Mr. Speaker, as a former member of the BCTF in British Columbia, I can say that this legislation is most welcome to those of us who are both former and current members.
I am grateful for the opportunity to speak to Bill C-377, a private member's bill to amend the Income Tax Act to require labour organizations to publicly disclose their financial information. Before continuing, let me recognize the sponsor of this legislation, our Conservative colleague from British Columbia, the member for South Surrey—White Rock—Cloverdale. He has done a tremendous amount of work and research on the bill and is to be applauded for his work.
Since his election in 2004, the member for South Surrey—White Rock—Cloverdale has been very effective in his representation of his constituents and a well-respected parliamentarian. Indeed, that is why his constituents have re-elected him three times in a row and returned him to Ottawa to continue representing them so well. He has also continued the public debate on many issues, including the subject of today's private member's bill, which seeks to require public financial disclosure by organizations that receive substantial public benefits.
Unions play an important role in Canada, representing and defending the rights of workers. Each union represents health and safety in their jobs and ensures appropriate compensation for their members in accordance with negotiated collective agreements. Approximately 4.5 million Canadians currently pay union dues and many more millions have been unionized at one time or another. Labour organizations are influential institutions in Canadian society and the bill reflects the importance of each.
The bill, an act to amend the Income Tax Act (requirements for labour organizations), seeks to increase the transparency and accountability of all labour organizations as a result of the fact that they receive substantial public benefits through the tax system. The principle here is that, like charities, labour organizations receive public money and the public has a right to be informed about how foregone taxpayer dollars are being spent.
Since 1977, registered charities in Canada have been subjected to reporting requirements and public disclosure for over 30 years. This legislation would require every organized labour union in Canada to file a standard set of financial information with the Canada Revenue Agency each year, which would then be posted on its website for the Canadian public to see, just as is the case with charities. I will explain that in more detail in a moment for the benefit and education of the House and for Canadians watching at home. The public will be able to gauge the effectiveness, financial integrity and health of any union they wish. This legislation applies to all labour organizations that claim tax exempt status or whose dues payers receive a federal income tax deduction for their union dues, whether or not they are actual union members.
As promised, I would like to talk about the example of charities for a moment to more fully explain what is already required of them and how this private member's bill follows that example. As such, I will briefly provide the chamber with an overview of the measures currently in place to oversee financial disclosure by charities in relation to today's proposal.
The Canada Revenue Agency, also known as the CRA, has various tools at its disposal to monitor and disclose spending by Canadian charities. At the federal level, the CRA administers a system to registered charities under the Income Tax Act. As the regulator of charities, the CRA's responsibilities include processing applications for registration, offering technical advice on operating a charity, handling audit and compliance activities, and providing general information to the public.
The regulation of the charitable sector by the CRA is based on both common law and the provisions under the Income Tax Act. The common-law requirement that charities devote their resources to charitable activities is central to how the CRA provides guidance to the sector and enforces the rules. For instance, recent legislative and administrative reforms have given the CRA additional compliance tools for use in regulation of the charitable sector, such as intermediate sanctions in the form of taxes or penalties for charities that do not comply with the requirements of the Income Tax Act. Prior to this, the only sanction available to the CRA was the revocation of registered charity status.
At the same time, the concept of undue personal benefit was clarified in the Income Tax Act. As a result, in the case of excessive executive compensation, the CRA has the authority under the Income Tax Act to conduct an investigation to determine whether the charity is indeed fulfilling its charitable purposes. It also has the authority to determine whether there is undue personal benefit and to impose a range of penalties up to and including a suspension of receipting privileges.
There is also more public information available today on the activities of registered charities. This helps increase accountability in the sector by providing prospective donors with the information to determine for themselves whether or not they would like to donate to a particular charity. Under the Income Tax Act, all registered charities are required to complete a registered charity information return, which is published on the Canada Revenue Agency website and includes information about compensation.
What is more, our Conservative government recently made a key change to further improve accountability of charities. Up until 2008, charities were required to report on the compensation for the five highest-paid employees, and indicate their salary range, with the last threshold being $119,000 and over. We changed that. Starting in 2009, charities were required to report the 10 most highly compensated positions. Annual compensation categories were also expanded, with the last threshold being $350,000 and over.
The introduction of this new reporting on employee compensation has served as a key tool to help increase transparency to show how charitable resources are being used, providing Canadians who generously donate their hard-earned money with even more information to help guide their decisions about giving.
One wonders, if charities are required to submit all such information and have it disclosed, should not union members and the Canadian public have the same type of information about organized labour? Many people have asked that question and have suggested it is appropriate.
Gregory Thomas, the federal director of the Canadian Taxpayers Federation, had much to say about this issue in an article published in an October issue of The Chronicle Herald newspaper entitled, “Putting unions, charities on same playing field”.
Let me conclude by quoting an important passage from that article that I suggest everyone read.
The Income Tax Act gives tax breaks to Canadians for various purposes. However, there are two major groups in particular that benefit most directly from tax breaks within the act: registered charities and labour unions.
While both groups benefit from taxpayer-aided income tax laws, the way they disclose to the public what they do with the money is very different.....
Charities in Canada receive a pretty decent taxpayer-funded advantage. If you donate money to a registered charity, you get to claim a hefty tax credit when you file your annual return. In return for this favoured tax treatment, charities are required, by law, under the Income Tax Act, to make annual financial filings and disclose their salaries, revenues and expenses. In fact, you can look at every charity’s filing online on the Canada Revenue Agency (CRA) website.....
However, despite their tax-advantaged status, Canada’s unions are currently not required to submit any public financial disclosures to the CRA, let alone the public.....
Some unionized workers have spent thousands of dollars, and big chunks of their lives, battling to get a look at their union’s books. In B.C., the United Food and Commercial Workers Union fought these workers in multiple labour relations board and court hearings, in a bid to deny them five years of financial statements. The case raged on for years. When it was finally decided in the Supreme Court of B.C., it came to light that the financial statements for 2002 through to 2007 weren’t even compiled until the end of 2007 and early 2008.
Examples like this go to show that the legislation is long overdue. Canadian workers are entitled to greater fiscal transparency and accountability from their labour unions. It is for that reason that I urge all members to support this important bill, and especially coming from a former BCTF member, I encourage all people in this House to support the bill.