The Chair (Mr. James Rajotte (Edmonton—Leduc, CPC)):
I call this meeting to order.
This is the 90th meeting of the Standing Committee on Finance. Pursuant to the order of reference of Wednesday, March 14, 2012, we are continuing our study of Bill C-377, An Act to amend the Income Tax Act (requirements for labour organizations).
Colleagues, we have eight individuals who will present to us during this two-hour session.
First of all, we have the Canadian LabourWatch Association. We have the Quebec Employers' Council. We have Leith Wheeler Investment Counsel Ltd. We have Merit Canada. We have the Montreal Economic Institute. We have the Multi-Employer Benefit Plan Council of Canada. We have the Office of the Privacy Commissioner of Canada. We have the United Brotherhood of Carpenters and Joiners of America.
Welcome to all of you. Thank you very much for being with us. As you can see, it's a very full panel today, so I would request that you respect the five-minute maximum time for your opening presentation, and at the end of the last presentation we'll have questions from members.
We will start with Mr. Mortimer.
Mr. John Mortimer (President, Canadian LabourWatch Association):
Thank you, Mr. Chair.
I would like to present our submission's objectives.
First, we address incorrect statements made by labour leaders and critics of Bill C-377. Our comprehensive submission provides other examples and factual evidence to correct the record.
Second, an existing section of the Income Tax Act addresses when union dues are not deductible. The only interpretations we could find underscore our position: a significant percentage of union dues levied by unions don't qualify for deduction.
Are Canadians forgoing $1 million, $100 million, or more in tax revenue?
The bill's specific, detailed line item schedules and its $5,000 threshold are critical to putting an end to what is going on. If the act was effectively enforced, unionized Canadians would pay less in dues and government tax expenditures would be reduced.
Two prominent union presidents, CAW's Ken Lewenza and CEP's Dave Coles, wrote: “Most jurisdictions in Canada require annual financial statements to be filed by all certified unions, where they can be inspected by the public.” This is not true.
Appendix C of our submission contains a one-page table of all 14 tax jurisdictions, based on laws outlined in appendix D. We've spoken with several labour board chairs to confirm that no labour board or any government body anywhere in Canada keeps such statements for public access.
Yes, eight jurisdictions enable actual union members only to ask for a financial statement for their union only. None of the eight entitles dues-paying non-members to any information at all about how their dues are used. These two groups of dues payers are a very distinct subset of who Bill C-377 serves, the Canadian public.
Appendix A contains one gutsy union member's experience at CUPE local meetings and national conventions. He publicly contradicts the internal transparency claims of labour leaders. Appendix D contains accurate facts about the British Columbia cases discussed here last month. Mr. Georgetti's responses to Ms. Glover's questions were simply not accurate. Whether or not members have disclosure is a red herring when it comes to enabling Canadians to assess the full extent of the lack of efficacy of the current tax situation.
This is not the only example. Others include grossly inflated claims about potential compliance costs that are contradicted by actual U.S. experience, unsupportable statements about Canadian privacy law, weak attempts to equate unions with professional associations, and false claims that no U.S. labour trusts must report; some must still report, even after President Obama used executive powers to help some trusts in the United States hide their activities again.
We encourage every member of the finance committee to carefully review our submission and question virtually everything labour leaders and critics are stating when amending this bill.
Regarding the non-deductibility of dues, paragraph 8(5)(c) of the Income Tax Act at its core says that dues are not deductible to the extent levied “for any purpose not directly related to the ordinary operating expenses” of the union.
Our submission quotes from the only CRA documents we could find. They demonstrate that the Income Tax Act has been carefully constructed and consistently interpreted. Even the very limited knowledge we have today about the broad range of expenses for which union dues are levied suggests that hundreds of millions in union dues are deducted and tax revenues forgone when they should not be.
With regard to the public policy problem, no one appears to have the information with which to ensure this section of the act can be properly applied. If unionized Canadians even know this, it is not in their interests to bring to the surface labour organization expenses that do not meet the act's requirements, because their taxes might go up if their union does not stop spending forced dues on non-qualifying purposes.
Similarly, tax-exempt labour organizations that levy dues for non-qualifying purposes have no interest in advising government or the people they represent of non-qualifying dues. Something has to be done to ensure that union dues for deductible versus non-deductible purposes become a part of labour organization accounting and separated out of the T4 slips of Canadians who must pay dues or be fired.
Paragraph 8(5)(c) is entirely consistent with the Rand formula. Supreme Court Justice Rand's 1946 arbitration award has a core finding: all unionized employees, whether or not they are actual union members,
||...should be required to shoulder their portion of the burden of expense for administering the law of their employment, the union contract.
What is going on today with billions of dollars in dues deducted annually is inconsistent with the act and inconsistent with Justice Rand.
Finally, the union corruption experiences of countries such as America and Germany have led to disclosure schemes that have returned massive amounts of money and led to a cleanup of unions.
All Canadians, including unionized Canadians, deserve better than the status quo.
Ms. Norma Kozhaya (Director of Research and Chief Economist, Quebec Employers' Council):
My name is Norma Kozhaya and I am the Chief Economist at the Quebec Employers' Council. The Council wishes to thank the Standing Committee on Finance for the opportunity to comment on Bill C-377.
Let me say from the outset that the Council welcomes the bill, which, in the interests of transparency, requires unions to release their financial statements and disclose how they spend dues collected from their members.
As the representative of Quebec’s employers, the Employers Council has already spoken several times in favour of these kinds of changes. It believes it is completely appropriate that the amount of dues that workers are required to pay to their union under the Rand formula be made public, as well as the manner in which they are used. There are significant tax advantages associated with those dues.
A 2012 survey conducted for the Employers Council itself by Léger Marketing yielded similar results. What they show is that the general public, at 97%, believes that unions should be legally required to provide information on how the dues paid by unionized employees are spent.
The government, public agencies, listed companies and most organizations with large memberships are subject to strict standards requiring the disclosure of financial information. It would make sense for organizations as large as unions to be subject to similar requirements. The current situation generally features a lack of transparency not only for taxpayers and the general public, but also for the unionized workers themselves.
Furthermore, while we support the general approach, we have two specific comments. We are wondering, for instance, whether some simplifications can be made. As you may now, the Quebec Employers' Council has constantly been advocating for reducing the regulatory and administrative burden. In line with that, we are wondering, for example, whether some items could be grouped to make those simplifications possible.
However, the breakdown of expenses as to whether or not they are related to labour relations is particularly interesting and important; the Employers Council considers this to be a key aspect of the bill. That distinction should not be a real problem. Certain criteria could even be developed to make it easier to carry out. In a number of countries, this distinction is already being made.
Some union leaders and others claim that the new requirements greatly complicate matters. In the opinion of a number of experts consulted, appropriate coding and systematic expenditure accounting could make the task easier and would not generate additional costs, at least in the medium term. However, as I said earlier, there could be a way to simplify certain requirements.
In response to those who would argue that employer associations are not subject to the requirements introduced by the bill, the Employers Council states that, as an employer organization, unlike union organizations, it is funded mainly by voluntary contributions from its member associations and businesses.
The Employers Council’s financial statements are audited annually by an external auditing firm and presented to the board of directors. In addition, any member dissatisfied with how the contributions are used may withdraw from the association at any time and no longer contribute to the organization. Unfortunately, such a decision is unavailable to a worker in a unionized workplace.
While this bill does require the disclosure of several details regarding how union dues are used, it of course does not contain any requirement to justify these expenditures. According to the Employers Council, additional measures are needed to give more power to workers and greater legitimacy to union activity. While the Quebec Employers' Council understands the reasoning behind the Rand formula, it believes that labour associations should be legally required to use all funds collected on a mandatory basis solely for labour relations purposes.
To conclude, we believe that this bill corrects an existing anomaly and that it has the advantage of harmonizing and clarifying requirements.
Mr. Neil Watson (Portfolio Manager, Senior Partner, Leith Wheeler Investment Counsel Ltd.):
Thank you for allowing Leith Wheeler Investment Counsel the opportunity to present before the committee.
Leith Wheeler Investment Counsel Ltd. is an employee-owned investment firm managing over $11 billion in investment portfolios on behalf of our clients. Approximately 10% of these portfolios are managed for individual high net worth clients, and 90% of the assets are managed for institutional clients. Institutionally, we manage portfolios for foundations, endowments, corporations, and first nation clients, as well as for pension trust funds and health and welfare trusts. Many of the pension and benefit plans that we manage portfolios for are associated with labour organizations, but others are not.
As an investment manager, we support disclosure of information. Without adequate information about the companies or securities we're investing in, we would be unable to assess the merits of an investment. From our perspective, the intent of Bill C-377, to provide improved disclosure of information, is understandable. Our concern, though, is that if this bill is enacted, any potential benefits from the legislation would be more than offset by negative unintended consequences.
Pension plans and health and welfare trusts have had a difficult time over the last few years. Liabilities have increased due to declining interest rates and increased life expectancy, while equity markets have not kept up with the growth in liabilities. According to Mercer, the solvency position of Canadian pension plans stood at 80% on September 30, 2012. Benefit trusts are grappling with similar issues and rising health care costs.
Our experience has been that the trustees of pension and health and welfare trust funds have been extremely diligent in carrying out their fiduciary duty to the members of their plans. This has included controlling the cost of the plan. Without this prudent stewardship, we believe the trust fund insolvency position would be worse.
It is in the interests of all Canadians to ensure that everyone has a decent pension. I'm sure that Mr. Hiebert and the members of the committee share this objective. However, we believe one of the unintended consequences of Bill C-377 is that the costs of compliance with this proposed piece of legislation will significantly increase the costs of any pension or benefit plan that has any members who are part of a labour organization. This is a significant part of the workforce who will be affected. This will result either in reduced pensions or benefits for members of the affected plan or in the employer or employee making increased contributions.
If increased costs negatively impact the solvency position of these plans, this could threaten their existence, increasing the demand on government and ultimately the Canadian taxpayer to fill the gap. This is not a desirable result.
It also results in inequality, as other pension and benefit plans, sometimes with the same employer, would not be subject to these costs. This seems very unfair to us. Pension and benefit plans are already subject to a significant amount of disclosure, while the trustees have a legal fiduciary obligation to operate the plan in the best interests of the beneficiaries. They currently must file annual financial statements with the CRA and are also subject to regulation and disclosure under federal and provincial legislation. We do not believe the additional disclosure contemplated under the proposed legislation is necessary.
The public listing of the purchase and sale of securities within a portfolio could also negatively impact the competitive advantage of investment managers and cause certain investment managers to refrain from managing assets associated with labour organizations. We're happy to, and we do, provide regulators, trustees, independent consultants, and auditors with any of the information they require.
In summary, we believe the unintended consequences of the proposed legislation outweigh the benefits, and we request that the legislation be withdrawn.
Thank you for listening to our submission.
Mr. Terrance Oakey (President, Merit Canada):
Thank you, Mr. Chairman, for the opportunity to appear today on Bill C-377.
Merit Canada is the national voice of Canada's eight provincial open shop construction associations, a sector that represents approximately 70% of the construction in Canada annually. We advocate for employee choice and open and free competition among construction companies, free from government policy that favours one type of firm over another.
Our 3,500 member companies, which employ over 60,000 workers, strongly support this bill.
It is important to clarify what Bill C-377 does and does not do. Labour organizations will continue to benefit from the forced contribution of unionized workers. The bill also does not dictate how labour organizations can spend the money that they collect.
Instead, Bill C-377 is simply about transparency requirements that fall upon entities that enjoy the public trust and will allow Canada to catch up with other advanced economies when it comes to financial disclosure. This is important for two primary reasons.
First is the union funding model itself, which is protected in law and delivers over $4.5 billion annually to labour organizations in Canada. If you work in a unionized workplace, you are required by law to pay dues. If you refuse, you are fired. This taxation power alone should be reason enough to require enhanced transparency.
The workers forced to make these contributions deserve to know how their money is being spent, as do members of the general public who subsidize this revenue through the tax system.
If you are looking for support for these measures, look no further than the former head of the AFL-CIO—which is the largest labour organization in the United States—George Meany, who testified at the U.S. Senate union disclosure hearings. I quote:
||All of these [transparency] bills are based on...the goldfish bowl theory, the concept that reporting and public disclosure of union finances...will either eliminate or tend to discourage the abuses.... The AFL-CIO firmly believes this theory to be sound.
I would encourage the unions that appear here today, and also that have appeared in the past, to heed those words.
There are countless examples of labour organizations funding initiatives contrary to the interests of their members. These include campaigns against the oil sands and pipeline projects, support for the Quebec student protest, organizations seeking to shut down all nuclear reactors, and of course the most famous example, PSAC's support for the Parti Québécois.
Given these examples, it should come as no surprise that a Nanos poll recently found that 86% of unionized Canadians support greater transparency for labour organizations, so when labour leaders appear before you to oppose this bill, they are not representing the views of unionized Canadians.
Second, labour organizations receive over $400 million every year in tax benefits, as union dues are tax deductible and all revenues are tax exempt. These tax-exempt funds, which are drawn from mandatory dues, are then funnelled into a wide range of causes, many of which have nothing to do with the collective bargaining process. Canadians have the right to know how their tax dollars are being used to influence public policy since, unlike charities, no constraints are put on the political activities of labour organizations.
For example, the president of the Communications, Energy and Paperworkers Union of Canada stated, after the vote to merge his union with the CAW, “Can you imagine what it will mean to the CEP, the CAW when we’re the first unionized party that governs a country?”
I think Canadians deserve to know how the so-called superunion plans to use the hundreds of millions of dollars at its disposal to achieve that end. Labour organizations, quite frankly, enjoy a more privileged position in our society and economy than any other entity, yet they have no public reporting requirements, unlike charities; publicly traded companies; federal, provincial, and municipal governments; government agencies; boards; crown corporations; first nations bands; foundations; political parties; and MPs, senators, and MLA offices.
In opposing Bill C-377, labour leaders suggest that Canada is proposing some new, radical terrain. In reality, Canada is simply catching up with the rest of the developed world. Australia, New Zealand, Germany, France, Ireland, the U.K., and the United States all have some form of financial union disclosure that surpasses what exists in Canada.
Before wrapping up, please let me address three final points. First, our members recognize that there have been legitimate privacy concerns raised about aspects of the bill, and we support amendments that would address those issues.
Second, we oppose any change that would allow union leaders to report aggregate data rather than specific expenditures over $5,000.
Finally, we oppose any efforts to weaken the fines included in the bill. These reporting requirements are not onerous, and fines ensure compliance.
Thank you again for the opportunity to appear today.
Mr. Youri Chassin (Economist, Montreal Economic Institute):
First of all, I would like to thank the Standing Committee on Finance for sending an invitation to the Montreal Economic Institute.
I would like to say a few words about our institute. The Montreal Economic Institute is an organization dedicated to research and economic education. We are an independent, non-partisan and not-for-profit organization. We do not accept any government funding.
A year ago, we published a research paper called The Financing and Transparency of Unions, co-authored by Louis Fortin, Michel Kelly-Gagnon and myself.
That is the basis for my presentation today. I will touch on three points. I will start with the general principle, followed by a major distinction concerning professional associations and, finally, I will give you some concrete examples.
First, in terms of the general principle, we support the idea of increased financial transparency of labour organizations on the basis of the general principle that with compulsory financing comes a moral obligation of transparency, contrary to voluntary financing. Only the government can legitimately impose financial obligations on its citizens and that is how it finances public organizations. Private organizations must persuade their clients, associations must attract members and charity organizations must collect donations. That is all done voluntarily.
Unions are the only private organizations that do not rely on voluntary funding. Laws and court decisions grants them powers that are quite unusual. In short, the Rand formula gives them the equivalent of a power to tax. So the general principle seeks to ensure that, in addition to the power to tax, unions demonstrate increased transparency to the public. That is at the heart of Bill C-377.
In terms of unions and professional associations, it is true that, from one angle, the situation of unions is somewhat similar to that of professional associations. For example, to practise medicine, law or other professions, you are required to pay dues to that type of association. However, there is a major difference that should be pointed out. Professional associations are set up by governments to protect the public, whereas unions are set up by their own members to defend their own interests. Professional dues paid to an association are used to finance a service that serves the public interest, whereas union dues finance a private organization that serves the specific interests of its members. That is commendable, but it is not the same thing as a professional association.
Let me give you a few concrete examples. Beyond the general principle, there are concrete problems that Bill C-377 seeks to address. I will give you a few examples.
In December 2010, it was revealed that the Fraternité inter-provinciale des ouvriers en électricité had made a loan of $5 million to Tony Accurso, a construction magnate at the centre of various allegations, found guilty of fraud and formally charged of corruption and breach of trust. It is highly problematic that a union was able to conduct those types of transactions hidden from view.
In September 2011, Le Devoir revealed that labour organizations were buying advertising space at the convention of the New Democratic Party, possibly violating political parties financing rules. The NDP has since returned these sums. The interesting point in this matter is that the journalist, Hélène Buzzetti, figured out the existence of those transactions by using publicly available information on the website of the department of labour, in the United States, even though it concerned Canadian labour organizations and a Canadian political party.
The difference is that the United States has higher transparency standards for labour organizations than Canada.
Mr. Cameron Hunter (Director, Multi-Employer Benefit Plan Council of Canada):
Thank you, Mr. Chair and honourable members of the committee, for the opportunity to address you today.
I'm here representing the Multi-Employer Benefit Plan Council of Canada, a non-profit organization whose mandate is to represent the interests of Canadian multi-employer pension and benefit plans with provincial and federal governments regarding proposed or existing legislation.
The trust funds that MEBCO speaks on behalf of cover well over one million Canadian workers, plus their families. MEBCO's volunteer board of directors is elected from all professions and disciplines involved in multi-employer plans, including union and employer trustees, professional administrators, actuaries, lawyers, accountants, and benefit consultants.
MEBCO has provided a written submission on Bill C-377, which provides the details of our concerns with this bill. We believe that this bill will have a detrimental and unjustified impact on pension and benefit plans. MEBCO believes that the bill goes far beyond its intended objective of transparency and accountability and would impose enormous costs and other implications for many private and public entities doing business in Canada.
The bill proposes to require disclosure of personal information, including personal health, medical, and beneficiary information, which conflicts with the legislation already in place. Further, the bill proposes to duplicate existing financial disclosure requirements applicable to pension and benefit trusts. We fail to see the merit of disclosing any of this information to individuals other than those who participate in the pension or benefit plan. Currently, any such personal information is not disclosed to anyone but the member.
The bill includes a definition of labour trusts that is broad and would capture any benefit fund that has any unionized beneficiaries, including public sector plans and any applicable public or private entity. Pension and benefit plans are already highly regulated and subject to rigid and rigorous privacy standards. They are also subject to extensive disclosure requirements under other provincial and federal legislation, including reporting to the Canada Revenue Agency. These are in addition to stringent fiduciary duties assumed by the pension and benefit plan trustees, which obligate them to act solely in the best interest of the plan and its beneficiaries.
Bill C-377 will create additional and unnecessary red tape for a sector that is already in a difficult state. Existing legislation already ensures that plan members and other stakeholders receive sufficient information and disclosure concerning these plans. The cost of providing this unnecessary information may be significant, depending on the specifics required. No matter what the cost, any expenses related to such reporting takes money away from the purpose of these trusts, which is to provide financial security to workers and their families.
There will also be additional costs incurred by the government to administer these new requirements. I don't have a sense as to the magnitude of these increased governmental costs, but I understand that the provinces have expended significant resources collecting such information.
We also have significant concern about the invasion of privacy for plan members. Disclosure of any transaction in excess of $5,000 would require trustees to publicly disclose the most personal of information on plan members for payments of pensions, disability benefits, death benefits, drugs, dental benefits, and many other types of benefits. This is just wrong.
Further, these trusts are large and enter into numerous financial transactions daily. Reporting on all financial transactions in excess of $5,000 would result in voluminous reporting. It also may require the disclosure of confidential business strategies for investment, legal, and financial advisers retained by the trusts. This may impede the ability of such trusts to retain qualified, successful advisers.
Finally, two trusts of the same size and same experience will result in one being subject to the bill and one not, simply because one has union members participating and the other doesn't.
Mr. Cameron Hunter:
Subjecting only one of these trusts to additional costs and disclosure burdens doesn't seem fair.
We understand that Mr. Hiebert suggested that amendments to the bill should be considered for reasons just stated. We believe that all pension and benefit trusts should be exempt from the requirements of Bill C-377. Examples include the obvious trusts: pension, health and welfare, employee life and health trusts, supplemental unemployment, etc.
There are also other organizations that would be subject to the bill, including Helmets to Hardhats, an organization that provides careers in the construction trades for returning veterans, and Effective Reading in Context, whose goal is to enhance literacy skills of workers. It doesn't seem right to be required to disclose any benefits provided by such organizations.
We believe that many charities will also be subject to the bill, such as United Way, the MS Society of Canada, and the Canadian Diabetes Association. We believe that it's impractical to provide an exhaustive list of all such trusts, corporations, or organizations, and suggest that the best approach to amending Bill C-377 is to simply remove the definition of labour trusts.
Ms. Jennifer Stoddart (Privacy Commissioner of Canada, Office of the Privacy Commissioner of Canada):
Thank you very much, honourable members.
Transparency and accountability, we know, are essential features of good governance and critical elements of an effective and robust democracy. However, as the Privacy Commissioner of Canada, I must say that the extent of public disclosure of personal information contemplated in this bill does raise serious privacy concerns.
I understand that Mr. Russ Hiebert, the sponsor of the bill, has already proposed amendments that would mitigate some privacy-intrusive provisions. Excluding recipients of pension and health care benefits and the removal of home addresses from public disclosure, raised by many of the preceding speakers, are steps in the right direction. However, I respectfully submit there remain other privacy concerns with the bill.
You have probably already heard about the analysis framework that we use in such situations. Its elements can be summarized by four key questions.
One, is the measure demonstrably necessary to meet a specific need? Two, is it likely to be effective in meeting that need? Three, is the loss of privacy proportional to the need? And four, is there a less privacy-invasive way of achieving the same end?
As I understand it, the need purportedly being met by this bill is greater accountability and transparency of unions. With respect to the first two questions then, it should be noted that labour organizations, whether in the public or private sector, receive funding largely through membership dues.
This bill aims to increase transparency and accountability of unions vis-à-vis their members by requiring detailed disclosure of salaries and other individualized expenses through online posting. However, the bill goes much farther than that by requiring such disclosures also be made to the public at large, which in my humble opinion, oversteps what is needed to achieve its stated objective.
With respect to the third question about proportionality, I should begin by stating that an individual's remuneration constitutes personal information that cannot be disclosed without the individual's consent. Exceptionally, there are instances in Canada of specific salaries being publicly disclosed when funded directly by the public. Examples include salaries of elected officials and of some high-ranking federal and provincial civil servants. However, to my mind these exceptional cases of public disclosure do not create a clear precedent for labour organizations, given that their accountability is to their members and not to the general public.
Some of the preceding speakers have said that because labour organizations are tax exempt under the Income Tax Act and because membership dues are tax deductible, labour organizations should be subject to a higher degree of public accountability. However, it is not clear that the names, the salaries, and the disbursements above $5,000 in respect of all labour organization employees and contractors need to be publicly disclosed to achieve this more limited objective. I think this is a significant privacy intrusion, and it seems highly disproportionate.
I'll conclude with the possible alternatives, Mr. Chair.
I believe that limiting the scope of the bill such that public disclosure requirements would apply to a much smaller subset of individuals or would require only aggregate-level reporting would result in a more balanced, yet equally effective, regime. For instance, the registered charities in Canada are required to publicly disclose only high-level salary information for their 10 highest-compensated positions in annual information returns. Even then, only the numbers of positions within specified salary ranges are disclosed.
Mr. James E. Smith (Vice-President, Canada, United Brotherhood of Carpenters and Joiners of America):
My name is Jim Smith. I am Canadian vice-president for the United Brotherhood of Carpenters and Joiners of America.
This bill jeopardizes many gains that the government has made in relation to projects we build for you. I would like to explain to you how the construction free market economy works, because you are about to interfere with it.
In the construction sector, upon which your economic action plan hinged, project owners purchase construction. Companies like Suncor, Bruce Power, Irving, and Nalcor decide to build a project and then let tenders. Union and non-union contractors compete. The most competitive bid gets the job. This is our free market.
Many happily unionized contractors welcome the union in their workplace and see the value proposition in having a unionized workforce.
What gives union contractors a competitive advantage are the well-trained, productive, work-ready, and safe employees we provide. We provide this service at a cost to the union, which this bill will force us to disclose. This bill interferes in the free market because it uses the Parliament of Canada to force us to reveal our contractors' business advantages to their competitors. More than an interference in the free market, Bill C-377 and the onerous costs associated with it, whether it's reporting or compliance, is nothing more than a tax on unionized contractors in order to tip the scales in favour of their non-union competition. Their non-union competition is here today at the table, but our partners, the unionized contractors, have not been invited.
How is this a tax? The dues our members choose to pay come from their paycheques as deductions. They choose to pay this money to belong to the guild rather than going it on their own in the industry. Many non-union workers have exercised their free choice not to belong to the union and not to pay this tax as dues.
The costs associated with compiling, reporting, and revealing our trade secrets to our competition will result in a higher tax on our members or a lesser service to our contractors. In either case, the level playing field is tipped. Our members' salaries are paid for by our contractors, so the tax will be passed along to them. How conservative is that?
Interference in the construction free market is hardly a notion that this government should entertain. Those who speak here today in support of this bill are attempting to use the Parliament of Canada as a tool to get a leg-up on their competition. How conservative is that?
I mentioned that our contractors recognize the value-added propositions that construction unions add to their business. You may wonder what exactly these are. Let me briefly explain.
We spend $250 million a year on training for our members. This ensures they are the safest, most productive, and most highly skilled workers in the industry. Our unionized contractors require fewer man-hours of work than their open shop contractors. This money comes from dues; it's money the government does not have to spend to train people for employment. We prepare people for the jobs the Government of Canada is creating.
One of the most important value-added benefits we provide to our contractors and to the industries that depend on them is our hiring hall. This is an archaic term that few understand, but in today's world it means that we provide a nationwide infrastructure and membership database that can be accessed by contractors at a moment's notice. We manage the peaks and valleys of employment in our industry so the government doesn't have to.
Mr. Alexandre Boulerice (Rosemont—La Petite-Patrie, NDP):
Thank you, Mr. Chair.
I would like to thank our many witnesses and guests for being here today and delivering such interesting presentations.
This committee has begun to show that this bill contains too many flaws to be passed, that it would cause major collateral damage, and that it even threatens Canada's economic health during these fragile times. This bill is clearly useless, discriminatory, unconstitutional, costly and excessively bureaucratic.
It is useless because unions are accountable first and foremost to their members, and the requirement for transparency already exists. I would point out to everyone that that requirement is in section 110 of the Canada Labour Code.
It is discriminatory because it targets only unions and pension funds and trusts associated with unionized workers, but it does not cover other organizations in our society that benefit from tax advantages granted by the federal government.
It is unconstitutional. Here, I am referring to statements by the Canadian Bar Association, which raised this significant concern last week.
It is costly. Last week, Professor Logan explained to us that, in the United States, dealing with less onerous reporting requirements than those in Mr. Hiebert's bill cost the federal government $6.5 million.
It is excessively bureaucratic because of the enormous amount of paperwork and the administrative burden that the organizations, trusts and pension funds affected by this bill would have to deal with. This is an example of big government.
That's not all. This bill is also intrusive. It is a threat to privacy and personal information. For example, if a retired union member is collecting pension benefits, his name and address, along with transaction amounts could be disclosed to the public on a website. Information about a firefighter who is disabled due to a work-related accident, including his name, health information, address and income, could be disclosed to the public.
My question is for the Privacy Commissioner.
What impact do you think this bill will have on the private lives of the individuals it is likely to affect? Does it raise serious issues with respect to the Privacy Act?
Mrs. Cathy McLeod (Kamloops—Thompson—Cariboo, CPC):
Thank you, Mr. Chair.
Thank you to all the witnesses.
I want to start by noting that the proponent of the bill, Mr. Hiebert, has indicated he intends to put forward amendments regarding some of the issues that were raised today, especially in terms of the pension and health care funds, etc. I think those amendments, hopefully, will deal with a number of the concerns and issues that were raised.
I have a number of what I hope will be fairly quick questions.
Ms. Stoddart, I was involved in health care before. I certainly recall that everyone who earned over a certain level of wages went on a list that was published on the Internet. There were nurses on it. There were X-ray technicians. It was just part of the routine disclosure of compensation. I believe the school boards and a number of different organizations did that. Certainly there don't seem to be the same concerns provincially that you have federally.
Mr. Rodger Cuzner (Cape Breton—Canso, Lib.):
Thank you very much, Mr. Chair.
Thank you all for being here today.
There are a couple of take-your-child-to-school guys here today. We want to give them a shout here. I'm sure they were wishing they were back at school right now.
Some voices: Oh, oh!
Mr. Rodger Cuzner:The proponents of the bill like to say that we ask this of charities, so why can't we ask it of unions? I want to hold this up. It's a filing from one of the largest charities in the country. It's Alberta Health Services. They have the highest revenue of all charities in the country, one of the highest number of employees, and their filing is 11 pages thick. CRA has over 300 employees, and it costs $33 million a year to administer the charities program, so that would give you an indication as to where we are.
This bad boy here is two-sided print, and in one language, English. This is from the United Steelworkers of America. It files 715 pages for its filing, which is very close to what we're asking organized unions in Canada to file. That's what we're asking them to file. In the U.S., at the Office of Labor-Management Standards, it costs them $41.3 million a year to administer. They have 249 people on staff.
I'm going to put forward two motions at the end of the meeting here, one with regard to calling CRA in to give us its estimates for what it's going to cost taxpayers. We're also going to ask the Parliamentary Budget Officer to give his.
Do you see the merit in having those people in to tell us what it's going to cost?
Mr. Chassin, your organization is big on education. Do you think that's a wise move?
Ms. Peggy Nash (Parkdale—High Park, NDP):
Thank you, Mr. Chair, and thank you to the witnesses for being here today.
I just want to clarify for the witnesses and for anybody watching the testimony today that we have not received any amendments on this bill, or even any written notice of amendments, so we are dealing with the bill as Mr. Hiebert has introduced it. While many witnesses have indicated that they understand there are amendments, we have not seen notice of amendments or seen actual amendments to this bill.
The goal that we understand with the bill is one of transparency. It is ironic that the government is putting forward a bill on transparency when the Parliamentary Budget Officer is indicating he may well have to go to court to get transparency and financial information from this government.
Nevertheless, we're dealing with this bill. It concerns union members, and contrary to what some have said, which is that unions are not voluntary organizations, I want to make the point that they are voluntary organizations and that individuals can choose not to become members. However, because they get the benefits of the union, under the Rand formula they are still required to pay dues. The group can decide not to belong to the union and to decertify, so it can be a group voluntary decision as to whether or not to join a union, just to correct the record.
Unions, of course, are already required to disclose quite a bit of information. Many file their collective agreements and file financial statements. I notice that many of you may know each other and you're on each other's boards, but I notice, for example, Mr. Oakey, that I don't see the members of your board of directors listed on the website, so I don't know how much disclosure there is there.
Let me turn to Ms. Stoddart.
If the goal is to make unions more accountable to their members, to the individuals who pay dues to the union, can you clarify for us, because of the very serious privacy concerns you have raised with this bill, whether you believe it would be better for the objectives of the bill to provide limited individual reporting, or aggregate reporting? Which would be a better solution, again recognizing we've received no proposed amendments for this bill?
Mr. Mark Adler:
Being as objective as I am on this, I want to come to understand a few things. I can understand the purpose of trade unions. Nobody is disputing the fact that trade unions are necessary. Trade unions, like corporations, are legitimate instruments of society, but there is one thing I don't understand. Australia, France, Germany, the U.K., New Zealand, the Unites States, and even MPs, senators, all levels of government, publicly traded companies, charities, foundations—all these entities have to make public disclosure of how they spend their money.
Help me out here, Mr. Oakey. First, if a public disclosure is good for everybody else, why isn't it good for trade unions? Second, would this legislation restrict trade unions from engaging in the kinds of activity that they engage in right now, such as funding political lobbying and funding groups that are not associated with advancing the interest of workers? Would this bill restrict their ability to do that?
Mr. Guy Caron (Rimouski-Neigette—Témiscouata—Les Basques, NDP):
Thank you, Mr. Chair.
For the sake of transparency, I think it might have been interesting, Mr. Mortimer, to mention that you have 15 member associations. Of these 15, six are actually provincial Merit components, Le Conseil du patronat du Québec, and the Canadian Federation of Independent Business. Basically, we heard from you and over half of your membership on this bill, obviously all agreeing with each other. It would have been interesting if you had actually mentioned that at the beginning.
I would like to repeat something I said earlier. This bill is three pages long, plus definitions. Mr. Hiebert himself admitted that the number of amendments required to make this bill acceptable would mean not just changing the bill, but completely rewriting it.
So you are talking about a version of the bill that will most likely not be final, if there are amendments. In fact, it needs to be rewritten entirely.
Plus, based on Ms. Stoddart's testimony, it is seriously flawed in terms of privacy. This bill, as written, is a big huge mess even though this is its second incarnation after Bill C-377—the first version—was ruled out of order.
My first question is for Mr. Smith. You mentioned this briefly, but I would like you to give us some more details about the impact of this bill on the ability of unionized contractors to compete with non-unionized contractors, such as members of Merit.
Mr. James E. Smith:
Yes. I believe the cost would be huge to the Canadian taxpayers.
I have a report, 10 years old, from the Department of Labor in the U.S. It states the cost for the oversight of the reporting that was required in the U.S. I believe the reporting that will be required in Canada will be substantially more than that in the U.S., but 10 years ago it cost the U.S. government $28 million and took 300 full-time workers to oversee the compliance. That was just to oversee the compliance of the workers in the United States.
There were 13.4 million U.S. union workers for that $28 million. The Canadian Labour Congress represents 4.2 million Canadian unionized workers, which is about one-third of that. If you were to take one-third of the amount found in that 10-year-old report, which showed $28 million, and add inflation into it, that might be part of the cost. The other cost would be the set-up of the programs, the infrastructure to do it; that would be a huge cost.
I think Canadian taxpayers would like to know how much it would cost. I think it would cost more than the gun registry to set up.
Mr. Randy Hoback (Prince Albert, CPC):
Thank you, Mr. Chair. Thank you, witnesses, for being here.
One thing I pride myself on is working on good governance and making sure, being in government, that in any of the organizations I'm involved with, whether parliamentary associations or others, we have proper governance structures and good governance for proper transparency and proper reporting. That's not only beneficial for the people who belong to the organization, but also beneficial for the people who run the organization, so that they have good guidelines to act under and to follow in cases of crisis or in instances where things aren't normal and they have a process to follow through.
Coming from Saskatchewan, I know there's no question about the tie between the NDP and labour. I don't think anybody will question that. In fact, in Saskatchewan there was a convention at which one of the labour organizations was insisting that all of its members become members of the NDP. It's things like this that make me often wonder what organized labour is actually doing.
If it's actually sitting there to represent employees and look after the employees' interests, I understand that, but if they're going to go into social issues and issues that go beyond the scope of the workplace of those employees, I question the involvement. However, I suppose that's up to them.
When I talk to some of the union leaders and members from my riding, they say that they're already consulting with their members, that they're already going through that process, that the members know everything that's going on, that there are no surprises, that there's already a process in place for a member to raise his or her objection.
Mr. Mortimer, with LabourWatch, I'm curious. You're saying, and I'm hearing from some members, that there may be some consultation, but it's always hidden or it's always done in such a way that we never get all the facts, or there's intimidation involved when we raise questions on specific spending by different members.
Can you give us some examples of this? Am I right? Am I wrong?
Mr. Wayne Marston:
Mr. Hoback talked about transparency and being straightforward with things, and I think that's very important. I think Canadians expect that of us.
Beyond the fact that this bill is significantly flawed, we've had witness after witness here talking about who was getting sideswiped by it. Ms. Stoddart spoke of privacy concerns, another area of this bill that's significantly flawed.
Mr. Smith, are you aware that Mr. Oakey of Merit Canada—I want to say that, to be very clear here, because he's one of the people testifying—a direct competitor of your organization, has had unprecedented access to the PMO and other senior Conservatives not only once or twice, but 72 times, and he's met with Conservative MPs, senior staff, dozens of times between October 22 and October 24 alone? After hearing testimony here today, sir, would you say that Merit had the possibility of making significant financial gains if this bill is passed?
Mr. Brian Jean:
It's absolution. Thank you. I can't even pronounce it.
Mr. Chair, I find it ironic that only the Canadian government would give a tax break to people to lobby against public policy, such as foundations, in this country. I always found that very interesting indeed.
In this particular case, I sold office supplies and printing to unions. I was a lawyer as well, and I sold those services to union and non-union members. In fact, I printed for Suncor for 15 years and provided office supplies and printing to them. I don't see any way that information being published on a website would be a competitive advantage for anyone. I simply cannot see how it would, and I've been in business for a long, long time.
First of all, Mr. Mortimer, I want to commend you on your testimony. I thought it was excellent. In my past life as a lawyer, when I was representing union members, I found exactly what you found in some of your dialogue here earlier.
Mrs. Shelly Glover (Saint Boniface, CPC):
Thank you, Mr. Chair.
Thanks to all the witnesses for being here.
I'm going to ask Mr. Smith to do something for me. I'm not going to ask you a specific long question. I just want you to find in the annual reports you brought with you the exact page on which you list the percentage of dollars from dues you spent on political activities. While you do that, I'll ask the other questions. Then I'll come back to you.
I want to thank the commissioner for being here. I know that you work very hard, Commissioner.
I want to examine the comments you made about the exceptional publicly disclosed salaries. “Exceptional” means that they're an exception. The truth of the matter, as I see it, with regard to funded salaries that come directly from the public is that having them disclosed is more the rule.
I am a police officer, and I'm not a high-ranking police officer. I'm just a patrol sergeant. Then there are sergeants and staff sergeants. We have inspectors and superintendents. I'm not up there. However, hundreds of us have our salaries disclosed at the municipal level. I somewhat take exception to the word “exception”, because as my colleague has indicated, this is frequent. Paramedics, firefighters, and police officers—those who are benefiting from public funds—quite frequently see their salaries being public for everyone.
I would ask, because you suggested that you'd be open to a salary level, what that salary level would be. Would it be $50,000, or $100,000? If we were to put in place a salary level, what would you suggest it be for disclosure?
Mrs. Shelly Glover:
Okay. If you could get back to us with that and look at it, we'd be interested in hearing about that.
Thank you. You talked about the
Steelworkers AFL-CIO. As Mr. Cuzner did, I just happen to have a copy of the American printout from the Steelworkers AFL-CIO, and in it we have information on Canadian officials, because by law they have to report. I note that the salary and disbursements of the national director for Canada are listed.
Then of great interest to me on this page was the representational activities, which make up 33%. The political activities and lobbying make up 33%, and administration makes up 33%. What was of great interest to me was that when I looked at the rest of the high-level representatives, the Canadian entry was the highest in political activities and lobbying. I flipped through several pages, and political activity and lobbying activity of another vice-president is at 2%; another one is 5%, and another is 1%, but the Canadian has 33%, by far the highest. As a Canadian I'm entitled to know, and I want to know, how much unions are spending.
I'm a union member—I'm on a leave of absence—and I want to know where those dues are going when they concern political activities, so I would ask the commissioner again, why is it that Americans are allowed to have access to all this information, salaries included, and yet they don't have a privacy concern? Why do you think it's a privacy concern here and not there?
All right. I'm going to take a round as the chair.
I did want to address the issue of labour trusts. In our last hearing on the bill we had two witnesses who said the labour trusts, while they're included in this legislation, in this specific bill, are not included in U.S. legislation.
Mr. Mortimer, I think you addressed it during your opening statement today. I was going to ask you and perhaps Mr. Hunter if you could address the issue of whether labour trusts are included in the U.S. legislation, and if so, whether there are any differences between what's proposed in this bill and what is in the U.S. legislation.
Could we hear from Mr. Mortimer first on that, please?
Mrs. Shelly Glover:
Thank you, Mr. Chair.
Thank you to Mr. Cuzner for the motion.
I did want to let Mr. Cuzner know, though, that there's a letter dated November 21, 2011, from the PBO saying he's already costed this one. In fact, I'll read the third paragraph of his letter. What he's done is he's costed PMBs for those that may have a material impact on Canada's fiscal framework as well as those that may have a significant operational impact on an affected department or departments.
Then he goes on to cite that of the 27 bills that his office looked at, there were only two that had an impact, and this was not one of them. It may already have been done, so I'm wondering why we might need a further motion for it.