 p.m.

The Deputy Speaker

The time provided for the consideration of Private Members' Business has now expired.

Under Standing Order 93 the matter will come up for further debate in the fairly foreseeable future.

It being 2.30 p.m., the House stands adjourned until Monday at 11 a.m.

(The House adjourned at 2.30 p.m.)