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Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs

Issue 13 - Evidence, June 17, 2003

OTTAWA, Tuesday, June 17, 2003

The Standing Senate Committee on Legal and Constitutional Affairs, to which was referred Bill C-39, to amend the Members of Parliament Retiring Allowance Act and the Parliament of Canada Act; and Bill C-24, to amend the Canada Elections Act and the Income Tax Act (political financing), met this day at 3:30 p.m. to give consideration to the bills.

Senator George J. Furey (Chairman) in the Chair.


The Chairman: Honourable senators, today we will be studying two bills — Bill C-39, to amend the Members of Parliament Retiring Allowances Act and the Parliament of Canada Act and Bill C-24, to amend the Canada Elections Act and the Income Tax Act (political financing). The Honourable Don Boudria, Minister responsible for Elections Canada will speak to us on both bills today.

We will begin with Bill C-39. We welcome the minister and his officials from Treasury Board Secretariat. Mr. Aaron Allen is the Manager of Other Statutory Plans. You will note on your agendas that Ms. Joan Arnold was to appear but is unable to attend. From Privy Council Office, we welcome Mr. Matthew Lynch, Parliamentary Relations Officer.

I understand, Minister, that you have another engagement in a little over an hour. We will ask you to begin with a short presentation. I ask senators to keep questions as brief as possible.


Mr. Don Boudria, Leader of the Government in the House of Commons: I am pleased to appear before you this afternoon to present Bill C-39, to amend the Members of Parliament Retiring Allowances Act. The Chair indicated that Mr. Allen from the Treasury Board and Mr. Lynch from the Privy Council are present.

First, I will give a very brief overview of Bill C-39, which makes several technical corrections and does not in any way affect existing policies. The bill makes four main changes. First, clauses 1 through 9 clarify the accrual rate provisions for the parliamentary pension plan for service after 2001, following comments made by the chief actuary: this is essential to better guarantee an application; no strategic changes are being made to the pension plan.

Mr. Allen can respond to the technical questions and the comments of the chief actuary. It is not about making changes. This concerns the accrual of credits and the various interpretations that could be made.

Clause 10 rectifies an oversight dating back to 2001 when changes were made to the allowances of parliamentarians from both Houses, as a result of which additional allowances were provided to chairs and vice-chairs of standing committees but not of special committees. The objective was obviously to provide additional remuneration to committee chairs, whether they headed a standing or a temporary committee. This should not make any difference, except that the remuneration of temporary committees is based on the number of sitting days.

Clause 11 would reinstate the pre-2001 provisions of rounding down ministers' salaries, as is the case with all other members' allowances, and as was the case for ministers before 2001.

Of course, after adding the rate of wage growth as is done with judicial salaries, using the well-known formula, a minister will receive $312.25. That was not the intention. The intention was to round down to the nearest $100. The salaries of members of Parliament are already rounded down, but additional allowances earned by ministers are not rounded down. Rounding down is used in all other instances.

This is an oversight. No increase is to be provided. This will simply make it easier for the accountants to do their job.


Fourth, clause 12 clarifies the calculation of the disability allowance by specifying which salaries and allowances are to be used in the calculation this allowance. This addresses a technical concern that only the sessional indemnity would be the basis of a disability allowance. That is not what was foreseen, of course. The disability allowance should be based on the entire salary. If, at the time of disability the salary is lower, it is based on that amount. If it is higher, it is based on that amount. That was a mistake.

The disability allowance on the House side has only been used once in recent years, in any case, but should it occur again, it is important for both Houses that it be clear in the law as to what we mean.

The proposed changes would ensure that all the salaries in place before a parliamentarian went on disability would be applied to the calculation of the disability allowance that I just indicated. That is basically it.

There are four technical changes. Honourable senators, Bill C-39 addresses these four technical changes that have been raised since parliamentary compensation was updated in 2001. I repeat what I said in the beginning: Nothing here addresses any policy changes. There were concerns and some people wanted to put in other items that were arguably of a policy nature. However, there was not a consensus to move on those. This merely addresses the technical corrections.

The Chairman: Thank you very much, minister.

Senators, are there any questions?


Senator Robichaud: I would like to clarify a few points relating to retroactivity. For the chairs of special committees, retroactivity applies to disability allowances. Is that correct?

Mr. Boudria: In relation to the first part, there is no retroactivity.

Senator Robichaud: Could it apply to disability allowances?

Mr. Boudria: Retroactivity does not apply in the other case. Retroactivity might apply in the case of individuals entitled to additional earnings and who would have to leave due to a disability.

I do not believe there are any cases in either House. There is one case in the House of Commons; I am referring to General Richardson who stepped down due to a disability. There have not been any other cases, either before or after the preceding legislation, which rectified the salaries of members of Parliament. That was not an issue.

Furthermore, I have been handed notes indicating that there have not been any cases in the Senate either. Therefore, retroactivity is not applicable.

Senator Joyal: My question concerns clause 10 of the bill. When you considered extending additional remuneration to the chairs of special committees, did you consider the possibility of simply abolishing it for all chairs and vice-chairs, since Parliament existed for many years without it?

Members or senators who are chairs or vice-chairs receive a benefit; in practice, this position does not entail many more responsibilities or work than other members or senators who do preparatory work in relation to bills, attend all committee meetings, prepare questions and, occasionally, amendments. With all due respect to our chair, it is nonetheless true that, in practice, the workload is the identical.

Why provide an additional benefit to someone who is often chosen in a particular way? As much as possible, we must strive to maintain a certain balance of this system and avoid introducing elements that seek to differentiate the work of members and senators.

Mr. Boudria: There is nothing political about this bill. It makes only remedial amendments. The initiative originated with the Lumley report, which recommended increases for certain positions, and these measures were adopted.

If Parliament wants to ignore the recommendations in the Lumley report, it can, but it would have to do so following an election. In that case, there would be a review of all the benefits granted to parliamentarians rather than an examination of an isolated case which, after all, would go against the report already been adopted by parliamentarians.

Senator Joyal: We are adding a great many names to the list of individuals in Parliament eligible to receive additional remuneration.

To the 40 ministers and 30 parliamentary secretaries, we added the committee chairs and vice-chairs. Now we have added the special committees, the whips and deputy whips.

Who is not getting a little extra under the current system? The only ones left are the foot soldiers, those without titles, the grumblers and the dragons.

The entire system is designed to provide rewards, which seems to affect how parliamentarians behave. This just adds to an already existing policy.

However, when additions are made to a policy, the question arises as to their impact on the system. Currently, these additions are perhaps not the best way to improve this system.

Mr. Boudria: I am going to quote the Lumley reference to you. The way in which it is written, in the report we adopted, does not reflect what he said.

The Lumley report stated — and I will quote it in English:


The commission recommends that chairs of the House and Senate committees...


It did not say ``standing committees.''


...should receive a salary for additional responsibilities of $9,480. Vice-chairs should receive $5,000.


That is what was proposed. The Liaison Committee and the Library Committee were excluded from this because they were not, according to Lumley, important enough to receive this additional salary.

At the time, Lumley's recommendation was adopted, but we made a mistake by writing ``standing committee'' instead of simply ``committee,'' as per Lumley's recommendation.

When the Special Committee on Non-Medical Use of Drugs was struck, a member advised me that he was refused the additional allowance. I did not understand why. Once we verified this, we realized that the administration had decided that the bill excluded the members of the special committee, although the adopted recommendation had not.

The aim of the current bill is simply to rectify this and not to create something new. There was a debate as to whether a new system should be created when legislation regarding the salaries of members of parliament was passed several years ago.

I want to ensure, in the future, that the regulations can be reviewed and benefits can be added or eliminated, if that is what everyone wants, but I think this should be done in a comprehensive way. Currently, I am not proposing additional benefits. I am simply proposing technical corrections to reflect the original intent, which, inadvertently or unfortunately — or both — was not actualized.

I hope, honourable senators, that this answer is satisfactory.


Senator Grafstein: This is a follow-up to Senator Joyal's question. Senator Smith and I have been trying to calculate the number of members of Parliament. I take it that in Parliament there are 301 members of the Commons and 105 senators, which makes the total number of parliamentarians 406. Is that right?

Mr. Boudria: I think so, yes.

Senator Grafstein: Of that 406, how many members of Parliament — be they members of cabinet, parliamentary secretaries, chairmen or vice-chairman of either standing or joint committees — would, under the previous bill, receive extra remuneration? My calculation was 96. However, I am not sure that is accurate now.

Mr. Boudria: Honourable senators, I do not have the precise number with me, but it sounds like it would be roughly of that order. There are a little over two dozen ministers, about a dozen secretaries of state and two dozen parliamentary secretaries. There are 18 committee chairs and twice as many vice-chairs on the House side. Of course I would not be as familiar with the numbers for the Senate, but I am assuming that the proportion would somewhat less on the Senate side, because, of course, there are no parliamentary secretaries and no ministers. You just have to take the number of senators and make the calculation. I suppose the number would be somewhere between 80 and 100 — and 96 sounds entirely plausible.

Senator Grafstein: I say that because I tried to calculate it once for our previous bill and had a little difficulty pinning down the number. The estimate I received was 96.

Again, Senator Joyal raised the issue we raised in the Senate about the rationale for differentiating, again, essentially, for members of the Senate. I think our concern should be more directly concerned with our own house than your House.

Having said that, let me ask a budgetary question. Have you been able to estimate what the cost to the taxpayers of the proposals in this particular bill would be?

Mr. Boudria: Honourable senators, it is almost totally neutral. Since the last election, we have had only one special committee on the House side. It involved three people for a few months. The bill is not retroactive. It is a technical change. The portion as it relates to the Chief Actuary is one of clarification only. In his report, the Chief Actuary identified that this lacked clarity and precision needed to be made. I will say arguably that that is revenue neutral.

With regard to the provision about rounding off to the nearest $100, that is probably slightly lower than revenue neutral when you take into account the simplicity of the accounting, which is the only thing that that actually does.

With respect to the disability allowance provision — and that is the only other case — we have only had one since the present compensation regime has been in place. In that case, it did not apply. Of course, heaven forbid that we would ever have another disability case in either House.

To calculate whether that person would be entitled to extra benefits, that person would have to be entitled to the extra emolument at the time that the person was withdrawing. When that will occur next is very difficult to speculate. Arguably, whatever it is, it would be more than now because even if there is only one in 10 years, that is definitely an increased cost. However, it is certainly not an increase over what was anticipated because it was never anticipated that someone would be losing benefits as a result of inappropriate drafting.

Senator Grafstein: Finally, could you remind me why the age 69 was adopted in the legislation?

Mr. Boudria: With your permission, the expert who is with us from the Treasury Board will respond to that.

Mr. Aaron Allen, Manager, Other Statutory Plans, Pension and Benefits Sector, Human Resources Management Office, Treasury Board of Canada, Secretariat: The age 69 provision is adopted to ensure that the pension arrangement continues to comply with the requirements of the Income Tax Act as regards accrual of pension benefits under a registered pension plan. The portion of pension benefits — which are under what is called the ``retirement compensation arrangement'' — is outside the normal registered tax assistance retirement savings vehicles. Therefore, that tax requirement provides that that registered pension plan ceases contributions at the first of January following reaching age 69 and ceases accrual of pension credits at that point.

The age 69 differentiation provides for the transfer of the pension accrual from the portion of the pension plan under Part 1 of the act, which is the registered pension plan, and puts those contributions under Part 2 of the act, the retirement compensation arrangement.

Senator Grafstein: I thought that 69 was a very appropriate age when I first came to the Senate. I no longer believe that is an appropriate age. Perhaps the government might give further consideration to pushing it into the future.

The Chairman: If there are no further questions, I would like to thank you, Mr. Minister, Mr. Allen and Mr. Lynch.

We will now hear from the minister again on Bill C-24. This time, the minister will be accompanied by officials from the Privy Council Office, Ms. Kathy O'Hara, Deputy Secretary to the cabinet (Machinery of Government), and Michèle René de Cotret, Senior Privy Council Officer.


Mr. Boudria: Honourable senators, I am pleased to appear before you to speak about Bill C-24, to amend the Canada Elections Act and the Income Tax Act (political financing). The primary aim of this bill is to increase the transparency and equity of Canada's electoral system.

I would like to review with you the main elements of this bill, particularly the expanded disclosure clauses, the prohibitions on contributions by corporations and unions, the limits on contributions by individuals and public funding.

I intend to demonstrate that the bill was drafted using a sound approach based on Canadian political financing practices, which are based in turn on procedures used in other jurisdictions — particularly the provinces — and that this bill is a perfect response to various concerns.

Before the bill reached third reading in the House of Commons, it was subject to thorough consideration by the Standing Committee on Procedure and House Affairs. This committee considered over 200 amendments, 80 of which were retained. The amendments made in committee, as well as those made at the report stage, greatly improved the bill while respecting its key principles. I will come back to this shortly.

With regard to extending the disclosure clauses, under the existing Canada Elections Act, only registered parties and candidates are required to disclose to the Chief Electoral Officer all contributions received and all expenses incurred.

Both in the past and in the report, the Chief Electoral Officer has referred to the black hole of political financing, since the other important political participants, such as the riding associations, the leadership contestants and nomination contestants did not have to provide the same information. In other words, information was available, but only in a kind of silo because other political contributions were not disclosed at all.

Under Bill C-24, the entities I just named will now be required, too, to disclose all contributions received and all expenses incurred to the Chief Electoral Officer, who must then publish the name and address of each contributor making contributions of more than $200. Riding associations would have to provide an annual report of contributions and expenditures. With regard to leadership contests, leadership contestants would have to detail contributions received when they registered as contestants, for the four weeks preceding the day of the leadership contest. They would also have to report, within six months after the end of the leadership contest, all contributions received and expenditures incurred.

Riding association nomination contestants would have to report, within four months after the nomination contest, contributions received and expenses incurred. Should an election be held during that time, these contestants would have to file their report within four months after the election. Selected individuals are extremely busy and must campaign to get elected, as those of you who were members of Parliament will no doubt remember.

Furthermore, as of January 1, 2005, those political parties eligible to receive the quarterly allowance, which I will talk about later, would have to provide quarterly reports of contributions received. Although some members of the committee indicated that these changes could constitute a significant administrative burden, the majority was in favour of extending measures relating to disclosure. Seven provinces apply provisions similar to the clauses in the bill. These provisions require local associations to register and file a report.

In my province of Ontario, for example, these measures have been in place since 1975, and boundaries of electoral districts are identical to the federal government's boundaries. The system has identical ridings and sometimes even the same employees at the federal and provincial level.

Even if the riding associations and the leadership contestants and nomination contestants for each party are subject to greater controls following the adoption of these measures, these are reasonable measures that are essential to attaining the bill's objectives. That said, the government did take into consideration related concerns, and the standing committee retained various amendments.

For example, one of the main concerns was the effect of the redistribution scheduled for next year under the Electoral Boundaries Readjustment Act. The bill was amended to allow already existing registered electoral district associations — meaning those that will have registered after January 1, but which will have to be re-designated following the redistribution of seats — to continue to exist in a new district if the old one is eliminated.

Furthermore, other associations will be allowed to pre-register so as to be able to operate once the representation order has entered into force. Therefore, preparations can be made in March, April or May. When the redistribution of seats occurs on July 19, 2004, the new structures can be implemented, as advance measures will have been taken.

Other important amendments retained by the committee seek to reduce the administrative burden. I will give you a few examples. Parties holding fundraisers are not required to issue receipts for donations less than $25. The original bill referred to $10. This change acknowledges the fact that, at some fundraising events, the hat gets passed around to offset the costs of renting the room, and that $10, which might have been sufficient ten years ago, was a little low. At the members' request, this amount was increased to $25.

Second, the limit beyond which nomination contestants will have to report contributions received and expenses incurred has increased from $500 to $1,000.

In other words, the obligation to provide a detailed report on contributions and expenditures does not really apply to contestants of small parties or a contestant elected by acclamation who might, for example, spend $600 buying donuts for delegates. The obligation to report has been eliminated up to $1,000. Between $1,000 and $5,000, summary reports can be provided. After $10,000, there is a more complete report for regions with strongly contested nomination contests. Over $10,000, auditors and so forth will be used. There are three levels so as not to bog down the system with too much paperwork.

In his evaluation of the disclosure measures, the chief electoral officer indicated, to my great satisfaction, that these new measures will eliminate what he called the black hole. He will tell you about this shortly.


In respect of prohibitions on corporate and union donations and limits on contributions from individuals, recent surveys indicate that Canadians are concerned about corporate and union influence on the political process. According to Environics research, 81 per cent of Canadians support limits on contributions. This information has been submitted to election officials. Focus groups, in which we tested the bill, have also spoken to this issue.

Bill C-24 would limit the amount of contributions from individuals to $5,000 annually to a registered party, all of its local associations, candidates and nomination contestants together. In other words, it is the aggregate of the party and its affiliations. When someone donates $3,000 to a political party, the balance of $2,000 could only be donated to an affiliated local association or candidate for a grand total annually of $5,000. By the way, the amount of that limit was $10,000 in the original draft but the House of Commons committee saw fit to reduce the amount to $5,000, which I supported.

An individual would also be allowed to contribute up to $5,000 to leadership contestants of a registered party in a leadership campaign. Candidates would be allowed to contribute an additional $5,000 to their own campaign, as a candidate. As honourable senators are aware, the contribution limit for individuals was reduced from the original $10,000 following testimony by witnesses before the commons committee, as I indicated.

The $5,000 limit should provide an effective balance for our objective of removing the perception of undue influence on political participants, while at the same time providing the necessary financial contributions, or potential contributions, for a healthy electoral system in a democracy.

I note that many provinces already have limits on contributions, for example, Quebec, Ontario, Manitoba, New Brunswick and Alberta. Both Quebec and Manitoba have imposed a ban on corporate and union contributions altogether.

The contribution limits range from $3,000 in Quebec and Manitoba to as high as $15,000 in Alberta. In my own province, I think they are $7,500 in the Province of Ontario. Bill C-24 would prohibit contributions from corporations unions and associations, while allowing a small exception whereby those entities would be entitled to contribute a maximum amount of $1,000 annually to all of the candidates' local association and nomination contestants of a registered party, but not the central party. In other words, this is to permit the local hardware store to buy a ticket to a candidate's golf tournament, but it is a minor exception of the nature that I described.

The corporations, unions and associations would also be allowed to make a second contribution of $1,000 when a second election is held in the same riding in the same year. For example, there were two by-elections yesterday. Within a year after this bill comes into force, should there be a general election, the amount that those who contributed to the by-election would be erased so they can do it again. Obviously, having two elections in the same year is a different proposition and we must recognize that.

There is also another minor variance to the $1,000 contribution, which has to do with the nomination contestants where someone contributes to the campaign of a nomination of someone who did not win — in other words, a losing candidate. Obviously, someone who contributed to the losing candidate did not affect the winning candidate and no one could argue that that somehow influenced him or her — at least not in a positive way. That would trigger the possibility of making an additional contribution.

All these contribution limits would be automatically indexed for inflation so we will not need to bother you with all this again in the near future. While some commentators have argued there should be no prohibition on corporations and unions, or that limits should be higher, I have made it clear that this would go against the fundamental principle of the bill.

Seven out of 10 provinces have also spoken to this. It has existed at the provincial level and the limits, never mind arguing the size for a second, have existed for a long time. In terms of the outright ban, they have existed in two provinces, one for a long time and one more recent, as I said a while ago.

I want to talk about nomination contestants. During my consultations on Bill C-24, about this time last year, the strongest messages I received came from women members of Parliament about the need for a more level playing field at the nomination level.

As a result, the proposed legislation includes a spending limit for nomination contestants of 20 per cent of the amount that candidates were allowed to spend in the previous election, recognizing that these contests of course are much smaller. After all, you do not have 100,000 voters when you are dealing with a nomination contestant.

I believe that the 20 per cent limit responds to the call for more fairness at the nomination level, while ensuring that contestants can spend adequate amounts to run an effective campaign. Remember that the personal expenses of the candidate are excluded from that. An example would be someone who had a vast rural area and needed to rent a plane to go from village to village, or Aboriginal community to Aboriginal community; that candidate's personal expenses do not fall in the calculation.

That is already the case for a candidate in an election and it will be the same system for a candidate for the nomination; the candidate's personal expenditures are removed from the calculation.

I had initially put this amount at 50 per cent of the last election and I had thought that was far more restrictive than what we had. There was almost unanimous condemnation. Everyone said it was too high and it was reduced at the request of many interveners, including, of course, members of Parliament, to 20 per cent.


In closing, I would like to talk about public funding measures in the bill. The aim of these measures is essentially to compensate for the shortfall of parties and candidates subject to prohibitions relating to corporations and unions, and the ceilings on contributions by individuals.

These measures respect the public funding tradition with regard to Canada's electoral system, which was implemented in 1974, along with the Election Expenses Act. In short, public funding in Canada is not new, contrary to recent statements. Funding has existed since 1974, but in a different form.

The definition of election expenses eligible for a certificate of return would be updated and expanded to include polling expenditures and the election expenses limit would be consequently increased. In 1974, polls were not frequent, but today they are recurring election expenditures. I do not, therefore, see why they would not be included in the total eligible expenses.

Under the bill, the percentage of a registered party's election expenses eligible for a certificate would increase from 22.5 per cent to 50 per cent. Furthermore, this would increase to 60 per cent for the next election only, to facilitate the transition to the new system. Candidates would need only 10 per cent of valid votes cast, instead of 15 per cent as in past years, to reach the minimum amount of election expenses eligible for a certificate. The smallest parties brought this matter to our attention, because traditionally there were only two or three major parties in the House of Commons. Now, in our second mandate, there are five parties.

The past rate of 15 per cent of votes for a certificate seems very high in this system. Therefore, 10 per cent was seen as a very reasonable rate. As proof, if you verify the results of yesterday's by-elections, you will see that not many candidates, even with this limit, would receive public funds following the election.

The percentage of a candidate's election expenses eligible for a certificate would increase from 50 per cent to 60 per cent to reduce the impact of contribution limits on the ability of candidates to raise funds. Furthermore, the registered parties would be entitled to an allowance of $1.75 per vote received in the preceding general election. This allowance would be paid on a quarterly basis.

This system is similar to systems currently in place in Quebec, New Brunswick and Prince Edward Island. A lump- sum payment, a transitional measure intended to help the parties, equal to the 2004 allowance would be paid at the beginning of the year. In other years, this allowance would be paid on a quarterly basis, again to facilitate the transition. Clearly, if individuals receive funds in addition to those they are entitled to during an election year, they must repay them. When the chief electoral officer of Quebec addressed the standing committee of the House, he indicated that, for Quebeckers, this measure was an integral part of Quebec's political financing system.

Ultimately, the allowance of $1.75 per vote would ensure that the restrictions will not hurt the parties and that they would have the funds needed to operate adequately during non-election periods. The parties play an extremely important role in our democratic system. This measure would also reinforce the link between voters and their party.

Important amendments were moved by the standing committee of the House with regard to allowances and provincial and territorial associations. I will use my party as an example.

Some of my colleagues in the Liberal caucus indicated that the needs of these associations must be taken into consideration, which, in my opinion, is entirely justified. As a result, the standing committee of the House retained an amendment that would authorize the Receiver General of Canada to pay a portion of these allowances to provincial and territorial division of a party, if the leader of the party so authorizes.

The provincial and territorial associations recognized by the leader would themselves appoint agents responsible for issuing receipts for contributions in Quebec City, Toronto or Fredericton, if that is where the New Brunswick party has its head office, and able to issue local receipts, naturally, if the leader of the party so authorizes.

We live in a federation, and some political parties are federated. Our party is, and I am told that the Progressive Conservative Party also has a very similar structure. This does not apply to certain other parties because they are more centralized.

This bill seeks to amend the Income Tax Act. It is important to clarify this. Tax credits of 75 per cent on contributions to registered political parties would increase from $200 to $400. I think that Ontario allows 75 per cent of the first $350 or so. Federally, this would increase to $400. Consequently, each bracket of the tax credit would increase, by $200 for the 50 per cent bracket and by $200 for the 33.3 per cent bracket. The maximum tax credit per contribution would increase from $1,075 to $1,275.

In conclusion, Bill C-24 is a huge step toward a true modernization of Canada's public funding system. These measures respect our national or provincial traditions with regard to public funding, and they will guarantee greater transparency and equity in a system that Canadians trust. It is a great pleasure to respectfully present this bill to you, and to answer your questions.


The Chairman: How does the legislation affect changing riding associations? What, if any, effect will it have on the formation of new parties?

Mr. Boudria: You only create a new constituency association when there is redistribution. That being said, there are some areas of the country where there are no constituency associations. Traditionally, some parts of the country do not usually elect a member from a particular party. After a length of time in that pattern, there tends to be a dwindling number of volunteers, particularly if there is not a local person to act as the lightning rod for support. That does occur and in those cases, the central party could retain the power to make the receipt for that particular constituency association. If a constituency association is created later, there would be a letter from the leader of the party requesting issuance of the receipt book and everything else required to the person who is the new party riding president

Insofar as the redistribution is concerned, I explained how you could pre-register the new riding boundaries once associations begin to have what we call ``foundation meetings'' based on the future redistribution. It could then be triggered on the day that it takes place.

I believe that your second question was concerning how it would affect the formation of new parties. The bill is silent on that and the existing rules would continue to apply. No one is, of course, prevented in any way from doing that. Arguably, there is very little difference from the current system. A person could, of course, fundraise, recruit the signatures, and carry out all other activities associated with a new party. Following the next election, the person would be eligible for the public subsidy of $1.75 per vote, based on the number of votes that the person receives.

Again, in respect of the Quebec model, the Quebec Liberal Party was eligible for hundreds of thousands of dollars, if not more. Mr. Mario Dumont often complained that he would receive only $3,000 per year because he thought that his popularity — based on public opinion polls — was higher and that he should, therefore, receive more money for the party. However, that is not a tangible measure. The only tangible element is the physical act of the voter, namely the franchise by which he or she indicated in the affirmative his or her support in an election. The amount is based on that system, which has been used in two provinces. That is emulated here and is no different.


Senator Nolin: I would like to thank you for agreeing to the amendments I attempted to present to the Senate a few years ago. During our consideration of electoral legislation, I had tried to convince my colleagues to extend to electoral district associations controls similar to those you are proposing today. First, will your government agree to consider amendments, if the Senate concludes that the bill needs amending?

Mr. Boudria: It is difficult for me to comment on this without being able to refer to specific amendments. You will recognize, however, that we would like this legislation to come into force on January 1, 2004, so that these measures will be in place for the next elections in 2004 or 2005. I do not know who will be leader of our party at that time; that leader will decide, as is a Prime Minister's right. But the bill would be difficult to implement if it were subject to an additional consideration in the House. The more delays prior to January 1, the more difficult it will be, and I submit these facts to you with all due respect, because I have testified many times before Senate committees, and I attempt to be clear when addressing the honourable senators.

Senator Nolin: I want to draw your attention to pages 33 and 34 of the bill, particularly clauses 405.2(1), 405.2(2), 405.2(3) and 405.2(4). These four clauses contain erroneous references. Should we decide to amend these clauses, what procedure would you suggest in order to ensure that the bill is adopted with the necessary clarifications? Because there are definitely erroneous references in the four clauses I have just listed.

Mr. Boudria: Senator Nolin is correct since there are, I believe, four errors. These four errors are found in the French version. When the bill was drafted, the digitizing was done subsequent to the amendments, and it seems that corrections were made in one version and not the other. The French text refers, for example, to a non-existent clause.

This matter was brought to the attention of the Clerk of the House of Commons and the House law clerk who were to communicate with their colleagues in the Senate. The House of Commons considers this to be a non-essential legislative amendment. With unanimous consent, a remedial correction could be made as was done in similar cases in the past, or so I am told. It is not an amendment as such.

Senator Nolin: When you introduced the bill, there was $80 million to refund election expenses. This $80 million, clearly, did not take into account the amendments that would be adopted following consideration by the committee. Do you have the new amount to be used as the baseline for calculating refunds for election expenses?

Mr. Boudria: There are two amounts: the refund related to election expenses, meaning the increase from 50 per cent to 60 per cent.

Senator Nolin: And the decrease from 15 per cent to 10 per cent in the ridings.

Mr. Boudria: No, the decrease from 15 per cent to 10 per cent is not amendment. It was in the original bill. In fact, there are two amendments: to increase the 50 per cent to 60 per cent, and to increase the 50 per cent to 60 per cent on a one-time only basis.

Senator Nolin: There is also question of issuing national parties with refunds for election expenses.

Mr. Boudria: That is what I mean. There is the permanent increase from 50 per cent to 60 per cent for riding associations, and the one-time only increase from 50 per cent to 60 per cent for the parties. There are two refunds, one permanent and one transitional.

You will tell me that there will be a third one: in the first year of the new system, people will be entitled to the $1.75. They would get all four at once. In fact, this is not an additional expenditure, except if the borrowing cost is considered. It could be considered a minor expense. If people collect funds to which they are not entitled, these funds will be deducted from that year's refund. There is almost no difference.

Ms. Michèle René de Cotret, Officer, Privy Council Office, Counsel: The candidate's refund, which is increasing to 60 per cent, represents a net financial impact of $3.4 million. The party refund, which is increasing from 50 per cent to 60 per cent for the next election only, also represents $3.4 million.

Senator Nolin: That is the total value?

Mr. Boudria: That is the added value of the increase from 50 per cent to 60 per cent.

Senator Nolin: During the next four-year cycle, including refunds of election expenses and annual subsidies, what is the total amount?

Mr. Boudria: I will use a non-election year as an example. There are the following items: a refund of the association's auditing costs, the annual allowance of $1.75 and the tax credit increase. The Department of Finance has provided us with an estimate: we wonder how much more people would be encouraged to give when the tax credit will be between $200 and $400. It is more speculation than anything else. This amount is estimated at $3 million.

Senator Nolin: Just for taxes.

Mr. Boudria: The tax shortfall.

Senator Nolin: This measure would generate an additional shortfall of $3 million?

Mr. Boudria: That is the claim. Then, there is the annual allowance of $1.75 per vote cast for $22 million and the auditing costs of riding associations for $1 million. Once again, it is difficult to be exact, because some associations could choose not to register, and the auditing will be done by the central party.

The administrative costs of launching the program with Elections Canada are estimated at $3 million, for $29 million in total. In an election year, only one or two of these figures changes. The same approximate figures must be used, but with the addition of the election expenses refund rate that was previously 22.5 per cent. This will increase to 50 per cent. This represents an additional $9 million in expenses, but only during an election year because this is a refund of election expenses. If no elections are held, there are no expenses.

By broadening the definition of eligible expenses, including polling and other similar items, there is an additional $1 million. There will also be a decrease to 10 per cent of valid votes so that candidates can receive the refund; the estimated cost of this measure is $1 million. It is difficult to assess. It is estimated that a certain number of candidates will have between 10 per cent and 14.999 per cent. Costs are anticipated only for this range, because candidates already receiving 15 per cent of the vote or higher already benefit from this measure.

The increase to 60 per cent of the refund rate with regard to the expenses of candidates already receiving 50 per cent equals $3 million; this represents $47 million. An election year represents approximately $47 million and a non-election year, $29 million.

Senator Nolin: In a four-year cycle, assuming for our purposes that a general election is held once every four years, the total cost of this measure is approximately $165 million.

Mr. Boudria: I am told it is $137 million.

Senator Nolin: I am using the figures you provided just now, I multiply by four, I add an election year, and I get $163 million.

Mr. Boudria: It is three times $30 million, plus $47 million.

Senator Nolin: You are including the annual costs in your $47 million.

Mr. Boudria: I am being told that it is $137 million. I would like to add that some current expenses will disappear for taxpayers. As we all know, businesses previously made election contributions and claimed them as business expenses.

Perhaps they should not have done this, but it is well known that they did. These taxes, which were not paid in the past, will become recoverable because businesses can no longer make these kinds of contributions. The related tax deduction will no longer exist.

Senator Nolin: Have you assessed the shortfall?

Mr. Boudria: No.


Senator Joyal: Could you explain to us the rationale behind clause 435.01(1), which deals with the threshold for a registered party — I repeat, registered party — but parties that have not, in the previous election, met the 2 per cent of the number of valid votes casts or the 5 per cent of number of valid votes cast in the electoral district.

This seems to raise an important Charter issue. You appeared previously at this committee on the issue of Figueroa. In 2000, you were requesting amendments. The Supreme Court of Canada, in many decisions — Libman, Harvey and the Reference Re Provincial Electoral Boundaries, Saskatchewan (1991) — clearly established the standards of fairness and political equality.

Here we have a situation where there is a party registered according to the act. In other words, the party has met the obligations set out under the act. According to the objective of the proposed bill, the party will be barred from receiving more than $1,000 per corporation per constituency. It will be barred from getting more than $5,000 per voter or per elector. That party will not receive any allocation on a trimester basis, as other parties will, for the specific reason that that party did not meet the threshold in the previous election.

In all your presentations, you have claimed the example of Quebec. However, if I look into section 82 of the Quebec legislation, which specifies clearly that in the calculation of the amount of money directed to a party in an annual or trimester payment or installment, no such distinction is put on the fact that a party has not met a certain number of votes while the party is still registered. It is not a new party. It is a party that has run candidates and has met the obligations of the act. It is complying with all of the other obligations put on the shoulders of the party. However, because it is a small party, it is disenfranchised.

According to the previous decisions of the Supreme Court, you have a very important test to meet because you discriminate against the small parties. If you discriminate against the small parties, you must have very good reasons. The Supreme Court has established those reasons.

According to the last general election, six parties would be disenfranchised. Their total votes were 235,184. The treasury would have to spend $411,572, if those parties were admissible at the same level as the other parties.

Why have you decided to exclude those parties from public financing while, at the same time, maintaining the status of registered parties? If you go to court, how will you argue to support that provision of the bill?

Mr. Boudria: One of the difficulties we have is that the issue is presently before the court. Commenting on it is somewhat touchy. I will touch on the matter in a superficial way but it is presently before the courts.


In the Barrette decision, in 1994, the Court of Appeal of Quebec had set a refund eligibility requirement of 15 per cent of votes. A percentage is still a requirement to obtain taxpayer funding. You will say that this is not the same, but it is a principle. At that time, it was stated that this requirement did not violate the Charter.

In the Figueroa case, decisions from other courts clearly identified that the minimum required to put the name of a recognized political party on a ballot was not necessarily the same minimum required to obtain other benefits. The current legislation states that a certain level is necessary to get one's name on the ballot and another level for public funding. This qualification is based on the affirmation that there must be a critical mass of support to qualify. This exists already in the Barrette and Figueroa decisions. This qualification exists also at the Court of Appeal.


Senator Joyal: Yes, but this is under appeal, as you know, to the Supreme Court presently. The issue is still pending. Currently, small parties have access to the same basis of funding as any of the other parties. Your proposal essentially establishes limits to the funding that could accrue to a party from private sources — be they corporations, unions, citizens or other sources.

The problem is that you are depriving them of a freedom that they have under the present system. At the same time, you will not give them the same benefits that you are giving to other parties while they are still registered parties. Again, your section still says ``a registered party.'' It is a party that has met the threshold that you have recognized yourself as the applicable threshold by number of candidates.

Mr. Boudria: Honourable senators, the 2 per cent and 5 per cent formula is already there. After an election, in order to qualify for reimbursement of taxpayer dollars in another context — namely the context of spending for an election — the identical threshold is used. If taxpayers' dollars are dispensed for the purpose of giving a reimbursement after an election based on the 2 per cent and 5 per cent criteria, it stands to reason that the same criteria for dispensing of public dollars on the annual system of $1.75 should be based on the identical threshold.

If there were a different threshold, I suspect members of both houses would ask me why the threshold for getting public dollars during an election year is different than it is during a non-election year. In this way, it is the identical in both cases. Whether it is for an election reimbursement or annual subsidy, both cases give federal dollars using the same formulation.

Senator Joyal: As I said earlier, you are now depriving them from access to a system of funding that is at par with all the other parties. You are giving to the large parties a benefit that you do not recognize for the small parties. That is essentially the distinction between the reimbursement and the votes. That is why I think the bill is vulnerable on that section. The last thing we want is a Charter challenge in the courts.

You say eliminating the system brings some benefit. Balance that against the benefit that comes with giving them the amount of money that they would receive to continue to promote their ideology, try to enlarge their bases, educate people, and have better candidates for the next election. That is what all parties will do with the amount of money that is received from the treasury. I see no compelling reason why they should be barred from that. I think this measure makes the bill vulnerable to a court challenge based on the fact that you will deprive them of a current benefit and then give a new compensation to other parties that these parties will not receive. That is where you are vulnerable in my opinion to a court challenge.

Mr. Boudria: It can be argued both ways, I suppose, honourable senators. It could be argued that if that threshold does not exist there, it would be inconsistent with the other portions of the act. Why is it not consistent in that way?

Now the argument is being presented to me that it is inconsistent that others are eligible for reimbursement to replace the private sector dollars that they generate, but this group is deprived from the same benefit. It is an interesting debate.

We had to establish cut-off at some point. We made our choice based on the case that we have currently before the Supreme Court and on the decisions of lower courts. The 2 per cent and 5 per cent is reasonable and proper in terms of getting the funding back after an election. Therefore, it is equally reasonable and proper to get the funding back during, generally, non-election years when you use $1.75 for the continued sustenance of political parties. That is the logic under which we have operated for this.

I hope that it is not challenged before the courts. However, we will have to see. In terms of it being valid, I am confident that we have a good case in Figueroa. Lower courts have already spoken to that issue and where they have said otherwise we have acted accordingly. From our perspective, it will be resolved in the affirmative.

Senator Grafstein: I want to commend you on steering this very controversial bill through the House. We know about the difficulties you have encountered on this and I am not here to make your life more difficult — but more interesting.

My concern is the Charter, but from a somewhat different perspective than my colleague Senator Joyal. That is, the question of whether you have received advice that this bill, in all its aspects, is constitutionally sound and that it does not breach the Constitution and particularly the Charter.

Mr. Boudria: Indeed that is the case. The bill was approved by the Minister of Justice for its constitutionality, as of course we have been required to do since 1982 for all legislation. Justice officials were involved in the preparation of the bill. They have been at my side from the beginning. The official of the Privy Council Office sitting to my left has worked both for and with the Department of Justice during the entire process. The entire bill was in the affirmative to the question that was asked previously.

Senator Grafstein: Did your advisors consider the question of section 15, the equality provisions, and I think it is section 3, the rights of association as it applies to individuals and corporations?

Mr. Boudria: Yes, that is the case. As a matter of fact, there is a measure in the bill that reflects that. For example, the Quebec law has bans on corporate and union contributions and an association cannot donate either. Under our measure, it is permitted for an association to make contributions at the local level because a corporation and a union can make a $1,000 local contribution. You have noticed that the bill is drafted in a way that it refers to corporations, unions and associations, to respect the freedom of association principles about which you are inquiring.

Senator Grafstein: Thank you for that, but my preliminary question is whether or not there is a built-in discrimination among individuals, associations, corporations and unions by establishing a limitation on the one and a higher limitation on the other? There is $5,000 for an individual and $1,000 for a corporation or an association. Is that not on its face discriminatory? Is that not discriminatory based on the principle of equality?

Mr. Boudria: I will ask Ms. René de Cotret to elaborate on that, and to answer the question that you are asking now, particularly in relation to section 15.

Senator Grafstein: I am referring, if you will, to sections 404 and 405 that put the limitations on individuals versus corporations.

Ms. René de Cotret: The right to equality protected under section 15 of the Charter applies only to individuals. It does not apply to corporations, associations or unions. This applies only to individuals.

Senator Grafstein: Is it not true that under freedom of speech and the right to association there are equality treatments there? Is there not a line of cases or at least an argument to be made that a corporation's rights or an association's rights are impinged by limiting its ability to express itself by means of a public donation to a registered party?

Ms. René de Cotret: I would agree with you, senator, that freedom of association or of speech of a corporation or of a union could be triggered. It is the position of the government that a court would find that, overall, their rights have not been infringed, or at least that the infringement constitutes a reasonable limit.

Senator Nolin: Can we expand on that? If I may, are you referring to section 1 of the Charter?

Ms. René de Cotret: Yes.

Senator Nolin: Can you walk us through your reasoning on that, please?


Ms. René de Cotret: I cannot speak as the committee's counsel, but the government contends that a court would conclude that it is about a reasonable limit in a democratic society, if it can be claimed that the right to association or expression of a union or company may be compromised by the $1,000 limit.


Senator Nolin: That is exactly my point. That is section 1.

Senator Grafstein: That is very helpful in terms of my line of argument. Thank you for that, Senator Nolin.

Let us apply the reasonable test to a Member of Parliament in a small rural community. In that small community as an example, there are a number of comfortable individuals. There may be one or two financial institutions that have branches there. If the test is reasonable in that particular community and the financial institution — which is a national institution spread from coast to coast — has $1,000 to expend in 301 ridings across the country and a member from a small community who relies on all the resources in that community — which are sparse — to fund his political activities, finds himself in a position where he is having to slice the pie ever so thin in terms of his corporate funding and also finds himself, on the test of reasonableness, in the hands of a number of individuals who may be reasonably wealthy, this, in fact, puts more undue influence in the hands of individuals than in a corporation. Would that be reasonable in those circumstances?

I am really addressing myself to Ms. René de Cotret as opposed to the minister because I think we are trying look at reasonableness here. What is a reasonable limitation under the Charter?

Mr. Boudria: Mr. Chairman and honourable senators, several things should be borne in mind. Quebec and Manitoba have an outright ban on corporate contributions. If a limit on corporate contributions at the local level is a test of something that is arguably stronger than not having a limit at all, then arguably having a complete ban is even stronger than that. Some of those measures have existed for decades — at least in the Province of Quebec. The ban is only three or four years old in Manitoba. I do not know whether there have been constitutional challenges to those provisions, but they are still valid law.

In a rural riding, it is claimed that there is a greater tendency to raise money from the corporate sector and individuals replace any decrease of previous funding from the corporate sector. That is certainly not my experience, as a rural MP. Urban members presented this argument during the entire debate. Traditionally, there are more corporate head offices in urban ridings, and those members had become accustomed to receiving higher contributions from the corporate level. That is not the case for rural areas.

Finally, the more generous provisions that have been made for individual contributions and smaller corporate contributions at the local level are designed in a way as to increase the broadening of the contributions made by individuals, particularly up to $400. Donating $400 costs an individual Canadian only $100. It is a combination of various factors that creates this — not only the decrease of the corporate contributions that was there.

I did not even mention that election expenses would be reimbursed at a more generous rate than they were in the past and that election expenses that did not qualify for reimbursement in the past will qualify in the future. You must put all these things together.

Senator Grafstein: Minister, I do not quarrel with your argument. I am really interested in the very narrow constitutional issues and whether there is justification for concluding that the test of reasonable limitation is one that would be applicable in these particular circumstances.

We are talking about a fact base that is different than those two provincial legislations. We have not had the opportunity to review those. Perhaps if we did, we might come to a different conclusion in Quebec. As you know, from time to time, we have differed with the government on its constitutional conclusions. Sometimes the government, as all governments do, has erred. We are here to ensure that this is constitutionally fireproof. If it is not, then it is something we, as the Senate, have to look at carefully.

I am really interested in what counsel would say. I understand the political arguments quite well, and I do not quarrel with them. I am more interested at this time on a strict application of the Charter. Frankly, I think this is really at the intersection between the Charter and democracy.

The Chairman: Madam de Cotret, before you answer, if your assistant can be of some help to you, please have him pull a chair up to the table. Maybe we could have your name for the record?


Mr. Stéphane Perrault, Senior Privy Council Officer/Counsel, Privy Council Office: I work for the Privy Council Office. This question raises the justification in section one of the Charter. I will not give all the details, but it is essential to recognize that the legislation has very serious objectives, which could be described as important or urgent, in a free and democratic society. This particular constitutional language maintains the voters' confidence in the political process, and the Supreme Court recognized this important objective in the Liebman decision. We know that Canadians believe that corporations exercise undue influence.

The second component of this objective could be described as egalitarian. A company president who already donates personally, and who controls a corporation, is in a position of voting twice when his company gives corporate funds, meaning that person exercises influence by wearing two hats.

There is, therefore, an egalitarian component and a component seeking to protect the voters' trust in the democratic system. These two objectives are fundamental to our constitutional tradition and are recognized in jurisprudence.

I would also point out that the Supreme Court of the United States — a court with quite libertarian traditions, much more so than our Supreme Court — recognized in the Buckley decision in 1976, the validity, for essentially the same reasons, of completely prohibiting corporations and unions from providing monies to campaign funds of parties.


Senator Grafstein: This is the start. I am thankful for the answer. We have more to come.

Senator Beaudoin: I am very interested in what you said. Under section 1, it is the test of reasonableness. However, we are concerned here with individual rights. This is what the Charter of Rights concerns. Now it may have an application, as you said, to the corporations. It is true that in section 2, the right of association is addressed. They have the right to expression, of course.

To what extent do you consider that we have to have some equality between a corporation and an individual? Prima facie, I am inclined to think that there is a relation. There should be some equality, except to the extent of section 1 of the Charter.

In our society, perhaps it is reasonable to accept, if not necessarily the parity between individuals, the collective interest. What is your opinion on this?

Mr. Perrault: I would make a couple of points. I do not want to get too heavily into details of legal issues simply for the reason of protecting solicitor-client privilege on the issue. It is an important consideration to bear in mind when we come here to testify.

The Supreme Court in a number of cases fairly recently, and quite strongly in the case of Delisle — the RCMP litigation on the right of RCMP members to get union status under law — indicated that we should not be too quick in including under section 2 issues of equality that are better dealt with under section 15.

Senator Beaudoin: I agree.

Mr. Perrault: They have been pushing back on that issue for a little while. We know that under section 15 corporations are not entitled to protections. Corporations as you pointed out — and rightfully so — have a right to freedom of expression. That is amply recognized.

That brings us back to the issue of reasonable limits under section 1. Is it appropriate to treat corporation and individuals differently in a democratic system? I would suggest that in our electoral process — which is what the issue is here — individuals have the right to cast a vote; they get to form parties; they get to run as candidates. Corporations do not do that. You do not have a separate vote as a corporate president than as a citizen. You get a single vote.

This principle of equality between people who have influence in the corporate world and people who do not have influence in the corporate world is reflected in this bill.

Senator Beaudoin: However, we must distinguish between two rights: the right of expression under section 2 and the right of equality under section 15. I understand that we are not concerned here with the right of expression, because obviously there is that right. It is not controverted.

Senator Nolin: No, I think it is included in the argument. Of course, you are impinging on the right of expression of the corporation.

Senator Beaudoin: We are discussing at the same time two rights. One is the right of equality before the law, which is section 15. Of course, section 1 applies to that, except perhaps for men and women, because section 28 reads that notwithstanding anything in this Charter, laws apply equally to men and women. Some jurists come to the conclusion that the equality between men and women is absolute. It may very well be the case.

Mr. Perrault: It certainly is under this legislation, in any event.

Senator Beaudoin: I want to be quite sure of that. Our Constitution, in that sense, is certainly the best I have ever seen with regard to equality between men and women, because it states that notwithstanding anything in the Charter, laws apply equally to men and women. It cannot be better than that. However, that is for men and women.

With regard to corporations and individuals, the Charter first is concerned with individual rights. We all agree with that. However, when a corporation may do the same thing in the law, then I think we are have more latitude. We have more latitude under section 1 when it is individual and collective than we would have generally between two individuals, because one is a corporation and the other is an individual. I am not aware of any case of the Supreme Court that has distinguished between a corporation and an individual under section 15, but there must be something.

Mr. Perrault: Certainly, in the Figueroa decision mentioned earlier, the Court of Appeal indicated that only physical persons and individuals, more specifically, get section 15 protection.

Senator Beaudoin: A corporation does not?

Mr. Perrault: No. More specifically, in that case it was found that political parties do not have section 15 protection. The issue is before the court and it will all be discussed again.

Senator Beaudoin: It is before the Court of Appeal?

Mr. Perrault: Yes, it is before the Ontario Court of Appeal.

Senator Beaudoin: It is not before the Supreme Court of Canada.

Mr. Perrault: No, it is not.

Senator Beaudoin: Until the Supreme Court of Canada rules, the debate is open.

Mr. Perrault: I do not have all the case law in mind, but I am confident that on this issue the corporations do not get section 15 protection.

Senator Beaudoin: I am very interested in that.

The Chairman: Senator Beaudoin and senators, we have very little time left with the minister. We have about 10 minutes. I will try to wind down.

Mr. Boudria: I would like to indicate, if I may, that the officials will be available for a subsequent meeting as well at the official level, I believe tomorrow. I do not know if that makes a difference for senators to prepare additional questions for them in this or any other matter.

The Chairman: You are quite right, minister. Thank you.


Senator Nolin: Mr. Chair, I would like a confirmation from the minister about whether the legislation applies to trusts or not, specifically those trusts created for different political party leaders.

Sometimes, a party leader can incur expenses that Parliament recognizes when that party leader is a parliamentarian. When that member is the Prime Minister, the government supports these expenses. That is when this type of trust is created to defray the specific expenses of the party leader. I would like to know if the legislation will apply to this kind of trust.

Mr. Boudria: With regard to elections, different things are considered trusts. According to the newspapers, some people have trusts in which the member is his own trustee. In my opinion, this is obviously not a trust. You cannot be a trustee for yourself.

There are three types of trusts; first, trusts created by groups of individuals including parliamentarians. For example, this can be a group of people organizing a fundraising campaign to help farmers in Western Canada hit by last year's drought. Perhaps some members of this group of fourteen individuals, including two parliamentarians, are collecting funds in a trust. This has nothing to do with politics and, naturally, the bill does not address this type of group. It is possible that the legislation on the ethics code, set for consideration in the fall, will apply in some cases.

The type of trust that grants a personal benefit to a parliamentarian will perhaps fit Senator Nolin's definition better. Once again, this is not something that comes under the Elections Act or Elections Canada. This issue must be resolved by the Senate or that other place. The situation of a public office holder must be resolved by the Prime Minister's code. But, in all events, this issue will be able to be resolved by one of the three existing codes. Of course, other things must be considered, particularly if it is a personal benefit to which the Income Tax Act applies. This is the second type of trust.

The third type concerns those cases when funds accumulate and are used during an election campaign. Then, all the rules apply, and it cannot be claimed that these funds belong to no one. They are going to be used in an election campaign because these funds are from a particular trust. It is not logical.

I am adding a fourth type of trust. Political parties are often compared to separate banks. They are not really trusts, but they are still called trusts. The Liberal Party created the Judy LaMarsh fund to encourage women to run. During each election campaign, these funds are shared by candidates who are women. Receipts are issued for these funds in advance. These are not hidden funds.

From now on, setting up such a fund and using it in electoral campaigns with hidden money would be prohibited. There must be proper receipts for every dollar spent during an electoral campaign.

That is currently not the case. Even riding associations are trust funds to a certain extent. There may be $50,000 in a riding association fund, of which $10,000 can be taken and transferred to the candidate's campaign. This is entirely above board. However, in the past, a receipt was not required for this money. The money was all lumped together and no one knew for which amounts receipts had been issued.

The objective is that from now on a receipt is to be issued for any money that comes from a riding association or a separate account. Taking money out without issuing a receipt is prohibited. If a political party has a separate account and receives money, a receipt will be issued in advance. All that will be left, of course, is the fund as it was before the bill became law.

Senator Nolin: A corporation would not be able to contribute to a fund if the beneficiary is the leader of the party, for instance, if the latter used this money to offset partisan expenses?

Mr. Boudria: A corporation would not be able to contribute to a fund created for electoral purposes. If this money were used to increase his salary, for instance, that would be a different problem and would come under the code of ethics.

Senator Nolin: When you talk about the electoral process, you mean in a very general sense. This is not just about the election period, but the entire Canadian democratic process. It is not a period every four years, but rather 365 days a year whether there is a partisan activity or not?

Mr. Boudria: Naturally.

Senator Nolin: If we still have time, Mr. Chairman, I would like to ask another question specifically about Quebec.


The Chairman: Is your question something that could wait for officials?

Senator Nolin: I want to know if the House committee heard from Mr. Côté, the former chief electoral officer in Quebec?

Mr. Boudria: He did not testify before the House committee, but the present chief electoral officer did.

Senator Nolin: Are you familiar with the fact that he publicly stated — after leaving office as chief electoral officer in Quebec — that the process in Quebec by which there is a total ban on corporate donations was almost a farce. Almost everyone knows in Quebec that any corporation that wishes to give to a political party can do it, and they are actually doing it. Are you aware of that statement from Mr. Côté? Was it not important to question Mr. Côté to understand the meaning of such a declaration?


Mr. Boudria: I was not aware that Mr. Coté made this statement, but I knew that the allegation had been made. When the bill was prepared with input from Elections Canada, an escape clause was included in order to ensure that there was no collusion or anything else to circumvent the law and turn corporate contributions into individual contributions. Such contributions would also be illegal. In other words, the president of a company would not be able to increase his employee's salaries by $1000 and the next day ask them to contribute $200 to the candidate from party X in their riding. That would be illegal under the bill. Clause 405.2 makes a clear reference to this.


Senator Grafstein: This is a follow-up to Mr. Perrault. I listened with great interest to his response to my earlier question. I wonder if he would not agree that a corporation, a union, or an association has constitutionally recognized interests that include the right to express and promote those interests freely and openly?

Mr. Perrault: I do think that is absolutely the case. That was the substance of my answer previously, subject to the section 1 justification, what are reasonable limits?

As I pointed out, the United States Supreme Court has endorsed corporate bans. We are not — and the Minister made that point quite clearly — we are not talking about bans here but only limits. Even an outright ban was supported. We have a more permissible measure —more permissible than in other jurisdictions, including Quebec and Manitoba.

Senator Grafstein: I understand what you are saying. I am trying to return to the narrow confines of our Charter and the ``holy trilogy.'' The trilogy is: equality, freedom of expression, and freedom of association. It seems that these three rights or privileges or principles are all bound up in this narrow issue of being an association, a union, a partnership, or a corporation being able to express and promote those interests in the most important function in democracy: the selection of candidates to express or promote their particular viewpoints. This is perfectly permissible and desirable in a democratic society.

My question comes back to the same point. I understand limitations. I am not suggesting the American system of open-ended corporate or individual contributions. I understand that and I commend the Minister for putting a reasonable limitation on expenditures from one particular source.

However, having said that, at these particular levels it seems that we have marginalized and really almost made nugatory the freedom of expression, equality and the freedom of association for corporations, unions and associations. By the way, there is a whole raft of associations that are neither union nor corporate — co-ops are an example.

Mr. Perrault: These associations indeed are given some recognition in the bill. In respect of the limits, you indicate that you have an agreement with the idea of limits but have some concerns about the level of those limits.

Senator Grafstein: No, it is equality between the two limits. It is a differentiation. Five to one.

Mr. Perrault: I can only reiterate my earlier position. A corporation is in a different situation than an individual. It does not hold democratic rights, although it does hold expressive rights. Real people control the corporation and these real people are entitled to make a contribution. To make them equally capable of making additional contributions through corporations that they hold would place these people in a privileged position within society.

In the United States, there is quite abundant jurisprudence on the issue of contribution limits and bans. One of the key points that has been established is that the level of the limit is not all that important. I will explain why.

The notion of a contribution as an expressive communication — as a ``speech,'' as they would use the term in the U.S. — is considered as largely symbolic. They recognize that whether a person gives $3,000 or $4,000 or $1,000, the symbolic expression of support is there, irrespective of the amount. It does vary somewhat, if you give more, you signal a greater support. However, for them in their jurisprudence, it is not a critical element; as long as the symbolic gesture of support is made, the speech element is there. This is provided for in this proposed legislation.

The Hon. the Speaker: I will ask Senator Joyal to finish up with one question. The others will have to wait until we have the officials back again.

Senator Joyal: Mr. Perrault, I take it from paragraph 62 of Justice Molloy from the Ontario Court of Justice on the Figueroa case that we all know:

...In the context of s. 15 of the Charter and anti-discrimination statutes, the Supreme Court of Canada has held that even where there is no obligation to extend a benefit to employees once the benefit is provided, principles of equality require that it be provided to all employees without discrimination: Brooks v. Canada Safeway Ltd., [1989]

The principle that Senator Grafstein is stating is that once you put a limit and you recognize that corporations have access to financing, you must put the limits at the same level. That is essentially what Senator Grafstein is proposing as a fair interpretation of the principles of equality that are underlining the approach taken by the government.

The point is not contesting the limits. I believe people accept that. You have not excluded the corporation, you have kept the corporation, and therefore the principle of equality would support the contention that the two levels have to be at par, on the basis of previous precedents of the Supreme Court.

Mr. Perrault: If I may, there are two elements to the answer that I would personally make. I see that the minister is anxious to provide his own input.

The idea of providing the same treatment to all was specifically rejected in the Ontario Court of Appeal's; the Molloy judgment as trial decision was rejected. Assuming that it may be a requirement to provide equality to all, that is still subject to a justification if we do not provide equality to all.

In our view, there is a coherent rationale for not providing exactly the same amount. That is a rationale that would be sustained under a section 1 analysis of the Charter.

Mr. Boudria: In the Libman decision, you will recall this had to do with the Quebec referendum and the right of others to associate. From the obiter dictum of Libman, we put together an entirely different bill that has to do with restrictions on third parties. I remember that one reasonably well in the sense that there was a passage in Libman that was quite interesting, where the Supreme Court said that it is the candidates that seek public office and not what the court called ``associations.'' Associations meant third parties in that context.

Clearly, there was a distinction in Libman of these associations as being considered the same as the individual, the candidate. There was not a parallel. It was asymmetrical in that particular case. It was not deemed to be one as being equal to the other as it pertains to another democratic right. Perhaps it would be helpful if, when the officials came tomorrow, they have that documentation as a convenience.

Senator Grafstein referred to $1,000 and $5,000. They are not the same at all. The $1,000 restriction applies at the local level only. The $5,000 restriction on the individual is the combination of the local, the nomination convention and the national put together. At the local level, they are, perhaps, very close to being identical because you are adding a critical mass of three vis-à-vis comparing it to one. They are not the same at all. They are two different things. One applies in the broader area than the other. The distinction, for what it is worth, is perhaps not as large as what we believed it to be initially because it applies in a different forum.

The Chairman: Thank you, Mr. Minister, for coming today. We have kept you far beyond what we promised.

Thank you, Ms. René de Cotret, Ms. O'Hara and Mr. Perrault.

Your agenda indicates that Mr. Kingsley and Elections Canada would be next. However, Mr. Kingsley has graciously agreed to allow Ms. Alexa McDonough to precede him. I have assured him that Ms. McDonough informed me she would only be making a brief statement, and we hope that questions or interaction with senators will not last much more than half an hour.

Senators, the steering committee made a decision to invite representatives of the registered parties that are represented and recognized in the House of Commons. Unfortunately, only one party was able to accede to our request to join us this evening and make a presentation. We welcome, in this regard, Ms. Alexa McDonough. She needs no further introduction.

The Honourable Alexa McDonough, M.P.: I must confess at the outset that I am feeling slightly disadvantaged in this brief presentation knowing how long you have already been in your seats. Someone once said that the longer you are in your seats, the harder it is to concentrate the mind. I hope that will not apply. I also know that Mr. Kingsley will be making a presentation following. I do appreciate his willingness to let me go ahead.

I am not a constitutional lawyer, and I note that a number of the questions raised were very much focused on constitutional and legal issues. I am not a lawyer period, and I do not have any of my advisors here, so I hope that that will not make for an uninteresting exchange.

There are many things I could say on behalf of the New Democratic Party and the NDP caucus about the legislation, but I will say at the outset that we very much support the principle of the legislation and, in the main, support the substance of it. We were pleased that some amendments were acceded to.

I would also say that a number of amendments that were put forward by ourselves as well as, in a few cases, by others were not implemented. We are disappointed in that. I do not want to concentrate at any length on those measures. There is a provision in the bill — it was an amendment — that it will be fully reviewed after the next election with a view to the experience that has taken place in the meantime. Presumably, we get another kick at the can.

I would like mention two brief items that we feel could use further attention and that is why I have chosen to come before the Senate this evening. There are two other weightier or more substantive matters about which we have very grave concerns. It is our feeling that, to some degree, these other two matters about which I will speak in a moment really do compromise the principle of the bill, which we very much support. In fact, I would argue they actually subvert, to some extent, the very essence of the bill.

I was pleased in the discussion that I heard with the previous presentation from Mr. Boudria that there was in fact considerable interest in the questions of equitable treatment, of equality. I do not want to distract you from your focus on the issue of the treatment of individuals versus corporations. However, the stated purpose of the bill is to get big money and the perception of big money out of our democratic political system and there are some ways in which that objective is being subverted.

I would suggest that you be willing to give at least equal consideration to the question of the equitable treatment being accorded to corporate entities, corporations, versus union entities. Any fair-minded consideration of the legislation as it now exists — which is why I am here now to plea for consideration of amendments — would strongly indicate that the treatment is simply not equitable. For that reason I think it needs to be addressed.

I should say at the outset that the New Democratic Party position is, and has been for a number of years, that the most democratic legislation that we could put in place would be a complete ban on both corporate and union donations. I will not go into all the reasons for that, although I would be happy to discuss them if people have further questions. It is our feeling that the manner in which corporate and union donations have been dealt with creates a very inequitable situation. Considering that the objective, as has been stated many times, is to level the playing field, this is very unfortunate.

Before coming back to that, I want to say that one of the matters about which there was no discussion in the previous round — other than a quite dismissive reference by Mr. Boudria — was the issue of trust funds. You may have noted that I had a brief exchange with Senator Buchanan before he was forced to leave for a meeting of the Energy Committee. I was very interested to have a bit of a discussion about this question of trust funds.

This takes me back to when I was in the Nova Scotia legislature and the Conservative government of the day brought in significant reform measures in terms of political party financing and election financing. We actually pushed to deal with the issue of trust funds but the government of the day decided not to do that. As a result — and there are probably some people in the room who know this to be true and others who may be shocked to know it but I believe I am correct in this — the Liberal Party of Nova Scotia sits on a trust fund of $3.5 million, most of which was amassed through illegal means. That fact was the subject of criminal convictions regarding influence peddling, tailgating and a third offence that will come to me in a moment.

Senator Nolin: Was it corruption?

Ms. McDonough: Yes, but it was something more specific. I will come back to that. The point is that, as a result of these ill-begotten funds not being brought within the purview of the legislation, the Liberal Party of Nova Scotia has financed every single election campaign since then from the trust funds without having to raise any money at all. There is no requirement to name the sources and amounts of the trust fund money. That is astounding.

I do not know how many similar trust funds may be set up. My point is not that I have reason to think that there are a lot of ill-begotten trust funds illegally in someone's hands. However, it is a matter of record that there are a number of members of Parliament who have said clearly that they have trust funds that have been set up for the purpose of supporting political party and campaign activities. Those trust funds do not come within the purview of the legislation. I believe Mr. Boudria sort of dismissed those as being individual trust funds that do not really count, but surely serious questions are raised about this legislation if no such trust funds become accountable in any way whatsoever because of being acquired or amassed prior to the date that this legislation becomes effective.

I would be interested to know whether anyone has a concern about this. It seems to me it must be the subject of some concern if the issues are transparency, disclosure, levelling the playing field, and democratizing our political party financing.

Second is the issue of the treatment of corporate and union donations. In popular terms, the public believes that we have a case of having brought in legislation to make political party and election financing the business of individual citizens. If you want to talk about equality, surely the whole purpose of this exercise is to give every citizen an equal opportunity to have their say in making the democratic choices of who will represent them. For that reason, we would continue to argue that the most fair thing, the most satisfactory thing, the most democratic thing, would be to ban all corporate and union donations. However, that is not what we have. Instead, we have a situation where exceptions have been introduced to provide for very inequitable treatment of unions and corporations.

There are, I believe, 1.2 million corporations registered in this country. There are 886 separate unions represented in this country. The number of union locals in the country is 16,601. At this point, I am not aware as to whether there has been any exhaustive research to clearly answer this question. I would think that, of the 1.2 million businesses or corporations, many would fall into the category of either franchises or dealerships.

The legislation that is now before the Senate, that was passed through the House of Commons last week, provides in one instance that franchises and dealerships are permitted to make $1,000 donations to individual candidates, but that no union local is permitted to make any such contribution. This simply does not accord any kind of fair or equitable treatment. Let me just dream up an example.

I do not know how many Tim Horton's franchises there are in my riding of Halifax but there are certainly dozens. There are seven in little old Charlottetown so I am assuming there are way more than that. I should have a head count; I am actually a big Tim Horton's fan so it is not that I am singling them out. If every one of those stores is individually franchised, then every one of those Tim Horton franchises can contribute to the campaigns of the candidates running in my riding. No such contribution is permitted from any union local; that is, after all, a democratically chosen organization of workers.

When you make those kinds of comparisons, you are led to the conclusion that it would make sense to ban both. That is our position. We tried to introduce amendments to that effect. However, if there are to be provisions for franchises and dealerships to make individual $1,000 contributions, then it simply defies all notions of fair and equitable treatment for there not to be any provision for a trade union to make similar $1,000 contributions. I would like to put that position before you for some consideration.

I raise my third issue because we do not think we have heard a satisfactory explanation for the change in the $1.50- per-vote public financing provision to $1.75. When the bill was introduced, the government clearly said that this amount of $1.50 was chosen to create a revenue-neutral situation as it related to the political parties. I have only to conclude that the increase from $1.50 to $1.75 came about to either satisfy the Liberal Party president — who was freaking at the potential impact of a reduction in corporate dollars — or to satisfy others who do not think that election campaigns can be run on anything less than very big money.

The whole point of the exercise is to try to have appropriate kinds of balance between individual contributions to election campaigns and putting reasonable limits on what can be spent so that individual candidates are not put at a serious disadvantage.

That is a particular issue as it relates to women. We know women have always been disadvantaged financially in both winning nominations and winning election campaigns. However, it is not clear to us what gave rise to the decision to change the position that $1.50 was reasonable and revenue neutral to suddenly a situation where that amount would result in $10 million to the Liberal Party and very considerably less, obviously, to the other political parties.

Senator Grafstein: Thank you for coming to enlighten us of your views. We have always taken the position that we want the House to conclude its deliberations before we start thinking about what we have to think about. I certainly appreciate your coming after the break to give us the benefit of your views, which I found quite interesting and echoed some of my own concerns.

I will start with an overall view about your party. Under the current situation before this regime, how much in total funds did the NDP raise from all sources last year? We are talking about transparency here. I would be interested in knowing where was the NDP before and after?

Ms. McDonough: All of that information is public record because the NDP, during the 1972 to 1974 minority government, made sure there was legislation that was transparent as to source amounts of political party donations. I wish I had a party official here to corroborate. I believe the figures are all fully disclosed, but I will say — and I hope I am right —will say we are talking roughly $3.7 million last year.

Senator Grafstein: In the year 2004, if this bill were implemented in the process that we now have before us, what would be the NDP's cash benefits under this bill?

Ms. McDonough: I am sorry to say that I cannot give you the exact figure. I will say it is my understanding that it would be slightly better off as a result of the legislation, but not in relative terms to the other parties, for the several reasons I have already mentioned.

However, I will say generally we are not contesting the general proposition that is before us. We just think there are some inequities in it that one could not calculate what would be the impact. For example, what we know for sure is that considerably less than one-third of our funding comes from trade unions. The contribution that trade unions will now be able to provide becomes absolutely infinitesimal. In comparison to that, I believe 3 per cent of our funding comes from corporations. I suppose one could fantasize that we will get more money from corporations as a result of this provision about franchises and dealerships but I think that is rather unlikely.

We do know that while unions will have their hands tied behind their back in terms of contributing, corporations in fact have some pretty big windows here for contributing. Since somewhere between 62 and 66 per cent of the Liberal Party financing, very similar to that — I think the Alliance financing comes from corporations — they will undoubtedly be the much bigger recipients of that inequitable provision about corporate funding.

Senator Grafstein: I am concerned, as you probably heard, about equality of treatment. I would be open to hearing more about being fair to unions. I think you said there are 886 unions and 1,600 locals, and I assume in terms of the number of workers it is about 3 million. Is that the number?

Ms. McDonough: Yes, just under 3 million.

Senator Grafstein: Of the 1.2 million corporations, lay aside the top 500, would represent how many shareholders across Canada, large and small? Is it about 10 million, 12 million?

My point is that it is important to look at who benefits from the Charter provisions dealing with equality, freedom of expression and the right to exert their viewpoints in the political process. I hope that you will give some thought to that because it is important that this bill is perceived to be fair and equal to all interests: individuals, shareholders, stakeholders, co-op members, members of unaffiliated organizations.

This bears some work on all our parts to ensure that it is that way and perceived that way. I have some concerns about it and I would hope that we could somehow, if not now at a future time, work together to ensure that this bill is fair in all respects.

I do have some concerns — not as a member of this committee but as a senator — that this bill may on its face not be fair and will be interested to see what you and the other witnesses say about that.

Ms. McDonough: At the risk of repeating myself, you get into a real mug's game when you get into this whole thing about how many workers are represented or how many shareholders are represented. I do not know what that has to do with a citizen-based democracy. I do not know what that has to do with giving equal weighting to the individual citizen or the individual candidate.

It is the citizens who vote, and the citizens who have a head, a heart and a soul to bring to bear on decisions about what kind of world in which they want to live. To give various kinds of weightings to workers and shareholders is, by definition, giving in some cases second and in other cases fourth and fifth opportunities to further influence the political decisions. You could have workers in a couple of different workplaces and you start weighing then how many dollars should flow from those workplaces then you have shareholders, many of whom will be multiple shareholders. The citizen democracy should be based on citizen influence, but that is a major point of difference, in point of view. I will not take further time from the committee in restating that position.

Senator Smith: Ms. McDonough, I do appreciate your being here. I am just not certain — I suppose I should know this — on the points that you raised, such as the union locals. Were amendments moved by the NDP in committee?

Ms. McDonough: Yes.

Senator Smith: They did not make it, obviously.

Ms. McDonough: That is right.

Senator Smith: I see. I am familiar — and I truly do not mean to be cute here — with the NDP's view of the Senate and that is fine. Were we to be persuaded to move some of these amendments, I am curious about what you feel of the appropriateness of this body — as you know its existence has been questioned by some — to perhaps thwart the will of the House of Commons in an issue that really does not affect us directly in the way it does them? We do not have elections.

Do you think that it is appropriate for a pattern to develop in which the Senate tells the House of Commons, ``You have talked about this. You had amendments and all that. Some carried and some did not?'' I have the statistics. I think 80 amendments did carry. It did pass the Commons; I think the vote was 172 to 62. That is almost three to one with three out of the five parties.

Given that set of facts, are you urging us to change it and to amend something that clearly went through the elected body with an almost three to one majority?

Ms. McDonough: I thought the subject of this committee meeting was electoral reform, electoral finance reform, and not parliamentary reform. I would be happy to come back and debate parliamentary reform.

I do not intend any disrespect when I say this. I probably did not make myself very popular when I said this the last time I came before the Senate. It is my view that some sober second thought does indeed happen at the Senate again and again. I just think that thought should be from elected senators.

In the meantime, and here is where no disrespect is intended, if you are here doing a job for Canadians and being paid for it, then I should make you work for it just like anyone else. That is why I am before the committee.

Senator Smith: That is a fair answer.

Senator Nolin: I would like you to expand on the subject of trust funds and explain to us how that would work. You have raised the example of Nova Scotia. You are familiar with that example. Can you explain to us how that works? From where does the money come?

Did I understand from your testimony that what we have in front of us would whitewash the all those trust funds? Those funds would be there for the beneficiaries of the trust funds. How does it work, and what is your perception of that provision?

Ms. McDonough: Extortion is the third source of funding in Nova Scotia. I do not know about all of the $3.5 million, but it was much of the money. This was the subject of criminal proceedings in court and the basis for the imprisonment of some party officials.

I have no way of knowing. I do not think that honourable senators have any way of knowing how many trust funds exist and which MPs have them. Nor do we have any way of knowing how they will make their way into the political process because there is no treatment of those trust funds in this bill whatsoever.

The bill says that any funds that have been amassed before the effective enactment of this legislation cannot be captured by the legislation. There is nothing to prevent — unless I have misunderstood it — individual MPs from amassing more trust fund monies. When the legislation comes into effect, they will not be permitted to do that any more. From now until then though, they can amass those funds and spend them in various ways.

This is a big problem. It boggles the mind to think that there are all kinds of ways in which the existence of that money will create unevenness in terms of the capacity of individual political candidates and parties to advance their interests in the political arena.

Senator Nolin: Are you telling us that there is nothing in the bill that prevents an individual or a group of individuals that have amassed a sum of money from various sources — corporations, individuals, and unions — to channel that money legally in the electoral process?

Ms. McDonough: Not that I can find.

Senator Nolin: We have a problem. That bill is questionable, definitely. We will hear from the Chief Electoral Officer who will explain to us what is really in that.

Senator Joyal: I was happy to hear your answer to Senator Smith and my colleagues around the table. I fully concur with you. As long as one of the two Houses of Parliament is charged with the responsibility to exercise sober second thought, it has to exercise it throughout the legislative system. This committee, especially, has a history of amending the Electoral Act in a way to conform to many objectives to which the other place has concurred.

I commend you for coming tonight. I appreciate your presentation. This committee has benefited from representatives of the NDP on many important bills including human rights. I commend you for that.

I wish to move on to the issue raised by Senator Nolin. Mr. Kingsley is listening to you. He will have an opportunity to clear that up later. As I understood Mr. Boudria's testimony this afternoon, a riding association with a large amount of money in banks could not make a cheque of, say, $50,000 to a candidate at the next election and say, ``It comes from the riding association, thank you very much,'' without having to explain the sources of the money.

A trust fund is outside the political process of a riding association. It has a board and yearly meetings where the directors are elected and so forth. The riding association is open to the public, chooses candidates and delegates for a leadership convention, and so forth — we all know the process.

Your contention is that a trust fund over which no-one has any control will be able — under a type of ``grandfather'' clause — to transfer a large amount of money to a candidate for the next election either through the association or any other means, and that could thwart the objectives of this bill of transparency and equality. Is that the way you interpret that?

Ms. McDonough: No. I appreciate the precision of your question. It is important for me not to leave any misunderstanding of what I am saying.

Mr. Boudria correctly outlined the process whereby party contributions have to be properly receipted and accounted for. An election campaign is 36 days. An electoral cycle is for five years. Let us just say that Joe Smith in the riding next to mine has amassed several hundred thousand dollars of trust fund money and used those monies to put up big billboards for six months before the 36-day campaign. He runs extensive political party advertising on those funds and any number of other things that you can imagine in the cycle, which are completely outside of any accountability of any kind.

I am saying that that is a problem. They do not, as I understand it, have to account for those within the election party financing. Outside of the political party financing, we are talking about two kinds of funds. There are the funds on the basis of which political parties function and the funds on the basis of which political party candidates run for elected office. The open-endedness of this trust fund money means that a significant amount of the remainder of the legislation has little real impact.

Senator Joyal: I tried to clearly understand that your preoccupation is outside the electoral cycle. Unless there is a grandfather clause in the bill to protect the monies in the trust fund, they would have to declare the money as profit and make a statement to account for it. You are concerned with that area outside the electoral cycle and that a certain amount of money is available that cannot be used within the election period of 36 days but rather in the months or years preceding the election period. A four-year term government would begin to spend a significant amount of money on advertising campaigns and many initiatives in the year preceding an election. That would provide an additional advantage to a candidate or to a party without having to account for those funds.

Ms. McDonough: Contributions to political parties need to be properly receipted and properly disclosed. It is my understanding that those funds would exist completely outside of that area.

Second, I would be interested to read the Mr. Boudria's testimony. I believe I understood him to say that one could not possibly account for the money because it is somewhat irrelevant for trust funds that individual members of Parliament or contestants for parliamentary representation may have set up.

I do not know why you would come to that conclusion. It seems to me that they need to fall within the act. One argument one might make is the notion that you cannot retroactively say what a trust fund can or cannot be used for. However, if laws are created to clean up inequities, unacceptable practices, abuses, and excesses, then it could be dealt with in some way.

I remember having this debate in Nova Scotia. We argued that because those trust funds would completely distort the purpose of the act, the monies should go into either general revenues or into charitable purposes. However, what they should not be allowed to do is continue to influence the political process outside accountability.

Senator Beaudoin: Ms. McDonough, you were here when we discussed the question of the individual and the corporation. You are from the New Democratic Party and I should like to know what you think of this question of equality of rights, if there is such a thing.

The Charter of rights applies to the electoral laws, of course, and we have certain latitude under section 1 of the Charter for the test of reasonability. I know that it is different in Quebec. What about your own province? What are your views on this question of equality between individuals and corporations?

Ms. McDonough: I do not see that that is a legal question that ought to apply as it relates to citizen rights in participating in the democratic process. There have been many findings, as I understand it, that it is reasonable to limit the participation of corporations in various ways in the democratic process. As I said, the view of my party is quite straightforward: There should be an outright ban on both union contributions and on corporate contributions.

Nobody has asked this question but I think it is significant that the trade union movement has officially, for a number of years, advocated the same — that there should be a ban on union donations just as there should be a ban on corporate donations.

One of these parties under consideration very much holds the same view that there just should be an outright ban. To have entities other than citizens participating in this creates a situation where potentially some citizens have two, three, or four opportunities to influence through financial contributions. There could be not only individual citizens but also individual citizens through corporations where they may be owners or shareholders. It would be similar for trade unions.

If you are really trying to level the playing field — and this is about citizens having control over the political process — then it would seem to be a reasonable limit. Some legal body of opinion would support that.

Let us be clear where this legislation comes from: A great deal of skepticism, cynicism and increasing alienation by the public around the notion that they cannot really make a difference. They cannot make their voices heard and they cannot make their vote count. Thus, we should get back to ensuring that these matters are in the hands of citizens and not other entities that can have multiple, undue influence over what some citizens have in determining the political outcome.

The Chairman: Thank you, Ms. McDonough. It has been delightful having you here and we thank you for taking the time to come. You have added much to our deliberations.

Ms. McDonough: I wish you well in your deliberations.

The Chairman: Our next witnesses are from Elections Canada. Please welcome Mr. Kingsley, Ms. Davidson, Ms. Vézina and Mr. Sprague. Mr. Kingsley, please proceed.

Mr. Jean-Pierre Kingsley, Chief Electoral Officer, Elections Canada: Honourable senators, thank you for this opportunity. It is a pleasure to appear before the Standing Senate Committee on Legal and Constitutional Affairs. I am always delighted to deal with any bill relating to electoral matters.

With your indulgence, when we get to the question and answer stage I will feel quite at ease in asking my colleagues to help out so that you have as complete a picture as possible of the proposed legislation before you, Bill C-24.

As I said in my presentation to the House of Commons committee on April 8, 2003, Bill C-24 proposes the most notable changes to the regulation of political financing at the federal level since the 1974 Election Expenses Act. The bill draws on a variety of sources, including recommendations by the Royal Commission on Electoral Reform and Party Financing, and relevant provincial experience. However, it also proposes to add a number of significant new elements to the Canada Elections Act.

When I appeared before the House of Commons committee, I outlined the provisions of Bill C-24 with respect to contribution limits, public funding of political parties and candidates, registration and reporting requirements, spending limits and enforcement. I indicated how Elections Canada would implement them. I am tabling, for your information, a copy of those remarks. I believe they are available right now.

In light of the amendments that have been made to the bill since then, I will focus today on the main amendments — at least the ones I consider to be the main amendments — to Bill C-24 that were adopted by the House of Commons after the committee's review.

Among the most significant elements of Bill C-24 are the limits on contributions to federal political entities. When it was introduced, Bill C-24 proposed that contributions from individuals be limited to a total of $10,000 annually to the various entities of each registered political party — that is, to any combination of the local associations, candidates, nomination contestants and the national party. An additional limit of $10,000 per election was proposed for individual contributions to independent candidates, as well as a separate $10,000 limit per contest for the leadership contestants of each registered party.

As amended — that is to say as before you — Bill C-24 now provides that each of these limits for individual political contributions is set at $5,000, with the exception of candidates', nomination contestants' and leadership contestants' contributions to their own campaign, which will effectively be capped at $10,000.

As for contributions by corporations, trade unions and unincorporated associations, the $1,000 limit per calendar year to the grouping of local associations, candidates and nomination contestants of each registered political party has been amended to allow a second contribution in a particular electoral district if there are two elections in the same calendar year in that district, or if a nomination contestant to which a contribution has been made does not go on to become the candidate for that electoral district. In this case, an additional contribution of up to $1,000 may be made to the party's endorsed candidate in that district.

With respect to the second major element of Bill C-24, the public funding provisions for political parties and candidates, there have been a number of amendments. I heard you discuss some of them.

First, the proposed quarterly allowance for qualifying registered parties has been increased from 37.5 cents per valid vote received by the party in the previous general election to 43.75 cents. Calculated on an annual basis, that equates to an increase from $1.50 per valid vote received to $1.75. Furthermore, this amount will be adjusted annually for inflation. Based on the 2000 general election results, we calculate that the allowance would cost $21.9 million annually. That is at $1.75 per valid vote.

To qualify for the quarterly allowance, a registered political party must have obtained 2 per cent of the valid votes cast nationally during the previous general election, or 5 per cent on average of the valid votes cast in the ridings where it ran candidates. This is the same threshold as is currently used for reimbursement of registered parties' election expenses. There is no change. This is the way it has been for a while.

While other registered parties will not be eligible to receive the quarterly allowance, they will continue to have access to certain other benefits such as the right to issue income tax receipts and the right to free broadcast time.

In addition, until a party becomes registered — and I want to make this point because it has not been noted elsewhere — it is not subject to any contribution limits. It can receive $3 million from a corporation or an individual, until it is registered.

Moreover, as a transitional measure for the year in which the bill comes into effect, qualifying parties will be allocated, in a single payment, the full allowance for that year. The bill contains a provision for adjustments to the payments should an election, for example, be held during the course of the year 2004. Thereafter, the allowance will be allocated on a quarterly basis.

In addition, a registered party may authorize that all or part of its quarterly allowance be allocated directly to any provincial or territorial division, any wing or emanation of the party. To do so, the leader of the federal party must have registered that division or wing or emanation with my office.

When it was introduced, Bill C-24 proposed that reimbursements to qualified registered parties for election expenses be increased from 22.5 per cent to 50 per cent. As a result of an amendment, the party election expense reimbursement will be set at 60 per cent for the first general election following the bill's coming into force. Thereafter, it will be set at 50 per cent. This is a one-time provision.

If the 60 per cent reimbursement rule had been in place at the 2000 general election, parties would have received $21.9 million compared with the approximately $7.7 million that was reimbursed. Another amendment will raise the reimbursement of candidates' expenses from 50 per cent, which is what it is now, to 60 per cent on a permanent basis. The lower threshold for the reimbursement of candidates' election expenses from 15 per cent of valid votes to 10 per cent, proposed in the previous version of the bill, remains unchanged. Had these provisions been in place for the 2000 general election, 126 additional candidates would have qualified for reimbursement, totalling approximately $20.2 million.

With respect to income tax credits for political contributions, the changes proposed when the bill was introduced have not changed. Thus, the ceiling for receiving the credit of 75 per cent increases from $200 to $400, and the maximum tax credit would rise to $650 from the present $500 on a contribution of a maximum of $1,275.

However, there was an amendment to the tax credit system concerning the issuance of tax receipts. While Bill C-24 will enable registered electoral district associations to issue tax receipts, they will now require the written authorization of their party leader to do so. The change here is that local riding associations will be able to provide tax credit receipts.

As indicated in my April 8 presentation to the committee of the House, Bill C-24 extends the obligation to report to registered electoral district associations, nomination contestants and leadership contestants, thereby greatly increasing transparency of political financing at the federal level.

A number of subsequent amendments to the bill will bring even greater transparency to the system. Most significant in this regard is the requirement that registered parties eligible to receive the quarterly allowance will be obliged to report on a quarterly basis all contributions received, as well as any transfers received from their registered electoral district associations, the candidates, their nomination contestants or their leadership contestants.

These quarterly reports will be due 30 days following the relevant quarter. The requirement for full audited reports on contributions and expenses, both post-election and annually, remains unchanged.

At the same time, several amendments to Bill C-24 may be seen as reducing administrative requirements for nomination contestants and electoral district associations. One such amendment raises the threshold for reporting by nomination contestants from $500 to $1,000 in contributions or expenses.

In yet another simplification, electoral district associations will not be required to audit their first financial report coming into force of the bill. To ensure the accuracy of these initial reports, the bill states that financial agents must not make a declaration that they know — or ought to know — is not complete and accurate. However, the auditor's statement is not required for the first one.

Finally, in the event of a redistribution of boundaries, registered electoral district associations will not be required to deregister automatically. Rather, acting with the approval of the party leader, a simple notification to my office will allow the association to continue in a new electoral district. That is a change.


Bill C-24 proposes limiting election expenses for nomination contestants. When the bill was first tabled, the limit was set at 50 per cent of a candidate's election expenses in the riding during the last general election. This limit has been reduced to 20 per cent.

The success of the political financing rules depends on their enforcement. In my experience at the national and international level, one of the main strengths of the Canada Elections Act lies in the role played by the Commissioner of Canada Elections. More specifically, his ability to conduct independent inquiries and initiate proceedings for offences in the regular judicial system is the pillar of our federal law. The Canadian system is a world model. Furthermore, Bill C-24 provides tools to ensure compliance with the law.

When I appeared before the Standing Committee on Procedure and House Affairs, I recommended that the committee reinstate the commissioner's right, a right he had until 1999, to appoint officers authorized to seek a search warrant from the court for the purpose of investigating offences under the Canada Elections Act. The committee agreed and the provision was included in the bill before you. This is excellent news.

During debate on Bill C-24, the media raised the issue of the so-called in and out method. According to reports, some parties and candidates are in the practice of paying for goods and services that are usually free, on the condition that the payment is refunded in the form of a contribution. That way, the donator gets a receipt for tax purposes and the party or candidate receives an additional amount.

In order to prevent this practice, the bill as amended now includes a provision by which no person or entity shall enter into an agreement for the provision for payment of goods or services to a registered party or a candidate that includes a term that any person will make a contribution, directly or indirectly, to a registered party, a registered association, a candidate, a leadership contestant or a nomination contestant.

The bill, should it be passed, would come into effect on January 1, 2004 with the exception of the provision concerning political party quarterly returns, which would take effect a year later in order to allow the parties to set up their own process.

During the implementation of the measures proposed in Bill C-24, the main priority of Elections Canada will be to prepare the new entities governed by the bill, namely riding associations, nomination contestants and leadership contestants, for registration and reporting of transactions. We will develop a series of new tools, most of which will use information technology including self-check software to facilitate the new transactions reporting.

At the federal level, thanks for the most part to volunteers, local candidates, some 1,800 during the 2000 general election, currently manage to submit their election campaign returns and send in their receipts for tax purposes with very little problem. I am referring to the comment that this would be an additional burden for volunteers.

There are 1,800 volunteers who manage to meet reporting requirements, as required by existing legislation. Based on this experience, I am convinced that the new tools will simplify the transaction reporting required by this bill.

As part of our preparations, we will consult with the Advisory Committee of Political Parties. We began discussions at our regular meetings on March 7 and June 6. Should the bill receive Royal Assent, we will hold an information session as soon as possible thereafter with all the political parties.

A provision of Bill C-24 calls for the review of its impact on political financing following the first general election held after it takes effect. The review will be conducted by the House of Commons committee that receives the report from the chief electoral officer, as stipulated in the bill. This will allow members to make an initial assessment of the repercussions of the bill and I will help them by providing a report of the experience gained during the general election. It goes without saying that it will be my pleasure to appear before this, or any other, Senate committee that wants to undertake such a review.

As I mentioned earlier, the considerable amendments made to Bill C-24 build on the underlying values of the 1974 Election Expenses Act, in other words fairness and equality, by which all stakeholders play by the same rules: transparency and participation.

The bill reinforces transparency in several ways, including broadening the registering and reporting requirements for riding associations, nomination contestants and leadership contestants and by requiring more frequent reporting of transactions by registered political parties within the prescribed deadlines.

It reinforces fairness and justice by such measures as limiting political contributions. Provisions for this would address the problem of influence, real or apparent, potentially attached to major contributions.

Furthermore, the expense limit for nomination contestants should foster increased participation in the electoral process, especially by women. I am pleased to take part in the parliamentary review of reforms to the Canada Elections Act. As always, my office will provide any assistance you may need for any subsequent deliberations. We are ready to answer your questions.


The Chairman: Thank you very much, Mr. Kingsley.

I asked the minister when he was here about the effect of this measure on new party formations. Do I take it from your initial remarks that if someone were forming a new party, before it was registered any individual or any company could give it any amount of money?

Mr. Kingsley: That is right. I will explain further.

Before a party can be registered, it can be an eligible party. It can only become registered once it has fielded, under the present law, 50 candidates at a general election. It can have existed as an eligible party for three years, or for any number of years. During that time, there are no limits that apply to contributions, which is under the Canada Elections Act. Under Bill C-24 that does not change.

The Chairman: The reporting requirements are the same once they are registered, is that correct?

Mr. Kingsley: Once they are registered, they fall under the statute and they must report as required for every party.

The Chairman: Is that going forward from the date of registration or does it involve all monies collected to that date?

Mr. Kingsley: From the date of registration, sir.

The Chairman: That is interesting.


Senator Beaudoin: I have two questions. First, has your authority been extended under the new bill, I mean legally speaking, since that is what interests me?

Second, how do you define a trust fund? I believe that several senators on the other side will ask you the same thing. To me, a trust fund is a trust fund in the legal sense. As far as the first question is concerned, I am under the impression that your authority has been extended.

Mr. Kingsley: The basic authority of the chief electoral officer has remained the same. The application of this legal authority has been extended since we are talking about a candidate for nomination or party leadership now having to report to the chief electoral officer.

There is also the extended authority to give the parties money annually, but I already have the authority to do so based on campaign expenses. The authority remains the same, but the application has been extended.

Senator Beaudoin: This extension is good. The authority has remained the same but the application is broader. Is that correct?

Mr. Kingsley: That is right.

Senator Beaudoin: There was a discussion on the issue of trust funds. Trust funds are important in the electoral context, but not always defined the same way. What is the precise definition of a trust fund in your bill?

Mr. Kingsley: In the Canada Elections Act there is absolutely no definition of the term trust fund. Bill C-24 does not have one either.

I feel it is not necessary to define a trust fund under the Canada Elections Act. I must respond to an underlying question related to what Ms. McDonough said. It is important to read the passages I cited when I appeared before the committee.

The Canada Elections Act will not necessarily prevent the creation of trust funds by a Member of Parliament or fundraising by a Member of Parliament — trust fund or not — for non-electoral purposes.

The bill as it stands will prevent a new trust fund from being created or new money from entering the process, if the sum is greater than $1000. That is the limit.

However, to successfully control what we commonly refer to as trust funds — some members had huge trust funds of $250,000 or more — Bill C-24 [Translator's note: Bill number needs changing to C-24 in the French] should and must, in my view, deal with this. Under Bill C-24, the conflict of interest code for Members of Parliament would be such that any financial contribution to a Member of Parliament — whether there is a trust fund or not — would have to be reported to the commissioner for a decision on the legitimacy of the contribution and its use.

A good commissioner would indicate whether he considered the purpose of the funds going to a Member of Parliament for non-electoral purposes to be legitimate. If not, he would have to tell the Member of Parliament that the money could not be accepted. I am speaking as someone who administered the code for Mr. Mulroney for three years and who has 13 years of electoral experience.

Senator Beaudoin: The term trust fund has not been defined. Is there a reason? Will we rely on the provisions in the Civil Code of Quebec and the provisions set out for trust companies in provinces other than Quebec?

Ms. Diane R. Davidson, Deputy Chief Electoral Officer and Chief Legal Counsel, Elections Canada: You are right. A trust fund can be a person, a corporation, or a group of people who own property in their name and can only be used for the purposes set out in the trust fund.

Senator Beaudoin: Is that the case in all ten provinces?

Ms. Davidson: The definition is more or less standard in all the provinces.

Senator Beaudoin: That answers my questions.


Senator Smith: I thought all of your explanations for the amendments were clear, and it was a good general overview. I do not really have any questions on them, but I am rather curious about the same question that Senator Furey asked you about.

You emphasized earlier that until a party is registered, there is no limitation on the money they can receive. I must acknowledge that I have heard a fair bit of commentary about the extent to which brand new parties are inhibited. You referred to a $3 million donation. Is that a deliberate strategy approach to address some people's concerns that until they are registered, there is no limitation, or is that almost a curiosity and a fluke? To what extent is it a deliberate strategy to address that issue?

Mr. Kingsley: It is aimed at ensuring that people have a full appreciation. I have heard criticism about the fact that new parties would suffer should the bill come to pass. I wanted to ensure there is an appreciation of what a registered party is subject to and what a party not yet registered still has the option of doing.

In my experience, one party was formed and did receive a $4 million contribution from one person before it was registered. That was in Canada's recent past while I was Chief Electoral Officer. That is still possible. I think it was the National Party that received this.

I am trying to say that there are quid pro quos of which people must be aware. It does not suffice to let it hang there and not have an answer. I wanted to ensure you had a complete picture, and there is no other purpose behind my saying that.

Senator Smith: It is one thing to have the money in the bank, but how much can you spend? Can you have the name of the party on the ballot beside your candidates if you are not registered?

Mr. Kingsley: At the present time, the answer is yes, if you have fielded 12 candidates at the previous general election. You may not have fielded 50, but you may have fielded 12. I say ``at the present time'' because there is a matter before the Supreme Court of Canada right now dealing with a number of these issues. However, at the present time, that is the law as it stands.

Senator Smith: To the extent that you can understand the mindsets of the authors of this provision, do you feel that that is to address any otherwise perceived disadvantage that start-up parties would have rather than being a fluke as to what the threshold was?

Mr. Kingsley: There are bound to be advantages to registration, and there are bound to be some offsetting advantages to not having been fully registered at a moment in time. In my view, there are slightly more advantages to being a registered party, which is why people seek to have the registered party status, including the ability to issue tax credit receipts and to obtain free broadcast time during an electoral campaign.

Senator Baker: Having served 28 and one half years in the House of Commons as a MP, I must say that your office has been very good. That is a general feeling amongst members of Parliament about the way your office has operated and that is perhaps a good reflection on yourself as being the person in charge.

Having said that, you mentioned that you really did not have any new powers under this act in relation to Senator Beaudoin's question. I am wondering then why you have changes under the prosecution section of the act, specifically in the limitation period. Would you explain briefly the changes on page 99 of the bill, referenced as proposed sections 511 and 514(1) and (3)? There are new powers for search warrants as well as new powers to prosecute. Why do you need seven years to make up your mind whether a prosecution will take place? Do you not think it rather strange that someone could be finished with politics and contributing to political parties and yet find himself or herself, seven years later, the subject of a prosecution? Why is that section being proposed?

Mr. Kingsley: If I may, I will ask Mr. Sprague to answer part of your question, but first I do want to make clear that I interpreted the question from Senator Beaudoin to apply to the Chief Electoral Officer. I did explain the additional powers to the commissioner. I said that this would be a reinstatement of powers that were held until 1999 when a change to the statute removed those powers. In terms of getting additional powers, the commissioner is getting what he used to have in terms of search warrant powers.

In respect of additional time frames, Mr. Sprague will answer that part.

Mr. James Sprague, Senior Practitioner and General Counsel, Elections Canada: The expanded period is a practical matter. Under the current act, the limitation period for bringing a prosecution is 18 months after the commission of the offence. Under the new act, however, there can be incidents where there will not be any reasonable opportunity to do so.

Senator Baker: Are you referring to summary conviction or indictable offences?

Mr. Sprague: This applies to all offences, whether one goes by summary or indictment. Under the proposed bill, the donation caps are worded on an annual basis. A person may give only so much money per year to a candidate. The main method the commissioner will have for discovering a breach of the annual cap is in the returns. A candidate will not make a return until after there is an election. If the act had kept the prosecution limitation period at 18 months after commission of the offence, a person could give $3 million to a prospective candidate in year one, hoping the next election would not be called until four years from now.

When the election is over, the candidate could report, ``I received a $3-million contribution from someone four years ago. Thank you very much, Mr. Commissioner. Good luck in prosecuting that.'' The period had to be adjusted to allow time for those annual caps to be captured in the election reports by the commissioner.

The second corollary question you asked was, why seven years? That was a rough mathematical calculation. If someone gives a contribution in year one, there would be an election within four or five years thereafter. Then there is a six-month reporting period to file and then a six-month period to investigate and to lay the charges. That would bring us to approximately six and a half years — which was rounded to seven, as I understand it.

Senator Baker: There is also a section there regarding a commissioner's certificate. I just discovered this as I was looking through it. The wording in the limitation period and in the commissioner's certificate is the same — word for word — as the wording in the 1991 version of the Environmental Protection Act. It was also put in the Fisheries Act for prosecutions on deleterious substances going in rivers.

The history of that wording within an enactment of Parliament has faced enormous problems in case law. As you know, under the Interpretation Act, section 34 states that the Interpretation Act shall apply to all enactments. ``Enactments'' are defined as acts of Parliament or regulations of Parliament as they pertain to indictable and summary conviction offences. The Criminal Code shall apply in that section unless otherwise provided for in the enactment. You have otherwise provided for that here — seven years and a certificate.

There have been two classic cases on the problems with this wording. One is called West Fraser Mills Limited, British Columbia, Court of Appeal, 1994. The lower courts in British Columbia had said, ``This means that the commissioner has to provide awareness of the event in order to bring an action.'' In this section, you have said that the commissioner must be aware of the event in order for any action to be brought under the act. That is what the lower court said. The Court of Appeal in British Columbia in 1994 struck it down and said no because they looked at what was in the act before and no such certificate was there before.

Then you go to 2001 and a case called R. v. Gateway Industries Ltd. in Manitoba. The Court of Queen's Bench ruled and has successively ruled the same way for the last three years. Until about three months ago, Gateway was still there. That court has ruled that a commissioner's awareness must be proven for each case.

The courts all went back to these committee hearings and the House of Commons and to the minister and asked about their intent, their reason for doing this. Of course, they could not find anything. No one said anything.

The purpose of my question now is to get on the record the intent of this legislation — because the response will be used, I can assure you, if ever a prosecution is brought.

I am also puzzled about some of the wording. The commissioner institutes a ``prosecution'' here. In other acts, the wording is institutes a ``proceeding.'' I do not know why you would use the word ``prosecution.''

Proposed section 514.(1) make no sense at all, but let me ask this simple question: Is it then your understanding and the intent of the legislation that, in each case of prosecution under this act, a certificate of commissioner's awareness has to be produced before a prosecution can be initiated in the courts?

Mr. Sprague: I will back up a bit. The big issue in the debate between the B.C. courts and the Manitoba courts is whether you need a certificate to prosecute when the very minimum time period will not have expanded.

Senator Baker: It is two years under that act.

Mr. Sprague: The B.C. court's position was, essentially, if there is a minimum period of two years, then the purpose of the certificate is to expand the time because the commissioner would not have known about the incident until later. Therefore, the time period will not start to run until he knows of it. However, if he knew about it right from the beginning and it has only been two years, the prosecution would automatically fall within the period. Therefore, as long as the prosecution is brought within that minimum period, we do not need the certificate because, logically, if the commissioner knew about the offence the minute it was committed, the prosecution would still be within the period. Therefore, logically, we do not need the certificate.

The Manitoba courts took a more legalistic approach and said, ``We do not care if you can logically figure out that it is impossible for him not to fall within the period; we think you need the certificate.'' That was essentially it.

What is the purpose of the certificate? The purpose is evidentiary because we have a provision that says the time limit starts to run from the time the commissioner first becomes aware of the offence. How does anyone know when the commissioner first becomes aware of the offence without calling the commissioner as a witness in the proceeding and asking, ``Mr. Commissioner, when did you first read about this in the newspaper or when was your first suspicion?''

The way the Canada Elections Act is set up, we only have one commissioner. We may have many prosecutions and he might get rather tired running from court to court saying when he first became aware of this. Therefore the purpose of this clause is to provide the means whereby the commissioner can establish, through hearsay evidence, a written document: ``I first became aware of this on March 15 when I saw it in the newspaper.''

This document can be brought to the court rather than hauling the commissioner in to court. The document can be put in front of the court and the court can then rely on this in the absence of any evidence to the contrary because it is not determinative. It is not creating the method for the commissioner to automatically create his own limitation periods. This is just if there is no evidence that establishes that it actually came to his knowledge some other time, the certificate stands on its own, and they can accept it even though it is hearsay evidence. Therefore, it is really just evidentiary. It is to allow the courts to be able to determine when did the commissioner first become aware of the subject matter of the facts in the matter without having the commissioner there personally to give it to them.

In prosecutions under this bill, probably the conservative method would be always to file the certificate to deal with the problem raised.

Senator Baker: Mr. Sprague, I am very impressed with your answer. You are very knowledgeable in this area, there is no doubt about that. However, you have not answered my question. He has not answered my question, Mr. Chairman, and of course we cannot force him to answer the question as to whether or not proof of the commissioner's awareness of the facts are necessary in order to have jurisdiction. I just used the word ``jurisdiction.''

Mr. Sprague: The certificate is the proof absent anything else.

Senator Baker: Yes, but are you saying, then, that proof of the commissioner's awareness — be it in the form of a certificate or a letter or evidence by the commissioner, him or herself — is necessary in order to initiate a proceeding in the court?

Mr. Sprague: Are you saying that if there was no certificate? The certificate is some evidence.

Senator Baker: Of course. However, the wording you have here is, ``...after the day on which the Commissioner becomes aware of the facts giving rise to the prosecution.'' A prosecution for an offence under this act must be instituted within 18 months after the day on which the commissioner ``became aware of the facts giving rise...'' There is, therefore a judicial prerequisite there that there must be proof of the commissioner's awareness.

Am I correct or am I not correct, Mr. Sprague? Does there need to be proof of the commissioner's awareness in order to initiate a proceeding?

Mr. Sprague: It will bring you back to that logical conundrum. The conservative approach will probably be that you will always want some proof to establish when the limitation period starts to run. That is the conservative approach. Since the act provides the means for that proof to be provided easily through the certificate, that is the method you should use.

If the circumstance should arise at some time where, for some bizarre reason, there is no certificate, or the commissioner says, ``I cannot remember for the life of me when this first arose,'' then you could fall back on the B.C. Court of Appeal's approach to say, ``Well, when did the act take place? The act took place on March 1. What date is this? It is now one year later.'' That is less the 18 months, but that is for the courts to decide.

Senator Baker: Exactly, Mr. Sprague. That was in 1994. Do you think that the judgment of the Manitoba Court of Queen's Bench in 2001 and 2002 will trump the judgment of the B.C. Court of Appeal in 1994?

Mr. Sprague: If it is a pure matter of speculation, the B.C. Court of Appeal's decision appears more logical to me. However, it has been a long time since any court has done exactly what I said because I thought it was logical.

Senator Baker: Normally, this is not a problem because, of course, if you do not have the commissioner's awareness in the other acts then you could proceed by indictment if there is no prejudice to the person charged. In other words, before plea, you could change it. That is the way it operates. In this case, however, what they have done is put this requirement of awareness in for any prosecution.

It is a very interesting matter that is raised here. I am sorry to subject you to this intricate examination of wording, but these are problems that come up in this committee on a continual basis.

Mr. Sprague: Another consideration when you are drafting, you are balancing interests. The commissioner's knowledge and awareness of the facts is there is to provide a shorter period as well. The drafters could have asked what is the maximum period of time — seven years is how it is usually calculated. That is the time from the first commission of an offence to the logical period where a prosecution could be launched. We could make it a pure seven-year time period. That will expose everyone to a limitation period of seven years across the board.

However, the 18 months serves as a lessening, so that the commissioner will be required when he first becomes aware of a subject matter to initiate an investigation and not sit and allow a potentially accused person to lose his evidence and so forth by the passage of time. The 18 months serves to require the commissioner the minute that he first finds out about the facts to start an investigation and not allow time to run that might erode the evidentiary base.

The seven years is there to provide a maximum limit so that there is some protection for people after a certain time that may be very difficult for them to prove their innocence in a case.

Senator Baker: That is the problem under the Charter. That is why we have requirements.

Senator Beaudoin: You may always solve a problem under the Charter.

Senator Baker: Let me suggest that anyone reading this bill will find that this is an excellent section 7 argument under the Charter, abuse of process if they cannot produce the commissioner's awareness. It is outside the jurisdiction of the court to even hear the case.

The Chairman: Senator Baker, are you just about finished?

Senator Baker: I am not even half-way there, but that is okay. You can let it go. The other two clauses are interesting. We could perhaps suggest wording changes when the bill comes back again at some future date.

The Chairman: We could alternatively take it up with the officials when we have them back tomorrow, if you want.

Senator Baker: I think Mr. Sprague is perhaps more in tune.

Senator Grafstein: I am interested in the before and after. You heard my question to Ms. McDonough about the money. Let us follow the money. Tell us, first so we have an idea, what happens to the various parties before and after? In other words, if you take this year's intake by each of the parties, what will be the difference between the year before this legislation and the first year after it in terms of benefit to the parties in dollar terms?

How much now, how much after? Just take us through the parties: The Liberals, the Canadian Alliance, the Progressive Conservatives, the Bloc and the NDP.

Mr. Kingsley: Mr. Chairman, we can provide you with the last year for which we have numbers, which is not 2003 because we have not yet received the reports. We have not even received the reports for 2002, if I remember correctly.

Senator Grafstein: Check them to the first year thereafter.

Mr. Kingsley: I will ask Ms. Vézina, who is a director of election financing, to respond to your question.

Senator Grafstein: I am just looking for a rounded number. I am not looking for precision, but just before and after for each of the parties.

Ms. Janice Vézina, Senior Director of Election Financing, Elections Canada: Honourable senators, we have looked at the numbers as they were submitted to Elections Canada in the fiscal reports of the parties. We created what we called a four-year election cycle. The reality was, between 1997 and 2000, it was only three years — two non-elections, and one election. Thus, we created a fourth year based on the average of 1998-99. Thus, we have a hypothetical four-year election cycle.

When we apply the $5,000 limit from individuals to the parties, we factor in estimates on the increasing contributions due to the enhanced tax credit. That was an estimate from the Department of Finance. We also calculated the 60 per cent reimbursement of election expenses versus 22.5 per cent. In addition, we calculated the subsidy at $1.75 per valid vote obtained in the 2000 general election. We measured that against the contributions and election expenses that would have been collected in that hypothetical four years with the act as currently written.

The difference that we calculated — and these are just estimates — is basically a $41 million gain over the four years. In other words, there is more inflow than there are lost contributions. Again, this is a model that we have built and is not the reality.

Mr. Kingsley: For the parties that you were asking for —

Senator Grafstein: They are the Liberals, the Alliance, the Bloc Québécois, the NDP and the Conservatives, and not necessarily in that order. The reference is in the order of dollars.

Ms. Vézina: First, we calculated that no one would lose in this scenario.

Senator Grafstein: Could we have the numbers before and after?

Ms. Vézina: We estimated that the Bloc would be ahead by $10 million, the Alliance by $17.7 million, the Liberals by $6.5 million, the NDP by $4 million, and the Progressive Conservatives by $3 million ahead. That would be in a four-year cycle, including the election.

Senator Grafstein: To be fair, the Canadian Alliance would be the largest beneficiary at $17.7 million. The Bloc would be the second largest beneficiary at $10 million. The Liberals would be the third at $6.5 million. The NDP would be fourth at $4 million, and the Progressive Conservatives in fifth at $3 million. Is that correct?

Ms. Vézina: Yes, that is correct.

Senator Grafstein: I want these figures on the record so that the public understands what we are talking about. It will also be enlightening to members of the committee to understand where the net benefits are. That could be helpful.

I will go back to my line of questioning about the constitutionality of the provisions dealing with the individual contributions of $5,000 and the limitation on corporations, unions, and associations of $1,000.

First, the minister seemed to indicate — although I have not yet read through the transcript — that this would be equalized in some fashion because of the various provisions dealing with corporations and unions. When I looked at the act, after his evidence today, I thought it was the reverse such that individuals could contribute $15,000 in one year to a party. Corporations would be limited nationally to $1,000 per year. The provision dealing with contributions to the party and to a candidate, et cetera would allow for an individual to give up to $15,000 in one year of the three categories. Is that right?

Mr. Kingsley: Before I ask Mr. Sprague to answer, I want to ensure that, because this is on the record, it is clear that the numbers we provide are hypothetical and they are in order of size.

I want to make an additional statement that I made at the House Committee on Procedure and Affairs. It is evident to us that we do not know the full picture of financing politics in this country. I am speaking as the federal Chief Electoral Officer. We cannot get a clear picture of this based on the reporting requirements that exist for candidates, local associations have none and parties, at the present time. We are talking about the black hole of election financing that has existed for years.

It is not possible for us to stake our reputation on these numbers without people realizing that they are hypothetical and so too the hypotheses that were built around them.

Senator Grafstein: Mr. Kingsley, I appreciate everything you say. I agree that it is dangerous to let loose conclusions of numbers. However, on the other hand, it is important for senators to be aware of, as best we can, a rough calculation subject to many changes in terms of order of magnitude and, obviously, with all of the things that you caveat.

I am not seeking to pump up a number. Rather, I am simply attempting to give the committee a sense of what we are talking about as it applies to the public and the public purse.

Mr. Kingsley: I agree with that, senator. I make my point because it is part of the record. Certainly, you are entitled to answer the question. That is why we have answered it as best we can. I want all honourable senators to appreciate that.

Perhaps Mr. Sprague could answer your question as well as it relates to the limits under the bill.

Mr. Sprague: As I understand the question, it is simple. Basically, if I am an individual and I want to give the maximum amount of money I can in one year, how much can I give? I am a supporter of one particular party; I am not someone who supports many parties.

From my understanding of the bill, the maximum that I can give is $5,000 in one year. I can divide that $5,000 among any one of the registered parties, anyone who is purporting to be a candidate of that party, any of its registered electoral district associations and any of its nomination contestants. That is my $5,000.

Senator Grafstein: I am looking at proposed section 405(1). Again, just to sum up and not to go through the provisions, if I am a dedicated member of the Liberal Party, I can chose in a particular year to give $5,000 under clause 405(1)(a), another $5,000 under 405(1)(b) and $5,000 under (c).

Mr. Sprague: That is the difference. If you are only talking about supporting the liberals —

Senator Grafstein: — yes.

Mr. Sprague: Then you do not mix (a) and (b). Proposed section 405(1)(b) covers candidates who are not from registered parties. Proposed section 405(1)(a) states that your $5,000 is to be given to all of the emanations of the Liberal Party. If, however, you are not a supporter of the Liberal Party and you are instead a supporter of independent candidates, you may give $5,000 not per year but per election cycle to each independent candidate that you choose to endow.

Let us say there are three independent candidates.

Senator Grafstein: Is that under (b)?

Mr. Sprague: That is under (b). Bear in mind that (b) and (a) never mix. If I am only supporting liberals, (c) can kick in but (c) only operates for leadership contests and there would not be a leadership contest each year.

Senator Grafstein: Is it fair to say that a corporation, a union or an association would be limited under those two categories — (a) and (c) to$1,000 in total?

Mr. Sprague: Corporations work in much the same way, except that their $1,000 is to be divided between the local levels in a calendar year of a registered party. They cannot give to the registered party. Rather than $5,000, if the corporation is a registered party supporter, they are allowed to give a maximum in one year of $1,000 to be divided among the local level emanations of that registered party — the electoral district associations, candidates and nomination contestants.

Senator Grafstein: I understand. Does that include leadership?

Mr. Sprague: They cannot give to leadership at all.

Senator Grafstein: Right. In effect, if I compare a contribution to the party in a particular year, it would be that an individual could give $10,000 should he or she choose or $1,000. I am trying to compare the two classes: the individual versus the corporation, the unions and the associations.

Mr. Sprague: In my individual capacity, I could give $5,000 and then as the corporation, I could give $1,000. As the individual, I could give throw in another $5,000, but only for a leadership race and one time only. As a corporation, I cannot give it at all. At the same time, when I am giving, I can give, as the individual, my $5,000. I can then turn around and give another $1,000 under my corporate guise. I incorporate myself and I am giving again as my corporation.

Senator Robichaud: In the case where a corporation makes a donation at the local level to a person seeking a nomination and he does not get the nomination, is that corporation allowed to make another contribution to the person who would get the nomination in that case?

Mr. Sprague: Yes, as one of the two corporate double-ups. If the corporation gives their $1,000 in a calendar year to a nomination contestant and that person loses the nomination contest at the local level and does not become the candidate, then the corporation can give another $1,000 to the candidate in that calendar year. They cannot save it up and give it the next year. It has to be within the same year.

Senator Robichaud: Senator Grafstein was saying that the individual can make two contributions, but so can the corporation; is that right?

Mr. Sprague: Yes, under certain circumstances.

Senator Robichaud: Both.

Senator Grafstein: It is one to five.

Senator Robichaud: It is, but you can make two fives and two ones.

Mr. Kingsley: To answer the question more directly, there is a difference between what individuals can do and what corporations and unions can do. There is a clear difference under this statute. They are not the same.

Senator Grafstein: Getting back to my earlier line of questioning, under section 3 of the Charter, association, religion and expression are, in effect, the highest hierarchy of rights in a hierarchy of rights because they are not subject to the notwithstanding clause. The Oakes case says they should be strictly construed when they are tampered with. You have heard my argumentation with respect to the constitutional interest of corporations, unions and associations — all different categories.

Are you comfortable, from a constitutional standpoint, that the objective meets the Oakes test, that the provision of $1,000 versus $5,000 meets the Oakes test as expressed in the Figueroa case? I would like to elaborate, but I think you know what I am saying. I am doing it for the benefit of the chairman to get it on the record.

Mr. Sprague: Unfortunately, I am going to try to dodge that question, senator.

The reason I will dodge the constitutional question is that the Office of the Chief Electoral Officer is not a body that is set up to give constitutional law opinions. We would prefer that questions of this nature be directed to the Department of Justice rather than to us.

Senator Grafstein: I appreciate that.

The Chairman: Mr. Kingsley and group, I want to thank you very much.

Hon. Senators: Hear, hear!

The Chairman: Your participation has been enlightening and helpful in our deliberations. Thank you very much for coming.

Mr. Kingsley: Thank you for having invited us.

The committee adjourned.

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