Mr. Speaker, I am pleased to take part in the prebudget debate, particularly because today the finance committee submitted its fifth annual report of the Standing Committee on Finance entitled "The 1997 Budget and Beyond: Finish the Job".
The finance committee went into quite a bit of detail about proposals that would increase and encourage charitable giving in Canada. This arises from some of the remarks of the finance minister during the 1996 budget debate when he suggested that government should be getting out of some services and perhaps charities should be encouraged to take up where government is leaving.
The finance committee held hearings, heard from the charitable industry and made a number of recommendations to encourage charitable giving both by individuals and corporations.
We should remember, however, that when individuals or corporations give to charity this money does not go into the tax coffers in Ottawa. In a sense every time money is given to a charity it is money that is not given in taxes to the government to spend. It is given to private corporations to spend.
In one very real sense I was disappointed by the finance committee's report because while endorsing various measures to encourage charitable giving it did not mention about encouraging the charitable sector to be more accountable.
I have an interest in that because two months ago I tabled before the finance committee a report I had prepared entitled "Canada's Charities: A Need for Reform". This was a result of an effort entirely on my part in which I examined the financial information returns of about 600 charities and compared them to the financial statements of individual charities when I could get them.
I discovered that for decades and perhaps forever Canada's charitable sector had been managed without any reasonable measure of government accountability.
The most elementary things are lacking in the way charges are managed. We do not even have a definition that is more recent than 1601, the time of Shakespeare. That is the definition Revenue Canada uses to define what a charitable organization is when it comes to giving and to tax deferral.
There are no penalties; there are no measures. Even in the T-3010 form, the financial reforms I examined, I found all kinds of inconsistencies. Charitable organizations were able not to fill out the form adequately because there were no penalties in legislation other than revocation of charitable status to ensure compliance.
Something very big is at stake. It is not just a matter that the finance committee proposed encouraging people to give more to charities. It is also the fact the charitable industry is a huge sector of the economy. As of 1993 there were 73,000 charities in Canada. The revenue going in and out of charities accounts for about $86 billion.
I say to the member for Vancouver East that it is equivalent to the GDP of British Columbia. She would know the charitable industry, which is basically unmanaged by the federal government, has an enormous consequence on the economy in general. In fact 1.6 million Canadians are actually employed by charities.
I examined several areas but I will only give a few instances because time is short. Revenue Canada rules would require that charities spend 80 per cent of their tax receiptable givings on charitable activities. There is a huge loophole in this regard. Charities get revenue from a variety of other sources, mainly from government and including some other charities like the United Way. Only a very small percentage of a charity's revenues in general come from tax receiptable donations. Most of it comes from other sources. Consequently many charities spend 50 per cent of their total revenue, 40 per cent of their total revenue, or almost none of their total revenue on actual charitable activities. It is a huge loophole.
To become a charity is as simple as filling out a two-sided form, putting names on it and sending it in. The difficulty is that someone like myself, a member of the public or a member of Parliament cannot even examine that charitable application form to see who filled it out. The opportunities for abuse are legion. It is a very difficult matter.
Worst of all, I hate to suggest that Canadians suspect their charities. I am afraid they do. There is lack of guarantee that the charity one is giving to is managing its affairs competently. A difficulty is the Canadian public thinks that because a charity obtains registered status the federal government in some way is overseeing the charity and making sure it performs in a competent and responsible manner. I regret to say that is not necessarily so.
I could have wished the finance committee would have at least suggested to the Minister of Finance, in encouraging more donations to charities, that he demand at the same time increased responsibility, increased openness and increased accountability.
In the final analysis Canadians are generous. Canadians want to give. However they want to be sure that when they give they give to organizations that are accountable and that the maximum amount of the dollar they give actually gets to the worthy cause. Right now there is no such guarantee.
I made 64 recommendations and would like to highlight the main one. In the next budget I would like to see new regulations applied to charities such that the information Revenue Canada receives from charities is good, reliable information. To make sure it is reliable the government will have to apply penalties. Penalties will have to be introduced for charities that do not supply accurate information.
Once the information is received by Revenue Canada and we know it is accurate, Revenue Canada should take advantage of the electronic age and put that information on the Internet so that any individual or corporation considering making a donation to a charity can call up the financial information on that charity and know it has been vetted by Revenue Canada and is good information. They could see for themselves if the charity is wisely spending the money it is receiving from the public.
That one move would save billions of dollars which could go toward the deficit. It would also give Canadians a sense of confidence in the charities to which they are donating and would increase spending rather than decrease it.
I saw in the report of the finance committee that Canadians give less to charities than Americans give because in the United States the requirement for openness on the part of charities is much more rigorous than it is in Canada.
Charities are not the only problem. There is also the problem of non-profit organizations that are also tax exempt. There are 66,000 non-profit organizations ranging from Canadian automobile clubs to athletic clubs. They have revenues probably in the area of $40 billion a year. These non-profit organizations are not accountable to Revenue Canada. The financial information returns they send in are secret. The public has no access to them. By law in the United States any person can walk into the office of a non-profit organization and demand to see its financial statements. That is not the case in this country.
I hope the finance minister and the revenue minister, in looking to charities to take up part of the slack left by government as it abandons certain areas of social services and health services that have traditionally been a part of government and in encouraging corporations and individuals to give to these charities, will remember that the ultimate responsibility is to ensure these organizations are as accountable as government departments.