Debates of March 17th, 1995

The House resumed from February 10, consideration of the motion that Bill C-224, 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.

Charitable And Non-Profit Organization Director Remuneration Disclosure Act

[Peter Milliken, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, on a point of order. With respect to the motion for second reading of this private members' bill, should the question come to a vote, I think you would find there is unanimous consent to amend the order to read:

That the bill not be referred to a legislative committee, but to the Standing Committee on Government Operations.

[The Deputy Speaker]

Is there unanimous consent?

[Some hon. members]

Agreed.

Motion agreed to.

[Maurice Dumas, Bloc, Argenteuil—Papineau, QC]

Mr. Speaker, before speaking on Bill C-224, I would like to take this opportunity to mark St. Patrick's Day and wish all our Irish friends a very happy St. Patrick's Day. I would also like to call your attention to Claude Bourguignon's excellent article published in La Presse today on this subject.

Mr. Bourguignon is a resident of my riding of Argenteuil-Papineau. In his paper, he relates the history of the massive presence of thousands of Irish Canadians from coast to coast. Claude Bourguignon is also one of the founders of the Irish Quebecers interpretation centre, located in Saint-Colomban, in the riding of Argenteuil-Papineau.

The principle of Bill C-224, the Charitable and Non-profit Organization Director Remuneration Disclosure Act, introduced by the hon. member for Hamilton-Wentworth is to force non-profit organizations and charitable organizations that receives, directly or indirectly, any assistance from the public funds of Canada to disclose the remuneration and benefits paid to their directors and senior officers.

This means that the remuneration and benefits received by the directors and senior officers of charitable organizations would be disclosed upon receipt of federal government or public funds. This way, Canadians would have the assurance that public funds do not go to the directors and senior officers.

Because it is all too often perceived as a charitable activity carried out on an individual basis and in isolation, volunteer work is overlooked in our political debates on the Canadian economy. However, individual volunteers' efforts are far from negligible given their economic impact. There is an obvious need to promote volunteerism. This essential element of society is also a lifestyle and a social duty.

Yet, in recessionary times, volunteer organizations will have to use other financing methods because government assistance is getting increasingly restricted. It must also be noted that the survival of those services and programs people rely on is not guaranteed.

The old stereotypes concerning volunteers, their activities and their motivation are no longer valid. Today, two thirds of volunteers in Canada belong to the paid labour force and most of them hold full time jobs.

This bill contains a few flaws, however. First of all, clause 3, line 17, reads in part as follows:

and receives, directly or indirectly

This very broad wording could refer to a great many non-profit organizations which do not feel they have anything to do with the federal government. It should simply read, "and receives directly".

Second, the next line reads in part as follows:

from the public funds of Canada

The expression "public funds of Canada" is very ambiguous because it does not specify if these funds are strictly federal or if they include provincial and municipal funds.

The main purpose of this bill is to avoid any possibility of fraud by directors and senior officers of non-profit organizations.

All Canadians and Quebecers alike recognize that volunteerism is a great blessing to society. According to Statistics Canada, in 1987, Canada benefited from the work of over 9 million unpaid volunteers. Their work represented over one billion hours, or an average of two hours per week per job from November 1986 to October 1987, or more than 500,000 full-time jobs for a year.

The three main sectors relying on volunteer work are religious organizations, sports and recreation, as well as education and youth development.

Close to one quarter of male volunteer workers are involved in recreational endeavours, while another quarter participates in religious and educational activities. Women are more likely to do volunteer work with religious organizations, with one fifth of them in that sector.

Overall, 38 per cent of the volunteer work is related to the collection of funds, 36 per cent to the provision of information, and 35 per cent to the organization, monitoring or co-ordination of activities.

It is surprising to see that most volunteers are not older or retired people. Close to half of them are in the 25-44 age group; a little over a quarter are in the 45-64 category, while the others are 15 to 24 year olds. Volunteers in the 25-44 age group hold close to two thirds of the jobs in education and youth development, and three fifths of the jobs in sports and recreation.

As the official opposition representative and critic for issues concerning seniors, I want to point out that volunteers aged 65 and over hold close to one fifth of the jobs related to social services, including health care and support.

Moreover, the majority of volunteers come from middle-income households. Over 40 per cent of all volunteers come from households whose income is in the $30,000 to $60,000 range, 14 per cent come from households with an income of over $60,000, while only 5 per cent come from households whose income is less than $10,000.

Volunteers with a household income of over $60,000 are found mostly in organizations with an economic or international focus, the percentages being, respectively, 19 and 21 per cent. Those with a household income of less than $20,000 are usually in social services and represent nearly one-quarter of all volunteers, which reflects the high ratio of senior citizens in this area.

At least 19 per cent of volunteers in social services are aged 65 and over.

In an article that appeared in La Presse on February 6, 1993, journalist Clause Masson discussed the use of funds collected during telethons, saying that if we consider the preparations for a telethon, the need to maintain a permanent staff and also the promotion campaign, the cost of producing this kind of show is enormous and that is where a substantial amount of money collected is spent.

And that is where the organizations that conduct these telethons will have to make some changes. For instance, there is definitely something wrong when a total of $3 million is collected and only 10 or 20 per cent is donated to the actual cause. To make a telethon worthwhile, at least 50 per cent or $1.5 million should go to direct services.

We must keep telethons from being a way for people and organizations to perpetuate the so-called charity business. Just because organizations are not for profit does not mean we should trust them implicitly.

In 1991, Quebecers gave over $400 million to a myriad of organizations appealing to their generosity, that is charities, foundations, church parishes, recreational organizations, etc. Canadians on the whole, excluding business, gave roughly ten times more, that is, some $5 billion dollars, according to the Canadian Centre for Philanthropy. Thus, on the subject of transparency, it would be interesting if the organizations receiving federal government or public assistance were required to reveal the benefits and salaries of their officers.

Canadians could then verify that public funds used to support charitable organizations do not simply go into the pockets of the people administering them. In conclusion, subject to the two points I raised earlier, we would be prepared to support the spirit of this bill.

[Dianne Brushett, Liberal, Cumberland—Colchester, NS]

Mr. Speaker, it is a pleasure to speak in support of Bill C-224, an act to require charitable and non-profit organizations that receive public funds to declare the remuneration of their directors and senior officers. My colleague from Hamilton-Wentworth has spent a great deal of time and research on this matter in the interests of deficit reduction and in the interests of the Canadian taxpayer.

Accountability has been the battle cry of the 1990s. We have heard this cry coming from all sides: from business, from special interest groups and most important, from the individual Canadian taxpayer. What this bill does is provide for accountability in the charitable and non-profit sector of the economy, and the very large segment of the economy that it is.

This bill is about disclosure of the real value of non-profit and charitable organizations, not only in the human resource but in financial dollars to the Government of Canada. The people of Canada have a right to know. The reason I believe this is that we rationalize our growth as well as our debt against GDP. Therefore it is very important that we have accurate information on the real value of GDP. It should include the value to the Canadian economy of non-profit and charitable organizations.

This bill is not intended to harm or embarrass anyone. However it is intended to provide transparency and accountability. While Canadians hold their government responsible for its actions, they also trust it to report on all public matters with accuracy, openness and truthful representation.

These same keystones must exist for charities and non-profit organizations which receive public funds. After all, if government is to be fully accountable to the Canadian people and if we are to efficiently execute our mandate as the trustees of public funds, then it follows that we must have complete and accurate reports on where and how public money is spent.

At the present time there is no process in place that will allow for complete scrutiny, at least not without applying to the courts. Even then, full disclosure may not be possible. This problem has been a longstanding one which arises from the Income Tax Act and the legal system.

Neither department can absolutely or clearly define which category charities and non-profit organizations should come under because these groups cross several lines with regard to existence, function and purpose. They function like a business but unlike a business they do not make a profit.

Quite often not for profit organizations make large investments which earn interest or capital gains yet they are not taxed on this money. They have no product or service to offer in the normal sense of the word. However, we have heard the complaint that a not for profit organization will operate a tavern and pay no taxes while a small business person across the street pays taxes on a similar operation. Is this fair competition? Is this a level playing field?

These not for profit groups have a social function to ease or remedy some problems which may exist in our communities or national settings. They receive funds in one form or another, a portion of which are the taxes paid by hard working Canadians. With these funds they run their programs, pay salaries and execute daily business.

As anyone can see, a clear definition as to where charities and non-profit organizations belong is no easy matter. Since the assent of the Income War Tax Act of 1927, the courts have tried but have not yet been successful in absolutely defining any organization which has as its focus the improvement of the human condition.

This special category which charities and non-profit organizations are given exempts them from paying income tax. Yet there seems to be an inequality here. The amount of information these groups must provide to Revenue Canada, which exempts them from tax, and the accountability they have to funding ministries is minimal. Smaller still is the amount of information available to the very people who actually fund them, the Canadian taxpayer.

For example, the public is made aware daily through the press of the salary of every hon. member of the House. They are aware of the tax free allowance and they are bombarded with information regarding the MPs' pensions, all of this rightly so. Would it not seem fair that the same public have access to the same information of high profile heads of non-profit organizations?

One that comes to mind is David Somerville, the president of the National Citizen's Coalition, a non-profit organization. Mr. Somerville does great work on behalf of the public so should they not have a right to know his salary, his pension and his total benefit package?

If Bill C-224 becomes law, within 30 days of fiscal year end there would be full disclosure of salaries and benefits paid to directors and senior officials of these charitable and non-profit organizations.

I mentioned earlier that charitable and non-profit organizations were a large sector of our economy. To demonstrate how significant these numbers are, we know there are more than 130,000 organizations in Canada classified as charities or non-profit organizations. Available estimates show that approximately $120 billion flow through these organizations annually and that $49 billion comes from the various levels of government.

We know these organizations act in the public interest but we also know there is no measurement to gauge the effectiveness of the programs. By anybody's standards, that is a big bundle of money.

Some months ago we read in the newspapers in every city in the country where the Chamber of Commerce in Quebec City gave a gift to the premier of Quebec. The gift was a mansion worth $650,000 and $150,000 worth of furnishings. This was a gift to a politician, to Jacques Parizeau. The moneys that paid for this political gift were moneys claimed as 100 per cent business deductions passed through this Quebec City Chamber of Commerce as donations to non-profit organizations and the Chamber of Commerce bought the house as a gift to a politician.

Does the public not have the right to know how much money is going through non-profit organizations to buy mansions for politicians across the country? Does the public not have the right to know how many politicians at all levels may be receiving financial support or valuable gifts from non-profit organizations? I think most Canadians will agree with me that we have a right, especially since most Canadians are paying their fair share of taxes. In the final analysis, those who are paying are picking up the tab as well for those who are not.

If we are to be the guardians of the public trust and if we are to be fair to all sectors of the economy then I believe we have a great opportunity to at least take a first step toward more fairness with the implementation of Bill C-224.

I come from rural Canada, the Atlantic region, where people are generally very kind, very charitable with their friends and neighbours and very generous with what money they have. In most instances they would give you their last dollar if you really needed it. That is the Canadian spirit. I believe in my heart that with disclosure, the Canadian spirit of giving would be enhanced. The openness of information would generate greater trust and financial support to those organizations that we depend on in our communities and the thousands of volunteers who give so generously of their time and energy.

At this very crucial financial period in our nation's history, when the government has taken unprecedented bold, courageous steps to cut programs, to cut jobs and to cut spending, surely we have that same bold courage to support this bill.

Canadians are generous in their donations and each of us places great value on the work our charities and non-profit organizations do in our communities. However, I am sure that each of us has wondered where exactly the money goes. How much is spent on very high paying salaries and how much really reaches the needs of the child or the researcher for which it is intended?

Bill C-224 provides that information to the public. It provides disclosure. I believe that having full knowledge of where the money is spent, Canadians will be even more generous to the groups that are deemed worthy of financial support. I commend my seatmate, the hon. member for Hamilton-Wentworth, for his foresight, for his diligent research as well as his integrity and determination to do what is right. I believe in times to come this bill may be considered the very most important piece of legislation that comes before this 35th Parliament.

I believe Canadians are ready for this legislation and that the bill is very compatible and may even be considered a companion to the very recent budget bill.

In conclusion, it is my hope that all hon. members of the House will give serious consideration to this bill and offer their full support.

[Dale Johnston, Reform, Wetaskiwin, AB]

Mr. Speaker, it is a pleasure for me to rise to speak on this private member's bill. I would like to congratulate my friend from Hamilton-Wentworth for putting it before the House.

This is a bill which I do not think the Reform Party would have any problem supporting. It is about two things which we feel very strongly about, accountability and public disclosure.

We all have made contributions to non-profit groups and to charities and I am sure that all of us at times have wondered just what percentage of our dollars actually goes to the cause, which was mentioned by the previous speaker. How much of it goes to the cause and how much of it goes to administration and bureaucracy? This bill will go a long way in allaying some of our fears. There is nothing like information to put one's mind at rest. Certainly speculation and fear of the unknown are things which lead to more and more speculation.

While we are talking about accountability and public disclosure, I note that the previous speaker mentioned the pension plan. It was my understanding that there was great difficulty trying to get the record of who had received parliamentary pensions in the past, the amounts and also the amounts which were put in by the member and the amounts which were paid by the taxpayer. Perhaps a companion bill sometime down the road, along the lines of public disclosure and accountability for publicly paid pension plans, would be a great idea as well.

I have to make apologies to my research assistant, who actually wrote two speeches for me today, but I am using neither of them. I send my apologies to him.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

It sounds pretty good to me.

[Dale Johnston, Reform, Wetaskiwin, AB]

I hope it sounds good to my research assistant too, who should take some solace in that.

I am sure that most people in the House realize and recognize that Reform MPs are making considerable donations in their constituencies, as a percentage of their income, to charities. We are all fairly well versed in the charities that are available in the community. As the previous member also said, this is intended in no way to call into question the good which these charities and non-profit organizations do.

As a matter of fact, I could see this as being an augmentation to the good they do. If too much of their collected funds actually do go to administration and so forth, then I am sure the people who have volunteered many hours to ensure these organizations and charities are a success would be very disheartened to learn of exorbitant salaries and fees paid to board members and executives.

I do not intend to take up my full time on this bill. A few words are as good as many words in a case of this type.

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, until the member for Kent comes back into the Chamber I would like to stand and support my colleague for Hamilton-Wentworth.

This bill is an example of how a member of Parliament can come into this Chamber and with proper research support, with a very specific idea and with a lot of hard work can put something on the national agenda which touches every community, every city, every part of our country very positively. I salute my colleague for Hamilton-Wentworth for this tremendous achievement in bringing the bill this far.

In regard to a specific aspect of the bill, this type of accountability for Canada's not for profit sector is going to create internal efficiency within these organizations. We have all read stories from time to time where various organizations have been accused of being too heavy in administration with not enough going to the line after the administration expenses have been accounted for. It casts aspersions on the organization because it cannot put all of its books and records into the public. It also does not allow the not for profit organizations that are acting efficiently to make their performance record open to the public.

This bill will achieve a renewed interest in the volunteer sector. We will be depending upon that sector more and more as we move into a very difficult period in terms of fiscal discipline. The organizations which are operating efficiently and which are meeting their constituents' needs are going to be rewarded by those in our society who appreciate that type of efficient volunteer service.

I thank my colleague and give him my full support.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Mr. Speaker, I support the hon. member for Hamilton-Wentworth's bill as well. Listening to the previous speakers, I heard the member for Cumberland-Colchester say that it could become the most important piece of legislation during this session. The member for Broadview-Greenwood said it was a magnificent achievement.

I am looking for words to give it even more applause but unfortunately, I cannot reach that high in my praise for this bill. However, to compliment the hon. member for Hamilton-Wentworth, I will say it is a good bill. It is a very necessary bill and certainly I and my colleagues of the Reform Party have no problem supporting it.

When Reformers came to Ottawa we said we would not be here on this side of the House simply to criticize the Liberal government. The way it has turned out in this 35th Parliament we have not had much choice but to criticize. The Canadian people who tune in to what is happening in Parliament will know that whenever we criticize we do at the same time offer constructive alternatives.

This is one of the times when we really do not have to criticize this bill because quite frankly after all the exhaustive research we have done on it we really cannot find too much wrong with it bill. I want to the let the House know that while the member for Hamilton-Wentworth and his research assistants have done exhaustive research to define the bill clearly, we have done exhaustive research to determine whether this was a good bill or not and indeed it is.

We basically want the non-profit organizations and the charity organizations to become more accountable in their bookkeeping primarily so we can find out what the leading members of the organization are getting paid for their services.

We know the Government of Canada contributes a lot of money to non-profit organizations, special interest groups. Of late we have had examples where expenses have been seen to be exorbitant because of the lack of accountability in how these expenses are reported. We have seen many cases where these special interest groups and non-profit organizations will skip some of the lines on the income tax return and just put in a lump sum showing lump sum salaries paid to some of the top people in the organization. This will do away with all that. We are going to get more accountability.

When I am talking about accountability I have to hold the member for Hamilton-Wentworth blameless in this because he seems to have a good understanding of what accountability means. I would encourage him to apply the same principles he did to this bill to his conversations with other members of the Liberal Party. What the Reform Party came here to do was to demand accountability from the government.

The hon. member for Hamilton-Wentworth appears to have a pretty good handle on accountability. In supporting this bill I want to encourage him to talk to as many of his colleagues as he can so that we may finally get some accountability from the government as we go forward in the 35th Parliament.

We support this bill.

[Ken Epp, Reform, Elk Island, AB]

Mr. Speaker, it is a pleasure and an honour to speak in favour of the motion.

A couple of things have come to mind in the last few minutes while I have been listening to the other speakers. I would be remiss if I did not add to the commendation of the hon. member who has proposed this bill. I have had the privilege of working with him in the Bill C-43 committee. It is a very healthy sign and gives me a little glimmer of hope that perhaps there are some Liberals who do believe in accountability. Sometimes we get the impression that is not there.

The hon. member was instrumental in adding to the strength of Bill C-43 in a couple of areas, in particular disclosing. When lobbyists receive government funds they must now disclose it. I believe disclosure is the first step to elimination of receiving the funds.

The best legislation in the House seems to come from private members. It is really the only time when we have this large envelope of unanimity. Perhaps we ought to consider changing the rules of the House and have government business the last time of the day on Friday and have private members' bills the rest of the time. Perhaps we would be able to change the system.

I commend the member on this principle. It is close to my heart because I believe strongly in charities and the work they do. I also believe in accountability. If it were not for that I would not have come here as a member of Parliament. That was one of my prime motivations.

I remember listening to my son whom I have mentioned before in the House. He is currently working as an administrator in an orphanage in Rwanda for a charitable organization. He and his wife are helping to look after some 400 children whose parents were killed in the unfortunate occurrence there. My son has been doing this type of work for five or six years, having been in Somalia, in the Sudan, in Bosnia and in other areas. He made a statement that I thought was very significant. He said that in the areas where he has worked the non-government organizations, the NGOs, are about twice or more as efficient as government organizations.

He talked about salaries. When he goes there he basically gets an expense allowance and that is about it. Whereas other people who are supposed to be helping receive huge salaries. He said he could not believe it. I will not mention the organizations because that would be unkind since they are not here to defend themselves. After working over there for five or ten years some of the people he mentioned will come back to Canada with a pile of wealth in their accounts because they were not spending it over there.

A charitable organization has potential for the greatest accountability. The whole idea of bringing the good we do to help people down to people and away from government needs to be strengthened. That will happen if we open the accountability and the desire of organizations to be open and honest with the people that support them.

In my experiences I made it a policy many years ago of not supporting private charitable organizations that will not open their books. In some instances I have actually written and and said: "Please send me your annual statement for last year. If it is not audited by an independent auditor I will probably not help you". I believe in that principle and it ought to be applied right across the board.

It is refreshing to see it being done in this area of tax expenditure. I say in the very best sense I can that I wish the hon. member for Hamilton-Wentworth would spread this virus of accountability throughout his caucus so we can infect every agency of government with total openness, total accountability and total declarations of how much money was received and how it was spent.

I am pleased to have spoken in favour of the motion. I certainly will be supporting it.

[The Deputy Speaker]

Under the circumstances the hon. member for Hamilton-Wentworth might wish to close the debate.

[John Bryden, Liberal, Hamilton—Wentworth, ON]

Mr. Speaker, I wish from the bottom of my heart to thank my colleagues on all sides of the House who spoke in favour of the bill.

All things aside I believe the bill is important and will have a profound effect on Canadian society in what it proposes to do. For me as a member of Parliament the experience of presenting the bill to the House and having the support of my colleagues on all sides fills me with great pride in this 35th Parliament.

[The Deputy Speaker]

Is the House ready for the question?

[Some hon. members]

Question.

[The Deputy Speaker]

Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[The Deputy Speaker]

Accordingly, this bill is referred to the Standing Committee on Government Operations.

(Motion agreed to, bill read the second time and referred to a committee.)

[The Deputy Speaker]

It being 2.10 p.m., the House stands adjourned until Monday at 11 a.m.

(The House adjourned at 2.10 p.m.)