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Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs

Issue 12 - Evidence, October 18, 2006


OTTAWA, Wednesday, October 18, 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 4:05 p.m. to give consideration to the bill.

Senator Donald H. Oliver (Chairman) in the chair.

[English]

The Chairman: Honourable senators, I would like to call this meeting of the Standing Senate Committee on Legal and Constitutional Affairs to order.

This is our twenty-sixth meeting in relation to our study of 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 as the federal accountability bill.

As senators, our witnesses and members of the public both here and across Canada on television know, this bill reflects a central portion of the new government's agenda. It is one of the most significant pieces of proposed legislation brought before Parliament in recent years. The committee is giving the bill the extensive, careful and detailed study that it deserves.

During more than 88 hours of meetings to date, we have heard from in excess of 138 witnesses. These witnesses have discussed topics ranging from accountability, ethics and conflict of interest, parliamentary privilege, political financing, the parliamentary budget office, access to information, privacy, whistle-blowing, audit powers, procurement and lobbying.

For this meeting, we will be focusing on the question of lobbying and political financing.

Today, I am pleased to welcome Ms. Elaine Flis, President of Public Affairs Association of Canada. The association's principal objective is to help public affairs professionals succeed in their work by providing them with forums for professional development, the exchange of new ideas and networking. Ms. Flis is presently a senior consultant with Enterprise Canada.

Joining her today is Mr. Jayson Myers, Senior Vice-President and Chief Economist for the Canadian Manufacturers and Exporters. The CME, as it is called, has a mandate that is to promote the competitiveness of Canadian manufacturers and enable the success of Canadian goods and services exporters in markets around the world. Welcome.

[Translation]

On behalf of the committee, I would like to thank you for your presence. You can go ahead now, and after your presentation we will open the floor for a questions and discussion period which will, no doubt, be quite useful to all the committee members.

[English]

Please proceed, Ms. Flis.

Elaine Flis, President, Public Affairs Association of Canada: Mr. Chairman, honourable senators, as you may know, I also work in support of the Liberal Party. However, I speak today only on behalf of the public affairs industry.

PAAC is a non-partisan organization and I am here today in a non-partisan capacity. PAAC speaks for a much wider spectrum of professionals than just those who do government relations or lobbying. We represent people in pursuits as diverse as public relations, corporate social responsibility, regulatory compliance and other aspects of good corporate or organizational citizenship.

Yes, some of us are lobbyists. Lobbying is an important part of public dialogue in a democracy. In this context, the proposed legislation imposing new rules on lobbying could detrimentally affect the general public good, if it proceeds without change. Aspects of the bill are counter to the interests of a healthy dialogue between government and the governed.

We in public affairs, with a few rare exceptions, are ethical people. It pains us when some politicians and commentators focus on the misbehaviour of a very few lobbyists, much as I know it pains politicians when people focus on the misbehaviour of a few of them.

Since this committee exists to look at these matters beyond shallow rhetoric, I wish to put our position in context and offer constructive suggestions for legislation.

Public affairs professionals, including lobbyists, work for small enterprises as well as large ones. They work for non- governmental organizations, charities and advocacy groups. Our clients include groups that speak for ordinary Canadians.

Democracy is about giving voice to the concerns of all citizens. Yet government can be so complex as to frustrate attempts by many of these groups to be heard. Professionals who help corporations, advocacy groups, not-for-profits and NGOs speak to government are a necessary part of the mechanism of democracy.

We guide people through the complexities of public policy-making. We help them make their case. We help government hear those important points of view.

It is clear this government intends to focus on our industry for further regulation, and that is their right. They campaigned on it in the last federal election. Yet we believe certain aspects of the proposed legislation have not been fully considered and could act against accountability and ethics.

Certainly, there have been people in our industry who have drawn scorn because of their relationships and how they conduct business. They were rooted out and their tactics exposed. That sort of checks-and-balances system holds many industries to account.

We in public affairs have taken our own steps to discourage unethical practices, through the introduction of a code of behaviour in our Statement of Ethical Principles. Our industry is as ethical as many — more so than most because the focus on our activities is so intense — yet it faces particular economic challenges through onerous regulations or overzealous application of rules. We believe if the regulation contemplated by this proposed act comes into effect, those most detrimentally affected will be NGOs, charities and smaller interests.

The reason for this is that larger corporations are already used to rules and red tape. Smaller interests are another matter. Onerous rules — and the costs associated with them that larger interests can afford — may not be affordable to the smaller players. If new rules are to come, they should deal with the transgressors rather than simply add a new burden to all.

With that as context, we offer suggestions so that Bill C-2 can become a framework to selectively punish the bad apples rather than become a straitjacket for those who advocate for legitimate causes.

The bill should spell out rules that apply equally to corporations, NGOs, charities and unions but that will not have the effect of curtailing lobbying on behalf of the latter organizations, which are typically not so well funded as big corporations. Requirements that big corporations can afford and small organizations cannot unfairly punishes the smaller.

Grass roots advocacy is the communication between individuals and their elected officials. Volunteer advocates for not-for-profit organizations, such as those focused on medical research for specific diseases, could be driven away from the socially useful work fearing that these regulations will make lawbreakers of them.

Consider the additional filing requirements for people lobbying government. Every month they would have to file the names of senior public officials with whom they met, the date of the communication or meeting and many other particulars. It is a considerable additional burden.

The proposed act should close loopholes that allow lawyers to exempt their activities under the guise of solicitor- client privilege. Such privilege is too important to allow it to be used as a cloak for lobbying activity involving lawyers and government officials. Certain activities are legal and should be protected by solicitor-client privilege, but experience with lobbyist registration across Canada is that many lawyers hide behind their privilege to engage in lobbying without regulation. This is something that should be addressed.

We have concerns about the bill's prohibition of contingency fees. Contingency fees are considered a valid approach in almost all other areas of our economy, where they are called "pay for performance." We agree that contingency fees should not be permitted on certain projects where public money may flow, such as technology partnership grants. Elsewhere, it amounts to pay for performance and that ought not to be discouraged.

Some have suggested a further tightening of contingency or success fees to include in-house lobbyists. Not only would this degrade the incentive to perform, but we believe it would be an inappropriate intrusion into the contract between employer and employee. Whether such a provision would be enforceable or even legal is a question that may yet arise. What we ask the committee to consider is whether it is right. We believe, rather than impose a blanket prohibition on performance-based fees, that it makes better sense to impose rules on specific activities, such as grant applications, so that the spending of public money is not directly tied to a contingency fee. This is the currently the case and we believe it to be effective.

Where properly focused, the proposed legislation should be tough. We think that contravention of the Lobbyists Code of Conduct should be an offence as should obstructing the commissioner of lobbying. It should be an offence to contravene a prohibition imposed by the commissioner. Ethical lobbyists can live with such rules.

The Public Affairs Association of Canada supports the spirit of the proposed accountability act. We understand it addresses the same spirit of ethics and accountability that we have long supported in our industry and written into our own ethical code. We would like to see it fine-tuned so as to hit the right targets, and not cause collateral damage.

We appreciate that a very few lobbyists have done unethical things, but the majority of ethical lobbyists help citizens and interest groups make their case in a democratic fashion. Let us not pinch off such necessary government relations in our haste to get at the bad actors in the business.

Jayson Myers, Senior Vice-President and Chief Economist, Canadian Manufacturers and Exporters: Thank you for the opportunity to present our perspectives and some of our concerns on behalf of Canadian manufacturers with respect to the proposed federal accountability act.

I am registered as an in-house lobbyist under the Lobbyists Registration Act. My job is to provide the best advice I possibly can to policy-makers at all levels of the federal government as well as to provincial governments across Canada, based on the views of our member companies, as well as in my considered judgment and my expertise in the fields of business and industrial economics, technological change and international business. I view my role as an important one in the development of good public policy in Canada.

My effectiveness in carrying out my responsibilities depends on my integrity and that of the association for which I work. My colleagues and I are committed to meeting the highest ethical standards. Like any well-managed organization, CME has clearly defined rules and procedures in place regarding professional conduct and potential conflicts of interest. CME is in full compliance with the current compliance under the Lobbyists Registration Act. We have procedures in place to ensure that accurate information is provided and updated on a regular basis. We meet annually with officials of the Office of the Registrar of Lobbyists to review our compliance procedures.

Today, I speak on behalf of CME as a lobbying organization as well as on behalf of our members. Canadian Manufacturers and Exporters is Canada's largest trade and industry association. It is Canada's oldest trade association. Our 3,000 members come from across all sectors of manufacturing services. Close to 90 per cent of our members are small and mid-size enterprises. We estimate that they account for about 70 per cent of Canada's total manufacturing output and about 90 per cent of our total exports. In turn, these are sectors that contribute 24 per cent directly to Canada's economy and employ over 2.4 million Canadians.

CME and our member companies strongly endorse the objectives of the proposed federal accountability act, namely: to minimize possible conflicts of interests between public duties and private interests of public office holders; encourage competent persons to seek and accept public office; facilitate interchange between private and public sectors; enhance transparency with respect to activities of paid lobbyists; and, strengthen compliance with and enforcement of the Lobbyists Registration Act.

We would, however, recommend that three further objectives be added and respected in Bill C-2 and should be taken into consideration of the drafting of regulations pursuant to this proposed act.

First is the need to ensure that the views of Canadians and the collective interests of organizations are well represented to senior public officials. This is a critical requirement, as Ms. Flis has explained, of any well-functioning democracy and is especially important in a pluralistic democracy such as Canada's.

Second is the need to ensure that disclosure requirements under the proposed act respect both the legislative privacy rights of Canadians and the protection of commercially sensitive and confidential information. CME is on record in expressing the importance of exempting the disclosure by public officials of commercially sensitive information. We believe that the current provisions of the proposed act, now before this house, provide adequate safeguards in this respect. For instance, the right of Crown corporations, like Canada Post and Export Development Canada, to refuse the disclosure of trade secrets or financial, commercial or technical information that has consistently been treated as confidential by those organizations is important for their clients and for the competitiveness of the services they provide.

Third is the need to ensure that the regulatory requirements of the bill make it simple and inexpensive for both public office-holders and lobbyists to understand and comply. Regulations must be clear, must provide certainty with respect to their interpretation, and they must ensure the speedy resolution of interpretive disagreements and requirements.

Our concerns are primarily with respect to the nature of the regulations that will be developed in accordance with the proposed act. First is the definition of senior public office-holder. It is easy to identify ministers and deputies by their title, but it is not so simple to identify senior public office holders in government departments and agencies who do not carry those titles but who have equivalent status. It is difficult for anyone outside of the country to keep current with the position or status of civil servants. Sufficient clarity must be provided by government that will enable the easy identification of persons deemed to be senior public office-holders under the proposed act and amendments to the Lobbyists Registration Act.

Second is the frequency and level of detail that will be required with respect to communications between lobbyists and senior public office-holders. The amendments to the Lobbyists Registration Act do create a significant administrative burden on the part of both lobbyists and senior public office-holders. We are concerned that detailed information requirements, as to the nature and subject of communications, will create an overly onerous, complicated and costly process for both the regulated parties as well as for those officials overseeing compliance. In that case, many businesses are likely to opt for third parties to represent their specific interests to public officials, and that response would only serve to reduce transparency while giving more business to consultant lobbyists around town.

Outside organizations will be more reluctant to express their views to senior public office-holders. We are particularly concerned that detailed disclosure requirements could result in the publication of commercially sensitive information. We are also concerned that detailed disclosure requirements could chill communication and consultation between senior public office-holders and outside organizations. Such ongoing communication is vital to the development of sound public policies and programs.

Third is the definition of prearranged meetings and calls. At what point does casual conversation become lobbying activity?

Fourth is the need for greater clarity with respect to the obligations of participants in private-public interchanges or of private-sector individuals asked to become members of boards or advisory groups or who have direct advisory role to senior public officials. All participants have a strong interest in ensuring that public interest is protected by ensuring that any conflicts of interest are avoided. From the perspective of business, it is important that such participation meets the highest possible ethical standards.

With respect to private-public interchange, it is necessary for participants to have a clear understanding of what limitations Bill C-2 might place on the activities of individuals who take part and of their employers both while the exchange takes place and after employees return to their original places of work. For example, would the fact of a government employee working on an exchange with a private-sector company prevent that company from doing business with or receiving any services from the department where the official was previously employed when that company would otherwise have been eligible to do so? Similarly, would a private-sector employee who works on exchange with a government department or that employee's company be limited to their ability to deal with a department or other agencies once the assignment has ended? It would be important to ensure that companies and individuals taking part in any exchange program neither gain undue advantages nor suffer any penalties as a result.

Clearly, there is a need for extensive consultations in drafting the regulations that will support the proposed legislation. Respect for the democratic rights of Canadians and the development of good public policy both demand that a balance be struck between measures that enhance transparency and accountability on the one hand and provisions that safeguard private and commercially sensitive information and that allow for the effect of consultation and representation of private-sector interests on the other hand.

We believe the federal accountability bill provides a basis for significant improvement in the quality of the government's regulating function. Accountability is the key to better regulation ensuring that public officials perform their duties while taking into account the regulatory policy and applying it rigorously to every case. The federal accountability bill makes deputy heads accountable in their own right to all parliamentary committees for ensuring compliance with government policies, including the government's regulatory policy.

Canadian Manufacturers and Exporters recommends that the regulatory policy be issued as a Treasury Board directive. This would mean that the bill would also require deputy heads to register in writing any disagreement with ministers over the application of the regulatory policy with the Secretary of the Treasury Board. It would require consideration and decision by Treasury Board on the issue and a record of that decision would be deposited with the Auditor General.

We believe that such a measure, coupled with the provisions of the federal accountability bill, would promote greater compliance by regulating departments and agencies with government regulating policy and would create more efficient and effectively enforced regulations for all Canadians.

The Chairman: Ms. Flis, you said that you have concerns about the federal accountability bill's prohibition against contingency fees. You also talked about pay for performance and success fees, et cetera. Years ago, when Senator Cowan and I began practising law in Nova Scotia, it was not considered proper or professional for lawyers to charge a contingency fee, so the law society did not permit it initially. That prohibition was in place because it was not considered professional for a professional to be charging a fee and then adding a big bonus to it depending on one's success. I have been thinking about that old prohibition, so I cannot help but wonder: If lobbyists can be paid $500 to $1,000 per hour for doing their job, why should they require a balloon contingency fee, dependent upon their success? Why not leave it to the clients to determine that figure, based on their opinion of the lobbyists' performance? Why should contingency fees not be prohibited?

Ms. Flis: It goes to the question of choice. For example, in the case of an in-house consultant, that decision should be made internally by the employer and the employee internally. That is a performance-based system. Sales representatives receive commission based on their performance. Any such bonuses or fees for an in-house consultant should be determined by the employer and employee.

To your point regarding consultants and their clients, we do not think there should be a restriction. Again, it is a question of choice for the clients to decide whether they want to provide a bonus or incentive. That should be their decision.

The Chairman: Certainly, I agree with that. Do you consider such fees professional?

Ms. Flis: Yes, performance-based systems are professional.

Senator Day: The first area I wish to explore is the five-year cooling-off period. Can you comment on whether it is necessary to increase the cooling-off period to five years to achieve the separation? With that five-year wait, are we likely to lose some good talent in government because we have dissuaded individuals from working in government and in ministers' offices?

Ms. Flis: The five-year cooling-off period would be excellent for the industry as it stands. However, it is a bit extensive. As you know, government is highly complex and can be a maze for some people to navigate. A specific understanding is required to enable an individual to counsel someone on the navigation process through government, for example how to meet with a member of Parliament or how to develop a strategy and approach for policy. A five- year cooling-off period could dissuade individuals from leaving an in-house or outside consulting position and moving into government, where they have a specific expertise.

We are seeing that a bit now with the current government in the sense that there was discussion early on that it was difficult for them to find qualified senior staff that could understand government and manage a bureaucracy. Increasing the cooling-off period to five years would be a disincentive to bringing good people into government.

Senator Day: Would you be content to leave it as is or should it be increased?

Ms. Flis: We believe it should be status quo.

Mr. Myers: We would be happy with the status quo. The safeguards around conflict of interest would limit the activities of people who have been in government and then move into consulting positions where they work with people with whom they had previous dealings in government and deal with specific issues that speak to their expertise in government.

There are two issues, and Ms. Flis has spoken to both. First, some people in our organization have made a decision to not pursue a career in government because of concerns around potential limitations on future employment. This is not necessarily because of Bill C-2 but some of the provisions in it would make that a bit more onerous. I am sure it would mean a loss of talent and expertise that is important in government. This interchange between the private sector, elected officials and senior officials of the public service is extremely important for good policy development in Canada. There would be that loss in government as well as a loss in the ability of these people to come into associations like ours and to be able to help us develop good public policy.

Senator Milne: Ms. Flis and Mr. Myers, you have spoken about the cross-fertilization of ideas between the public and private sector. This five-year cooling-off period gives me great concern.

I had a cousin who worked with Bell Canada, setting up its original microwave system. I am not giving away trade secrets, because this was in the 1950s. He went from Bell Canada. He was on loan to the Department of National Defence to help the Canadian military set up the same kind of relay system. Would that be allowed under this proposed legislation?

Mr. Myers: I am not sure, and these are some of the issues that must be spelled out in the regulations. That is why better direction should be provided that recognizes some of these issues and provides a better balance.

Senator Milne: The government would be able to borrow expertise from the private sector over a certain project that needed to be done in the national interest and then that person could immediately go back to the private sector and not be stuck for five years before returning to work.

Mr. Myers: It also depends on the level of position that they hold in the government and the types of decisions that they have been asked to make here.

Ms. Flis: It also speaks to what Mr. Myers had mentioned in terms of the definition around a senior public office- holder. There are some areas that do require clarification. It is not necessarily a specific position within an office and not always is it in a political office, let us say a chief of staff or a senior policy adviser. There needs to be clarity around that issue.

Mr. Myers: I would like to add one more point, not specifically on the issue of the five-year cooling-off period but on the issue of some of the disclosure requirements that are required on the part of senior public servants or people who have been appointed by ministers or by the Prime Minister to serve on advisory boards. There are a number of Canadians who are appointed every year to serve in advisory positions, and one of the questions that we have is about the provisions of this act and the disclosure requirements, the need to provide monthly information about the on-going communications. That would certainly make it very difficult for many Canadians, not only in business but also from other non-governmental organizations to play that key role in a senior advisory role in government.

Senator Day: I heard Mr. Myers' point with respect to the definition of "senior public office-holder" and Ms. Flis made mention of that as well. Is there anything that you can help us out with here? I agree with you that it is a cumbersome definition when it talks about section 128 of the Public Service Employment Act for part of the definition of a senior public office-holder. That is at page 66 of Bill C-2. It then goes on to section 2 of the Financial Administration Act. You are running all over the place. Finally, if someone is missed, there is a possibility of regulations under section 12(c.I). It would be almost impossible for someone to determine whether he or she might possibly fall within that definition.

Do you have any proposals as to how we can tighten that up?

Mr. Myers: This would be a matter for regulation, and my only proposal is that the government keep a registry of who is considered a senior public office-holder and that identification is made prior to communication.

My concern, though, is that people outside of government may be trying to communicate with people in government, not knowing that they are senior public office-holders and not, therefore, registering the communication and then be in non-compliance with the act. It is a problem, but the only way that we can manage this is for the government itself and for senior public office-holders themselves to identify their status. No one will read the act and no one will be able to identify who holds a senior position, given all of the gradations of the public service.

Ms. Flis: I suggest that there needs to be consistency in the definition, and it needs to be clear whether it is a position within a minister's office or whether it is all staff, it needs to be consistent.

Senator Day: Our job here is to try to improve the legislation where we can. This is in the act as it now appears in a very broad sense, leaving, as I said, a great deal to regulation, but also including references to two other acts. I agree with you it should be clear, but we are not sure how it should be made clearer.

On your way back home, if you have any thoughts about the definition, it certainly would be helpful if you could send those along to the clerk.

Mr. Myers: If it is not clear to you and to senior people in government, then it will be very difficult for anyone outside of government to understand.

Senator Day: Mr. Myers, are there any companies in your organization that use contingency fees? At the present time a contingency fee is permissible, but as I understand it, if there is a provision for a contingency fee in the contract, it must be stipulated so that the current registrar of lobbyists would know about that. That is open, transparent and everyone could find out that this lobbyist is working for this organization to try to get them something through the government, but it is all above-board. Now it is being banned outright and it is going in the opposite direction to my friend Senator Oliver's point about lawyers. Lawyers were never allowed contingency fees, but now they do in most jurisdictions, as long as it is open and transparent.

Is it now a widespread practice and will it therefore be a major impact, Mr. Myers, in relation to your members?

Mr. Myers: In our organization, our rules of conduct do not allow contingency fees. None of our members pay contingency fees for what we do on their behalf. That speaks to one of the points that Ms. Flis has made about the difference, perhaps, between organizations that lobby on behalf of the members, like associations, like other interest groups and what are considered "in-house lobbyists" and other consultants who may be paid contingency fees for the performance that they achieve.

Ms. Flis: I cannot speak, unfortunately, for specific companies that belong to the association. I would not suggest that it is widespread and that it is common practice, although within some of our members and private companies it is an employee-employer decision, not so much a consultancy, like the outside consultants. It is all about openness and transparency, which, I believe, is the point that you make. If it is open and transparent and it is private funds, then we feel that that should be allowed.

Senator Day: What was the problem that is trying to be addressed by this and what impact will it have? You have answered the first part of that question and you are unaware of any problems. You would have told me about those, presumably.

Ms. Flis: I am not aware of any.

Mr. Myers: In project development, the procurement process and contracting options, many companies have contingency fees built in as part of their performance compensation. Again, it should be open and transparent. Many businesses work that way.

Senator Day: You point out that the difficulty with the contract lobbyists who cannot have contingency fees whereas an in-house lobbyist who meets with success will receive recognition for the work. In effect, that person is receiving a contingency fee.

Mr. Myers: For in-house lobbyists it is likely not a contingency fee, which is more for the consultant lobbyists. Whether it is a contingency fee or a bonus for achieving success might simply be a matter of semantics.

Senator Day: One is addressed and one is not addressed

Mr. Myers: Right.

Ms. Flis: The key differentiator is public funds versus private funds.

Senator Day: Does it surprise you that there is no definition of "lobbyist" in the Lobbyists Registration Act?

Mr. Myers: Yes, it surprises me. You can call me a lobbyist and I am proud of my work because I play an important role in the development of good public policy in Canada. There are specific activities in which people represent organizations, especially if they are looking for contracts or special advantages for their clients. If we are to provide a specific definition of the kinds of activities under the umbrella of lobbying, we should look at that specifically.

Ms. Flis: As someone whose background is primarily in the not-for-profit sector dealing with volunteers and grass- roots advocates, I deem that a key point. I read the proposed accountability legislation as someone who used to be a lobbyist for the Juvenile Diabetes Association when my volunteers across the country met with members of parliament or senators. Would they be considered lobbyists?

Senator Day: Could each of the witnesses prepare and send to the committee a definition of "lobbyist"? Lobbyist is referred to in the current act in the preamble but not in text of the document, which I find quite strange.

Senator Stratton: A volunteer for not-for-profit organizations is not considered a lobbyist because the work is voluntary. A person who is paid for such work is considered a lobbyist. I am curious to know how you would define "lobbyist."

The Chairman: The witnesses will send that by mail, senator.

Senator Cowan: Following up on the same point, it is my understanding that unless you are paid to do something, you are not a lobbyist. If you are volunteering your time for an organization or a cause, you are not required to report and, therefore, you are not covered by this definition.

Ms. Flis: Certainly, we will provide something substantive to the committee; however, some volunteers receive an honorarium or a per diem. The definition needs clarification.

Senator Cowan: Senator Stratton is correct in saying that when someone works purely on a volunteer basis, there is no requirement to report.

Ms. Flis: It is not defined so it is not clear.

Senator Cowan: If you have concerns about that, we would like to hear about it, because I do not believe the intent is to cover such a situation.

The other part on the contingency fee is in respect of the small organization. Senator Oliver talked about people paying a lobbyist $500 per hour. He was talking about large corporations and organizations that have a budget for that kind of expenditure. It seems to me that many people will require the services of lobbyists in the best sense but do not have the money to pay or to promise to pay those rates up front. It is arguably legitimate that they would pay based upon success. As long as that is disclosed, then what is the problem?

Maybe you have to carve out an exception for receipt of grants but it seems entirely reasonable to allow a kind of contingency arrangement, in particular for smaller organizations that simply do not have the money to agree to pay large sums of money up front without some assurance that they will receive something in return for their expenditure.

Mr. Myers: I would agree with adequate transparency.

Senator Cowan: Perhaps we would be better served by insisting on readily accessible disclosure rather than on prohibitions, which often go too far and cover too much and create all kinds of unforeseen circumstances. Disclosure will get to most of the problems.

Ms. Flis: I would be surprised if you would find someone in the profession of government relations or public affairs that would be against disclosure.

Mr. Myers: One of my concerns is that we are paid fees by our members to undertake a specific public policy initiative for their benefit. For example, an analysis that I am preparing is on how to speed up drug approvals. This is in the interest of a number of pharmaceutical companies but also in the interest of good public policy in Canada. I am paid a fee for undertaking that project and the fee is not considered a contingency fee, but the fee will be significantly higher if we are able to achieve an outcome at the end of the day.

I am a little concerned about the definition of "contingency fee." Would that in any way restrict the kind of membership fees that an association like CME would charge our members for actually achieving good public policy outcomes?

Senator Cowan: I agree and I do not see what harm is done to the public good by permitting exactly that kind of arrangement. Certainly, the performance of in-house lobbyists will be reviewed on an annual basis. If they have done a good job at professional lobbying, they can legitimately expect a bonus. Whether it is called a bonus or a contingency fee, I do not see anything wrong with it.

Senator Baker: My one question will go back to the original question asked by Senator Oliver at the beginning of the meeting and the careful manner in which he put it. It has been shown that it is perhaps a key question.

You said that you have concerns about the prohibition of contingency fees. The chair then asked you an interesting question because in recent years, federal legislation has changed substantively. For example, the phrase "shall not be assigned" has entered various acts. I will give you an example. As Senator Cowan and Senator Day have pointed out, it is common practice to have contingency fees or success fees or agreements. If lawyers represent a client who cannot afford to pay up front, as the example used, and success is attained at the end of the day, then there can be a contingency fee of between 15 per cent and 25 per cent or, in some particularly complicated injury cases, it could be higher. However, what has crept in are the words "cannot be assigned," and they have crept into acts, for example, like the Canada Pension Act, under which there are ongoing appeals; I give you the example of the Canada pension disability. Therefore, it is against the law now for the federal bureaucracy to recognize that a lawyer has signed a contingency agreement with a claimant who has been battling for years, and it has gone through the Court of Appeal. In the act it says, "cannot be assigned," and the courts have interpreted that to mean "no contingency fee."

The chair asked you this key question: What is wrong with it, if, at the end of the day, you are successful and then the person can afford to pay you what would have been in the contingency agreement or a deal that you have made privately?

Granted, the lawyer would have to trust the person he or she is representing. In order to get paid, you would have to have that trust, and I imagine many lawyers today refuse to take cases because of this change in the law, namely, "cannot be assigned." I am using Canada pension as an example.

What do you think of the chair's question that you can have a law that says "cannot be assigned," meaning "no contingency arrangements," but that you could have a private deal with your client that was outside of the realm of that definition in the act?

Ms. Flis: First, it needs to be open and transparent and fully disclosed; second, we differentiate between private and public funds.

Senator Baker: Give us your definition. Could you explain "private and public funds"?

Ms. Flis: "Public" means government money.

Senator Baker: You would be lobbying for government money.

Ms. Flis: We would be lobbying for a government grant. I am just using it as an example. If I am working for a corporation with a specific measurable objective that I achieve, there is a performance bonus associated with that.

Senator Baker: Do you mean that you obtained the government money?

Ms. Flis: No. That is not government funds. I am talking specifically taking from government. That is an internal.

Senator Baker: If you were lobbying on behalf of a client for certain government contracts or attention or licence or whatever, is that private money?

Ms. Flis: If it is government money, it is government money. It is public funds.

Senator Baker: Do you agree that for any dealings with the government there should not be a contingency agreement?

Ms. Flis: I would agree in the case of public funds, for a grant.

What I am referring to specifically is a performance-based system. If you have an arrangement with a client or you have an arrangement with your boss to achieve a certain goal and objective, you have a base salary and, let us say, you get a 10 per cent bonus if you achieve this goal. That should be permitted.

Senator Baker: What you object to in this act is that the prohibition of contingency fees, according to you, only applies if it does not involve something that you are getting from the government.

Ms. Flis: Government funds.

Mr. Myers: The good management of the administration of government funding programs might deal with that issue. It is clear that in those programs, the payment for contingency fees is not allowed. This is what a number of programs already do. It is just a matter of good government program administration and good review of government programs. I am a little worried that we are trying to solve a specific problem by legislation and getting too complicated and too complex.

Senator Joyal: Mr. Myers, I would like to quote your brief because you have raised an important issue. I quote the top of page 3:

We are concerned that detailed information requirements as to the nature and subject of communications would create an overly onerous, complicated and costly process for the regulated parties as well as for those officials overseeing compliance. In that case, many businesses are likely to opt for third parties to represent their specific interest to public officials, a response that may reduce transparency but create a thriving business for consultant lobbyists.

Further, on page 3 you say, "The definition of "pre-arranged meetings and calls". At what point does casual conversation become lobbying activity?

My perception is the more you try to constrain the natural flow of exchange by all kinds of reporting mechanisms or an obligation to report, you create a reaction, and that reaction is to go underground.

You have probably drawn our attention to that because you speak from experience. What experience led you to conclude that we are doing here might have unintended consequences of not creating more transparency but pushing relationships between the private sector and government officer into an area whereby there would be less clarity?

Mr. Myers: That is a concern. Most of our members are small companies, and they do not want to be involved with a great administration burden in terms of monthly disclosure, even though they may be dealing quite frequently with senior public officers.

My concern is that if you make it onerous in terms of the time or the resources or the information that must be disclosed, or make it costly or complicated, companies will go to other parties and have them lobby on their behalf. That weakens not only their input, involvement and engagement in good public policy-making, but also probably takes many of these discussions out of the public realm and into the realm of private-sector lobbyists.

This act will be effective if people comply with provisions and the objectives of the act will be achieved if it is easy to comply with. If this third objective were recognized in the act, there would be a balance. Based on this act as it sits right now, if you give regulators the power to regulate the act, it will be difficult to know how much information and communication must be reported. It is important to provide that balance so that the regulating process does not become so cumbersome that you lose the public-sector dialogue that is so important and that you find that companies will say, "We are not going to be engaged directly with government officials. We will go to consultants and take that out of the public-sector debate."

Senator Joyal: In other words, would it serve the private consulting firms if the regulation were heavy, complicated and demanding for any businessperson who does not have time to file all those reports?

Mr. Myers: The people who know their way around the regulations will make a lot of money.

The Chairman: Mr. Myers and Ms. Flis, on behalf of the committee I thank you very much for coming forward and responding to senators' questions.

Senator Baker: I forgot to mention during my address what a great job Ms. Flis has done over the years for the not- for-profit sector in this country. She has performed admirably.

The Chairman: Honourable senators, we are now returning to the issue of political financing. We have before us Errol P. Mendes, professor at the Faculty of Law, the University of Ottawa. Professor Mendes is a frequent speaker and media commentator on international business ethics, constitutional and human rights topics across Canada and the world. He has been invited to present numerous briefs to the Parliament of Canada and has acted as an advisor to the Government of Canada in these areas. Welcome, Mr. Mendes.

[Translation]

On behalf of the committee, I would like to thank you for your presence. I give you the floor without further ado, and after your presentation we will open the floor for a questions and discussion period which will, no doubt, be quite useful to all the committee members.

[English]

Mr. Mendes, after you present your brief the first questioner will be Senator Zimmer, who has expertise in this area. I note from your paper that you have read the extensive testimony we have received from more than 20 witnesses on this area of election financing. We would like you to emphasize the areas that are new and have not been mentioned by the other 20 witnesses on this subject when you make your presentation.

Errol P. Mendes, Professor, Faculty of Law, University of Ottawa, as an individual: Thank you very much for your invitation to appear before this committee.

[Translation]

I regret to say that I will make my comments in English only because it is easier for me to express my thoughts using that language rather than French.

Senator Nolin: That is a pretty good level in the other official language.

[English]

Mr. Mendes: Permit me to begin by positing that in a parliamentary democracy it is of the utmost importance that ethics and the accountability in the institutions of government and the public service be treated by those who seek to impose legal structures on these issues as an opportunity for improving the citizens' trust and confidence in government. It should not be used as a sword to draw blood in the ring of partisan politics. In the end, it is partisan politics and all parties that lose the confidence and trust of the people. For example, if one side debases the other party as the party of corruption in order to be seen as the champion of ethics and accountability. This course of action will result in all politics and all politicians falling into disrepute.

It is also important that legal frameworks in ethics and accountability be examined for counter-productive, unintended consequences and weakly-tested assumptions that can wreak havoc on the body politic in the end.

It is in this spirit that I come before you, in the final stages of your deliberations, to point out in one key area of the bill, namely political financing, that unintended consequences may result due to some weakly-tested assumptions in critical parts of Bill C-2.

I want to begin with the weakly-tested assumption that because large corporations and unions can improperly influence parties in elections with their substantial contributions all businesses, unions and associations should be banned from contributing. Bill C-2 totally bans these entities.

The total prohibition of corporate contributions assumes that all corporations are big and endowed with sufficient resources to be able to manipulate the electoral and political systems in our democracy. In fact, the majority of corporations in this country are medium, small and very small corporations. Industry Canada gives the following statistics on the extent of small businesses in Canada, and I quote from the Industry Canada website:

Small businesses, establishments with fewer than 100 employees, are an important force in Canada, accounting for nearly 98 per cent of all enterprises. The majority, 80 per cent of Canada's small firms, have fewer than five employees and are labelled micro-enterprises. Nearly 99.8 per cent of the 2.2 million businesses in Canada are small and medium-size enterprises, having fewer than 500 employees.

Thousands of corporations consist of one person or a few individuals carrying on their livelihoods as they would if they were unincorporated but have chosen the corporate form for legitimate tax reasons. According to the CIBC report, almost 60 per cent of all small business owners in Canada see themselves as "lifestylers" who use their businesses as a means of earning income while balancing other commitments or lifestyle choices. Why should thousands of Canadians be denied the right to contribute the $1,000 limit out of the earnings vehicle that is best suited to contribute for them to the political process? They can contribute personally outside the corporate structure, but why are we denying them the ability to contribute from the vehicle best suited to their tax and lifestyle situation? This denial may well result in a reluctance to contribute as an individual.

There is a vital freedom of expression and association right guaranteed under the Canadian Charter of Rights and Freedoms at stake, which previous witnesses have not addressed. The Supreme Court of Canada has stated in several cases that political contributions are a form of protected expression and can only be subject to reasonable limits demonstrably justified in a free and democratic society, which is section 1 of the Charter. Justice Beverly McLachlin emphasized that total prohibitions should not be contemplated even where the protected expression is commercial expression. I do not have time to read out the whole of her majority decision in RJR-MacDonald Inc. but I will cite the relevant part.

...A full prohibition will only be constitutionally acceptable under the minimal impairment stage of the analysis where the government can show that only a full prohibition will enable it to achieve its objective. Where, as here, no evidence is adduced to show that a partial ban would be less effective than a total ban, the justification required by section 1 to save the violation of free speech is not established.

Given that the Supreme Court is willing to strike down total prohibitions against advertising and promotion of harmful, and some would add deadly, tobacco products, would one expect there to be even more concern about the total prohibitions on one of the most vital forms of political expression; the right to contribute to the political process?

This was confirmed in another Supreme Court of Canada decision, the Libman v. Quebec decision, which held that the total prohibition on third party expenditures in the Quebec Referendum Act outside the yes and no committees was a violation of the Charter's freedom of expression. The court held that the total prohibition on third party expenditures was a more drastic infringement on freedom of expression than was necessary to achieve the objective of the government. They suggested a financial ceiling of $1,000, which would be less intrusive and which the Quebec government subsequently accepted and adopted.

Would not the Supreme Court, in a constitutional challenge to Bill C-2, suggest a similar, rational and proportionate limit for corporations and perhaps trade unions to contribute to the political process in Canada?

If the underpinnings of our Canadian, and indeed other parliamentary free and democratic societies are to permit freedom of association to pursue collective goals, which is the foundation of the trade union movement, and economic liberty, which is the foundation of corporate enterprise, is it not passing strange that these actors are totally prohibited from participating in the political process? Indeed, the focus on rational and proportional limitations on political financing is to be found in all the major Supreme Court of Canada decisions on election financing.

It should be noted that Parliament in 2002 reacted to a decision of the Alberta Court of Appeal, which I describe on page 4, by amending the Canada Elections Act to raise the $1,000, third party election expenditure limit to a substantial total of $150,000, of which no more than $3,000 could be spent in an electoral district.

A future prime minister took these new limits to the Supreme Court again, arguing that they constituted a violation of the Charter's right of freedom of expression. In Harper v. Canada, he lost, albeit in a majority decision of six judges who concluded that the limits were proportional and allowed third parties to use modest means of advertising to inform the electorate of their message in a manner which would not overwhelm Canada's political parties or other third parties.

You have heard from other witnesses that even though Manitoba and Quebec have legislated total prohibitions on corporate donations, they may have some growing concerns as to whether that was the right choice in the first place. You have heard from Mr. Pierre F. Côté, who was Quebec's chief electoral officer for 20 years, that he and others in Quebec are beginning to question whether the total prohibition on corporate contributions was a good idea. In fact, he also mentioned to you that he convinced Justice Jean Moisan of the same position, who made similar recommendations to go back against the total prohibition to the Quebec government in June of this year.

The Supreme Court of Canada decisions raise the need to examine the very low threshold of permitted contributions by individuals to political parties. If the Supreme Court has concluded that $150,000 by third parties is an appropriate limit, are the individual limits too low?

Turning to page 6, is there a sound rationale for allowing one or more individuals who organize themselves to constitute a third party to have more influence in an election campaign through the $150,000 limit than another individual who wants to contribute as a concerned citizen to the electoral process through the present contribution limits of approximately $5,000, but which would be limited to $1,000 or $2,000 if you take the totality of the provisions after the enactment of Bill C-2?

While several witnesses before this committee testified that the average contributions by individuals are under $1,000 in this country, it should be kept in mind that these limits do not seem to take into account the possibility that Canada may be moving toward more frequent elections due to unstable minority governments. A $1,000 limit today may be totally inadequate in a few years' time.

The Chairman: Professor Mendes, is it your intention to read the entire paper?

Mr. Mendes: I am about two minutes away from finishing.

The Chairman: Okay.

Mr. Mendes: This committee should look at the unintended consequences of too frequent elections. It is important to look at other jurisdictions that we can legitimately compare ourselves with and who place a high value on the integrity of the political process. Australia, New Zealand and the U.K. have no limits. I am not suggesting that we have no limits; however, defined and proportionate limits should take into account the reality of running election campaigns.

I will not read out to you what other European democracies have done in terms of limits that are far above the $1,000 limit. Others have appeared before you and given you the statistics. Indeed, the Province of Alberta — the home of the Prime Minister and other senior ministers — also has higher limits.

Before we settle on a very low limit of $1,000, we must ask ourselves, should the federal Canadian electoral framework be so different from these other countries and our own provinces? What is the danger we are trying to avoid before we open ourselves up to the dangers of unintended consequences and much more frequent elections? Some would argue that given the frequent elections, even the present $5,000 limit may be too low.

Another critical unintended consequence of Bill C-24 — the previous bill and this bill, as was pointed out by Mr. Seidle in his presentation — was that we may be turning political parties into empty shells. What I have to add to that is the possibility that we may be also placing too high barriers to the new entrants into the political process in Canada. For example, would a new federal First Nations' party that has not fought in previous elections have an equal opportunity to contest elections, given that it would not have the ability to have access to the public subsidy, and therefore open up the possibility of a Charter section 15 violation? I set this scenario as an exam question two years ago in my constitutional law class. Most of my students concluded there was a potential violation of the Charter. It did not surprise me that last Thursday, an Ontario Superior Court judge agreed with them, and I guess myself, when he ruled that excluding small third parties from access to the $1.75 public subsidy did constitute a violation of the Charter.

Until today, I did not have access to the actual decision so I am just quoting from The Globe and Mail article on the decision.

I consider that the existence of the threshold diminishes public confidence in the electoral process and encourages a public perception that the threshold exists only to benefit the major political parties, who alternate, from time to time, in forming the government and are in a position to maintain it.

As my best students correctly concluded, this violated both section 13 and section 3 of the Charter, the right to vote. We should take note of Justice Matlow's description of what he thought the right to vote in section 3 of the Charter entailed. He basically stated, as other Supreme Court of Canada decisions have stated, that the right to vote is much more than the mere right to enter a voting booth and mark a ballot that is counted in an election.

It is not beyond the realm of possibility that if this decision reaches the Supreme Court of Canada, the court could strike down the whole electoral scheme in Bill C-24, rather than just agreeing with the remedy ordered by Justice Matlow, as there were substantial policy reasons why the government had the 2 per cent national threshold limit. This result could necessitate the wholesale revamping of the public subsidy scheme and, indeed, then the scheme in Bill C-2.

I remind the committee of Mr. Seidle's statement that we are creating a unique party system in Canada which relies overwhelmingly on public subsidies to the extent of creating a state system of political parties.

In closing, I would like to ask you to examine the potential of other unintended consequences in other parts of Bill C-2. In particular, I suggest you examine how other issues relating to conflict of interest and ethics do not undermine the critical need for establishing a culture of values and ethics in the Public Service and Government of Canada.

You have heard similar concerns from former Ethics Commissioner Bernard Shapiro in this area. Experience from both the public and private sectors around the world have demonstrated it is not a surfeit of rules, audit committees and lengthy mandated audit reports that is the best guarantee of ethical and accountable behaviour. The experience of the private sector in the U.S. has shown that the imposition of the Sarbanes-Oxley Act morass of legal compliance rules, controls and audit requirements has not prevented some of the biggest frauds since the Sarbanes-Oxley legislation.

Thought should be given in Bill C-2 to introduce the opportunity for the Ethics Commissioner to promote a culture of values and ethics into the parliamentarians and senior public office-holders through cooperative learning exercises, partnerships and values building initiatives.

In closing, a persistent lesson that millennia of human governance has taught us is that the constraints of values, virtues and moral courage are far more enduring than the compliance of laws and that the seeking of perfection is the enemy of the good.

Senator Zimmer: Thank you for your critical points.

Based on the research you have done on jurisdictions with higher or no limits on individuals or businesses and trade union contributions and in light of the possibility that Canadian federal elections, which you mentioned would become more frequent in the coming years, what limits would you suggest on contributions?

Mr. Mendes: I would have liked the electoral offices of this country to do an analysis of the existing law with the existing limits to see whether they were adequate or working before any new limits were imposed. To my knowledge, there has not been an analysis of the existing law. We should first learn from ourselves before we learn from others as to what our experience has been. I would say that should be the first step to learn what has been the experience, good and bad, of the existing law.

Senator Zimmer: At this point we have no empirical evidence of that being done.

Second, you make the point that consideration should be given to how Bill C-2 promotes cultural values and ethics. You mention that at the last part of your report on page 8 and 9. You suggest mandating the Ethics Commissioner to offer "cooperative learning initiatives, partnerships and values building initiatives."

I wonder if you could expand on what the initiatives could entail and assuming they have been implemented in other jurisdictions, give us an idea of their effectiveness.

Mr. Mendes: Let us take Sarbanes-Oxley Act in U.S. as an example. In that example, there is a morass of compliance rules, yet it does not stop some of the biggest frauds. Many corporations have indicated that these things do not stop. What you must do is to have knowledge learning sessions by every single employee in the company to understand that it is not just legal compliance but knowing the foundation of doing the right thing is values and ethics, not laws. All the best business and law schools around the world show it is a culture of values and ethics that protects against wrongful action more than compliance rules.

Senator Joyal: I listened with great personal interest to your presentation. When we read all the decisions of the Supreme Court of Canada, in relation to the interpretation that they gave to the electoral act, the court had an expensive interpretation of section 3 and section 15. In most cases, they have twinned those two sections of the Charter of Rights and Freedoms.

It seems to me that if we apply the three questions of the Oakes test to the prohibition of corporate financing, the first question is what objective is the legislation trying to achieve? Of course, the court will read the introduction of the act and the preamble or take into account the information document added to the act. You know quite well how they try to understand the objectives of the act. At the second step, they would ask the means taken to achieve that objective. They would proceed through the ban of corporate financing. Third, they want to discover if it is the minimum means to achieve the objective stated in the first question. That is the normal reasoning of the Supreme Court to conclude on the acceptability or nonacceptability of the limits and, in that case, prohibition. Fourth, they would enquire as to the norm in a reasonable democratic society. They would come back to the section 1 question of the Charter. I suspect that they would check at the provincial level, because it is in Canada, and then with the Western world where countries are recognized as being democratic systems. We all know that countries outside of Canada have not banned corporate financing. You cannot find solace to your question outside of Canada. You would go to provincial governments and in the provinces of Canada, two have banned financing and one is considering reopening it.

To me, a reasonable test of section 1 would conclude that it is not necessary in a democratic system to ban corporate financing. We have had some small parties come in to testify. I do not know if you had the opportunity to read their testimonies, but some of them are contemplating challenging the constitutionality of that specific section of Bill C-2 on the basis that it is an undue burden on small parties although the court has recognized small parties as an essential part to democratic life in Canada.

As I said in the Senate this afternoon, when I commented on the decision of Justice Matlow that I read in full, I am leaning to the conclusion that this is unconstitutional. This is a feel-good kind of proposal. Corporations do not vote so they should not be allowed to participate in the financing process of elections. As you said, if they do not support a political party, they can form a third group and spend $150,000 during an election and involve themselves more in the electoral process than if they would give $1,000 to a small party or candidate or riding associations. The court would take into account all of that before concluding that those sections are unconstitutional.

Mr. Mendes: That is the reason why I came, at this late stage, before you because I had growing concerns that there were fundamental issues that were not being addressed by many of the witnesses who appeared before you. I finally decided that I could not sit idly by. I recently gave a two-hour lecture on the Oakes test and all the points that you have raised.

The court would focus on the minimum impairment test, especially in the area of freedom of expression. Chief Justice Beverly McLachlin has made a point of saying that total prohibitions in the area of freedom of expression will not be allowed, even in the case of harmful or deadly products such as tobacco. If you are talking about allowing freedom of expression even in the case of commercial expression, which most people want to ban, and decisions are clear that a total ban on that would not be permitted, how much more so would it be in the most protected and valued form of expression — political expression? That is where the court would focus.

Senator Joyal: The court will put a lot of emphasis on the decision in Harper v. Canada. As I said, a company or group of companies or corporation could come together and intervene in an election or a referendum, which is even more emotional, and spend up to $150,000 for instance in the province of Quebec — 75 ridings times $3,000, which is the amount permitted per corporation during an election campaign. In doing that, they would be intervening in the election process and trying to influence public opinion. If that is legal, how can you ban $1,000 per corporation to a candidate at the riding level? That does not fly. The system must be logical.

Mr. Mendes: There are some serious issues with the rational connection test for all the reasons that you mentioned, Senator Joyal. There does not seem to be an underlying rationality when you compare the $150,000 limit with the public subsidy with the total prohibition. There is no logical foundation, especially given the potential for more frequent elections than we are used to because of unstable minority governments. Speaking in a non-partisan way, are we lending ourselves for all parties to create major difficulties for themselves?

Senator Joyal: I might have another question on the smaller parties and the Matlow decision in Figueroa on removing the candidate threshold. We discussed Bill C-24 in this committee. I do not remember whether Senator Stratton was on the committee at the time but I believe that Senator Nolin was in attendance. We raised the point that it establishes a threshold for small parties for no reason for the objective of the legislation.

Mr. Mendes: That is why I was equally opposed to Bill C-24. That is what my constitutional exam question was on — the constitutionality of the previous proposed legislation. Not enough attention has been given to both Bill C-24 and Bill C-2 and how they fit together and the potential for grave problems that they can place before us in the entire area of political financing, especially now, as you say, Senator Joyal, given the decision of Justice Matlow, if it is upheld. I do not know whether it will be appealed. The foundational public policy reasons for Bill C-24 are starting to fracture. This is serious. It is time to look at the entirety of the political financing system in our country.

Senator Joyal: Am I not right that Justice Matlow presided over the first court level in the Figueroa case? Justice Matlow brought down the first decision in the Figueroa case, whereby the obligation to run 50 candidates was struck down. It was reversed at the appeal level but reinstated at the Supreme Court of Canada.

Mr. Mendes: That is right.

Senator Joyal: He was the one who studied the Canada Elections Act in the context of the challenge on the basis of the previous exclusion.

Mr. Mendes: In his decision, Justice Matlow refers to the familiar face in the courtroom — Figueroa.

Senator Baker: I am interested in one particular question. I was just looking through the headnotes of 13 cases in which the courts have referenced your writings, Professor Mendes. They range from the Court of Appeal of Quebec in two or three cases, the Court of Appeal of Alberta and the Court of Appeal of Saskatchewan. Usually, where they have quoted you, I have noticed that there is a red flag at the top. This means that the case was overturned but they are using Professor Mendes at the appeal court that overturned a lower court. The first case at the Federal Court of Appeal notes that in his instructive article, "The Crucible of the Charter: Judicial Principles v. Judicial Deference in the Context of Section 1," Errol P. Mendes points out that even in criminal law cases where the state acts as singular antagonist, the Supreme Court has given deference to Parliament on their choices.

My question to you, Mr. Mendes, is this: When you reviewed Bill C-2, what struck you as the main point in the bill that you envision a court of appeal making a determination on regarding section 1 of the Charter, for which they will quote one of your articles again because you are recognized as the authority? Could you give us a guess as to what section of this bill might end up at either the Federal Court of Appeal or the Supreme Court of Canada where your name will be emblazoned across the front again with a red flag?

Mr. Mendes: I believe that it would be on the issue that I present in my brief, which is of deep concern to me for the future of all political parties in this country: the linkage between the total prohibition on trade unions, associations and corporations with the previous structure of the massive public subsidy, which is creating dysfunctional political systems — "empty shells," as Professor Seidle said, and, as Senator Joyal has said, the fact that you can just cloak yourself in a third party and suddenly your limit goes up to $150,000. I realized when I listened to all the witnesses that none of them had put all the pieces together. I had to come here and say that my profound worry is that the whole thing could be declared unconstitutional.

Senator Stratton: Are you aware that the Province of Manitoba, my home province, has banned corporate donations?

Mr. Mendes: Yes.

Senator Stratton: As well, Manitoba has put a cap on individual donations. It seems to be working rather well. I know the provincial Progressive Conservative Party has had to relearn how to fundraise, and it has done so quite successfully. They have retired their debt and are in the black. It has not been challenged in court, to my knowledge, in either case. The system seems to be operating quite well in Manitoba.

Mr. Mendes: I know that, Senator. The difference one should keep in mind is that the limit in Manitoba is $3,000.

Senator Stratton: Essentially, it is the same.

Mr. Mendes: It is my understanding, although I might be wrong, that there have been fairly stable majority governments in Manitoba's history. I do not think they have a history of minority governments. My concern is about when we combine the different elements of Bill C-2 in the federal setting, where there is the potential, given the reality of the Bloc Québécois, for a permanent era of minority governments in Canada. The Manitoba analogy might not be the appropriate one and could actually lead to our not realizing that we are adopting a structure based on Quebec and, to a lesser extent, on Manitoba, which is different in terms of the reality faced by the electorate.

Senator Stratton: We do not know that. However, if you go to Manitoba, as a concrete example of success, it is there. There is not really a long history of minority governments in Canada, either.

Mr. Mendes: The fact that there has not been cannot limit us to preparing for what could be, especially given the reality now.

Senator Stratton: There is one instance.

Mr. Mendes: We have had quite a few elections in two years. Reality is now creeping in, and we have to start addressing ourselves to that. I accept that Manitoba has had the system; it has had a $3,000 limit. There has been no litigation, but that does not mean there will not be some one day. That is my response to you.

Senator Day: Mr. Mendes, given that we are trying to improve this proposed legislation and get a system that will work and given that the amendments with respect to political financing are so soon after Bill C-24 that we do not have much history to look at that would drive the changes, could you talk to us about the frequent elections and what you think we should do with Bill C-2 to compensate or provide for the possibility of more frequent elections?

Mr. Mendes: You have to look at the rationality of having a $150,000 limit for third parties when entities can combine themselves into third parties, have that limit and therefore have as dramatic an impact on the election as we saw with the free trade election. You have to reach an understanding between that high limit and the present contemplated limit of $2,000 altogether plus the absolute prohibition on companies. What major stopgap measure can you suggest in this bill that would at least give some rationality to the different elements of political financing? It is too late now in the deliberations to scrap completely the political financing part of Bill C-2, but put in place some stopgap measure with an additional proviso to examine the entire system, given the frequency of elections, the possibility of unstable minority governments and the fact that Justice Matlow may well be upheld on appeal and the underlying structure of Bill C-24, on which Bill C-2 is based, may disappear.

Given the lateness of this intervention, my suggestion is to come up with a rational structure. It could be the $5,000 limit of the previous bill or even higher, depending on where your deliberations take you. However, it should be regarded only as a stopgap measure with the understanding that there must be a larger analysis of the reality of political financing in Canada.

Senator Day: Have you had a chance to think about or make any comments in relation to the provision that there is a $20 maximum cash donation, and after that, donations must be receipted?

Mr. Mendes: It is reasonable for governments, and I go back to Senator Baker's question, to have a margin of appreciation to determine what is and is not reasonable in terms of the small amounts of cash that could result in malfeasance if raised higher. For those areas, government should be given a margin of appreciation for the limit. I am not so much concerned about that as with the overall structure of political financing as a whole to be compatible with the foundational constitutional requirements of the Charter.

Senator Day: Several witnesses, especially from smaller parties, have made two points. One is that they are not geared towards a populous approach, only to their supporters. A witness from the animal rights party said they might have contributions from only a few people, but those contributions might be fairly large because their supporters believe in what the party is doing. He asked whether that causes a problem with respect to accountability. They let people know about it. How will they influence a government in an adverse way by lobbying and advocating for animal rights and being able to sponsor programs through individual donations? He said they are out of business with a limit of $1,000.

Mr. Mendes: That was Justice Matlow's concern in his decision regarding the public subsidy. His foundational concern about Bill C-24 is whether we are allowing small parties to compete equally with the traditional parties so that the political system does not become frozen. The foundation of any democratic political system is to keep the system open enough so that it can allow the political process to be renewed and refreshed. He was concerned about such situations' leading to smaller parties not being able to establish themselves, and he endorsed the broader conception of the right to vote as meaning more than just putting your vote in a ballot box.

If the issues that he raised result in a freezing of the political process to the established parties, yes, the courts would be concerned about that.

Senator Day: Your argument would be that that would support a higher individual limit?

Mr. Mendes: Going back to the answer I gave Senator Zimmer, there should be an analysis of what is right and what is wrong with the present situation in terms of the $5,000 limit. Until you have that analysis, how can you possibly say whether any other limit is right or wrong? It is absolutely essential, if you do give a stopgap measure of more than $1,000, that you should also add that there should be a profound analysis of what went right and what went wrong with the previous regime.

Senator Day: Have you done any analysis of the current Elections Act in relation to convention expenses?

Mr. Mendes: There again, practical issues must be taken into account. If convention fees are more than $1,000, does that freeze out completely any further contributions? I believe the Liberal Party faced that issue with its leadership convention at the end of November. If convention fees did freeze out other contributions, one might argue that the very holding of leadership or political conventions was jeopardized by very low limits.

The Supreme Court of Canada has said that there are two ways to infringe freedom of expression in this country. One is direct, intentional violations and the other is unintended adverse effects on freedom of expression. Both would be caught by the prohibition against undermining political expression in this country. I am sure Senator Joyal knows of the Irwin Toy decision where the court clearly said that not only intended but also unintended violations could be caught under section 2 of the Charter.

Senator Day: Do you have any opinion as to whether convention expenses should be included as political expenses?

Mr. Mendes: I am not an expert in that area, and you have heard from the Commissioner of Canada Elections. I would leave it up to his greater expertise to determine that.

Senator Milne: Mr. Mendes, I am going back to the third-party provisions set up in the year 2000. Am I to understand that if I resigned from the Liberal Party and formed my own party consisting of myself and my neighbours on either side and called it the Lone Pine Tree Party, or something like that, instead of being limited to $1,000 spending, we would be able to donate $3,000 to each of the ridings in our area and spend the rest of our $150,000 on national advertising to say the government was rotten?

Mr. Mendes: That is pretty much true, but in the electoral district you could not donate it.

Senator Milne: You could use it.

Mr. Mendes: Absolutely, yes. At least from the Harper v. Canada decision, that is right.

Senator Milne: That is peculiar, when I am presently at the limit from having donated to my own caucus expenses here in Ottawa, and then paying convention fees, I am over the $1,000 limit, and I have not given a cent to my party.

Mr. Mendes: If someone were to go to court to say that you are prohibited, let us say, from going to the convention and you claim that that is an unintended violation of your right to engage in the political process, that is a possible constitutional argument right there.

Senator Milne: Many senators I know are choosing not to go to the convention for that exact reason.

Mr. Mendes: That is very interesting.

Senator Milne: They are over the limit.

Senator Stratton: I am curious, Senator Milne. You are saying that your Senate caucus expenses are tax receiptable by your party?

Senator Milne: I do not know. I get some sort of a receipt.

Senator Stratton: Our caucus does not. It is considered our personal expense, as I think it should be.

Senator Cowan: I assume that the public policy reason for imposing limits is to prevent the perception or the reality that political parties or candidates can be bought. That is the only reason for doing it. All of us would agree that the amount of contributions we make ought to be disclosed, and it seems to me that it is the disclosure that is the deterrent for excess contributions. If you were a candidate and I was your fundraiser and I knew that the cost of running your campaign in your riding was $75,000 and someone came in and offered me $50,000, I would say that is completely unacceptable because that is not a reasonable amount for one person to contribute towards an individual campaign.

However, this bill restricts it to what seems to me to be an unreasonably small amount for someone to contribute. Even $5,000 is a small amount. Now, to look at an even lower limit seems to me to be unreasonable.

I do not see a public policy reason for distinguishing between individuals and corporations and unions.

Mr. Mendes: There is general agreement among the experts. You may have heard from them that it is reasonable for a government to determine that large corporate donations can affect rational and objective decision making by people who should not be focused only on one special interest or one area of interest. I think most experts, myself included, would say it is reasonable for governments to impose limits on corporations and trade unions and associations.

Senator Cowan: Also individuals.

Mr. Mendes: Also individuals, to prevent undue capturing of politicians by special interest. I think most people around the democratic world would agree with that.

That being said, one must take into account the reality that in Canada the vast majority of corporations are individuals who are incorporating for tax reasons; they are no different from you and me. I read the statistics to you. The vast majority of businesses in this country are very small businesses.

That is why I am pleading to look into untested assumptions. Yes, government has a right to try to limit the undue influence of big corporations and big trade unions. There must be some focus and some rational and proportional limits on them. We must also take into account the small and micro enterprises that are basically an incorporated form of individual enterprise.

Senator Cowan: Do you see any reason to distinguish between a cap for an individual and a cap for a corporation? Is there any public policy basis upon which you would make that distinction?

Mr. Mendes: Yes. History has shown that major corporations can have an undue influence. I think government is legitimately able to cap those, whereas individuals as a whole, other than very rich individuals, do not have the ability to contribute the huge amounts of money that make them special interest. For that reason, I think government does have a legitimate right.

Senator Cowan: I accept that there is a reason for putting a limit of X dollars for an individual. If it is a reasonably low limit, whether $5,000 or $10,000, why would you not have the same limit for a corporation?

Mr. Mendes: Absolutely. That is what I am suggesting. If you decide, for example, to have a limit of $5,000 or $6,000, have the same limit for the corporations too.

Senator Cowan: Can you see any public policy reason for distinguishing, on that basis, if you have a reasonable limit?

Mr. Mendes: None at all. That is basically the thrust of my presentation here. As long as you also make it clear to corporations, if you were to go that way, that they should not and cannot. As Mr. Côté has argued quite strenuously, they could do end runs around the legislation by contributing the same amount individually in addition to having their employees contribute. To me, that would be breaking the spirit and the letter of the law.

As long as you can arrange that, I am in agreement with you. If you have a low enough limit of $5,000, $6,000 or whatever you decide, there should not be a difference between individuals and corporations for the reason that I mentioned.

Senator Cowan: Did you have a look at the parts of the bill dealing with the limitation periods for prosecutions and investigations?

Mr. Mendes: Yes.

Senator Cowan: Do you have any comments on those?

Mr. Mendes: I was afraid that you would ask me about other parts of the bill that I do have some knowledge on and I could spend the next six hours with you. The only issue I would refer to you to keep in mind is that the Supreme Court of Canada has already said in the Askov decision that in the case of criminal trials six months is a very long time. I gather the limit here is ten years.

Senator Joyal: Summary conviction — it is not under the Criminal Code. That is the distinction and the argument they use.

Senator Baker: Mr. Mendes is pointing out that under the Criminal Code the limit is six months, and this bill extends the summary conviction offence to ten years.

Mr. Mendes, you are absolutely correct, as Senator Joyal would admit.

Mr. Mendes: I prefer to limit myself to that answer, in case you keep me here forever.

Senator Cowan: You anticipated my final question. On page 8 of your submission you ask us to examine the potential of other unintended consequences which you do not have time to go into. As Senator Day explained at the beginning, our job is to do what we can to improve the bill. As you are aware, we have heard a number of suggestions from a number of witnesses, and we are struggling with how we do this. All of us are in favour of the general thrust of the bill but are concerned with the phrase "unintended consequences." Many witnesses have complained that their particular organization or interest is caught as an unintended consequence of some part of this omnibus bill, which was put together very hurriedly and, not to anyone's surprise, does contain a number of unintended consequences.

We would be grateful if you could provide us with other thoughts. I mentioned the business about the limitation periods. If there are others we do have some time this evening and we would be delighted to hear from you on those.

Mr. Mendes: I can briefly refer to a matter I heard when I was a member of the audience, and that is the contingency plans. We should keep in mind that there is a division of powers in this country. To my understanding, contingency fees are a provincial jurisdiction — property and civil rights. There is one example where you may intend, for very good reasons, to have the provision in there, but you do not want to be undermined by the underlying constitutional structure in our country.

Senator Cowan: Perhaps if there is time after the other senators' questions, I can come back to the issue.

Senator Ringuette: The funding that political parties receive from government is, in my perspective, dangerous if we look at a party state system and how much political parties are funded by the general taxpayer revenue. One could consider that that is not a voluntary contribution on the part of the taxpayer.

I believe in fairness and a balanced approach to the political and democratic process. You said earlier, and it is true, that we do not have the benefit of a complete analysis of what happened with Bill C-24, and now we have this new bill that we must examine and try to improve.

Do you think that, in order to make some real improvement to Bill C-2, we should also review the public subsidy per vote and balance that with the political contribution from individuals, corporations, trade unions and third parties? We have not looked at the entire picture. We are looking only at this tiny picture, and it is blurred in regards to political financing. Please tell me your best recommendation so that we can have a balanced system for a valued, democratic society.

Mr. Mendes: I hear and understand the underlying issues that you are raising in your question. I think that Justice Matlow's decision is a call for us to do exactly what he is suggesting. If he is saying that the original public subsidy scheme under Bill C-24 is unconstitutional, and he has offered a remedy that may or may not be upheld in the Court of Appeal and the Supreme Court of Canada, it is really a call to fully understand what went on with Bill C-24 before even getting to Bill C-2. For example, if his remedy was to give to all small parties the public subsidy per vote received regardless of whether they received 2 per cent, what does that do to the public subsidy scheme in terms of accessibility? Does it satisfy completely their charter rights? Can one argue that the Bloc Québécois, which is limited to one part of the country, is receiving an unfair subsidy, as it does not have to contest across the country, whereas all the others do? There are some foundational things to be discussed.

Senator Ringuette: As well as independent candidates.

Mr. Mendes: Yes. Justice Matlow has raised one issue, but by doing that he has opened up many other issues to be discussed.

I want to return to the issue that if the present proposed limits in Bill C-2 stand, that again affects the Bill C-24 subsidy as now determined by Justice Matlow. How does that link into the $150,000 limit for third parties? There is an intricate structure. I was reticent to come before you, but when I realized no one else was doing it, I felt I had to come before you to point out how these other areas are linked in together.

Senator Ringuette: Yes. Money coming from the state to political parties comes from the general taxpayer. Some could argue that that enforces democracy, but some could also argue that it does not, because all taxpayers are forced to contribute to political parties. They may or may not want to. I am sorry. That issue is more blurred now for me than ever.

Senator Nolin: My colleague raises an interesting question about that balance between the individual donation and the state. Under the old system we had for many years, the public donation is built on the donation of the individual; a part of your donation is a tax break, and there is a limit to that. Given your answer and the intriguing question put by my colleague Senator Ringuette, was that system not the best?

Mr. Mendes: Yes.

Senator Nolin: Period. Forget the rest.

Mr. Mendes: I am not here to criticize Bill C-2. I am here equally to criticize Bill C-24.

Senator Nolin: When we dig into Bill C-24, we have to ask where the end is. We need to put a cap on it.

Senator Joyal: We never knew at the time. I am sorry for interrupting. Senator Nolin raises a very important issue. We raised it but received no answer. We cannot measure the impact on the basis of unintended consequence that would have for the money raised by the parties. We now have figures and charts, as provided by Professor Seidle. Another element of unintended consequence is that as more taxpayers support the system and it becomes more a public system, that is, a system financed at a greater percentage from public money, then the government has all the more reason to move in and regulate. Therefore, you create a situation whereby the political parties are now an extension of a government agency. That is a very important change in the system.

Mr. Mendes: The most astonishing part of that analysis is the fact that the Bloc Québécois, if I am correct, is receiving almost 100 per cent of its financing.

Senator Joyal: It is 420 per cent.

Senator Nolin: We do not want to get into the specificity of the Bloc Québécois. Senator Ringuette asked about when the public purse should become involved and to what limit or what extent. The decision you mentioned raises the question of limits. There should not be limits, if I understand that jurisprudence.

Mr. Mendes: There should be?

Senator Nolin: There should not be. If we want the system to be fair for everybody, why limit it to 2 per cent? Why should a party be limited to 2 per cent to have access to that money? That is the kind of question. My question is whether that old system was probably the best one.

Mr. Mendes: That is right. You have an enormous political issue. You have people in the other place demanding that you send this bill back right away.

Senator Nolin: We are used to that. This is not the first time, and probably not the last.

Mr. Mendes: You obviously must do something. The issues that have been raised so far are so enormous that you will not be able to do it in the next week or two. To satisfy the other House you have to think of some stop-gap solution, but with the proviso that you have a much larger analysis of all the related issues. Justice Matlock's decision will obviously demand that. You are in a very difficult situation.

Senator Nolin: The driving philosophy was undue influence in the system. The state is putting a lot of pressure on a very select number of political organizations and not on the others. That is a problem; that is not fair.

Mr. Mendes: That is a huge problem.

Senator Nolin: Speaking of influence, it goes both ways.

Senator Joyal: You have raised the issue that the new system, based on a per capita amount of money on the basis of a vote, creates an extraordinary situation whereby the Bloc Québécois's funding has increased by 420 per cent in comparison to what they were raising before.

When we voted in Bill C-24 we questioned ourselves on the basis of one dollar one vote, and we were answered by the Department of Justice at that time that it was the only way to respect the Charter, by not making a distinction between voters and the amount of money.

Senator Nolin will remember that I had calculated that instead of having a simple equation of one dollar per vote, if you had the equation of one dollar one vote and the number of candidates you run nationally, the result was more or less what they were raising before through the usual approach. It varied by a fraction.

I put that to the test with the Minister of Justice at the time. I told the minister that the equation I proposed is closer to what we know already. It takes into account that if you run 308 candidates across the country you have more costs to incur and you must spread your revenue across the country. If you run a slate of candidates only in one province, you concentrate all your expenses and exercise influence on the result, which is much greater in comparison with the responsibility that you have to play at the national level. I was told that that proposal would probably be in violation of the Charter. I am not convinced at all.

What do you think would be the evaluation of such a proposal?

Mr. Mendes: I think they should have listened to you. I do not think it would have been a violation of the Charter. There are enormous national unity reasons why you should have been listened to. Need I say anymore? I think that was very bad advice. I am not afraid to say that.

The Chairman: On page 3 of your brief I was interested in the way you were using the RJR-MacDonald Inc. precedent. You read only from the bottom section of that quote:

A full prohibition will only be constitutionally acceptable under the minimal impairment stage of the analysis where the government can show that only a full prohibition will enable it to achieve its objective. Where, as here, no evidence is adduced to show that a partial ban...

The point is that the court ruled in favour of the tobacco companies because the government tendered no evidence that a full prohibition was needed.

As for the ban on union and corporate contributions, there could be compelling evidence on the need for that. In this case they decided the way they did because they called no evidence.

Mr. Mendes: That was an issue in the court, and both the Chief Justice and Justice McLachlin, as she then was, and another judge pointed out the lack of proper evidence put forward to the court. My question back to you is about the evidence under Bill C-2.

The Chairman: I am not here to answer the evidence. The point is, once the proper evidence is adduced, there could very easily be a different result, and the court in this case left the door wide open for that with their explicit language, and I quote from your brief:

Where, as here, no evidence is adduced to show that a partial ban would be less effective than a total ban, the justification required by s. 1 to save the violation of free speech is not established.

Therefore, the door is open.

Mr. Mendes: Yes. Keeping with one of the senator's comments, they would look at comparable jurisdictions to find out if there has been what they call the mischief which a total ban was designed to achieve.

The Chairman: We do not know until they have the evidence. That is my point.

Mr. Mendes: With respect, part of being a legislative committee is to see whether that evidence can be produced by looking at comparative jurisdictions or provincial jurisdictions in this country.

The Chairman: That is not necessarily the role of a legislative committee.

Senator Zimmer: I have one further question in supplementary to what Senator Day asked.

Some say the reason the bill limits corporate donations to $1,000 is that otherwise they could buy undue influence. Some companies spill more than $1,000 when they drink. It just is not a factor.

Using the same logic, in the past two and a half years with the new bill and Bill C-24, I have been approached many times by people saying that if I do not do certain things or pass certain bills they will not vote for my party. My point is that many times they raise it. They have to eliminate the $1,000 because it could buy undue influence. By the same analogy, people are saying they will not give me my vote. Therefore, are we saying we should eliminate the vote? Of course the answer is no.

They always use the logic only for money, but people can buy your undue influence just as much, if not more, with the vote. Would you agree with that?

Mr. Mendes: That is why one should look at the rationale of limits and analyze whether they are rational and proportionate. If the existing $1,000 can buy influence, I think we are in a sorry state. As you say, apart from people using unethical means to gather $1,000 from every single employee, $1,000 should not influence any major decision making in this country. If it does, we are in a very sorry state. That would be my answer to you.

Senator Zimmer: Second, they could use the vote in the same way.

Mr. Mendes: Absolutely. There are many ways to try to exert undue influence on decision-makers — not only money.

Senator Zimmer: Some communities gather together and are able to do that.

Senator Day: I would like to touch on the public-funding issue and the comment you quoted about shell political organizations. There is nothing going on at the riding level and everything is happening where the money goes to the national area.

We have heard from several small parties again that it is very burdensome for them. That is why I was asking the question earlier about the $20. The small parties pass the hat around at meetings. It is difficult for them to give receipts for $25 donations.

In your view, would it be appropriate to have special rules for smaller organizations than larger organizations or do the rules have to be the same for all political parties?

Mr. Mendes: In general, you must be cautious about having different rules for different parties. There are ways you can accommodate smaller parties through perhaps a relationship with the Chief Electoral Officer for dispensation in terms of reporting periods. However, in general, there must be uniformity to ensure that people are not abusing the electoral systems for their own purposes.

Senator Day: Then we must ensure that the rules we have are not oppressive to the smaller organizations.

Mr. Mendes: That is correct.

Senator Day: That is what we are trying to do in this analysis.

How do you react to the comment that corporations do not vote and therefore it is fine if we exclude them from the political process?

Mr. Mendes: I urge you to look at the statistics from the Industry Canada website. That statement assumes that all corporations are big. However, 80 per cent of Canada's small firms have fewer than five employees; the majority of corporations in this country are essentially incorporated individuals, with a few employees. I question whether that assumption should stand, rather than having a more sophisticated and analytical examination to find a limit between $1,000 and no total prohibition that is a reasonable limit for both individuals and corporations.

Senator Day: In Bill C-2, there is a provision that prosecutions will be sent to a new director of public prosecutions. Have you had any opportunity to think about that? Can you comment on that?

Mr. Mendes: I wish I could say no — I do not want to comment on that.

Frankly, I worry about whether it was necessary, given that there was already independent prosecution authority in the Department of Justice.

Again, it is an area where I think the government has decided to do this. I think we should see whether or not it will work. It is something they are very keen on doing, but I think there should be a time limit to see whether or not it will work. In the end, it will be interesting to see how much work that office does have.

If it does not have enough work, there will be a question of whether keeping it separate is useful. It has created enormous upheavals in the workings of the Department of Justice. It will be interesting to see how it works out in practice and whether there is enough work for it to do.

Senator Day: Once you create the structure, is there not the danger that winding it down will be disruptive as well?

Mr. Mendes: Absolutely; that is the case with many things that are being wound down or put up at the moment.

Senator Cowan: To go back to the point I made earlier about additional issues that you may have had a chance to look at and that would help us in our efforts to improve this piece of legislation, I think you made a number of useful suggestions in several areas. I wanted to give you an opportunity to give us any further thoughts or comments you had on other parts of the bill.

Mr. Mendes: My overall comment is that, as I mentioned with the political financing, you have a major challenge in front of you; the other House is expecting you to deliver this back in a short space of time. There could be a whole range of areas in the bill that could work but may also have unintended consequences.

I would plead with you to keep an eye on the area of political financing, and the whole area of codifying the conflict of interest and code of ethics rule, which could, as Mr. Shapiro testified before you, lower the threshold rather than increase it.

As I mentioned, values and ethics are not about minimums, but rather about maximums, about creating a culture of integrity and ethics. The private sector has learned that big time and the public sector is learning it too.

Think about what additional structures you want to propose to create this culture of ethics and accountability, both in the political arena and in the public service of Canada. It is critical. If you focus only on compliance, you may end up in a worse situation than previously. Think about how you would prepare to have additional measures to create this culture of ethics and accountability.

I worry about the impact the bill will have on several areas. I know you have had several discussions on the single ethics commissioner for the Senate and the House of Commons. Without being forced to stay here for much longer, one of the things that I have mentioned to others is that there is a Supreme Court of Canada decision in the New Brunswick broadcasting case that says that parliamentary privilege is part of the Constitution of Canada. Therefore, nothing can interfere with your function as a deliberative body, both in the House of Commons and in the Senate.

If anything in the bill interferes with your parliamentary privilege, you should pay careful attention to it. Examine whether the single ethics commissioner does affect the way you function as a deliberative body.

Senator Cowan: Do you have a view on that?

Mr. Mendes: Yes, I do. I think that if the Senate is to be maintained as an independent deliberative body, some thought should be given to how, if you have a single ethics commissioner, the functions of that office will be separate for the Commons and for the Senate so that you are allowed to continue to function as an independent deliberative body separate and apart from the House of Commons. Maybe there could be a division of functions — one office but separate functions.

Senator Cowan: The proposal is a single officer.

Mr. Mendes: I think the political imperative is leaning that way. Again, the timeline is short. As Senator Oliver has mentioned, you have to deliver this back to the other House shortly. Even if it is a single ethics commissioner, think about having separate functions to allow you to continue to have your independent deliberative functions.

Senator Cowan: Though I was not here at the time, I understand this was a major issue and there was a bit of a standoff between the previous government and senators who felt strongly that it was necessary to have an independent ethics officer in order to maintain that parliamentary privilege you speak about.

Mr. Mendes: I think Senator Oliver is an expert in this area, so I will defer to his expertise. I think creative methods can be devised. Even if you do have a single officer, have separate, distinct functions so that you maintain your independence as a deliberative body.

The Chairman: Professor Mendes, on behalf of the committee, thank you very much for coming here tonight and sharing your views on many topics.

The committee adjourned.


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