John Bryden

[Competition Act, March 16th, 1998]

Mr. Speaker, I wish it were the parliamentary secretary on the spot instead of me. Again the hon. member takes me out of my area of expertise. I would prefer to give him a simple answer but he is now looking at the issue of the legal impact of the legislation as it sits before us.

I am saying in a longwinded fashion that I cannot reply to the hon. member's question. What really is key here is that when we debate legislation, we can only debate it in principle. It is for the lawyers afterwards and before committee to look at the legal nuances.

[Competition Act, March 16th, 1998]

I certainly agree, Mr. Speaker, that this issue of tied selling is a very difficult one because it pertains to the freedom of competition. I do not have the answer and I do not know if this bill really addresses it in any satisfactory way.

I know the minister and the department have been looking at the issue of tied selling for years. I wish I could offer the member an easy answer as I can with respect to my own hobby horses. I thank him for the question because I believe it is very appropriate.

[Competition Act, March 16th, 1998]

Madam Speaker, on the first point, I do not think there is any question that this bill is well aimed at the deceptive telemarketers because of its provision for wiretapping.

One of the problems with telemarketing as it exists now is how does one get the evidence if one did not receive the phone call. I believe this is the reason why the government has put this provision in the bill. It is a very controversial provision and I would hope there is considerable debate in committee on it. However, at this glance I do support the provision.

Second, very clearly the bill is aimed at deceptive telemarketing by providing Criminal Code penalties for deceptive telemarketers. Again, not to repeat myself, I just wish the bill were designed so that it would catch not for profit organizations as well as for profit organizations.

Finally, there are difficulties with the mergers of major corporations. It is a heartbreak when a store closes down and people are put out of work. However, it is very dangerous in a free enterprise society for a government to intrude with the rights of the marketplace to sort out the weak from the strong. Usually in a merger environment what is happening is that there has been change in public taste and because of that certain businesses and industries have weakened. Insurance and retail shopping are two classic cases where there have been major changes in public taste and public purchasing. The ultimate end to that is that there is a consolidation of the industry which leads to mergers which, I do regret, leads to the loss of jobs.

[Competition Act, March 16th, 1998]

Madam Speaker, I am not a lawyer but my interpretation of the bill is that it aims at transparency. If the telemarketer or the direct mail campaign tells the truth then it is up to the person who receives the solicitation to make a decision. The bill is aimed at misrepresentation. My problem is that if that misrepresentation is for a product or for business interests then all the penalties of the bill apply. It is the law. You could go to jail under this bill.

It is unfortunate that if a charity or a not for profit organization like the Canadian Automobile Association does the same thing, the bill will not catch it. These organizations can misrepresent as much as they like and the bill does not catch them. That is why I think an amendment is in order to the bill itself.

[Competition Act, March 16th, 1998]

Madam Speaker, I appear to have wound up dividing my time quite inadvertently but nevertheless as I said earlier I am very happy to be a part of this debate because it is an opportunity to offer some constructive criticisms and comments on this legislation.

The bill is deficient because of a deficiency that already existed in the Competition Act. This act describes the person who is affected and constrained by this legislation as a person having a business interest. It also restricts the scope of the activity to the production or the promoting of a product.

The problem with this is it lets fall through the net entirely any organization that is a not for profit organization which could be on the one hand a not for profit organization registered as a non profit organization under corporate Canada legislation or as a charity registered under the Revenue Canada definitions.

In both these instances, both types of not for profit organizations by definition are not engaged in business interests. If a telemarketer that is deliberately engaged in scamming or wishes to promote in a way that circumvents the spirit of this act, that organization can simply reconstitute itself as a not for profit organization. It can either seek charitable status or, on the other hand, it can be a registered non-profit organization. That organization or telemarketer would then fall completely outside this legislation. It could engage in any kind of practice it pleased.

The other aspect of the problem is that telemarketing is very much a transborder phenomenon these days. What is happening is that when you receive that phone call, often from a charity I might say, often from organizations that are soliciting funds, that phone call may in fact be emanating from the United States.

Indeed, some of the very large telemarketers are based in either Pennsylvania or Maryland and are using transborder trunk lines to telemarket anywhere in Ontario or in Canada.

However, the other side of it is that while we have to be worried about organizations that will deliberately evade the law by becoming non-profit organizations, we also have to be very concerned about charitable organizations that may be engaged in what are very unethical activities, at least in the context of a for-profit industry when they are engaged in raising funds.

We may say that if it is a charitable organization surely it would not be engaged in any form of misrepresentation, be it misrepresentation by advertising or telemarketing or whatever you may have. The Internet provides us with all kinds of wonderful information. I was surfing the net, as they say, and I came across an article from the Professional Marketing Research Society which did a study of a practice engaged in by charities called frugging.

Apparently frugging involves charities that deliberately through telemarketing phone up and say they are doing a survey on perhaps social welfare, or tastes in tea, whatever it is. Or they might be doing a survey asking if there should be homes for battered women and this kind of thing.

The article from the Professional Marketing Research Society pointed out that often the surveys are really false surveys which are not a very transparent attempt to draw the client, the donor, the victim or the target into a survey which is really just a way of raising funds.

Two organizations are cited in the article as being engaged in the false survey activity. It is misleading. It is misrepresentation and there is no getting around it. One was the Coalition for Gun Control which did all kinds of surveys trying to get people to say they did not like firearms and that kind of thing. But really it was actually a way of promoting support.

Another organization cited by the report as being engaged in questionable survey practices, which was really another way of fund raising or getting the message out there, was the National Anti-Poverty Organization. It was asking all sorts of questions and said if the recipient responded to the survey a letter would be sent to the Prime Minister.

Behind many of these false surveys is simply misrepresentation for the purposes of fundraising. That is the kind of thing that goes on.

When it comes to telemarketing, charities are not very clean in some respects. Telemarketing is a very popular feature with charities now. A lot of organizations are turning to telemarketers. I think everyone in this House, and everyone in Canada, has received phone calls from people soliciting their donations by telephone. That would be all right so long as the representations are indeed honest. What is said by the telemarketer is not honest.

I refer you to a program that was done by CBC's Marketplace about a year and a half ago, I think it was, in which the theme was telemarketing. The thrust of the Marketplace show was to demonstrate that many of these charitable organizations that use telemarketers where so much of the donated money goes to paying the for-profit telemarketer that very little actually goes to the charitable activity. It may be as little as 10% and often in the outset of a telemarketing campaign it is 0%.

Nevertheless, the reporter interviewed the president of the Canadian Haemophilia Society. Her name is Durhane Wong-Reiger The reporter challenged her.

The telemarketer in setting up the Canadian Haemophilia Society said that he was proud to say that by putting your gift on a credit card—this is what the telemarketer says—over 87% of your donation would go directly to the Haemophilia Society.

The president of the Haemophilia Society did not even reply to the reporter's question. She could not reply. Very obviously, 87% of the donated dollar is not going to the charitable activity.

Therefore, we have a case where there is an absolute misrepresentation by a telemarketer speaking on behalf of a charity. The problem is, as Bill C-20 sits now, because it does not cover charities or non-profit organizations, the Canadian Haemophilia Society will have been seen to have done no wrong., There is nothing to be done about it. Imagine. It is a blank cheque to every non-profit organization, be they charity or not for profit organization, to engage in telemarketing practices, to misrepresent or mislead as much as they please.

Telemarketing does not work in isolation. This is another flaw with the bill. Telemarketing usually works in co-operation and in tandem with a direct mail campaign. In fact, what we are talking about here is not just telemarketing at all, but direct marketing. It is the whole business of sending flyers through the mail and that kind of thing.

People will find that wherever there is a telemarketing campaign or a media campaign, a fundraising letter will come through the mail as well.

Again, it is a deficiency of the bill because in fact, as the Competition Act stands now and with Bill C-20, it does nothing whatsoever about misrepresentation through direct mail advertising if it is a charity or a non-profit organization.

I have a great example. As members in this House will remember recently, there was a hubbub in the press about the seal hunt. It was the International Fund for Animal Welfare that had conducted a major campaign under another title to claim that seals were being wantonly slaughtered on the ice floes.

I think every one of us received form letters cut out of the newspapers from our constituents. They were to protest the seal hunt to their MP.

Quite apart from that, much of the literature produced on the seal hunt by the International Fund for Animal Welfare was false. What was going on simultaneously with this campaign was another campaign called Pet Rescue.

I have some documents here. I cannot show the actual pictures here but Pet Rescue was a direct mail campaign actually launched out of the United States. This is coming from the United States, as most telemarketing does.

Pet Rescue was about how all these animals were being tortured and being kept in facilities that were really awful and that kind of thing. There are pictures of poor cats that were in difficulty.

We see a title here “Your support saves lives”. This is really a fundraising promotion by the International Fund for Animal Welfare at the same time as the seal hunt protest.

Here is what we have. This promotion literature says “Here is how you can help stop the cruelty: `Seventy-nine cents of every dollar spent went toward animal welfare during our 1996 fiscal year, so you know your contributions are helping to stop suffering. The International Fund for Animal Welfare—”'.

I submit that this is absolute misrepresentation and that, if the International Fund for Animal Welfare was indeed a for profit company, if it was indeed engaging in a business interest, if indeed it was doing something other than fundraising, it would be subject to penalty under the law and rightly so.

My feeling with respect to Bill C-20 is that it is a step in the right direction, even though that step is incomplete. We have to recognize that with telemarketing spreading across the country and direct mail becoming increasingly an avenue of fundraising, telemarketing and direct mail advertising is a costly way of fundraising. Seventy per cent to eighty per cent of the actual dollar goes to the cost of telemarketing and direct mail solicitations, much of which come from the United States. This bill can do nothing even if it is a for profit direct mail advertiser or telemarketer operating out of the United States.

I hope the government and the committee will very carefully consider taking the opportunity Bill C-20 gives us to widen the catch of the Competition Act so it includes not for profit organizations as well as for profit organizations.

I have two suggestions. In clause 52(1) we could insert the words “or fundraising and any fundraising activity” after the words “any business interest”. Second, we should make charitable and not for profit organizations responsible for the activities of the telemarketers they hire. At present, if a charity hires a for profit telemarketer and the telemarketer misrepresents the charity, under Bill C-20 only the telemarketer can be caught. I believe that if it is the intent knowingly and recklessly of a charity or a not for profit organization to use a telemarketer or a direct mail advertiser to misrepresent that charity to the public then the charity itself or the not for profit organization should be subject to the same penalties under the law. I hope the committee will consider these thoughts.

[Competition Act, March 16th, 1998]

Excuse me, Madam Speaker. I had presumed I was speaking on debate. I did not know we were on questions and comments.

[Competition Act, March 16th, 1998]

Madam Speaker, I am very pleased to be able to join in this second reading debate on what I think is very important legislation. I heard the parliamentary secretary indicate that the government is very anxious to hear all ideas on the subject.

I must say that I very much support the legislation. It is very timely and indeed overdue. It addresses a serious problem that affects some of the most vulnerable in society.

I particularly like the provision in the bill that blends criminal penalty with civil penalty. One of the problems with the existing Competition Act is that too much of it is done through the Criminal Code, a pretty heavy instrument to use on what can be in some instances relatively minor infractions in the area of misleading advertising. In the case of telemarketing it would be the same. We need to have a blend of penalties.

However I have significant reservations about one area of the bill. The bill, while very well intentioned, will miss the mark when it comes to applying the provisions for improper telemarketing against organizations which wish deliberately to carry on deceptive practices and wish to evade the law.

There exists in the legislation an ideal way for organizations to evade the intent of this law. I refer to clause 12 of Bill C-20 which will amend section 52.1 of the original Competition Act. This is basically the clause which applies the bill to the various entities that may be affected by it. The clause states that no person shall, for the purpose of promoting, directly or indirectly, the supply or use of a product, or for the purpose of promoting, directly or indirectly, any business interest by any means whatsoever, knowingly or recklessly make a representation to the public which is false or misleading in a material respect.

I submit that there are two problems with that clause. First, it refers to the supply or use of a product. What happens if there is no product involved and what in fact is being telemarketed is a campaign? What if it is fund raising for a non-profit organization?

Then we go on a little further and it states for the purpose of promoting, directly or indirectly, any business interest. Unfortunately a non-profit organization or a charity, either of those two separate entities, by definition are not engaged in a business interest.

[Supply, March 12th, 1998]

Madam Speaker, I listened with great interest to the member's remarks. I am quite willing to agree that the French culture in Quebec is a very important and different part of Canada, something we would want to cherish.

I hope he will agree that a university education is more than the French language and more than learning about the civil code. A university education is about learning the sciences, medicine, history and all kinds of disciplines.

One of the problems with Quebec's situation with respect to grants to students is that these grants are basically exclusive only to Quebec. It keeps students in Quebec.

Would he agree that the millennium fund and all the money that it gives to students will give opportunity for young Quebeckers to go to universities of their choice, not only in Canada, but elsewhere in North America? It will underwrite at least some of their educational costs. They will benefit from the experience.

Is it not a good thing to give young Quebeckers the opportunity to broaden their minds by experiences elsewhere in the country?

[Supply, March 12th, 1998]

Madam Speaker, I enjoyed the remarks of the member for Jonquière. I would like to ask her a hypothetical question.

I think she would agree that a national government has to be concerned about all Canadians even if she feels very strongly that her first allegiance is to the people of Quebec. Nevertheless a national government, as on this side of the House, has to be concerned about all Canadians.

Recent tests in science and mathematics conducted across the country disclosed that students in Quebec scored higher than the national average on mathematical and science questions. Other provinces, particularly my own province of Ontario, scored very low.

If it were turned around and Quebec students had scored very low as the result of governments of Quebec which had not paid enough attention to education whereas other provinces were much higher in the quality of education that the students were receiving, would it not be right and proper for the national government to want to intervene in order to ensure that those students in Quebec receive the same quality of education as was received elsewhere in the country?

[The Economy, March 10th, 1998]

Mr. Speaker, it is a pleasure to rise in this debate.

My remarks by coincidence are going to dovetail to a certain extent the remarks of the member for Mississauga West. The member was commenting that one of the provisions in the budget is the mandatory reporting of construction contracts which would help solve some of the problems of the multibillion dollar underground economy.

The member for Mississauga West was saying that this change in the budget came as a result of lobbying by members of the construction industry, the unions and so forth. I do not doubt that these groups lobbied, but I happen to know that a colleague of the member for Mississauga West, the member for Mississauga South, was a very strong champion throughout the previous Parliament in addressing the issue of the underground economy. Indeed he moved a private member's motion that addressed among other things the possibility of bringing transparency to the reporting of construction contracts as a means of solving the problem of GST evasion.

This is one of the things I like about the budget. We on all sides of the House should admire this budget as it is very much the MPs' budget. As we look through it we find many instances where the finance minister has heard MPs and made the appropriate changes.

I am thinking for example of the restoration of funding to the Medical Research Council. There was an enormous movement inside the Liberal caucus asking for this funding to be restored. I do not doubt that members on the opposite side also campaigned to restore this funding.

Similarly there was a concern on all sides of the House about the problem of student debt. This budget has provisions which will help alleviate the problem to some extent for students who have found themselves burdened with enormous debts at the conclusion of their studies.

I too had input into the budget and had hoped that the finance minister was listening to me. I must say that after reading the budget I was disappointed to a certain degree because I have long been a champion of cutting back on the GST. Reducing the GST by even one percentage point in my view would be a very positive saving for Canadians, particularly because of the underground economy. In the previous Parliament I was very concerned about the amount of money that was being lost to government coffers and to the economy at large because of unreported work and the resulting unpaid taxes.

I was disappointed for a short while in what I found in the budget, but then I encountered that portion of the budget which dealt with the elimination of the 3% surtax for all those Canadians earning incomes of less than $50,000. The more I looked at this provision, the more I realized the government had come up, if I may say so, with its own novel answer to some of my own concerns. I do not remember at any time before the budget was actually brought down a debate at least in my own caucus about getting rid of the 3% surtax.

When we examine this initiative we can see that there is some genuine wisdom on the part of the government. By limiting the elimination of the tax to 13 million Canadians whose income is less than $50,000, what we are in effect doing is putting more money in the pockets of not only less better off Canadians but also younger Canadians.

The reality is that those who earn more than $50,000 are likely to be the more affluent Canadians and more likely older Canadians who have established households. They have boxed their worldly wealth and are probably enjoying retirement and perhaps leaving the country to take holidays down south. Younger Canadians on the other hand, those earning less than $50,000 are the ones who are going to be buying consumer goods. They are going to be buying automobiles, refrigerators and new homes. They are going to be stimulating construction.

When we think of the elimination of the surtax in this context, that it actually puts money back into the pockets of consumers, what we see is a very efficient way of not only stimulating the economy but getting maximum value for the tax cut dollar which has been put in place.

When these young people buy things, it creates jobs. It creates employment. It creates salaries for people who will in turn pay taxes. The tax cut which is involved in eliminating the 3% surtax has enormous repercussions throughout the economy.

Particularly after the remarks of the member for Mississauga West, I realize that the government in its wisdom has found a better solution than I had thought of with respect to the underground economy. It is stimulating younger Canadians to purchase by eliminating the surtax instead of simply taking a percentage point off the GST. That would have been an across the board tax cut. It would not have been half as effective as eliminating the 3% surtax.

It is very important not only to praise the government and to look at what was done in this budget, but also to look ahead. We have to tell the finance minister at this early stage what we would like to see in the next budget.

I regret that sometimes the opposition members focus only on criticizing what is already on the table and what is already very good. They should be looking at this debate as an opportunity to make suggestions to the finance minister on what we can do next year. He listens.

In fact I will give an offhand compliment to the Reform Party. The Reform Party embarked in 1993 on a deficit reduction platform and continued the deficit reduction campaign. If the NDP had been the official opposition, there is no doubt in my mind that the finance minister would have perhaps within his own caucus had more of a struggle with the very good and tough medicine he came up with. Even the Reform Party shares in the success of the finance minister's budget, and so it should be.

Let us look ahead. I am very interested in finding novel ways in which to make the economy run more efficiently. One of those ways is for the government to address those sectors of the economy which have been overlooked for decades. One of those sectors is the not for profit sector.

Some people would be amazed to realize that the Canada Business Corporations Act has fairly stringent reporting requirements for profit companies, yet it requires virtually nothing of not for profit companies. For example, not for profit companies are not required to prepare financial reports on an annual basis, as are for profit companies. There are no standards set for not for profit companies to prepare financial reports for their own members. There are problems.

Some of the not for profit companies are very large. Many charities are not for profit companies. Large entities such as the Canadian Automobile Association are not for profit companies. These companies take in millions of dollars a year, yet the government requires no financial reporting to government of their activities. There are no mandatory standards on how these not for profit companies should report to their memberships.

It is amazing to realize that the Canada Business Corporations Act does not even require not for profit companies to use a qualified accountant or auditor to prepare financial statements for their members. Literally anyone can do them. There is a lack of transparency. I could go on.

Even Revenue Canada has no way of adequately tracking the financial activities of not for profit companies. Such reports as are required of these companies to Revenue Canada are not public documents.

I would like to see the federal government take careful aim in the next budget at the not for profit sector and rewrite the Canada Business Corporations Act. It should require of the not for profit sector the same standards of financial transparency as are required of the for profit sector. Since the not for profit sector deals with an area of the economy in the billions of dollars, I think it would be a very positive measure for the next budget.