Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs
Issue 8 - Evidence, September 20, 2006 - Morning meeting
OTTAWA, Wednesday, September 20, 2006
The Standing Senate Committee on Legal and Constitutional Affairs, to which was referred Bill C-2, providing for conflict of interest rules, restrictions on election financing and measures respecting administrative transparency, oversight and accountability, met this day at 9:05 a.m. to give consideration to the bill.
Senator Donald H. Oliver (Chairman) in the chair.
The Chairman: Honourable senators, before formally opening this morning's session, I should like to give the floor to Senator Day, the official critic on Bill C-2.
Senator Day: Thank you, Mr. Chairman.
Honourable senators, I wish to bring to the committee's attention a matter I think is important in our deliberations.
First of all, let me say we appreciate the level of importance of this bill from the point of view of the government, and that is why we have been meeting out of our normal time slot, even before the Senate is back, for almost two weeks to deal with this.
Bill C-2 requires us to deal with the area of political financing. In order to do this, we must understand the background and what is and is not involved in an annual donation, particularly the issue with respect to the convention fees.
Honourable senators will know that there has been a difference of opinion as to whether convention fees should be included as part of the $5,000 current limit under the Canada Elections Act or the reduced limit of $1,000 under Bill C- 2. During questioning of Mr. Donison, the Executive Director of the Conservative Party of Canada, by Senator Zimmer on September 7 — and I am reading from the transcript of the date — the following exchange took place:
Mr. Donison: I believe the fee was around $500. I would have to double-check that.
Senator Zimmer: How many people attended? Do you have any idea?
Mr. Donison: I do not have those figures in front of me, but I can certainly get those numbers for you.
Senator Zimmer: Do you have a rough idea?
Mr. Donison: No. I would not even hazard a guess. In terms of actual paying delegates, I do not know.
The Chairman: Mr. Donison, would you mind getting the figures and sending them to the clerk so that we can distribute them to all members of the committee?
Mr. Donison: I will dig up those numbers, senator and chairman, and give them to the clerk.
The Chairman: Thank you for that.
It is my understanding that that material has not been distributed to us.
The Chairman: I have just asked the clerk whether that information had come in and he has told me that it has not. I also asked him whether the information Mr. MacKinnon of the Liberal Party of Canada undertook to provide had come in, and I understand that that has not been forwarded either.
Senator Day: Could we ask the clerk to follow up on that? We cannot make a decision as to whether amendments should be proposed with respect to the provision of reducing the $5,000 limit to $1,000 until such time as we have all of the information.
Let me just go on here:
Senator Zimmer: My understanding is....
...The Chief Electoral Officer of this country has asked to look at your party's books concerning this convention. Have you complied with that request?
Mr. Donison: Yes, we have.
Yesterday, Mr. Kingsley, the Chief Electoral Officer, appeared before this committee. He indicated that he did not want to talk, in this committee, about specific complaints.
The Chairman: He gave the reason for it.
Senator Day: He did, and we accepted that. However, upon leaving yesterday's committee meeting, Mr. Kingsley told the Canadian press that he has not received the convention books that Mr. Donison stated he had given.
I am not suggesting that anyone has been misled, but I am suggesting to this committee, and I am saying to this committee, that it is critical for us to have the information. Therefore, I should like to suggest that we ask the clerk to follow up with both Mr. Kingsley and Mr. Donison —
The Chairman: And Mr. MacKinnon.
Senator Day: — and Mr. MacKinnon, to get the two representatives of the political parties to provide the information, and to ask Mr. Donison and Mr. Kingsley to clarify the point I referred to — that is, Mr. Donison says he has complied and Kingsley states that he has not received the information.
The Chairman: Mr. Kingsley's remarks were not made before this committee. As I understand it, the remarks were made perhaps to some media — and I do not know that. As a committee, we rely on the official record, it seems to me.
Senator Day: That is correct.
The Chairman: The last allegations you are making are not part of the official record of this committee.
Senator Day: They are not; you are quite right. I indicated that Mr. Kingsley's remarks were made outside of this committee.
We have two options. We can call Mr. Kingsley back to this committee or we can ask him to clarify his comments in writing.
I am trying to save time by asking him to make his clarification in writing, but if you wish to be formal then I would move that we ask Mr. Kingsley to return.
The Chairman: I am not asking to be formal. We may want to do both. Let us first ask the clerk to ask the Chief Electoral Officer for a clarification in writing.
Senator Day: Thank you.
The Chairman: If we receive the clarification in writing but either you on your side are not satisfied or we on our side are not satisfied, we reserve the right to recall Mr. Kingsley.
Senator Day: That is a perfect way to handle this. I am not suggesting that anyone was intentionally misled, but given that we could not ask Mr. Kingsley directly on a particular matter but that he went outside and talked about the very matter, then we must get this issue sorted out.
The Chairman: I have no knowledge of that, but I hear your representation.
Senator Stratton, you wanted to add something?
Senator Stratton: If we are talking about the issue of convention expenses, which is the bane of our existence, what are take-aways? If we are discussing brochures, et cetera, I would like to hear that from Mr. Kingsley what the take- aways are.
Senator Day: In order to sort this out, perhaps we should ask Mr. Kingsley to return.
Senator Stratton: Let him respond in writing first — let him give us a list of what take-aways are — so that at least we have an understanding of that.
Senator Day: I am content to follow the procedure I had earlier suggested in terms of asking for a clarification, but our concern here is to deal with the issue of Mr. Donison stating that he had complied fully and Mr. Kingsley saying —
Senator Stratton: Remember, we are talking about two parties here. The Liberals have not complied, nor have the Tories. In this instance, we should include both parties.
Senator Day: May I conclude?
The Chairman: Yes, please.
Senator Day: Thank you. Our concern is the apparent dichotomy concerning the evidence we received from Mr. Donison, where he stated he has complied. We are waiting for this ruling in order to determine what we should do with respect to this amendment.
The Chairman: That is clear. You said that yesterday.
Senator Day: If the ruling is not forthcoming because Mr. Donison has not complied but has said he has complied, then we have to get this sorted out.
The Chairman: Right now, the evidence before this committee is one-sided. I think we have an agreement that we will ask the clerk to ask the Chief Electoral Officer to respond to the questions in writing. As I said before, if neither your side nor our side is satisfied with the written result, then we reserve the right to recall Mr. Kingsley to this committee.
Senator Day: Mr. Chairman, that is an ideal way to proceed. The only other caveat I would add is that that information is critical to this committee's deliberation on this bill.
The Chairman: That is understood.
Senator Day: Therefore, it is critical that we get that information as quickly as possible.
The Chairman: That is understood.
Senator Day: Thank you.
The Chairman: Honourable senators, I should now like to move to the official opening of this session of the committee's deliberation on Bill C-2, providing for conflict of interest rules, restrictions on election financing, and measures respecting administrative transparency, oversight and accountability. The bill is more commonly known and referred to as the federal accountability bill.
As senators, our witnesses and members of the public both here in the room and across Canada watching these proceedings on television know, this bill reflects a central portion of the new government's agenda and is one of the most significant pieces of legislation brought before Parliament in recent years. The committee is giving the bill the extensive, careful and detailed study it deserves. This week, we have been continuing to look at various aspects of this bill, including accountability, ethics, conflict of interest, political financing, as you just heard from Senator Day, the parliamentary budget office and access to information and privacy.
This morning, I am delighted to welcome officials from the Office of the Information Commissioner of Canada. The Information Commissioner investigates complaints from people who believe they have been denied rights under the Access to Information Act, Canada's freedom of information legislation.
An independent ombudsman appointed by Parliament, the Information Commissioner has strong investigative powers. He mediates between disaffected applicants and government institutions. I am therefore pleased to welcome today the following people: Mr. Alan Leadbeater, Deputy Information Commissioner; Daniel Brunet, Director, Legal Services; Nadine Gendron, Legal Counsel; and J.G.D. Dupuis, the Director General of Investigation and Review.
We want to thank you for being here. I shall give you the floor and then we will have questions and discussions which, I am sure, will be very useful to the members of the committee.
Alan Leadbeater, Deputy Information Commissioner, Office of the Information Commissioner of Canada: Thank you, Mr. Chairman. I appreciate the invitation. I also appreciate the understanding of the committee with respect to my substitution for the Information Commissioner, who is attending the wedding of his son in Japan and who felt he would rather face the wrath of this committee than the wrath of his wife.
I have provided the committee a copy of the remarks Commissioner Reid would have made had he been here. I will not read them; I will just ask that they be taken as part of the record. I do have a couple of remarks to make myself just to situate our concerns in context.
I think it is fair to say that the Office of the Information Commissioner of Canada — and I hesitate to use adjectives — is deeply concerned that certain provisions of Bill C-2 would authorize new and broad zones of secrecy, which will have the effect of reducing the accountability of government through transparency. The office is so concerned, in fact, that a special report setting out our concerns was tabled in the House and Senate in April of this year, and copies of that report have been made available to you.
There is strong language in that report — for example, describing the proposals with respect to access to information as ``retrograde and dangerous.'' That strong language was not an accident. It was considered necessary to alert Parliament to the fact that, if passed, Bill C-2 will reduce the amount of information available to the public, will weaken the oversight role of the Information Commissioner, will increase government's ability to cover up wrongdoing and shield itself from embarrassment.
As well, the strong language of concern contained in the Information Commissioner's special report is intended to remind Parliament that Justice Gomery urged more transparency in government in order to make it more accountable.
For example, Justice Gomery, in his second report, states as follows — and I quote:
The Commission supports a different approach, whereby the first rule would be that records must be disclosed, unless disclosure would be injurious to some other important and competing interest (in other words, an `injury test' applies).
The provisions of Bill C-2 contain 10 new justifications for secrecy, and there are only 13 in the existing statute. Seven of these new justifications require secrecy forever, none contains an injury test, eight are mandatory, leaving no discretion to permit disclosure under any circumstance.
The Bill C-2 approach flies in the face of common sense — no government secret is justifiably kept forever. The Bill C-2 approach flies in the face of the approach taken in all serious proposals for reform that have been put forward since the 1986 parliamentary review of this legislation. As well, the Bill C-2 approach flies in the face of the Conservative election platform, which states — and I quote:
A Conservative government will...
Ensure that all exemptions from the disclosure of government information are justified only on the basis of the harm or injury that would result from disclosure, not blanket exemption rules.
To illustrate this bill's adverse impact on accountability, I refer you to the clauses that create a blanket of secrecy over all records relating to wrongdoing in government. We have included at tab 6 of the handout all of the provisions relating to access to information, and I am referring to proposed section 221.
Senator Day: Tab 6 of the handout?
Mr. Leadbeater: I apologize. Tab 7, proposed section 221, at page 171 of the bill. This clause would amend the Access to Information Act by requiring secrecy over documents related to disclosures of wrongdoing. You will notice over the page, at 172, where it says ``16.5'':
The head of a government institution shall refuse to disclose any record requested under this Act that contains information created for the purpose of making a disclosure under the Public Service Protection Act or in the course of an investigation into a disclosure under that Act.
The government's own integrity officer, the government's principal and largest public sector union, PSAC, and whistle-blowers such as Allan Cutler all say this is too much secrecy. This is not secrecy that will encourage whistle- blowers to come forward. It is secrecy that will keep wrongdoing under wraps forever. This is not a time-limited exemption and it is not an injury-based exemption. You may recall — and I refer you to tab 6 in this regard — that the first version of C-11, the whistle-blowing legislation, proposed to amend the Access to Information Act to shield records about wrongdoing for 20 years. You will see that on the right-hand column. There was then discussion in committee, and that was considered to be too much secrecy. It was eventually passed to protect such records for five years, which is how it comes to you at the moment.
Clause 221 of the bill would extend secrecy forever. It would require that section 55 of the ATI be amended to add proposed new section 16.4 — involving the Public Servants Disclosure Protection Act — to give secrecy to information about allegations of wrongdoing in government forever.
Justice Gomery considered even the five years which is in the bill to be too much. In that regard, he offered this comment:
We must wonder if legislation of this nature —
He is talking about the five years.
— would have made a difference in how Allan Cutler was treated.
The Commission takes the position that the new Act could be significantly improved if it were amended. It suggests that...
the Act's consequential amendments to the Access to Information Act and to the Privacy Act be revoked as unjustified.
Justice Gomery said five years was unjustified as a blanket.
In Bill C-2, the blanket of mandatory secrecy for records about wrongdoing in government is forever. If five years of mandatory secrecy is unjustified, then mandatory secrecy forever is entirely contrary to the public interest.
Another troubling increase in secrecy under Bill C-2 relates to draft audit reports and audit working papers. Such records are given a blanket of secrecy for 15 years, whereas at present secrecy requires meeting an injury test.
As well, under Bill C-2 a mandatory blanket of secrecy forever is thrown over the internal audit reports, draft reports and working papers of the Auditor General. If passed, no historian will ever be given access to the records of the Auditor General showing how, for example, the sponsorship program audit or any other audit was conducted.
What is the rationale for making auditors general immune from public scrutiny? Restrictions on the disclosure of draft audit reports and working papers by all government institutions contained in this bill inhibit the ability of government outsiders — in that group I include journalists, opposition MPs, senators and citizens — to assess the quality of audit work and to follow the accountability trail when wrongdoing or mismanagement is involved.
We must not forget that the Auditor General's investigation of the sponsorship program arose after journalists and opposition MPs obtained access under the Access to Information Act to audit reports, draft audit reports and working papers related to the sponsorship program. Based on what was revealed therein, the Auditor General decided to conduct an independent audit, and the rest is history.
You may also recall that during the Gomery inquiry much attention was paid to why a strongly critical draft audit report was watered down in the final version. Drafts and working papers are critical to the accountability trail.
We do well to remember that Justice Gomery did not accept the audit community's arguments that, to be of high quality, auditors' drafts and working papers require a blanket of secrecy. I urge you not to accept that argument either.
In our experience, the openness of audit reports has improved their quality and reduced the incidence of internal auditors siding with management.
Most of the Crown corporations and officers of Parliament added to the Access to Information Act by Bill C-2 are given a mandatory blanket of secrecy forever over all their mandated activities. While much has been made of the fact that additional institutions have been added to the Access to Information Act, with this blanket of secrecy the public will not get more access than they would by going to websites. They will get access to travel, hospitality and general administrative information.
In fact, the exemption given to Canada Post — and I refer now to the institutions that have been included because of the sponsorship issue — VIA Rail, Export Development Canada and the others that have been added is that they may withhold from public disclosure anything they have treated in confidence in the past.
If government institutions received that kind of an exemption when the Access to Information Act had been brought in, there would be no openness. The point of being made subject to the Access to Information Act is to give out more than you have given in the past, unless you meet an injury test. That is the test Bill C-2 gives to all these Crown corporations. They may deny access to the public to anything to which they have denied access in the past. Such broad zones of secrecy designed to entrench the status quo are entirely out of step with the purpose of both the Access to Information Act and the purpose of Bill C-2, both of which are intended to increase government accountability.
With respect to the CBC and Atomic Energy of Canada Limited, Bill C-2 simply seeks to exclude them from the right of access and from the oversight of the commissioner. Only general administration information will be accessible. Not only is that zone of secrecy unnecessarily broad, it is forever and it does not have any injury test. These records are put at the level of cabinet confidences, insofar as the commissioner's right to review records is concerned. In other words, for the CBC and AECL Bill C-2 makes their secrecy decisions immune from independent review.
You will find our specific recommendations for amendment in the handout we provided at tabs 2 and 3. We have also provided handouts showing the nature of secrecy given to officers of Parliament. Those can be found in the table at tab 4. It shows that during investigations Bill C-2 requires all these institutions to maintain their records in confidence. After investigations, it requires four to keep them in confidence and three to release them. What is the rationale for that? I have no idea. What is the difference between what the Information and Privacy Commissioners and the proposed commissioner of lobbying do versus the Auditor General, the Commissioner of Official Languages, the Chief Electoral Officer and the Public Sector Integrity Commissioner? Our point is that no specific exemption is required because in the statute there are exemptions to protect ongoing investigations.
If you look at the second page of the handout, the same concern arises under the Privacy Act exemptions in this proposed legislation, and you may wish to address that with the Privacy Commissioner. When someone makes an access request of any officer of Parliament for personal information about themselves, an injury test must be met before secrecy can be applied. It must be injurious to ongoing investigations, except in the case of the Privacy Commissioner. The Privacy Commissioner must refuse disclosure mandatorily during and after an investigation, except if it is a record that the Privacy Commissioner has created and it is after an investigation. I am not sure what the rationale for that is. I simply point out that there are internal inconsistencies with regard to how officers of Parliament are dealt with and there is too much secrecy for officers of Parliament. Surely, the watchdogs of the system should be accountable through transparency, just the same as other government institutions.
Tab 5 is an account of what I have gone through with you, the exemptions for Crown corporations that have been included in the statute. As I said, the exemption was that anything you have kept confidential in the past you can keep secret in the future. You will see on the first page of tab 5 that for Canada Post Corporation there is the exemption listed in the column labelled ``Class.'' It includes any record that contains trade secrets or financial, commercial, scientific or technical information that belongs to and has consistently been treated as confidential by the institution. There is no injury test there. There does not have to be any injury to the institution, and you will see that for the remainder of th0e Crown corporations that have been added.
I will be pleased to respond to any questions you have about those tables or any other matters. I am grateful to you for the opportunity to make these remarks, both the statement I have tabled and the one I have given orally.
The Chairman: Thank you for that great overview. The document you have presented to us is comprehensive. This is a very difficult area that raises many questions.
Senator Milne: Mr. Leadbeater, I do wish that you had given us your second presentation in writing as well as your first, because I find this very confusing. In your first presentation you make two suggestions. The first is to remove the broad exemptions in various clauses between 89 and 224. The second recommendation is to remove clause 159, which is exclusion for the Canadian Broadcasting Corporation and Atomic Energy of Canada Limited.
You have gone on to say that the proposed accountability act provides for secrecy forever for various and assorted institutions. Would you please expand on that that?
Mr. Leadbeater: The remarks I tabled at tab 1 are rather cryptic. I did not add anything in my other remarks except to explain what all those sections were. I will repeat three points.
Senator Milne: The amendments that you strongly believe are required are the ones under tab 2?
Mr. Leadbeater: Yes. They are under tab 2 and are more fully explained under tab 3 with the rationale alongside the provisions. The actual content of what we are seeking is the same in tabs 2 and 3.
The amendments fall into three groups. First, there is too much secrecy for officers of Parliament. Officers of Parliament do not need mandatory blankets of secrecy over their work when there are already injury-test-based exemptions in the statute. If officers of Parliament can show that a disclosure would be injurious to the conduct of their investigations and their work, they should be able to have secrecy, and that is already provided. They do not need to be able to tell requesters, ``Go away. I do not even have to think about an injury. I have a complete blanket.''
Second, regarding the Crown corporations that have been added to the statute, CBC and AECL should not have exclusion from blankets of secrecy forever with no injury tests. They have sensitive information to be protected and it can be protected without excluding them from the statute.
The third point has to do with reports of wrongdoing, draft audit reports and working papers of internal audits. From now on, reports of wrongdoing in the Government of Canada will be subject to a mandatory exemption forever. An individual who makes a report of wrongdoing to his manager will never be able to find out what the manager did. He will not be able to find out, even under the Privacy Act, whether he suffered recriminations because of this, whether things happened to his career. That is unacceptable.
Since 1983, when this statute came into force, all reports of wrongdoing inside government have been subject to the Access to Information Act. It protects the privacy of individuals; it protects the effectiveness of investigations. Why do we now need blankets of secrecy?
I have argued that internal audit reports are an essential accountability trail for the public to be able to follow. If they are removed, all we will have left is access to the sanitized final audits.
Those are the three general areas to which our recommendations are directed. We would be quite happy if all the provisions related to access to information in those areas were simply removed from the bill and the existing Access to Information Act provisions were allowed to operate. If you were to ask me how it happened that so much was put into an accountability bill that will denigrate from accountability, I would simply say that perhaps in a rush to develop the bill everyone who asked for secrecy — Canada Post, VIA Rail, et cetera — got what they asked for without there being a challenge function.
I do not believe that the Auditor General could defend the proposition that her office should be immune from transparency forever, yet that is what this bill will do. I do not believe that Canada Post can make the same argument. I do not believe that the Office of the Information Commissioner would ever make that argument, but during investigations that is what we are given by this bill.
Senator Milne: I find that incredible. I had not seen this ``secrecy forever'' provision when I examined the bill, and I have had some experience with access to information and particular civil servants deciding that something should be secret forever. It took seven years to get that straightened out and through Parliament, and it took an act of Parliament to do it. I am very concerned about the idea of secrecy forever.
Mr. Leadbeater: I believe you are speaking of census records.
Senator Milne: Yes, I am.
Mr. Leadbeater: Congratulations on that.
Senator Milne: When this bill was studied in the House of Commons, amendments expanded the number of Crown corporations that will be covered under the Access to Information Act, and some of these organizations expressed concerns during committee hearings about their ability to protect client information as proprietary and confidential.
Were any of your suggested amendments put into this bill in the House of Commons? Is this a sanitized list, an updated list? How does your office feel about these concerns? I am very concerned about this secrecy forever notion, which is absolutely ridiculous. How can we correct it?
You have given us a two-page list of amendments, which seems to me a bit excessive. Do you have a wish list on these amendments?
Mr. Leadbeater: I cannot give you an order of priority for the amendments we would like to see. I believe that the loss of transparency with respect to wrongdoing in government in audits is vital. We must get it back.
If we are going to have Crown corporations listed under the Access to Information Act, it must be meaningful. There must be a burden to prove injury from disclosure. That is what access is all about. Access is a right; we have to end the notion that it is by grace or by favour of officials. We make it a right by stipulating an objective test that must be met before secrecy can happen. This must be done.
With respect to officers of Parliament, I think it sends the wrong leadership message to the Public Service of Canada when the people who police them have blankets of secrecy over what they do. We are asking that all the provisions of Bill C-2 relating to access to information be taken out, and I do not think I can tell you that we would be happy if some were in and some were out.
The Chairman: The senator asked you about your appearance before the House of Commons and whether or not you had made any suggestions there for amendments to the bill. Have any of your suggested amendments been made to the bill?
Mr. Leadbeater: We made the same suggestions there that we have made to you. In the House, I believe only one amendment that we had recommended was made: the blanket of secrecy was removed from the National Arts Centre.
The Chairman: Officials from the National Arts Centre will be appearing before this committee later on.
Senator Milne: We must remember to ask that same question of them.
The Information Commissioner has remarked that many Canadian institutions that perform investigative law enforcement and audit functions have been subject to access to information since the bill was brought in. For example, the RCMP and CSIS, military police and other police and investigative bodies perform their duties and live under this Access to Information Act without being under this mandatory blanket of secrecy for all investigative records. With this in mind, what do you suppose is the reasoning for the specific exemption given to the Commissioner of Official Languages under this bill?
Mr. Leadbeater: I am speculating here that any institution not already covered by the Access to Information Act will greatly reticent to become subject to it now. They asked not to be become subject to it and they got their wish without a challenge function being performed. Back in the early 1980s, when the act was first coming into force, everyone was lining up — for example, police agencies, the Privy Council Office and the Treasury Board — to ask, ``Do not allow us to be covered by access; our work will never be possible.'' However, they were covered. It was an act of bravery on the part of Parliament. When the act was reviewed three years later, none of them showed up. The police were happy with doing their investigations under the statute, cabinet confidences were properly protected, and so on. The act has been incredibly well crafted to protect all types of sensitive information. It does put burdens on people who assert secrecy to justify their assertions. To leap from the existing 13 exemptions, add 10 — and all 10 are what we call class test; they contain no injury requirement — is just a rush. It has not been thought through, and it is totally contrary to the promises made by the government in its election platform and to all proposals for reform that we have seen. What is the explanation? To me, it seems to be an incredible generosity on the part of government officials to these institutions who simply asked for the protection of secrecy.
Senator Milne: The bill proposes 10 more exemptions that will also have blanket secrecy forever.
Mr. Leadbeater: That is right.
Senator Milne: Those will not be set up to provide access to information after a certain period of time and under certain conditions.
How do you feel about the notion that Bill C-2 wishes to provide these exemptions, even though an argument to grant complete secrecy for such records has already been attempted and rejected before the Supreme Court of Canada in Lavigne v. Canada in 2002. Could you tell us something about Lavigne v. Canada?
Mr. Leadbeater: That was a case involving the Official Languages Commissioner and a gentleman named Lavigne who had made a complaint and asked to have access to the investigation file after the completion of the investigation. I believe it was a request under the Privacy Act. The request was refused on the basis that it would be injurious to future investigations if people knew that the investigation file would be subject to access at some point. The matter went to court. It ended up in the Supreme Court of Canada and the court said that to be meaningful, the right of access — and there is a right of access under both privacy and access to information — requires a demonstration of injury. It is not enough to make blanket assertions that your process requires secrecy; you must demonstrate it. The court rejected the blanket assertions and ordered the disclosure. This particular set of amendments is designed essentially to address Lavigne v. Canada and to give to all of the officers of Parliament the blanket ability to assert secrecy during their investigations and no longer have to meet the injury test of Lavigne v. Canada.
Senator Milne: It is interesting that the Supreme Court has said there must be an injury test yet this bill now takes it out.
Mr. Leadbeater: The bill is saying that we do not want to have the burden of meeting an injury test.
Senator Milne: The Canadian Bar Association agrees with you that the language in this bill is overly broad, that these 10 new exemptions to the Access to Information Act are overly broad and that those exceptions relating to Crown corporations within this bill could arguably defeat the purpose of including these institutions under the Access to Information Act. Why put them in if the exemptions are so broad that you cannot access their information anyway?
Mr. Leadbeater: The point that we and the Canadian Bar Association and others are making is that the need for secrecy depends on the circumstances. Every time an access request is received, the recipient institution should turn its mind to the circumstances. Is this an old document? Is the information stale? Is there an overriding public interest? All of those factors should be taken into account. All of those activities are encapsulated in the term ``injury test.'' We have hoped that all of the exemptions to the right of access would have this built-in discretion to make these decisions, would have a requirement to meet injuries, and would have a public interest override. Perhaps Atomic Energy of Canada Limited will have a business reason for secrecy, but the information may relate so much to safety that it should nevertheless be disclosed. That is not possible under this statute.
Senator Milne: I understand that you are content with working under the present act, but you would you be hampered as far as access to information, that is, giving information to the public forever under this bill.
Mr. Leadbeater: The public will have access to less information under this bill than they currently do with respect to existing government institutions and with respect to newly added institutions. They will have access only to information about those institutions' general administration — that is, travel, hospitality and budgets. That information is already available in the institutions' annual reports and on their websites. The public will not be getting access to anything new.
Senator Milne: Why do we have this proposed act before us then?
Mr. Leadbeater: I cannot speculate on that.
Senator Milne: I am sorry, that is an unfair question.
Senator Baker: I have two general questions in mind. First, your office is continually before the courts and, in recent years, especially before the Supreme Court of Canada, either as an appellant or as an intervenor. I am sure you will agree with that. All the decisions that have come down as a result of your interventions and applications to the court have involved the wording of statutes. Sitting next to you is Mr. Daniel Brunet who teamed up with Clayton Ruby in a case called Canada (Information Commissioner) v. Canada (Commissioner of the Royal Canadian Mounted Police). You won the right of access to certain information, contrary to what was in the statute. It was not the right to all information, and you were not asking for all information. You were not asking for the private information of RCMP officers. You were asking for certain specific information.
Given the factual background that you are continually before the courts asking for access to information, contrary to the specificity of the legislation, what do you think will happen when this bill is passed? Will Mr. Brunet have to take up residence at the Supreme Court of Canada? What do you think will be the effect?
The Supreme Court of Canada interprets the law. How do they do that? First, they ask: What is the intent of the legislation? Second, they ask: What is the intent of the section that we are dealing with? What are the specifics? In that light, I would like for you to answer that question.
Mr. Leadbeater: I will address a couple of points in your premise. We receive about 1,500 complaints per year. Of those 1,500, we settle over 99 per cent and, on average, we take to court two to three cases per year. That alternate dispute resolution success rate is unparalleled.
We end up in court at the receiving end of government actions against us, for example, when we issued subpoenas to see records held in the Prime Minister's Office or to interview exempt staff of the Prime Minister. We were taken to court to have our powers challenged. We defended ourselves, of course, and ended up seeing the records and interviewing the exempt staff.
There is a certain amount of inevitable litigation. However, it is rare that we go to court on our own motion against government. That is because we are successful in convincing government to do the right thing without having to go to court.
In your question you also talked about the RCMP case and the Information Commissioner's getting involved in cases to convince courts to ignore the written statute. I do not imagine many of the judges would appreciate that comment. I would prefer to see it this way: We often see senior government officials, in that case the Commissioner of the RCMP, interpret the statute in a self-serving way toward secrecy. If we see that situation, we go to court to ask the judge who is right. The judge will read and apply the statute and say that one of us is right and the other is wrong. Happily, we have a pretty good record. We do not go often. When we do go it is usually because it is not the commissioner pushing the bounds of the statute but government officials failing to respect their obligations under the statute.
If these proposed provisions come into force, it will be more of the same. We will have a large number of institutions respecting our recommendations as to how to interpret and apply the statute. We will have one or two a year that will not and they will end up in court. That is my guess as to what will happen.
Senator Baker: You restricted your activity, saying it is not very often that you become the appellant or are directly involved in challenging the statute. However, on behalf of other people who bring their case to you, you assume the case, as you did in the case of the Information Commissioner versus the RCMP.
Mr. Leadbeater: No. Here is how it works, senator. If we make a recommendation to a government institution that they disclose a record and the government institution refuses, we go to court. The complainant is entitled to go to court as well. We do not go on their behalf. We go on behalf of the statute. We can settle the case at any time. We do not take instructions from the complainant. The complainant can be their own party.
With respect to the RCMP case, we lost at trial and the Court of Appeal and we won in the Supreme Court of Canada. That is the way litigation goes.
Senator Baker: Who was your lawyer?
Mr. Leadbeater: Daniel Brunet was our lawyer. The argument in the Supreme Court of Canada was done by Mr. Clayton Ruby.
Senator Baker: Mr. Brunet seems to be everywhere when it comes to appeals. He did not get anywhere in trying to get the cabinet to release why they pay lawyers in Toronto more than they pay lawyers in Nova Scotia, Quebec and British Columbia. I refer to the 2002 case of Babcock v. Canada (Attorney General).
I have a specific question to ask you about something you have not covered. You identified several instances where secrecy is an issue, or would become an issue, or additions to the non-disclosure of information that we presently have under the act.
What is your general opinion on the establishment of an office of the director of public prosecutions? Specifically, what jumps out at me, and I am sure to anyone who looks at this legislation here, is that directives can go from the Attorney General to the director of public prosecutions. Under proposed section 11 of the proposed director of public prosecutions act, on page 108 of the bill, publication may be delayed and withheld while a prosecution is in progress. The clause states that the Attorney General or the director may, if he or she considers it to be in the interests of the administration of justice, not disclose this communication between the Attorney General and the director of public prosecutions regarding a particular prosecution. What do you think of that proposition? Did you get a chance to look at it? Such provision is set out in proposed sections 11 and 15(3) of the proposed legislation.
I ask that question simply because if, during a prosecution, something is going on behind the scenes between a cabinet minister and the director of public prosecutions, who is a deputy minister, pertaining to that case and the removal of that case for some reason, certainly it would affect the prosecution taking place, and that will be held in secret and not published in the Canada Gazette. Have you had a chance to examine that? If not, what opinion comes to your mind immediately?
Mr. Leadbeater: I will trace through the effect of these amendments on that issue. The office of the director of public prosecutions is, by this statute, made subject to the Access to Information Act. The office of the director of public prosecutions is not given a specific exemption, so it falls under the general exemptions that are already in the Access to Information Act. The right of access that the public has is notwithstanding any other act of Parliament.
Therefore, section 4 of the Access to Information Act is a right of access given to all members of the public notwithstanding any other act of Parliament. Despite what is written there about how these directions will be kept secret, they will have to meet an injury test in the Access to Information Act before that will happen. There will be an assessment of injury, and it will be up to the institution to say that, in the circumstances of this particular case, the secrecy of this direction is justified under the Access to Information Act.
Senator Baker: Are you saying that this section then is contrary to law?
Mr. Leadbeater: No.
Senator Baker: Then what are you saying?
Mr. Leadbeater: All of the secrecy provisions in all other statutes do not take precedence over the Access to Information Act. The Access to Information Act takes precedence over provisions in other statutes unless they are listed in a schedule to the act, such as some secrecy provisions in other statutes; for example, the Statistics Act for census, and the Income Tax Act for your income tax information. This particular section for the director of public prosecutions is not listed.
Senator Baker: Therefore, it will be of no force and effect and it will not have any impact at all, and all the defence attorney would have to do is read your statement before this committee and conclude that it is correct and then get a copy of the directive. That is your opinion?
Mr. Leadbeater: No, I am saying it would depend on the circumstances of the case, the content of the directive and at what stage of the prosecution, but there would be a burden on the director of public prosecutions to demonstrate injury. It would not be automatic.
Senator Baker: How do you think that would fit in to, say, a Stinchcombe application?
Mr. Leadbeater: Well, the rules of disclosure under Stinchcombe before the courts are totally independent of the Access to Information Act, so the discovery rules are a different set of requirements in litigation that are unrelated to the Access to Information Act.
Senator Baker: I am asking you the question because we are passing a law that says that information will be withheld during a prosecution. I would like to know whether it will be withheld during a prosecution. You are telling me that it cannot be withheld if a request is made through the Access to Information Act.
Mr. Leadbeater: My opinion is that the withholding would not be automatic. If the director of public prosecutions could demonstrate that it would be injurious to the conduct of that prosecution to disclose the information while the prosecution is underway, the information would be withheld, but there would be a burden of proof.
Senator Baker: So you can envision this to be a stretched out, drawn out, pretrial argument under Stinchcombe.
Mr. Leadbeater: It would not be under Stinchcombe. However, it could be that it would go through the courts under the statute itself. If the director of public prosecutions refused to disclose information but it did not meet an injury test, either the requester or our office would take the matter to court, and it would makes it way through the court system. Yes, that would be long and drawn out.
Senator Baker: The reason I have asked is because that would be a violation of section 7 of the Charter. I am sure the witnesses would agree that non-disclosure of information during a trial would be a violation of section 7 of the Charter.
Mr. Leadbeater: I just cannot say it so boldly. There are issues around privileges, both statutory and common-law privileges, that Stinchcombe still recognizes. I just cannot make as bald a statement as you are attempting to lead me to make.
Senator Stratton: Mr. Leadbeater, are you aware that the minister has tabled a white paper to study this whole area?
Mr. Leadbeater: Yes.
Senator Stratton: It is very simple to point and say that there is a problem here and a problem there, but once you delve into the different areas that we are talking about, you realize that life is not that simple and it is indeed a very complex area. Would you not agree?
Mr. Leadbeater: Let me add to your question this way: The Minister of Justice has put out a discussion paper on the reform of the Access to Information Act. I have not made any comments here today about additional things that should be added to the bill. All I have said is that the actual amendments to the Access to Information Act proposed in Bill C-2 are problematic. I have not tried to get into the wider issue of reform of the Access to Information Act by adding a public-interest override or by putting in a duty to create records. I realize there is another process in another committee in the House that will deal with that. I take your point, and that is why I have limited my comments to what this bill does and where it goes wrong.
Senator Stratton: I make the point only to indicate to the table that something is underway to deal with this in a broader sense. When we start talking specifics it is easy to say this is wrong and that is wrong. Unless you try to get a handle on the overall picture, the overall scope of it, it becomes difficult to even grasp.
This proposed new legislation brings new institutions under the act; is that not correct?
Mr. Leadbeater: Yes, it does.
Senator Stratton: For instance, the commercial Crown corporation Public Sector Pension Investment Board was never under the act before but it is added by this bill. The Canada Pension Plan Investment Board and the CBC are added as well. These are examples of institutions that were not under the act that will be brought under the act with this bill. Atomic Energy of Canada and Export Development Canada are also examples. The government is trying to make this more accountable by bringing these institutions under the act.
I cannot emphasize more that, because of the complexity and sensitive nature of this whole area, whether it is commercial or investigative, and particularly with respect to public reporting requirements, whether in the form of an annual report or the final report that is issued at the end of an investigation, that becomes part of the argument that you made, which was whether information should be made public during an investigation. That becomes the argument, and it should not be.
The Chairman: Is that a question, Senator Stratton?
Senator Stratton: What I want is a general agreement or concurrence with what is the intent of what we are doing here with this bill.
Mr. Leadbeater: Maybe I could address that by taking you to tab 5 of the materials I have set out. The institutions listed in the left-hand column are newly added institutions. I have no disagreement that they are added, but my concern is that they are added in a way that gives them almost total secrecy over everything they hold, and that is why we have indicated what the exemptions are.
You will see in the column headed ``Injury'' — whether any injury is required — that it is left blank, and that is because all these institutions can refuse access without demonstrating that there would be any injury from disclosure.
Therefore, no, I do not agree with your general premise that this will increase accountability. This is smoke and mirrors. This is adding institutions to the Access to Information Act via the front door and taking them out via the back door.
You have asked me for my opinion, and that is it.
Senator Stratton: Are you aware that the bill creates a mandatory exemption for records obtained or created by the various agents of Parliament during an investigation? The exemptions for records obtained by the agents of Parliament during the course of their investigations are intended to ensure that requests for records obtained from other government institutions are dealt with by other institutions, that the agents are not used as a back door for information. Records created by the Information Commissioner, the Privacy Commissioner or a commissioner of lobbying during an investigation are exempt as long as the investigation is active, which prevents interference with the investigation. The records cannot be exempted under this provision once the investigation is complete.
There is evidence that there is potential harm to the audit or investigation —
The Chairman: Senator Stratton, before you continue, a number of people do not know what you are referring to.
Senator Stratton: I am referring to the agent. I am giving an overview of those proposed sections — 16(1), (2), (3), (4) and (5).
Senator Day: Section 16 of the act does not seem to correspond with what you are saying.
The Chairman: He is not quoting from the act. He said he is giving an overview of the section.
Senator Day: Sixteen does not have a (2), (3), (4).
Senator Stratton: Perhaps I have the wrong proposed sections.
The Chairman: Are you referring to the Access to Information Act?
Senator Stratton: I think it is the Access to Information Act, page 118.
Senator Day: That is section 144 of Bill C-2.
Senator Stratton: Yes, referring to the Access to Information Act.
There is evidence that there is potential harm to the audit or investigation processes of the Auditor General or the Public Sector Integrity Commissioner if records they create during their investigation or audits are disclosed even after the investigation or audit is completed.
I will give you a couple of reasons and examples of why there are some of these exemptions and why this area is more complex than we realize.
With regard to the Canadian Broadcasting Corporation, for example, in any review of the ATIA or any consideration of its application to the CBC, there has been a recognition of the need to protect journalistic sources and programming material — in other words, to protect the individual journalist.
With regard to Atomic Energy of Canada, the highly sensitive nature of the information relating to research and to the marketing activities of AECL and the highly competitive international arena they function in requires a high level of protection for a significant portion of their information only. That is another example.
I am not going to go down the list endlessly, but I would recommend to the committee that while we are going through this we should try to understand the complexity of the whole area and how this committee can properly deal with it. We are currently getting into specifics, and I do not think that is the route to take. If we do that, we will never get through this.
Mr. Leadbeater: There is no doubt that all institutions, including the newly added ones, have sensitive information that requires protection. The Information Commissioner is not arguing that they should have to give out everything they hold. The Information Commissioner is simply arguing that there should be a burden on them to justify their secrecy decisions. When you exclude the CBC from the act entirely, there is no justification or independent overview. The Information Commissioner does not get to see it. The CBC makes its own decisions on what will be released and what will not, and that is the end of it, and similarly with AECL.
We agree that they have sensitive information, but make it an exemption with a proper injury test, and we have proposed the wording for those tests.
I will return to a comment I made in my opening remarks. Access to information reform was subject to a cross- Canada hearing by Justice Gomery. It was part of his mandate to look at reform of the Access to Information Act as part of the accountability regime required for this country. He went across the country and he came back and said that we need to have injury tests. He specifically referred to the CBC. He said the CBC needs protection, but by way of an injury test, and it should be an exemption, not an exclusion.
There is no debate in any of the academic literature or any of the informed reviews by Parliament in the past that this is what is required. The fact that it does not appear in this bill is a matter of grave concern to the Information Commissioner. He has not pointed to any reasons; it is just that a terrible mistake has been made with respect to access to information in this bill. I urge this committee not to buy the suggestion that it can all be corrected in a committee in the other place. Once this becomes law, that will be the end of access reform until way past the next election.
Whether you call it detail or not, it is important that the Senate not ignore this abrogation of the notion of accountability.
Senator Milne: Mr. Leadbeater, I was very glad to hear what Senator Stratton said, that a committee of the other place is looking into the whole issue of access to information in order to improve it, but does it make sense to you to have such broad exemptions put into Bill C-2 for both the present section 16, I believe it is, and the proposed section 10, and then to perhaps take them out in only a month or two?
Mr. Leadbeater: The discussion paper that I have seen, put out by the Minister of Justice, does not propose to revisit any of the provisions in Bill C-2.
Senator Milne: We have to correct it now or it will not get done?
Mr. Leadbeater: Exactly.
Senator Stratton: I do not disagree that that should take place. I am trying to point out that as we go through this we should understand that there needs to be work done. If we discover that the appropriate work is not being done, then perhaps the Senate should look at it, because it is something into which we could have valuable input, which would help immensely.
Senator Cochrane: You have been speaking this morning about the removal of the exemptions for the CBC as well as AECL.
If a report were leaked to the public through a newspaper, let us say The Toronto Sun, the paper would not be required to reveal its sources because it is private, is that not the case?
Mr. Leadbeater: It would not be by statute; the paper would not be required to reveal sources.
Senator Cochrane: If it were leaked to the CBC, then the corporation would be required to reveal the sources?
Mr. Leadbeater: No, if the CBC were made subject to our statute today, with no special exclusions or exemptions, it would still have to protect the privacy of individuals, so it could not disclose the name of a source. That is a mandatory exemption under the statute, unless there is an overriding public interest. All personal information in the hands of government is subject to a mandatory exemption from the right of access, subject to a public interest override. Your medical information will be protected, but if your medical condition is a contagious one and you are behaving in a certain manner that threatens the public, then there is a public interest override and that could be disclosed to the public.
The idea that has been perpetrated, namely, that making the CBC subject to the Access to Information Act would mean disclosure of their sources, has no merit under the existing statute. There is no legal basis for it, all the more so in light of the exemption that is proposed, which would be an injury test exemption to protect its news gathering and programming activity.
I understand the concern, but it is just not a real concern under the existing statute.
Senator Joyal: Welcome, gentlemen and Madam. My first question is in the context of the points made by Senator Stratton. Since there is a government white paper that is being tabled and studied in the other place, would it not be wiser to wait until that investigation has been completed before we start amending the legislation in a restrictive manner?
Mr. Leadbeater: I am not sure. If you are saying, ``Let us take out all of the proposed sections that relate to access to information in this bill and put them into that study over there,'' I would say yes. If you are saying, ``Let us pass the bill, get all the proposed sections into law, and then study them again over there,'' I say no. Let us be realistic: These will be the law.
Senator Joyal: Let me qualify that. If you enter into a process of reviewing the legislation, it is better to stand still with this legislation as long as the process is on, unless there are deficiencies of such a damaging impact that you want to correct them immediately because a court has said you must correct this. It happens often in this committee that we must deal with legislation that has a corrective nature and has been considered by a court and concluded by the court.
Mr. Leadbeater: Yes.
Senator Joyal: My approach would be to say that since we are in a complete review process — because a white paper is a real review process; the government proposes options, and so on, and the committee advises on it — it would be more logical to wait before we enact those provisions that are really substantial changes to the present legislation.
Mr. Leadbeater: Senator Joyal, I bow to your strategic knowledge. I cannot come close to your experience in that. All I can say is that we are begging this committee not to allow these provisions related to access to information to become the law of this land. How you do that is your decision; you are better at that kind of strategy than I am.
Senator Joyal: My other concern — and on that I reach out to Senator Stratton — is that if there are provisions that, as you have stated, would put us in a worse position than before Gomery, then we must reconsider those proposed sections at least. The government's intention — and I accept the government's intention — is to take corrective measures following Gomery. However, if you are suggesting in your analysis that there are clauses in this bill that would have put, for example, Mr. Cutler in a position not to go forward, that is totally at the opposite end of what we want to achieve.
Mr. Leadbeater: Yes.
Senator Joyal: We want to protect the status quo insofar as it relates to the position in which Mr. Cutler finds himself.
Could you identify to us which proposed section would make it more difficult for a civil servant to come forward and receive the information that was given under access to information, either by Mr. Cutler or by a journalist who got the documents, and so forth, so that we can plug those holes to ensure that we are not in a worse situation after than before?
Mr. Leadbeater: As I indicated in my remarks, Justice Gomery made a lot of recommendations, but he specifically said that he thought Mr. Cutler and others would be worse off if there were these mandatory secrecy provisions with respect to the reporting of internal wrongdoing. That is found at proposed section 221. He also indicated that it was vital for the uncovering of the sponsorship program and the pursuit of getting to the bottom of it to have access to draft internal audit reports and working papers subject to an injury test. That is proposed section 150.
My own advice would be that maybe that is not the line to draw in the sand, but if that is the line you decide to draw in the sand, those are the provisions that are specifically contrary to Justice Gomery.
Senator Day: Am I correct, Mr. Leadbeater, that with the amendment to the act, if Bill C-2 is passed and comes into force, the Office of the Information Commissioner of Canada would be subject to the Access to Information Act?
Mr. Leadbeater: That is correct, yes.
Senator Day: Is there any need-to-know test? Did you apply any test to those who are asking for the information as to why they might be asking for the information?
Mr. Leadbeater: No. Even the Supreme Court of Canada has already commented on this — and I believe it was in the RCMP case. It is entirely inappropriate for government institutions to ask an access requester why he or she wants information and what the individual intends to do with the information.
Senator Day: Anyone, for his or her own reason, subject to whatever test you apply and exceptions, can ask for information of all the organizations, commissions, et cetera, that appear in Schedule I of the Access to Information Act?
Mr. Leadbeater: Yes, except our office. We will be given by the proposed statute a blanket ability to simply refuse, without reasons, all during our investigations.
Senator Day: As the law now stands — and then I would like you to tell me whether this will change if Bill C-2 comes into force as it appears — has anyone the right to find out who has asked for information under the Access to Information Act?
Mr. Leadbeater: Again, that is somewhat situation-specific. Who has asked is personal information, which is a mandatory exemption.
As I mentioned before, there are public interest override issues. Also, if the matter goes to court, the name of the requester will become known in the court proceedings. Normally, if one were to simply ask who had made an access request for information, the government institution would be required to refuse access to that information unless there were an overriding public interest in disclosure.
Senator Day: Who establishes the overriding public interest?
Mr. Leadbeater: It is the burden of the institution refusing access to justify the reason.
Senator Day: If I had asked for information about a particular government department, and the head of the department or the minister wanted to find out who was asking for this information, would that information be divulged? Would my name become known to the executive?
Mr. Leadbeater: That is a somewhat different issue: Within an institution, how broadly can the names of access requesters be disclosed? That is governed by the Privacy Act, which says that information may only be disclosed within an institution for the purpose for which it was collected. If you were the requester, your name could be disclosed to the finance people because it would be on your cheque for $5, and the finance people would need to cash the cheque, so they would see your name. Your name might be disclosed to the area that held the records because you might be asking for records about yourself, so the department would need to search the records for who the requester was.
Other than those situations, no, your name would not be disclosed, and under no circumstances should your name be disclosed to the minister or the minister's staff or the senior officials of the department, for communication purposes or to help them get prepared for questions that you might ask, and so forth, because that was not the purpose for which it was collected and it may result in prejudicial service to you, more hand-wringing — gosh, a senator wants this — or less openness.
We do see on a regular basis departments that conduct improper disclosures of the names of access requesters, and we always try to nip those in the bud and to recommend better training and better processes within the institution. However, as the law stands — and it is the Privacy Act that governs this — there should not be broad disclosure within departments.
Senator Day: It is the Privacy Act that governs rather than the Access to Information and the exception?
Mr. Leadbeater: That is right.
Senator Day: Is that because it is internal to a department?
Mr. Leadbeater: Yes, because it is internal. The external disclosure would be section 19, or the exemption in the Access to Information Act related to personal privacy.
Senator Day: Instead of the government, if the media, for example, were asking, ``Who is asking for information on this particular file?'' that would be the Access to Information Act?
Mr. Leadbeater: Yes.
Senator Day: If a government official is asking for such information within a department, would he be in violation of the existing law if he shared the information he obtained with other people?
Mr. Leadbeater: Yes.
Senator Day: If Bill C-2 is passed, your office will fall under the Access to Information Act. Will there be any change, or will this blanket exemption be enough to protect the individual who is taking advantage of the Access to Information Act?
Mr. Leadbeater: There will be a change for us. We will have a blanket of secrecy. Up until now, we have abided by the spirit of the act as it is written, which means that we will give out information if there is no injury to our process. Under the new proposed provision, we will be under a mandatory legal obligation to say no; we have no discretion to say yes during our investigations. To that extent, people will be getting less from our office than previously, even though we will become subject to the Access to Information Act. I suspect that most of the offices of Parliament may be the same way; informally they have been giving out information, but there will now be a mandatory obligation on them to say no.
Senator Day: You mentioned earlier that you were going to comment on what appears in Bill C-2 in relation to the Access to Information Act but that there were many more items that you would like to have dealt with. Are the items that appear here the result of consultation you have had with the government prior to this bill coming out?
Mr. Leadbeater: No, there was no consultation by the government with our office on the contents of Bill C-2.
Senator Day: Was it in any publication from your office that you would like your office to be formally included in Schedule I?
Mr. Leadbeater: Yes. In all of our recommendations, including a proposed open government act that we tabled before the House of Commons in the fall of last year, I believe it was, we have indicated that the Information Commissioner felt it was vital that he, too, be subject to the act which he administers, because it is embarrassing to ask other institutions to obey it when we do not have to obey it ourselves.
Senator Day: As part of that public dialogue that you had, this mandatory refusal that is proposed to be in the law, was that part of what you had asked for as well?
Mr. Leadbeater: No. Because we understood the government was concerned about records that other departments gave us, that we might disclose them, we proposed that we be subject to a mandatory requirement to say no if we got the record from another department and to refer the access requested to that other department to gain access to the material. That is the extent of the secrecy that we were asking for, over and above what is already in the statute.
Senator Day: I should like to move to a different subject, that of port authorities and airport authorities. I do not know how one describes them, because if the authority were compared to a public corporation, the shareholder is now the region and the board of directors is chosen according to a statute.
Mr. Leadbeater: Yes.
Senator Day: There are one or two federal representatives, a provincial representative and union representatives. Are those types of corporations subject to the Access to Information Act?
Mr. Leadbeater: Some port authorities are listed, but not airport authorities.
Senator Day: Is there a reason for that?
Mr. Leadbeater: I do not know if there is an articulated reason, because the statute simply provides that if an entity is listed in the schedule, it is subject to the act, and there are no criteria to guide the government in deciding which entities should be in the statute and which should not.
Senator Day: That leads me to that part of Bill C-2 that says that the federal government can create criteria for adding names to Bill C-2.
Mr. Leadbeater: Yes.
Senator Day: Do you read that as meaning that other corporations, other names, other organizations can be added to Bill C-2 by an executive order once the criteria are established?
Mr. Leadbeater: The government can add to the schedule at any time, and it proposes in this statute to give itself the authority to create criteria. Our office objects to that approach because it leaves the decision of who should be added in the hands of the government of the day. Instead, we think the criteria should be in the statute, that there should be an obligation on the Governor-in-Council to add institutions to the statute that meet the criteria, that anyone can complain to our office that an institution has not been added that should be, or that an institution has been added that should not be, and that that process would work its way out through the judicial process in the same way as all other disputes under the statute.
The proposal in Bill C-2 to give the government of the day the power to set the criteria is one step forward in that it would be useful to have criteria, but it still leaves it to the discretion of the government of the day rather than to Parliament by way of statute.
The Chairman: Senator Day, your questions are always very piercing and they raise a lot of questions in other senators' minds. I now have three senators who have supplementary questions to your questions.
Senator Day: I will take that as a compliment.
Senator Zimmer: First, I want to welcome the witnesses and thank you for appearing today. Your recommendations are clear, concise and strong.
Before I go further I should like to acknowledge Mr. Dupuis, with whom I worked for many years, along with Jim Richardson, at National Defence. I am delighted to see you today, sir.
As Senator Day indicated, as far as the recommendations are concerned, I presume you made the same recommendations to the House of Commons committee. My question is supplementary to the one raised by the honourable senator. Did you make the same report and was it as strong? Second, in your opinion, do you feel you had adequate time before that committee?
Mr. Leadbeater: We made the same recommendations, and we made them in as strong a fashion as we have here, with most of the same documentation. We feel we were heard. However, in the simple reality of the politics of a minority government, a leaderless Liberal party and so forth, one realizes that things will go through committee that normally might not. That is the most I can say in response to your question.
Senator Joyal: In answer to Senator Day about your own operation being accessible to citizens, are you not subjected to the injury test? In other words, you would disclose, unless you conclude that a harm would be inflicted on the person whose information is contained in the file.
Mr. Leadbeater: Not pursuant to this bill. During the course of our investigations, it will be a mandatory blanket of secrecy — we must say no. After the investigations are complete, we would revert to the Lavigne test, which would be an injury test.
Senator Joyal: It is not during the investigation but after that you are open to the context of the Supreme Court parameters.
Mr. Leadbeater: Exactly, except if the document were provided to us by another institution, in which case the request would have to go back to that other institution.
Senator Joyal: Then you send back the request.
Mr. Leadbeater: The scheme you outline, senator, is true for the Privacy Commissioner, the Information Commissioner and the proposed commissioner of lobbying. However, the blanket of secrecy for the other officers of Parliament, that is, the Auditor General, the Commissioner of Official Languages and the Chief Electoral Officer, extends forever. It is not opened up to an injury test after their investigations are complete.
Senator Joyal: What is the rationale for that?
Mr. Leadbeater: You have got me; I do not know.
Senator Day: Before the supplementary questions, we were talking about the proposed section of 163 of Bill C-2, which purports to add this provision:
(i) prescribing criteria before adding a body or office to Schedule I.
That schedule contains a list of organizations and departments, et cetera, that are subject to the Access to Information Act.
You will see in Bill C-2 that when Schedule I is being changed it is done by statute. What I was asking was this: Do you believe this amendment will allow in the future for Schedule I to be changed by executive order as opposed to statute?
Mr. Leadbeater: That is not actually a change from what is the case presently. I will check the Access to Information Act to confirm that.
I think the Governor-in-Council has the authority to add to the schedule of a statute. You may not have it in front of you, senator.
Senator Day: I am in your hands on this point. All I have in front of me is Bill C-2.
Mr. Leadbeater: Section 77(2) of the act states:
The Governor in Council may, by order, amend Schedule I by adding thereto any department, ministry of state, body or office of the Government of Canada.
Senator Day: The addition of these various commissioners, et cetera, would not fit within that definition; therefore, they had to add them by statute. Why are we seeing the Wheat Board being added by statute in proposed section 172 of Bill C-2?
Mr. Leadbeater: My opinion is that the government could have done it by the order, but there may have been a body of opinion within the Justice Department that it required a statute because the Wheat Board was not a body or institution of the Government of Canada.
The Chairman: It is not really a Crown corporation.
Mr. Leadbeater: The act simply states that the Governor-in-Council can add ``any department, ministry of state, body or office of the Government of Canada.'' I think it is broad enough to sweep in all those that have been added. They could have been added by Governor-in-Council. It is not unusual for it to be done by statute.
Senator Day: If it is not unusual, we will leave it at that.
It seems to me that the proposed office of the commissioner of lobbying, for example, is an office of the Government of Canada. Perhaps it is an officer of Parliament as opposed to the Government of Canada. There may be some arguments that some crafty lawyers might make, so it is easier to do it by statute and avoid the problems.
Mr. Leadbeater: I do not think there is anything nefarious either way.
Senator Day: Do you have any comment or concern with respect to the Wheat Board being added? Are you positive, or otherwise?
Mr. Leadbeater: We are positive it should be added. On a regular basis, we have received concerns expressed by Canadians who would like to know more about what the Wheat Board is up to and have not been able to do so all these years.
Senator Day: The chairman stated that he wanted, time permitting, and I am sure there will be, to ask a specific question that flowed out of our discussion yesterday with the Chief Electoral Officer. I will not steal his thunder. However, I will set up the question for him.
I should like your comment on the fact that the Canada Elections Act has been around since 1927. It has a built-in scheme for public disclosure. We now have Bill C-2 which, as you say, if enacted will have priority over other disclosure documents and other statutes. The Chief Electoral Officer was of the view that, if there were a need for further disclosure under the election process or election financing, it could have been done easily under this well- established piece of legislation that deals with that, the Canada Elections Act. We now have the Canada Elections Act, and the Access to Information Act, which requires disclosures under the Canada elections scheme. What is your view on that?
Mr. Leadbeater: Every institution, including our own, has specific statutory secrecy provisions — the Access to Information Act has extensive requirements for secrecy — all of which will now be superseded by the Access to Information Act. That does not mean we argued that we should amend our act before we embarked upon this general addition in Bill C-2.
I am not sure that Mr. Kingsley's argument is that changes to the right of access have to be done through individual statutes. However, I will make the point that, over many years, we have offered all officers of Parliament the opportunity to show us specific documents that they feel require protection that could not be protected under the Access to Information Act. I understand that Mr. Kingsley's concern has to do with things like voters' lists and election documents that are defined in the statute. There are protections in the existing statute for personal information. Thus, all the personalized information would be protected. However, the election process would be more open. We should remember the Florida experience during the George Bush-Al Gore election. Public interest groups made access requests under their access to information legislation for the ballots. They did their own count. Something like that could happen in Canada, although at 20 cents per page for reproduction fees, which does not include search and preparation, how realistic is that?
There is protection for the election documents that are not personalized. They would be open, unless there could be a showing of injury to his process at the time of elections and so forth. I bow to Mr. Kingsley on his knowledge of his statute.
I have tremendous respect for the man, but with regard to his concern about openness, we just have not seen the proof that he has specific sensitive documents that could not be protected under the statute.
Senator Day: Do we need the Access to Information Act to apply to that when we already have a statute that deals with disclosure in election matters?
Mr. Leadbeater: I believe the current act says that all of those election documents are to be kept secret except on the order of a court. This will supersede that. We would never have achieved open government by making all openness decisions by amending the individual statutes. Our approach to open government is that we define in the Access to Information Act the classes of injury about which we are concerned — there are 13 of them, including national security, privacy and commercial sensitivity — and then we tell all other institutions that regardless of what statute they live under and what confidentiality rules they have, they now live by this and this takes precedence.
I know that changes life for institutions, but that is what we want. We want more transparency. That, at least, seems to be the purpose of Bill C-2.
Senator Day: Groups, organizations and institutions like the Canada Foundation for Innovation and the Canada Foundation for Sustainable Development Technology have been added. Both of those foundations receive information from potential clients or potential partners that is highly sensitive from a technology and business development point of view. Surely, every bit of that information, in every instance, if requested to be divulged, will be sensitive and injurious to the client who has applied for assistance or support from the government.
Therefore, why do you say that a blanket exemption would not be appropriate in a case like that rather than saying that we have to apply the injury test, when you know that in every instance the injury test will tell you not to reveal that information?
Mr. Leadbeater: That is the key. You cannot say ``every instance.'' When the document is 100 years old, can you make the case that it is injurious to disclose that there was a contract between this institution and that supplier and the amount of it? Can you say that it is already public because one side announced in a press release that they got a contract or assistance from the Export Development Corporation, and then the institution says, ``I am sorry; I am required by mandate not to give it to you?''
Senator Day: Put a time limit on it.
Mr. Leadbeater: Time is one factor, and there are many circumstances. That is what an injury test is. An injury test means that you have to look at all of the circumstances, and passage of time is only one. I understand that institutions shiver at the notion that their old ways will be subject to the rigour of a test, but is that not what we want for accountability?
Senator Day: As an inventor and a new business person, I shiver at the idea that my competitors, for $5, can get all my technical information and pass me in the marketplace and that I will not be able to get the patent that I otherwise would be able to get.
Mr. Leadbeater: You have to file all these patents now.
Senator Day: I do. I do not want to get too technical, but once the information is made public by whatever means you lose your right to file for the patent.
Mr. Leadbeater: You can make an injury test. These fears that clearly sensitive information will be disclosed have no merit because they will clearly meet an injury test. We have been living for 23 years under the statute. The Government of Canada holds enormous amounts of proprietary and sensitive commercial information, including information from AECL in the hands of regulators, in the hands of External Affairs when they are dealing with the purchasers of reactors overseas, and so forth. That information is subject to the right of access in the hands of government, but it has protections. I do not think any of these institutions have come before you or before the other place to say, ``By the way, important things were released that we did not want released.'' I do not think anyone has told you that.
I am only saying that there is no disagreement that sensitive information must be protected, but there is disagreement that you can decide ahead of time that particular information is a good secret.
The Chairman: I want honourable senators to know that our next witnesses, who are already here, are from Sustainable Development Technology Canada, Export Development Canada and the Public Sector Pension Investment Board. I would not be surprised if some of the issues that have arisen from Senator Day's questions are addressed by this next set of witnesses.
To the witnesses, we are running a bit late due to a point of order at the beginning of our hearing day. Please be patient with the delay.
Senator Comeau: I have only a couple of follow-up questions. One is for clarification. In response to a question from Senator Cochrane regarding information on the CBC, I believe I understood you to say that sensitive information or sources of information with the CBC would be treated exactly the same as any other private organization.
Mr. Leadbeater: No, I did not mean to say that, because private organizations are not covered. I would simply say that it would be a mandatory obligation on the CBC to refuse disclosure of the names of sources because there is a mandatory exemption for personal information.
Senator Comeau: I was reviewing some of the testimony given this spring in the other place. John Reid said that the Access to Information Act applies only to government, which is what you are saying. It would not apply to the private sector. The question asked of Mr. Reid on May 18, 2006, by Tom Lukiwski, of the other place, was as follows:
So the Ottawa Citizen would not be obligated to release any information on whether there was a leak.
John Reid replied as follows:
That is correct, but if it had been the CBC then it would be different because the CBC is a Crown corporation.
Therefore, the CBC, in this case, would be required to release information. That confuses me somewhat.
Mr. Leadbeater: I think the commissioner was saying that the reason the CBC would be subject to the Access to Information Act but that a private broadcaster would not be is that the CBC receives public money.
The second issue is this: Once becoming subject, can the sensitive information held by the CBC be protected? The evidence that I think the commissioner gave, and that I am giving, is that it can be and we do support the creation, the tailoring, of a specific exemption for the CBC to protect its programming and newsgathering activity, and that would include sources. However, my point is simply that even without that its sources would be protected.
Senator Comeau: In your opening comments, with respect to the Access of Information Act, you indicated that you wished to clarify that records held in ministers' offices be subject to right of access. If I received correspondence from a constituent, be it business or personal, and I passed the document along to the minister, are you requesting access to that document?
Mr. Leadbeater: We believe that the existing statute covers documents held in ministers' offices that relate to departmental business, not the political or personal papers of a minister but departmental papers. If a constituent writes about a departmental issue and you pass it to a minister and there is an access request on what people were saying to the minister on this issue, it would be disclosed minus the identifying personal information. There would be the mandatory obligation to protect the privacy of your constituent, and if it related to the business of the department, the content would be released.
Senator Comeau: If a constituent writes to me requesting that a wharf extension be done to the wharf in my community, you would strike out the person's name, but the request that an extension to the wharf in my community would be made subject to the Access to Information Act. Is that correct?
Mr. Leadbeater: A member of the public could find out that the minister had received request for extension of the wharf in your constituency, yes.
Senator Comeau: The other people in the wharf down the road might not be too happy.
Mr. Leadbeater: They might be the ones asking.
Senator Comeau: This is my wharf.
Mr. Leadbeater: They might want to know who has the minister's ear.
Senator Comeau: Exactly. Thank you.
Senator Milne: Do you think that the courts will strike down the parts of the act that we were discussing as being overly restrictive. In a democratic country, do you think that the courts will strike these secrecy provisions down?
Mr. Leadbeater: No. We do not believe that any of the provisions that we are concerned about have Charter implications. We simply think they are bad policy.
Senator Milne: Suppose a staff member of a minister, or even a staff member in the PMO, or in a future PMO, attempted to find out the name of someone who has put in a request for information. Is that in conflict with the present Access to Information Act? Would it be in conflict with the act after these proposed changes have been made?
Mr. Leadbeater: That would not conflict with any provision of the Access to Information Act or Bill C-2, but it would conflict with existing provisions of the Privacy Act.
Senator Milne: In other words, these changes to the Privacy Act would remove that protection from someone who had put in a request?
Mr. Leadbeater: No, the protection for the names of requesters, both under the Privacy Act and the Access to Information Act, remains; it is unaffected by Bill C-2. I do not want you to have the wrong impression, because I did not mean to leave it, that somehow the names of access requesters are put at jeopardy by this bill. No. One of the other senators asked the question: Is there a protection? Yes, there is.
Senator Milne: Thank you.
The Chairman: This has been very helpful, Mr. Leadbeater. On behalf of the entire committee, I want to thank you very much for your clarity, for your candour and for your help. You are and have been a supremely important witness, because the sections of Bill C-2 that affect you need a lot of clarification and have you done that today. On behalf of everyone, thank you very much.
I understand that Export Development Canada will be beginning the next presentations, followed by Sustainable Development Technology Canada. We will have all of your presentations and then open the floor to questions from honourable senators.
Eric Siegel, Chief Operation Officer, Export Development Canada: Honorable senators, thank you for inviting me to take part in the hearings of your committee.
Export Development Canada has sought this opportunity to appear before the committee to assure senators that the current approach that is being taken by Bill C-2 to address EDC under the Access to Information Act represents, in our view, a balanced approach that is reflective of concerns that Export Development Canada has expressed. It represents, in our view, a workable approach to balancing public accountability with the commercial realities of EDC's business.
EDC already strives to make information about its activities available to the public. Based on Bill C-2, as it is currently structured, we believe we can positively support the changes to the act as representing a significant evolution in our own disclosure regime.
Public disclosure is already an established process and practice at Export Development Canada. As some of you will know, EDC introduced a public disclosure policy in 2001. After extensive consultations with the public, in 2005 we revised and enhanced that policy and its associated practices to reflect developments and to incorporate international best practices in our disclosure policies.
EDC operates in an extensive regime of disclosure already, through voluntary processes and through the annual and special audits performed by the Auditor General of Canada.
EDC's public accountability must always be balanced against the need to protect sensitive commercial information required to run our programs and ultimately fulfil our mandate. We believe Bill C-2 allows us to maintain that difficult balance.
More specifically, under Bill C-2, disclosure of records pertaining to the corporation's general administration will in fact be broadened from that currently voluntarily disclosed by EDC. At the same time, however, the proposed new section 18.1 of the Access to Information Act recognizes the need for Export Development Canada to protect records containing trade secrets, financial, commercial, scientific and technical information.
Let me give you an example. As a significant insurer of accounts receivable to all sizes of Canadian exporters, Export Development Canada has developed its own proprietary systems to evaluate and score credit risks of thousands of international buyers. These systems are the engine on which exporters rely for timely decisions from EDC and on which EDC manages billions of dollars of exposure. They represent an integral component of our, and ultimately the Canadian exporters', competitive arsenal. Were the system, the processes and the information required to deliberate on credit not protected, EDC would be immediately frustrated in its ability to operate.
In that same way, section 24 provides essential assurances to Canadian businesses and their foreign buyers and intermediaries that the commercially confidential information which they must provide to Export Development Canada to engage our support will ultimately be protected.
In closing, Mr. Chairman, maintaining the balance that Bill C-2 establishes is critical to enabling Export Development Canada to continue to do its job for Canadian exporters and investors. It is EDC's mandate to support and develop Canada's export trade and capacity to engage in that trade.
Last year, EDC facilitated more than $57 billion in foreign business, for roughly 7,000 Canadian companies, over 90 per cent of which were small- and medium-sized enterprises. Over 60 per cent of EDC's business was conducted not alone but in partnership with financial institutions, both domestic and international. In the end, EDC's support generated some $37 billion of Canada's GDP, sustaining over 450,000 jobs. We did that with no appropriations from government. Indeed, the corporation has been profitable throughout its history.
EDC's customers from coast to coast, and of all sizes, have told us that they would not be able to work with EDC if the information they entrust to us were not protected. While expanding significantly public access to information pertaining to matters of general corporate administration, Bill C-2 provides essential protection of commercially confidential information, and Export Development Canada is working diligently internally to be able to fully comply with the bill once it becomes law.
We hope that, through its decisions, your committee will allow EDC to continue acting in the best interest of Canadian companies and of the Canadian economy as a whole.
Mr. Chairman, thank you again for the opportunity to share our views, and I am pleased to answer questions or elaborate, as you wish.
The Chairman: Thank you very much, Mr. Siegel. We will not have any questions until we hear from the other presenters.
Vicky Sharpe, President and CEO, Sustainable Development Technology Canada: Thank you very much, Mr. Chairman and the committee, for the opportunity to address you today. I would like to start by saying that we support the general intent of the creation and development of Bill C-2. However, we are seeking your support and assistance with areas that will cause great harm to the ability of Sustainable Development Technology Canada to carry out its mandate.
By way of background, our organization was created by the Government of Canada to bring to the market technologies that create solutions for clean air, greenhouse gas reductions, clean water and clean soil. Those technologies, when adopted, will contribute to strengthening the economy of Canada while reducing our environmental footprint.
We accomplish this by de-risking technologies at a very critical funding and capacity gap in the innovation chain in Canada. If you look at the funding gap diagram, you will see that there is a lot of money at the research end of the spectrum, where concepts are developed. Likewise, in the commercialization section you have industry; the private sector put money into bringing technologies to market.
However, Canada has not been as successful as some of its neighbours at developing good ideas, demonstrating them and getting them to market. Sustainable Development Technology Canada functions in this pre- commercialization gap. Without this assistance, Canada would not be turning good ideas into profit, which will then feed back into the innovation chain. This is critical not just to clean technologies or sustainable development technologies but also to the whole functioning of innovation in Canada.
We work in another very important way. We are outward facing and we work with industry. We have a high level of leveraging of the dollars from the taxpayers, with two and a half to three times more money coming from the private sector. When we carry out a project to de-risk technology, a substantial amount of money, almost three times what we have put in, is required from the private sector in order for the project to proceed.
This leveraging is predicated on the interests of industry to have the solution work, and industry will also have something that is private and confidential. I will just hint at that issue and get into more details later.
We are an important part of the innovation chain. We work with some 2,900 companies across Canada. Ninety per cent of the recipients of our funding are small and medium-sized enterprises. We have a proprietary database containing information on SMEs, on their intellectual property and on competitor analysis, which they will need in order to be competitive globally.
SMEs have asked for about $2.5 billion of support from Sustainable Development Technology Canada. We have not obviously been putting that kind of money out there, but you can see the potential for future success for Canada in the area of clean technology, as the whole world looks to move towards more environmentally sensitive technologies and businesses.
As you can see on page 4, the investment portfolio shows that we have been able to attract some 1,200 applications from across Canada, and we have placed monies in 97 projects across the country and in one territory. These applications match the demographics of institutions across the country, so that representation has turned out to be very good.
Page 5 shows that our portfolio has technology solutions that address all our primary economic sectors. Clearly industry finds the technology solutions of potential value to them or they would not be involved. There is energy exploration, the oil and gas business. There is power generation. There are all the ways we use energy, in both commercial and residential sectors, as well as transportation, agriculture, forestry and all its sub-products, and waste management. It is a comprehensive set of solutions that we place before you.
Page contains information on our governance and accountability structure. Suffice to say that we have a stellar board of 15 directors who not only represent the different geographies of this country but who are also leaders in their own areas of business. They are able to provide exemplary guidance and oversight to Sustainable Development Technology Canada.
That is the mechanism under which we function. However, we report to Parliament through the Minister of Natural Resources, although Environment Canada and Natural Resources Canada are the departments that provide monies to us. We work with them on a routine basis. There is an extensive amount of coverage there.
On page 7 you will find information concerning our funding process. It is a four-step approach deliberately designed to be objective and to remove opportunities for influence. SDTC is involved in decisions only in the first gate. We use international experts both from the market and from technology areas for gate 2. Gate 3 covers the investment and project review committees headed by leaders from the venture capital industry who help guide us on what would be a good approach and what has potential for market success. Finally, the board is dealt with at gate 4.
We feel that we are highly accountable. We were one of the last foundations created; thus, many of the issues that were perceived at the beginning around accountability have been addressed, and all the clauses concerning oversight, evaluation and audit have been placed in our funding agreement.
In 2005, we went through a very successful compliance audit; it was said that there was no evidence that SDTC was not complying with the 98 clauses from its funding agreement that were checked. It was also stated that we have performed well. Considering we were only recently formed, we believe that that was a remarkable compliance audit report.
We are the first foundation to be audited by the Commissioner of the Environment and Sustainable Development at the Office of the Auditor General of Canada. Her report will be presented to Parliament in a week or so. Obviously, I cannot talk about the content in detail, but I can say that it is very positive regarding SDTC's performance.
We have also just completed our interim evaluation. Again, there was a good performance. The details can be found on page 8.
We are different from many of the other foundations. We are not in the research business. We are in development and demonstration of emerging technologies.
The impact of Bill C-2 is critical to us. We believe there is the unintended consequence that some foundations were pulled in because they had a legislative linkage. However, we have found that some foundations that were not created through legislation are covered by the bill while others that were created by legislation are also covered by Bill C-2. We were told that perhaps that was due to the size of the organization and their amount of funding. However, some organizations with more funds than us are not included in Bill C-2.
We feel we are closer to Export Development Canada and to the Business Development Bank of Canada in our modus operandi. That is because our core ability to function is predicated on handling third party confidential information. There has been some acceptance under the bill that those organizations should be given special consideration. We are asking that we be given similar consideration.
As to the overall intent of the proposed act, we are happy to provide additional information on our operations. However, we are seeking explicit exemptions.
We cannot conduct our due diligence if we do not have detailed confidential information for us or our experts to evaluate. Some 90 per cent of the organizations with whom we work are SMEs. They are concerned that we are not able to protect their information. As a result, they may not apply to us in the same numbers. We anticipate that we will see both a reduction in the number of applications to SDTC and a reduction in the quality of information, which will affect our ability to make objective decisions. I will refer later to a couple of letters we have from applicants in that regard.
I have talked about leveraging. The private sector will only make investments predicated on the future intent of profit down the road, and that information has to be kept confidential. Since our inception we have had confidentiality approaches and a whole mechanism for handling that. It was stipulated in our funding agreement that we do so. Historically, we have been able to provide a guarantee that we will not release confidential information.
Our concern with the current situation is that we will no longer be able to provide that guarantee. We understand there are protections under the act. However, the onus of has moved from the person asking for the information to the person having to provide the information. Thus the burden of proof to demonstrate harm is now on SDTC and its applicants.
First, that is a large burden on our applicants. Second, we work with IP at a stage when it is not certain what the value will be. It will be a very difficult thing to prove. We have situations involving trade secrets that become patentable information through the project being carried out. Applicants have expressed that severe concern.
I should also mention that we often share information with the private sector, with the approval of the applicants. We have had projects that have been considered by BDC. It would be very strange for us not to have an exemption under the act while BDC does. It would be a discontinuity of the protection of that information as it moves through the innovation chain.
We respectfully ask the committee that we be supplied a specific exemption for our confidential information similar to the exemption allowed BDC and EDC. The law recognizes that they could not carry out their mandates without the ability to provide an assurance of confidentiality. The specific exemptions they have allow them that assurance. They do not have to rely solely on the proposed section 20 of the act.
The second exemption we request is to protect our proprietary methodologies and the expert names of reviewers. As you can imagine, it is important for us to get forthright and objective reviews from our experts. If their names are known they will be open to being lobbied. If our methodology for scoring and screening and evaluation, which is similar to the process used in the venture capital industry, is explicitly revealed, then applicants will have the opportunity to know the method and not be straightforward in what they are putting forward. It is not a good place to be. As well, we have developed a model that allows us to explain why we are focusing on technologies. The output of that model is widely known across Canada, but the methodology for its analysis is proprietary. We have asked that our proprietary methodologies and expert reviews be exempted, as mentioned on page 14 of our presentation.
I would like to refer to a couple of letters that I think speak more eloquently than I to the nature of our applicants' concerns. This is a letter from the legal firm representing Mr. Rob Bryden of Plasco Energy Group, which has a project on waste management that we funded. It reads:
Accordingly, it would appear that in providing information to Sustainable Development Technology Canada (SDTC), Plasco's confidential information may not be protected under the provisions applicable to organizations listed along with the Export Development Corporation. In the absence of this protection, Plasco would be placing its confidential scientific or technical information into the public domain and possibly destroying important intellectual property rights, notably patent rights.
The letter goes on to say:
Had Bill C-2 been enacted prior to Plasco's application to SDTC, our legal advice to you would have been to delay collaborating with SDTC and providing proprietary intellectual property information that could result in a bar to applying for patent protection....
The effects of the proposed amendments, if they are to be retroactive, may also create risks on a similar scale. We advise that Plasco immediately review all information provided to SDTC and apply for patent protection for any disclosed information that may not have been included in any of its patent applications.
The Chairman: Could I ask that those letters be provided to our clerk so that they form part of our record?
Ms. Sharpe: I will be delighted to have that opportunity.
We can provide other letters as well. All of them express companies' concerns about the effort and dedication they have put into developing their technologies and businesses which they now feel will be at risk. You can see that that will influence Sustainable Development Technology Canada's ability to carry out its work. We believe that our transparency or accountability is not increased through disclosure of third party secrets. Therefore, we believe that the exemption would not fly in the face of the overall beliefs and intent behind Bill C-2 and we respectfully request your support in looking for these two exemptions.
Paul Cantor, Chairperson, Public Sector Pension Investment Board: Thank you, Mr. Chairman. With me is Gordon Fyfe, President and Chief Executive Officer of the Public Sector Pension Investment Board. You can see that our legislation already provides a separation between the roles of chairman and chief executive officer in this particular case.
The first part of my comments will be on other issues relating to Bill C-2 and the second half will be on access to information. The general statement at the start, however, is that the Public Sector Pension Investment Board, which we call PSP Investments, supports Bill C-2 as it has been drafted and presented to the committee.
PSP Investments is a Crown corporation that was established to manage the employer and employee contributions of the federal public service, the RCMP and the Armed Forces pension funds. We invest those funds; we are not the administrator of them.
Annual contributions now amount to $4 billion a year. Total assets now amount to about $30 billion and under the current practice we expect that the overall fund will rise to a level of about $100 billion in the next 10 to 15 years. Our job is to maximize the return on those investments without undue risk of loss.
The basis upon which our board of directors is appointed gives us a head start on addressing the spirit of the bill for the appointment of directors based on competency, transparency, accessibility and independence from political influence. However, instead of vesting the board of directors' nominations in the board of directors governance committee, our legislation requires the establishment of a nominating committee that is separate from the board and that is chaired by a person from the community who is independent from the board. The other members of the nominating committee are made up of government employer and employee groups who are nominated by the minister. The independent nominating committee's job is to rank candidates for recommendation to consideration by ministers.
The legislation requires the nominating committee to propose candidates where we have a sufficient number of directors with proven financial ability and relevant work experience so that the board will be able to achieve its objectives. They seek directors who not only know when to act, because they have the expertise to know when to act, but who also have the will to act, based on their business experience, in the circumstances in which they need to do so. Knowing when to act without having the will to act is as pointless as having the will to act but not knowing when to act.
From the outset, PSP Investments had a formal process in place to review the board's effectiveness and to advise the nominating committee of the complementary areas of expertise that were needed to fulfil most effectively the board's mandates. In addition to that, several years ago we established a process whereby the board chair is personally evaluated on his performance by the other members of the board, and last year —
The Chairman: Mr. Cantor, I am sorry to interrupt, but can you tell me how this relates directly to Bill C-2?
Mr. Cantor: Yes. In the next sentence I say that there is an issue of board renewal, on the one hand, to ensure that success is in place. There is an issue of board continuity, on the other hand, to ensure the board understands what is going on. Bill C-2 extends terms of the directors from three years to four years, and that provides us with a very important element of continuity that is associated with the board appointments. Conversely, the nominating committee has an obligation to provide excellent candidates to fulfill that four-year commitment.
Mr. Chairman, in the interest of brevity I will skip the sections on conflict of interest and governance that are covered in our brief, and would invite questions from senators in those areas, if they have any. I will proceed to access to information now.
As a Crown corporation, we fully accept our responsibility to provide as much information as possible to Canadians. We were not subject to the Access to Information Act before. As a result of this bill, we are brought within the act. Therefore, whatever exemptions we are seeking are incremental to the information that will now be provided by the Public Sector Pension Investment Board as a result of our being brought into the act. We support and welcome that. In response to that, we have conducted a review of the Ontario Securities Commission guidelines in order to ensure that our disclosure meets that standard.
In addition, we currently produce quarterly financial statements which we send to our ministers, and we would be able to comply with the requirements of Bill S-217 in this respect, that being the senator's bill.
That said, clause 147 of the bill provides us with the ability to keep our investment strategies and their implementation confidential. Similarly, managing confidential information provided to us by our investment partners requires us to underscore the importance of the protection that is provided under clause 148 of the bill.
In order to fulfil our mandate, in recent years PSP Investments has moved away from relying exclusively on widely held, publicly traded securities. An increasing proportion of our investments is now directed to real estate, private equity and infrastructure.
We are desirable investors for these private equity managers because we have at least 15 years to invest before our out-flows from pension funds begin to draw even with our in-flows from contributions and earnings. This is the key sentence. However, in this world a vast amount of money is chasing the best private equity opportunities. Partners responsible for investing private equity assets around the world demand confidentiality in respect of the business that they do. If PSP Investments cannot guarantee this confidentiality, we will not be given access to the funds.
That is a demonstrable case. U.S. public funds that have had to deal with confidentiality provisions such as those proposed in the amendments to Bill C-2 were forced to exit the best performing funds. To make the point clear: The issue of an injury test would not arise for us because we would not ever get access to the private equity investments that we would wish to make.
We provided you with a chart from Venture Economics. That chart demonstrates that if PSP Investments is unable to access best performing funds, we would expect to earn 10 per cent less each year on the investments invested in private investment funds. On this chart, the red bars reflect the investment returns of all the median funds, including the top funds. The blue bars reflect the results of the top funds. If we cannot get access to the top funds, we have no real prospect of being in the blue bars; we have only the prospect of being in the red bars.
I want to rush to say now, Mr. Chairman, that because PSP Investments will be allocating, on average, $5 billion to such funds over the next 10 years, the 10 per cent lower return would result in $500 million per year less in returns to these funds. The larger PSP Investments gets, the greater will be the proportion that we allocate to the private equity funds, to the real estate funds, and to the infrastructure where these issues arise.
In the course of the proceedings before the Commons committee, a number of amendments were introduced that, if adopted, would have the effect of limiting the application of the confidentiality provisions that have been provided on the basis of a public interest test or placing a 20-year limit on confidentiality or dealing with environmental issues. Any of these amendments, if they had been adopted, would have resulted in our expulsion or, in the future, our exclusion from the top private equity and real estate funds. As I noted before, that would cost us $500 million a year. Any shortfall in our ability to meet the public services, Armed Forces and RCMP liabilities must come from somewhere. If it does not come from returns we generate in the marketplace, it will have to come from the Canadian government and the employees in the form of increased contributions. That is the choice that needs to be made. Our recommendation to you is that we preserve these provisions as they have been drafted in order to minimize the risk of that result.
That concludes my remarks, Mr. Chairman, and we will respond to your questions.
The Chairman: Thank you for those interesting presentations.
Senator Milne: I will go immediately to the last speaker, Mr. Cantor, because he has spoken about basically supporting this bill. You have no problems with it, but then you say you do have problems. Were the provisions that you talk about put in at the House of Commons committee or were they taken out in the House of Commons committee? I am looking at a 200-page bill and I want to know specifically where you have concerns.
Mr. Cantor: The bill as passed by the House is acceptable to us.
The exclusion provisions, which were also referred to by our colleagues from EDC, are in the bill as passed and those are the exemptions that we need in order to conduct our business.
Senator Milne: They are already there, then, and you are fine?
Mr. Cantor: We are fine.
Senator Milne: Are you fine as well, Mr. Siegel?
Mr. Siegel: We are fine.
Senator Milne: Ms. Sharpe, you have two basic problems. First, you have a problem with the fact that EDC has been exempted from provisions of this bill but you have not been. You feel that you should be treated the same way as Mr. Siegel's group; is that correct?
Ms. Sharpe: That is correct. BDC, which also operates in a venture capital mode, also has the same exemptions as EDC.
Senator Milne: Have you any clue as to why you were not given the same exemptions? Were you consulted?
Ms. Sharpe: We certainly were not consulted and only became aware of this about two weeks before the bill went to the parliamentary committee in the House. This has been a rush for us.
We have asked and our understanding is there it is an unintended consequence of the drafting. We were classified as being one of the foundations, and the thought was to bring in as many of the foundations under the umbrella of the act as possible. We were listed along with those. However, when we questioned that rationale, we were told, ``You are closer to us. You were created by an act of Parliament.'' But when we look at who is included, that particular test is not applied consistently. We were told, ``Maybe it is because you have a large amount of money;'' but Genome Canada has $600 million of federal money yet that company was not included. We have been unable to find an explicit policy decision as to why Sustainable Development Technology Canada was included. We can only assume that it was an unintended consequence of the general concept. The overall concept of the bill concerning our operations is fine.
Senator Milne: There are no problems with it except for the problems you would have with the small enterprises. Perhaps it is because you are dealing with small- and medium-sized enterprises that tend to slip under the radar screen, whereas Genome Canada is coming in with something that is patentable?
Ms. Sharpe: Possibly, but we have currently three quarters of a billion dollars' worth of projects under our management and only $200 million or so is government money. We are small when compared with these entities and likely were not considered. We do operate very much like an early stage capital venture company and our business approach and modus operandi is not properly understood. We do not understand why and we have not received a satisfactory answer as to why. We have enquired, obviously.
Senator Milne: How would you advise the Crown corporations and foundations such as yourself to operate within this new access to information regime? I understand that witnesses from other foundations and Crown corporations have expressed concern before the House of Commons about how they would be affected by this bill.
Ms. Sharpe: There is quite a range, if I understand your question. There are organizations like the Canada Millennium Scholarship Foundation, whose confidential information is all around individuals, their incomes, et cetera. That quite naturally falls under the Privacy Act, and it is quite clear what is confidential and what is not. They are not asking for any exemptions. Canada Foundation for Innovation is not asking for exemptions because its confidential information is either around people, again falling under the Privacy Act as we understand it, or around research. They work with academics whose way of life is to publish and be open about the work that they do.
We are atypical; we are not like many of the other foundations. Our mandate is quite different, and we operate in a commercial milieu. As I say, we are upstream of the Business Development Bank of Canada. We have funded companies that are being examined for possible funding by the BDC, because they are closer to the private sector.
Senator Milne: You are trying to fill in the gap that you showed us on one of your charts; is that correct?
Ms. Sharpe: Exactly. It is very important to fill that gap. If we do not, there will not be deal flow or opportunities to downstream entities like BDC or to the private sector.
The intellectual property we deal with at this stage is not publishable, has not been valued, and is not commercial; it is very hard to determine exactly the value. Therefore, we will not easily be able to demonstrate harm for the harm test. Certainly, as an organization, we will not be able to do it alone. We will have to go back to the people who supplied information to us and determine with them whether they feel that information should or should not be released. That will impose a further burden on the SMEs who already feel that there is a substantial due-diligence burden on them. Also, they will be hard-pressed to prove harm.
The lawyers for these companies have said that when their clients' work is first submitted to Sustainable Development Technology Canada it might be classified only as a trade secret and therefore not easily excluded under the current protections. Once the work has been developed and tested under the funded project that we have supported, it becomes patentable intellectual property. However, it can be patentable only if it stayed outside the public domain.
I have to say that it has been an absolute privilege to work with the entrepreneurs and small businesses across this country. The amount of effort they invest is astounding. They put their lives on the line, often mortgaging their homes, and they spend an inordinate amount of time dedicated to building the technology. To put all that at risk is unfair. Sustainable Development Technology Canada is, if you like, just part of the picture. Our serious concern is not about Sustainable Development Technology Canada, it is about these companies.
Senator Milne: You will excuse me if I am centering on Ms. Sharpe, because she has come offering us specific amendments.
Is Sustainable Development Technology Canada registered as a lobbyist?
Ms. Sharpe: Yes.
Senator Milne: You are a government foundation, are you not? How can you be both?
Ms. Sharpe: That is inconsistent; you are absolutely correct. However, we did seek guidance and we were told that we should register as lobbyists.
We are constituted as an arm's length foundation. While we do report extensively to Parliament and are required to do so pursuant to our funding agreement, we are at arm's length. I report to a board of directors who constitute a very powerful and strong oversight on SDTC. Four of our board members are recipients of the Order of Canada. I can assure you that they are extremely thorough in ensuring that management follows the right obligations.
We have a private sector modus operandi, but we are sort of half in and half out. It is inconsistent to treat us in one way in the proposed federal accountability act, and yet require us to be lobbyists, and I appreciate your raising that point.
Senator Milne: Mr. Cantor spoke at some length about his board. Ms. Sharpe, do you have Governor-in-Council appointees on your board?
Ms. Sharpe: Yes, we do. We have seven Governor-in-Council appointees, and then the balance of the 15-member board is appointed by our member council. In a sense, our member council was set up to operate as a proxy for shareholders.
Our funding agreement contains specific requirements. Clause 1520 specifies that all decisions made by Sustainable Development Technology Canada, by the board and by the committees of the board must be made independently and not be seen to be influenced by government. It is written in our governance requirements that we operate independently.
Senator Milne: How will Bill C-2 affect your board?
Ms. Sharpe: There is another, far-reaching aspect that we have not put before you today. If the current wording in the federal accountability bill is passed, the Governor-in-Council appointees on the board will be classified as reporting public office-holders. Currently they are classified as public office-holders. If they become reporting public office- holders, they will not be allowed to have any income other than working on the board of Sustainable Development Technology Canada. That is common to many other foundations.
Senator Milne: You will not be able to afford to continue.
Ms. Sharpe: You will see a wholesale resignation of Sustainable Development Technology Canada's seven Governor-in-Council appointees. The same will happen at other foundations, because these people are donating their time and their skills to organizations like SDTC. They receive a stipend of $5,000. It is not reasonable to expect that they would be able to continue their service to Canada on such of boards of directors. You have raised a significant issue that is of concern to us.
Senator Milne: They will not even classify as the working poor.
Mr. Cantor, do you believe your board members would be affected in the same way?
Mr. Cantor: We believe our board members are public office-holders and would not be affected in that way.
Senator Milne: They would not be classified, under this new bill, as reporting public office-holders?
Mr. Cantor: That is the advice we have received.
Senator Milne: Mr. Siegel?
Mr. Siegel: I believe the only position that would potentially be affected by that would be the chair of our board. That would be problematic for the chair and for future chairs, if they were placed in that position.
The Chairman: Mr. Siegel, did you focus on this problem before Senator Milne raised it today?
Mr. Siegel: Perhaps I could ask Jim McArdle, our senior vice-president, to respond.
Jim McArdle, Senior Vice-President, Legal Services and Secretary, Export Development Canada: As secretary of the corporation, I have been involved in taking the board through some of the impacts of Bill C-2, including the definition of reporting public office-holder. The first question was whether it would impact all our board members. We spoke with Treasury Board and various people and our internal counsel and concluded that the 13 ministerial appointments would not be affected.
Our chair and our CEO would be; they are a separate position. The CEO is a full-time Governor-in-Council appointee, and there is no issue with respect to being subject to all of the proposed conflict of interest act provisions.
The chair, though, is a part-time Governor-in-Council appointee. As lawyers we really struggle to understand that definition and whether it applies to him. We have been seeking clarification on that, and I understand that there are still some internal discussions going on in relation to that provision. It could very well apply to our chair, and we have been keeping him informed because he is a private-sector person.
Senator Day: I may be of assistance. The definition of reporting public office-holder in the proposed new legislation is a Governor-in-Council appointee who exercises his or her official duties and functions on a part-time basis but receives an annual salary and benefits. Therefore, anyone who is a Governor-in-Council appointee part-time and who receives an annual salary and benefits would be a reporting public office-holder.
Mr. McArdle: Our concern with the definition is that while the chair receives an annual retainer, he receives no benefits. We have struggled with whether that is an annual salary and benefits.
The Chairman: I would think that if there are no benefits, it means no benefits. It does not meet the definition.
Mr. McArdle: We are hoping that is the interpretation.
Senator Day: It would be a benefit just to sit on the board.
Senator Comeau: Ms. Sharpe, I would like to know a little more about the foundation. Was it created over the years, and thereby removed from parliamentary oversight?
Ms. Sharpe: The foundation was created through an act of Parliament that received Royal Assent in June 2001. It is in no way removed from parliamentary oversight. Thank you for asking. We produce an annual report and an annual report supplement which outline all the projects we fund, the amounts of money that have been handed out and the consortium members of that recipient group. The report is submitted to Parliament, to the Minister of Natural Resources.
Senator Comeau: What I am zeroing in on is that, unlike a department of government which reports to members of Parliament, both the Senate and the House, you report to a minister through a report. In other words, the minister is your shareholder and not Parliament?
Ms. Sharpe: We are accountable to the minister through Parliament.
Senator Comeau: Not Parliament.
Ms. Sharpe: It says we are accountable to Parliament by reporting through the Minister of Natural Resources. We are accountable to Parliament.
Senator Comeau: I assume that you get annual funding from Parliament.
Ms. Sharpe: We do not necessarily receive annual funding. So far we have received three capitalizations through the budget process, but that funding is not automatic and it is not annual.
Senator Comeau: Can Parliament ask that you appear before Parliament and would you automatically prepare and account for the monies spent, like a government department?
Ms. Sharpe: No, I would not appear before Parliament. The Minister of Natural Resources would appear before Parliament and would answer those questions.
Senator Comeau: Is that because Sustainable Development Technology Canada reports to its board of directors and not to Parliament? I want to be absolutely sure I have the structure straight.
Ms. Sharpe: Yes. I report to a board of directors, and they report to the member council, but anything that the board requires us to do and is specified for accountability is taken to Parliament through the Minister of Natural Resources.
For example, when the Minister of Natural Resources and the deputy minister appear before of the Standing Committee on Public Accounts, Set's information is supplied along with the minister's submissions for budget and their progress and results. Thus, our information is fed into many of the departmental processes that you would consider to be checks and balances.
The important distinction is that we are enabled to make funding decisions without any undue influence from Parliament, but our accountability is extremely thorough.
Senator Comeau: But you are removed from Parliament?
Ms. Sharpe: I personally am removed from Parliament. However, if you look at our website, you will find the results of our interim evaluation and all of our financial audits.
Senator Comeau: Those are not ordered by Parliament but are requested by SDTC; is that correct?
Ms. Sharpe: They are ordered by Parliament. We operate through a funding agreement, which specifies what we may or may not do in terms of our processes, approvals and the emphasis on where we place money. That funding agreement is signed by the Minister of Natural Resources, the Minister of the Environment, the chairman of our board and me. That agreement is specific and we have to report the various evaluations, performance results and everything else.
Senator Comeau: As per the agreement?
Ms. Sharpe: As per the agreement.
Senator Comeau: Are you subject to the Auditor General's audit processes?
Ms. Sharpe: Absolutely. The Office of the Auditor General does not perform our financial audits. However, I do not think that is a major issue. We use an accounting company with full reputation. The chairman of our audit and grant investment committee on our board is David Kerr, who was chairman of Falconbridge.
Senator Comeau: I thought you just said that the Office of the Auditor General does conduct your audits, but now are you saying that it does not?
Ms. Sharpe: For our financial audits, the Auditor General does not; for everything else, she does. We have an obligation, written in our funding agreement, that there will be conducted, at least every five years, a performance or value-for-money evaluation and audit. That is carried out by the Office of the Auditor General, and in fact is the audit that we have just been through for the last 18 months. You will have the report of the Office of the Auditor General's evaluation on September 26, I believe.
Senator Comeau: That is a performance audit?
Ms. Sharpe: That is a performance or value-for-money audit.
Senator Comeau: Not the financial audit?
Ms. Sharpe: It is not a financial audit. We have compliance audits, which can be accessed by the departments to ensure that we are in compliance with our funding agreement, and those may also be conducted by the Auditor General.
Senator Comeau: Would it be fair to characterize Sustainable Development Technology Canada as a kind of hybrid creature? As a result of the way you were created, you do not have access under the Access to Information Act to the protections afforded to other agencies, for example for the proprietary information you receive from SMEs in the course of your work with them.
Now you are being brought under Bill C-2, which has as its goal transparency, openness, and accountability to taxpayers for how parliamentarians spend taxpayers' dollars. Yet it had not been foreseen that hybrids would be brought into this system.
Ms. Sharpe: I think that is a very good characterization. In fact, we use that exact term ourselves. We are a hybrid organization. We have the modus operandi of a private sector organization and we have the reporting, accountability and transparency of a public organization.
Senator Comeau: However, you are somewhat shielded from us, who are asked by the taxpayers to protect their tax dollars, to see to it that their tax dollars are wisely spent, because it is their dollars at the end of the day.
Ms. Sharpe: Absolutely.
Senator Comeau: We vote the dollars, but over the years we have created hybrid organizations that somehow now are removed from our scrutiny. In our attempt to bring back some sanity to government spending, we may have to look at those hybrids to ensure that they are brought back under some kind of parliamentary scrutiny. If we are going to vote on dollars for hybrids, we may have to come up with ways to be able to know that we have some kind of control over that vote.
Ms. Sharpe: You raise a good point. The issue here, though, is that historically there was a perception that we were not accountable. Foundations have been created over a long period of time. Many genuine concerns that were raised were addressed by Treasury Board. Treasury Board inserted into our funding agreement, and the funding agreements of some other organizations, a list of requirements on reporting and accountability that they felt addressed those concerns.
Senator Comeau: There may still be a difference of opinion between some Treasury Board people and some parliamentarians. That is a subject for future discussion, of course.
Ms. Sharpe: We have tried to understand what information we would have to provide that would increase our accountability and transparency. All the information on how we operate is available on the web. Regarding your questions of whether we are using the privilege of investing taxpayers' dollars appropriately, all those oversight activities have been conducted and reported and are available to the general public, as well as to parliamentarians.
We are not sure how divulging the confidential proprietary information that we hold in confidence and as a privilege of the various SMEs with whom we work will make any difference to our accountability and transparency, but we are certain that it will do substantial harm both to the SMEs and to the intent of why we were created. That is the issue we are trying to put forward.
Senator Zimmer: I wish to welcome and thank all the witnesses for their presentations this morning.
The earlier testimony I heard was moving in one direction. However, I appreciate your testimony this morning because, as that famous saying goes, I am now having sober second thought.
Dr. Sharpe, you are popular this morning. I have three questions for you. Why can the trade secrets of the businesses that Sustainable Development Technology Canada supports not be protected by patent?
Jenifer Aitken, Legal Counsel, Sustainable Development Technology Canada: A patent is given for an invention that is new. If the invention has already been disclosed in the public domain, the patent regime does not apply. The concern that Dr. Sharpe raised in her submission is that if you have a risk of that type of information being disclosed, then there will be a risk of it getting into the public domain and a patent's not being available.
Senator Zimmer: Dr. Sharpe, you also mentioned that you are currently required to protect information confidentially. Can you expand on that?
Ms. Sharpe: Yes. Our funding agreement contains the control mechanism from the Government of Canada to Sustainable Development Technology Canada. It tells us what to do and how to do it. We have clauses stating explicitly that we must handle third party proprietary information in a confidential fashion and set up processes and mechanisms to ensure that that be done.
Since our inception, we have done just that. We have labelled things and kept them in locked cabinets. We have all sorts of requirements. Every single person, including member council representatives, directors, officers, staff, experts or anyone, else has a non-disclosure agreement. We all have confidentiality agreements. We are obliged to sign those documents before any information is shared.
Another concern we have is that if the law changes we may have a legal issue in that we will no longer be able to guarantee protection for information we had been able to protect.
Senator Zimmer: You have a pretty airtight system.
Ms. Sharpe: Yes, we do.
Senator Zimmer: Are you asking to be removed from the provisions of the Access to Information Act?
Ms. Sharpe: No, we are not asking to be removed from the provisions of the act. We fully support the general intent. We are happy to provide information on our operations. We are requesting but two exemptions that will protect us and enable us to do the job that we have been set forth to do.
Senator Zimmer: Thank you for your clarity and your candour.
Senator Joyal: Mr. Siegel, before your appearance this morning, we heard from a representative of the Information Commissioner. He gave us a recommendation in relation to Export Development Canada. At the bottom of page 9 at tab 3 of his brief he quotes clause 147 of the bill, which is the piece you say you support. It states:
The Act is amended by adding the following after section 18:
18.1(1) The head of a government institution may refuse to disclose a record requested under this Act that contains trade secrets or financial, commercial, scientific or technical information that belongs to, and has consistently been treated as confidential by...
(b) Export Development Canada...
That is where you are covered by the bill. As I understand your testimony this morning, that is what you support.
However, the commissioner makes some comments on the left-hand side where he suggests that this section be removed from the bill, on the contention that section (b) already protects you. He states that the purpose of section (b) is to mirror section 20, that in the proposed section 18.1 the information does not need to be confidential. He goes on to say that, compared to the actual section 20, financial, commercial, scientific or technical information is confidential information supplied to a government institution by a third party and is treated consistently in a confidential manner by the third party.
In other words, the commissioner contends that you are already protected by section 18 of the act because that section recognizes the confidential nature of information, while what is proposed in the bill is much broader. He contends that you are already well covered by the act, that the exclusion that is contained in clause 147 puts you in a position whereby you will be more confidential than you were before. That is his contention, to put it in simple terms. How do you respond to the commissioner's assessment of the current section 18?
Mr. Siegel: We do not agree with that assessment, senator. We believe that the commissioner is proposing that Export Development Canada be placed in a position where in order to gain an exclusion we would have to demonstrate harm. That is just not a workable proposition for an organization like EDC, which deals with commercially confidential information and which, in order to do its job, has to obtain that information and effectively provide assurances in advance to the parties who give us that information.
To achieve an exemption to disclosure, the practice has been to impose very stringent tests to claim exemptions in the first place, and the courts have demonstrated that they would examine this very closely. It is difficult to adequately demonstrate harm resulting from disclosure. As a consequence, EDC would not be able to confidently offer the assurances to clients in advance in order to be able to obtain the information. More likely, in fact, EDC's customers or clients, financial institutions with which we would be dealing, would have to provide the evidence to support the actual exemption claim. In effect, EDC would have to ask the customer for affidavit evidence, which would itself be subject to cross-examination. In fact, the third party may become a party to the proceeding itself. Frankly, foreign clients do not know Canadian laws and quite simply will not put themselves in the position of potentially being subject to a Canadian process that governs them. We do not expect that they would allow their customer, a Canadian exporter, to indirectly put them in that process.
The bill as it currently stands provides a class exemption for this type of information, which then makes it possible for EDC to more effectively predict what would and would not be discloseable. There is still an onus on EDC to abide by the spirit of the bill itself, but it allows us to be more definitive with our customers as to what information would be treated confidentiality as provided to EDC.
Proposed new section 18.1, on page 119 of the bill, taken independently of section 24, does not work well. In effect, section 24 provides us with the ability to continue to maintain the confidentiality of commercial information that we acquire. Proposed new section 18.1 says that if we work with that information and create internal records based on it, it also would be treated as commercially confidential. A foreign third party would not accept that they are providing information that they believe to be commercially confidential pursuant to section 24, when inadvertently under proposed new section 18.1 EDC has to demonstrate harm in order to continue to protect the confidentiality of that information.
Senator Joyal: Do I understand correctly that you do not believe that the present legislation covers you sufficiently to maintain your regular operation?
Mr. Siegel: We believe that Bill C-2, as currently drafted, would provide sufficient protection to EDC. Proposed new section 18.1 deals with our ability to consistently treat information as confidential if it has been treated as confidential in the past.
Senator Joyal: The bill gives you additional coverage, but the Information Commissioner contends that you are already covered to a point by section 18 of the act. You can already refuse information on the basis that it is confidential under section 18 of the act. As I understand it, the act gives you additional protection. In other words, it widens your capacity to refuse to disclose. I understand the extension of proposed new section 18.1(1) in the way that the commissioner understands, unless I misunderstand you.
Mr. Siegel: EDC is currently not subject to the Access to Information Act. We are being brought into the access to information regime by way of this bill. Proposed new section 18.1, as currently drafted, provides clarity on what information is accessible — that is, general administrative information on EDC will now be clearly discloseable. We would now be able to confidently treat as commercially confidential financial, technical and other scientific information, and we would be confident as to on what basis we could treat it, which is a class exemption that provides clarity as to what assurances we can provide in respect to it.
Senator Joyal: Mr. Cantor, in his report, the commissioner contends also that the exemption you would get in the bill is too broad. He says the exemption is overboard, that it is a mandatory exemption with no injury test and no time limit.
I understand that you would refuse disclosure even after 20 years. Why are you so adamant on an exemption even after 20 years? After 20 years, cabinet documents become accessible as do documents from National Archives. Even the most secret documents of the land, which are cabinet documents, become available after a certain period of time. I can understand your problem on the basis of day-to-day operations and the sensitivity of the world in which you operate, but it seems to me that to shield everything forever hurts the accountability principle.
Mr. Cantor: I appreciate the difficulty of the issue, senator. The point is twofold. First, it is probable that many of the transactions into which we enter will still be in place 20 or 30 years in the future. We are looking at one today in which the previous owner held the property for 60 years, and there is no reason why that might not be the case with us as well. It is particularly the case for us because there is such a long span of time before our assets equal our liabilities. One of our competitive advantages in the marketplace is in fact to do incredibly long deals that cannot be done by others who do not have that access. The 20 years is really arbitrary from our perspective, and we expect many of the things for which we are seeking confidentiality to still be in that place at that time.
The second reason is more subtle, in that in each of these circumstances we are competing for the best opportunities to invest. Our investor will respond by saying, ``Perhaps you have agreed to 20 years today, but what confidence can we have that it will not be changed to 10 years next year or five years the year after?'' We could cite the other examples of the application of 20 years within the context of the Canadian legislative system and the response would be, ``That is nice, but why would we take the risk?''
Senator Joyal: Ms. Sharpe, at the bottom of page 9 of your brief you claim that you do not know the reasons for the determination of the group of agencies that would be protected and those that would not. If I were the person drafting the list in Treasury Board of those who are and those who are not included, I would probably have gone through a kind of administrative criteria, for example, agencies like yours that have Treasury Board agreements and those who do not have them; those that have obligations and those that do not; what kinds of obligations they have under their constituting act, and so on.
If I understand correctly, you were not called upon to make any comments because you received prior notice that you were in a classification group that would have opened you to access to information even though you deal with sensitive information the same way EDC and BDC claim they do.
Can you inform us on which basis you draw your conclusions that it has not been done on the basis of objective criteria or that the balance of evaluation has triggered you in another class than EDC and BDC?
Ms. Sharpe: We believe that the premise for including SDTC was that foundations created through an act of Parliament would be grouped together and moved under the act. That is all we have heard. When we looked at who was in and who was out, the Jules and Paul-Émile Léger Foundation was created under an act of Parliament but it was not included under Bill C-2. That is counter to the possible logic. It is inconsistent. Likewise, the Pierre Elliott Trudeau Foundation was created through the Canada Corporations Act and it is included in the ATI. The other thought we had was maybe it is the amount of money, the larger organizations, and perhaps we should include that. However, Genome Canada, which has more taxpayer money than us, was not included.
We were not able to obtain from our inquiries a logical rationale for our inclusion; neither were we able to obtain an explanation of what elements would contribute to increased accountability. We think that, rather than people having had the opportunity to talk to SDTC and better understand our business model — that being closer to BDC and EDC — it was just a matter of them deciding to get more foundations in and, as an unintended consequence, we were brought in with the other foundations. I was trying to explain that we are quite different to many of the other foundations and, because we were newer, not as well known. I do not believe it was deliberate decision other than foundations in general. It is very heterogeneous group of foundations, and that is my point.
Senator Joyal: Even though some foundations were dropped?
Ms. Sharpe: Yes. We just do not know why that is.
Senator Day: I appreciate Mr. Siegel going through the proposed new section 18.1 and section 24 dances for me because I was having some difficulty with this. As I understand matters that you have just explained, Export Development Canada was not under the access to information regime previously. It is now being brought in — clause 172, at page 127 of the bill, brings in the Export Development Act as part of Schedule II. In Schedule II, we must take a look at section 24 of the Export Development Act. In Schedule II, there are certain provisions that can be provided for all organizations and entities that are in Schedule II. Certain provisions can be made for a committee that meets from time to time. I do not have copies of all those provisions, but if this bill is passed you will be in Schedule II. Are you content with whatever the protections are under those provisions?
Mr. Siegel: As the bill is currently drafted, yes.
Senator Day: In addition, when you say ``as currently drafted,'' you would like the advantages of proposed new section 18.1, which appears at page 119 of the bill. Clause 147 of Bill C-2 brings in proposed new section 18.1, which, under the head ``Access to Information Act,'' states that ``the head of a government institution may.'' It is not mandatory, but the word used is ``may.'' There are some ``shalls'' in here, too, but this is permissive. The proposed new section reads as follows:
18.1(1) The head of a government institution may refuse to disclose a record requested under this Act that contains trade secrets or financial, commercial, scientific or technical information that belongs to, and has consistently been treated as confidential by...
The organizations included in that proposed new section are the Canada Post Corporation, Export Development Canada, the Public Sector Pension Investment Board and VIA Rail, but not the entity that Ms. Sharpe represents. That is one of the items we wish to talk about.
Ms. Sharpe, there are things you were looking for that you believe would be helpful for the Canada Foundation for Sustainable Development Technology. At page 119, if we amended clause 147 of Bill C-2 to include your organization in proposed new section 18.1, so that this section would give you protection for information that you treat as confidential — and, you were talking about your methodology and the way you assess things — and if, at page 126 and clause 166, rather than seeing your name added to Schedule 1, at page 127, under clause 172, you were added under Schedule II, would that achieve what you are seeking?
Ms. Aitken: The way we put forward the amendment would achieve the same thing you have just gone through for EDC. That is the same type of amendment. For them, in addition to Schedule II, there is a specific amendment to their constituting statute and Schedule II links to that. In the absence of that specific amendment, just adding us to Schedule II will not do anything. We have provided the words as a proposed new section 20.3 — because there are some amendments to proposed new section 20 — at clause 148 of the bill. Our proposal is that it be a new section 20.3 instead of an addition to Schedule II, but the effect is the same.
The Chairman: In their brief, the witnesses have some draft amendments to that effect.
Senator Day: Yes, I have that, but I am trying to make this as simple as possible, including fewer amendments.
Senator Stratton: I quite agree.
Senator Day: There are provisions under Schedule II. Section 24 of the act provides that there can be provisions made — at 24(2). Is it under those provisions that we are tying in the special extra privileges for Export Development Canada? Scheduled II just has a list.
Ms. Aitken: The list has specific section numbers of other statutes. In the current bill, at clause 172 there is a reference to the proposed new section of the Export Development Act.
Senator Day: A corresponding reference to 24.3?
Ms. Aitken: Yes. That 24.3 is a proposed new section created in clause 179 of the accountability bill.
Senator Day: We could put Sustainable Development Technology Canada into Schedule II, and then we must do something else, either through another clause of this bill or through 24, and tie in some other provision similar to what is done with Export Development Canada.
Ms. Aitken: What would be necessary would an amendment to the Canada Foundation for Sustainable Development Technology Act, and that is a statute that is not before you because the accountability bill amends the Access to Information Act, not the Canada Foundation for Sustainable Development Technology Act. Therefore, we are proposing an amendment to the Access to Information Act without bringing in other statutes. After carefully considering this, we thought that was more complicated.
Senator Day: That is very clear to me. You would have had to have worked at Borden Ladner Gervais to understand all of this.
Ms. Sharpe: You are right on 147; that is exactly what we are seeking. However, we feel the simplest route is to amend clause 148.
Senator Day: Another simple route would be not to have you under the Access to Information Act at all and let you do what you have been doing.
Ms. Sharpe: I do not think that would send the right messages, and we are happy to be under the broad acceptance of the act.
Senator Day: Is there anything in Bill C-2 that gives the Auditor General more power? We have not spoken to her yet, but I should like to know if, in your opinion, there is anything that gives the Auditor General more power or oversight over your organizations that we should be aware of that you are not happy with.
Mr. McArdle: We have not raised it specifically because our hope and expectation is that the regulation that would follow would take care of this. The Auditor General already audits EDC and performs special examinations, so there are no changes in that respect.
There is a section that allows the Auditor General to follow the money. There is a concern that, if the regulations are drafted in a way that we would see as incorrect, it could give the Auditor General the right to trace through to who we support, which would fly in the face of section 24, because that would be confidential information. We anticipate that the regulation could be drafted such that that was not the intention. The Auditor General would never want to go there, but that is the one concern, if the regulations were drafted in such a way as to give extensive powers beyond the scope of anyone's intent.
Mr. Cantor: Mr. McArdle's comments cover any concerns that we would have about that as well.
Ms. Sharpe: We also had a legal opinion on that and we are concerned that there is a possibility that the OAG might be able to extend her examinations to the SMEs that receive our funding, which would be of concern.
Senator Day: We will raise that matter with the Auditor General.
Finally, there are provisions under Bill C-2 with respect to corporate governance, and I think one of you touched on that — clause 254, towards the back here somewhere, as well as clause 295. I will not go specifically to those if there are no issues and you are happy with the changes. One is creating a separate audit committee, with the typical audit rules, and the other is extending terms for directors. If you are happy, we are happy with that. I see nods of happiness.
The Chairman: Thank you. That concludes the questions for this particular panel. Thank you very much for attending here and for clarifying issues that senators had with your presentations with the bill and your relationship to the provisions of Bill C-2.
The committee adjourned.