Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 34 - Evidence - May 22, 2013
OTTAWA, Wednesday, May 22, 2013
The Standing Senate Committee on Banking, Trade and Commerce, to which
was referred Bill C-377, An Act to amend the Income Tax Act (requirements
for labour organizations), met this day, at 4:15 p.m., to give consideration
to the bill.
Senator Irving Gerstein (Chair) in the chair.
The Chair: Today we begin our consideration of Bill C-377, An Act
to amend the Income Tax Act (requirements for labour organizations), which
was referred to this committee on Tuesday, May 7, 2013.
Honourable senators, before we begin, I would like to outline some ground
rules for our upcoming hearings, as decided unanimously by your steering
committee. First, we have an extensive list of witnesses, but rest assured
that we will have no more than four per panel; and, second, you will be
delighted to know that starting tomorrow and continuing for the duration of
our study, the committee will meet for three hours on Thursdays, starting at
To begin our consideration of Bill C-377, I am pleased to welcome Russ
Hiebert, MP, who will be joining us for the first hour today. He is the
Member of Parliament for South Surrey—White Rock—Cloverdale, British
Columbia, and is the sponsor of Bill C-377.
First elected in 2004, Mr. Hiebert serves as Co-Chair of the All-Party
Parliamentary Border Caucus and is Chair of the Canadian Branch of the
Commonwealth Parliamentary Association.
I would remind colleagues — though I suspect they do not need any
reminding — that our committee is known for its tightly crafted questions,
without lengthy preambles.
Mr. Hiebert, the floor is yours.
Russ Hiebert, M.P., sponsor of the bill: Thank you, Mr. Chair and
honourable senators, for the opportunity to speak before you on my private
member's bill, Bill C-377, requiring public financial disclosure by labour
My motivation for bringing forward legislation in the area of
transparency is based on similar actions by our Conservative government.
Among the legislation we have introduced as a government, including the
Federal Accountability Act, are bills requiring greater transparency for
public office-holders, for Crown corporations and most recently for Native
reserves — legislation that this chamber also passed.
Labour organizations play a valuable role in Canadian society, and we
provide substantial benefits to support the work that they do. However, many
people are surprised to learn that despite the massive federal-public
benefits for labour organizations and their members provided under the
Income Tax Act, there is currently no requirement to be accountable to the
public for the use of those benefits. Under the Income Tax Act, labour
organizations operate tax- free, their members receive full income tax
deductibility for their dues payments, and they receive their strike pay tax
free. Dues deductibility alone costs the federal treasury in the range of
$500 million a year.
The fundamental premise behind Bill C-377 is that the public is providing
a substantial benefit and they should know how that benefit is being used.
After all, charities that also receive substantial benefits from the public
have been publicly reporting on their finances for the past 36 years.
As I looked around at our largest trading partner, the United States, I
found that public financial disclosure for labour organizations has been a
fact of life there since 1959. In fact, Canadian labour organizations
headquartered in the United States, such as the United Steelworkers of
Canada, report very similar financial details to what I am asking for in
Bill C-377. Right now, you can go to the U.S. Department of Labor website
and find out exactly what the head of the United Steelworkers of Canada
earns and how he submits his time between political activities and labour
relations activities. You can also see how much his union donated to various
political parties in Canada.
Public financial disclosure is also the case in the U.K., France, Germany
Before this bill came to this chamber, I proposed amendments that were
accepted by the House of Commons and are contained in the bill before you.
First, there are amendments that address the issue of privacy. In
particular, my amendments eliminated any uncertainties about the fact that
pension plans, health benefit plans and other regulated plans will not be
required to report benefit payments to individuals from such registered
plans. Home addresses have also been removed from the reporting
Additionally, union employees earning less than $100,000 will not be
identified, unless they are in a position of authority. The $100,000
reporting requirement reflects similar legislation that has long existed in
Canada, such as the Province of Ontario's 1996 sunshine legislation for the
provincial public service.
The second major change was in the area of cost savings to government.
Significant cost savings will be achieved through the amendments, removing
the requirement that searches of the disclosure data be subject to
cross-referencing, and by requiring that all filings be electronic, thus
eliminating paper filings. Indeed, the Canada Revenue Agency has confirmed
that they believe there will be fewer than 1,000 entities reporting, and the
estimated start-up costs of implementing Bill C-377 will be $1.2 million per
year for the first two years and just $800,000 annually after that.
A third area of change that my amendments will foster is in what will be
reported. There are two significant changes here. The first is that less
will be required to be reported by a labour organization's core labour
relations activities. Instead of providing details of spending over $5,000
on such activities as organizing or collective bargaining, an aggregate
figure only will have to be reported.
Second, for transactions where there is a potential for conflict of
interest — a so-called related-party transaction — there will be full
reporting on the details of those transactions. An example of a
related-party transaction might be when a labour organization buys a parcel
of land from one of its directors. Bill C-377 does not comment on the
appropriateness of such a transaction; it merely requires that it be
reported. I believe that everyone will agree that full transparency is
called for when it comes to related-party transactions.
I followed the debate of honourable senators as they considered my bill
at second reading, and I would like to make a few comments for your
The question was raised whether other organizations that receive similar
tax benefits as labour organizations, such as professional associations,
should also be included in Bill C-377. In general, yes, it is reasonable to
apply the same principled demand for transparency to other organizations
receiving similar public benefits. However, Bill C-377 was specifically
written to focus on the specific activities that labour organizations
uniquely engage in, such as collective bargaining, labour relations
activities and so on. It would be up to another MP or senator to introduce a
bill requiring public financial disclosure by professional associations.
Another comment was made during second reading suggesting that, under
Bill C-377, the Canada Revenue Agency would be empowered to police how
labour organizations spend their money and become the political judge of
what expenses are appropriate. This is categorically incorrect. Bill C-377
does not regulate in any way how labour organizations spend their money;
Bill C-377 does not even require labour organizations to spend money on
having an audit. The sole requirement in the bill is the filing of an
information return, no more than is already required of businesses,
not-for-profits, charities or even individual Canadians.
One speaker at second reading asked why Bill C-377 does not apply to a
list of organizations such as rotary clubs, religious congregations and the
Fraser Institute. As I mentioned earlier, Canadian charities, including
rotary clubs, churches and the Fraser Institute, have been reporting their
financials publicly for the past 36 years.
A senator indicated that Canadian trade union legislation was originally
modeled after British statutes. He said that our laws were designed to
protect legitimate union rights and should do so now. I am quite glad that
the point was raised, because Britain is currently ahead of that when it
comes to labour organization public financial disclosure. Under legislation
passed in 1992 in the U.K., unions are required to submit annual reports and
maintain financial records for subsequent inspection, if required, for a
period of six years. The British legislation requires the disclosure of the
salaries and expenses of elected officials of the union. A British union's
annual financial reports must be audited, and they are public records
available for general viewing.
The suggestion was made at another time that ``a two-year supply of
coffee, a used car, a new computer system or printer, or the replacement of
plumbing or a boiler at union headquarters would qualify for explicit
disclosure.'' Actually, the $5,000 disclosure threshold does not apply to
the core functions of a labour organization. If the funds expended for the
specific items mentioned were for administration, overhead, labour relations
activities, et cetera, then only an aggregate figure would be supplied for
all spending in those areas, and no information about the coffee supplier or
others would be disclosed at all.
The point was also raised — and I am sure you will hear it again — that
many Canadian labour organizations already disclose financial statements to
their members. While this may be the case, it is simply not the purpose of
Bill C-377 to require disclosure to organized members. Bill C-377's purpose
is to require public disclosure because of the substantial public benefits
that labour organizations receive.
Several of those opposed to Bill C-377 have suggested there is a
constitutional question of jurisdiction. In their view, Bill C-377 is labour
law and not tax law. Bill C-377 amends the Income Tax Act and not any labour
code. Bill C-377 does not attempt to regulate labour organizations in any
way, compel them to spend money or dictate how they may spend their money.
The only activity required by Bill C-377 is the filing of an information
return, an activity already required of many other types of institutions,
including organizations regulated exclusively by the provinces, such as
provincially chartered non-profits.
The constitutionality of the federal government requiring a Canadian
organization that receives revenues to file a financial information return
is not in doubt. Bill C-377 has already been reviewed for constitutionality
by the House of Commons and been deemed not unconstitutional by an all-party
committee with the Liberals being represented by former leader Stéphane
Dion. The bill was also reviewed for constitutionality by the Attorney
General of Canada, the top legal officer of the Crown, before he recommended
that the government support the bill.
I have also heard a concern raised that solicitor-client privilege is not
protected well enough in this bill. First, even if the term was not
mentioned, it would be addressed by our common law. However, to offer
greater clarity I have included it in a key place in the bill as an
exclusion under legal services. One group has suggested the exclusion should
appear under other clauses as well.
The simple answer is that if a lawyer is giving legal advice, those are
legal services, regardless of what other category of activity it may have
been provided under, and they are expressly protected in Bill C-377.
However, a lawyer lobbying for a labour organization, for example, is not a
legal service; hence, there is no need to mention solicitor-client privilege
in that category of lobbying.
Finally, one senator actually alleged that there was ``an anti-union bias
running rampant in Bill C-377.'' Such rhetoric may make for good political
theatre, but it is not supported by the facts. According to the 2011 Nanos
Labour Day survey, 83 per cent of working Canadians and fully 86 per cent of
unionized Canadians support public financial disclosure for labour
organizations. That is solid support from the grassroots.
In conclusion, while a handful of labour leaders and their political
friends may be uncomfortable with the idea of public disclosure right now,
in time the public will see that a large majority of Canadian labour
organizations are using their labour resources wisely and efficiently. As
this fact becomes apparent, a positive image of labour organizations as
fiscally responsible will be enhanced, just as happened when charities
become more accountable 36 years ago.
Thank you for your attention. I am pleased to answer your questions.
The Chair: Thank you very much, Mr. Hiebert, for your opening
comments. I will move immediately to my list of senators wishing to ask
Senator Greene: Thank you very much for your bill and for your
presentation. I like your bill very much. It is good to know that we are
catching up with our trading partners.
I have a simple question. In your view, what are the benefits of your
legislation to the average union worker?
Mr. Hiebert: The benefits extend beyond the average union worker;
they extend to the general public. Remember that the purpose of the bill is
to extend public disclosure to a group of institutions that receive
substantial public benefits, just like charities have had to disclose for 36
years. When that happened, Canadians had more confidence that the money they
were giving to charities was being used properly. I believe the same level
of confidence will accrue to labour organizations when Canadians know that
they, too, are using this money wisely, efficiently and effectively. The
benefit is broad, much beyond members of a labour organization.
Senator Greene: I appreciate that. However, from the average union
member's point of view, will that give them a better avenue to learn what
their union is up to?
Mr. Hiebert: Like the public, members of a labour organization
might have an interest in how their dues are being spent and would have the
opportunity, if they so desired, to have an influence on the leaders who
make those decisions about how that spending is occurring. Over the last two
years that I have been working on this piece of legislation I have heard
from a variety of Canadians, both unionized and non-unionized, that they are
very curious to know how their dues are being spent and very much applaud
this kind of transparency. If that is any reflection, then I think that can
also apply to many other Canadians.
Senator Massicotte: Mr. Hiebert, I understand the grasp of your
argument being that these organizations receive some tax benefits that, in
fact, are not taxable, and therefore they owe the public more information.
In your mind, how does that compare with a private corporation? Obviously,
they pay taxes. When the legislators decided to give tax-free status to
charitable organizations or unions, I presume there would have been
significant other benefits that they deemed necessary. How does the
reporting compare in what you are proposing with a private corporation of
about 500 employees?
Mr. Hiebert: You cannot really compare those institutions because
they are completely different. First, labour organizations receive
substantial public benefits for a variety of reasons that I just mentioned,
including tax deductibility of dues. They operate tax-free and strike pay is
tax free. Corporations do not have those same benefits. It is much like
charities receive tax credits for the donations that Canadians give to them.
That substantial public benefit is there because we want to support
charities. However, the obligation that goes along with that public
financial support is transparency and accountability. You do not have the
same thing with corporations. It is not a fair analogy.
Senator Massicotte: I presume corporations are paying taxes
because someone decided that they get benefits from society.
Let me go to the next point. How does your disclosure compare to a public
corporation, say to the Bank of Montreal or Royal Bank, which has thousands
of employees. They get significant protection from the Canadian government
relative to the percentage of shares that can be owned by third parties and
foreigners, including many strategic assets in Canada. How does that
reporting compare to what you are proposing?
Mr. Hiebert: Again, it was not my interest to compare to public or
private corporations because those are completely separate institutions that
do not receive the kinds of financial public benefits that charities or
labour organizations do. They are completely different institutions. It is
like apples and oranges; it is not fair to compare them.
The principle is still there in terms of a public corporation. The
shareholders of that corporation have an interest in the public company, and
so they get disclosure. It increases their confidence in their investment. I
think the same analogy applies to Canadian labour organizations. If
Canadians, both unionized and non-unionized, feel that their investment in
these labour organizations, to the tune of about $500 million a year, is
reciprocated with accountability and transparency, then their confidence
will increase as well.
Senator Massicotte: I certainly acknowledge with public companies
that the trust and transparency is phenomenal. We are talking about billions
and billions of dollars. However, in that circumstance, to maintain that
trust, how does their public disclosure compare to what you are proposing?
Mr. Hiebert: Again, I did not compare a labour organization and a
public or private company. There are different levels of transparency
required. In this case, I have tried to closely mirror what some Canadian
labour organizations already have to disclose, not to any Canadian authority
but to the U.S. Department of Labour. I have tried to make it parallel so
that we do not have this different playing field here in Canada with some
labour organizations having to disclose this information to the U.S.
Department of Justice but other labour organizations having to disclose
nothing at all. That is the level playing field I have tried to create with
Senator Massicotte: To get into more detail, I have been a CEO of
a private company and a public company. The reporting requirements that you
are proposing are immensely more significant and in much more detail than
even public companies have to provide.
Let me go on to the next question. In your presentation, I heard you say
that for the disclosure of any transaction of any supplier or employee in
excess of $5,000, that requirement would only apply to the portion of what I
call non- union work. Did I hear you correctly?
Mr. Hiebert: That is correct. For any core labour relations
activities — bargaining, organizing, labour relations, which are core union
or labour relation activities — that information will be disclosed in
aggregate, one big number at the end of the year, with no detail required.
However, when a labour organization gets involved in things like lobbying or
political activity, then that $5,000 threshold comes into play because that
is not a core labour relations activity.
Senator Massicotte: We can all read it here. Let me read the
English version for you. When I read proposed paragraph 149.01(3)(b),
it says the information referred to in subsection 2 shall include:
(b) a set of statements for the fiscal period setting out the
aggregate amount of all transactions and all disbursements — or book
value in the case of investments and assets — with all transactions and
all disbursements, the cumulative value of which in respect of a
particular payer or payee for the period is greater than $5,000, shown
as separate entries along with the name of the payer and payee and
setting out for each of those transactions and disbursements its purpose
and description and the specific amount that has been paid or received,
or that is to be paid or received . . .
In my reading of it, and maybe there is an amendment that I am not aware
of, it does not say this is only for what I call non-union work. It seems to
be explicit for any disbursement cumulative for one year to any payer or
Mr. Hiebert: If you scroll down to the bottom, below that section,
you will see:
(ix) a statement with the aggregate amount of disbursements on labour
relations activities . . .
If you continue down, you see:
(xiii) a statement with the aggregate amount of disbursements on
(xiv) a statement with the aggregate amount of disbursements on
general overhead . . .
Senator Massicotte: I agree, but let us go back to the
introduction where all the numbers are. It says, ``that is to be paid or
received, and including.'' It does not say that the following basically
satisfies the previous description. ``Including'' says over and above. When
you say, for instance, the statement of accounts payable, does that mean
they must give an itemized account of every accounts payable?
Mr. Hiebert: No, it stays statements of accounts payable.
Senator Massicotte: I have seen thousands of them, and they are
probably a 50-page document that lists every creditor and what they owe each
one. Why would the public be interested in that? I would argue that is quite
confidential, including a number of contractors doing business with these
people. They do not want to see their name disclosed with an amount. Their
competitor will take that information. It is not for the public interest.
The Chair: Senator Massicotte, I will intervene and put you down
for round two. These are very good questions.
Senator Massicotte: Please do.
Senator Nancy Ruth: Mr. Hiebert, you said in your introductory
remarks that Britain had been ahead of Canada since 1992. I am checking
whether I understood correctly. You said that they must report if they are
required to do so. That is not a mandatory requirement to report. In the
British legislation, it is only when asked to report; is that correct?
Mr. Hiebert: Let me be clear on what I did say. Under legislation
passed in 1992 in the U.K., unions are required to submit annual reports and
maintain financial records for inspection for up to six years. It also
requires disclosure of the salaries and expenses of elected officials of the
union. These annual reports must be audited, and their public records must
be available for general viewing.
Senator Nancy Ruth: There was nothing in there that they must
report if required, is there?
Mr. Hiebert: No, it is not optional.
Senator Nancy Ruth: Okay. Thank you.
Senator Ringuette: Mr. Hiebert, I am pleased you are here today.
However, I am somewhat surprised that someone who has been a member of
Parliament for nine years and who has a law degree, first of all, said that
unions give donations to political parties, which is against the Canada
Elections Act. You also indicated that it is the same as charities, and then
when Senator Massicotte further questioned you, you said, ``Well, no, you
cannot compare apples and oranges.''
I am surprised that the fundamental law of the land, the Constitution, is
not abided by in this legislation. This is not a tax bill; this is a labour
relations bill. It is clear — very clear — and I have spoken with many
constitutional experts, and they are all in agreement.
Mr. Hiebert, which constitutional experts did you contact or talk to who
said that this bill is constitutional and that it also respects the Canadian
Charter of Rights and Freedoms?
Mr. Hiebert: Thank you for the question, Senator Ringuette.
First of all, to clarify, you said that I said that unions donated to
political parties. If you look up the United Steelworkers of Canada on the
U.S. Department of Labor website, as I did, you will see that this Canadian
labour organization did in fact donate to political parties in Canada. They
happen to be provincial, but they are political parties.
In terms of charities and apples to oranges, I was referring to this
comparison between labour organizations and public or private companies.
That is the comparison I was making. It is not one that is comparable, and
that is why I use that analogy.
Regarding the constitutionality of the bill, first, as I mentioned in my
opening remarks, I consulted the House of Commons lawyers. The standing
committee within the House of Commons — a subset of the PROC committee — has
four criteria to permit a private member's bill to proceed to the house. One
of them is whether it is constitutional, and that is an all-party committee
that included, in this case, former Liberal leader Stéphane Dion. It
assessed the bill and said it was not unconstitutional.
In addition, the Attorney General of Canada, who is the highest legal
officer in Canada, recommended that the government support the bill. He
could not have done so if it was not deemed to be within the bounds of the
Senator Ringuette: Could you table all these written documents to
the committee, please, through the clerk, so all the members will have a
Mr. Hiebert: I am not privy to documents that are circulated in
cabinet, which is what I was referring to when I referred to the Attorney
General of Canada. There are no documents referenced —
The Chair: Do you have any written documents you have received
Mr. Hiebert: No. I am answering the question in terms of the fact
that the subcommittee of PROC tables a report in the House of Commons
deeming if a private member's bill is acceptable, and that fulfills the
To this point, no constitutional expert to my knowledge has cited any
court decision, any statute or any specific section of the Charter that
would suggest that Bill C-377 is unconstitutional.
Senator Ringuette: I am sorry; I have to stop you right now
because I read the entire proceedings of the house committee in regard to
this bill. You have received many, many constitutional experts stating that
this bill was not constitutional, that it is an infringement on the Charter
of Rights and Freedoms.
I am sorry, but if you want us to take seriously what you are trying to
do, please do not say something that is not accurate. I have spent many
weeks reading through all these documents.
Your sole source of expertise was the House of Commons lawyers. I suppose
that you have written requesting their comments. What written responses did
you receive and can you table them with the clerk of this committee?
Mr. Hiebert: It is the bill that you have before you. They helped
draft the bill. This is the written submission.
The Chair: Mr. Hiebert has indicated he has nothing in writing.
Mr. Hiebert: I appreciate your devotion to the subject matter
before this Senate committee; it is commendable for you to have taken all
that time to review the minutes before the House. However, perhaps you could
at the next sitting of this committee show me which references you are
referring to because I have heard many people say inside and outside the
media that it is unconstitutional, but I have yet to hear one of them cite a
Senator Ringuette: I guess you have met your match, Mr. Hiebert;
you have met your match. If you give me a second —
The Chair: Senator Ringuette, may I go on to another question and
then I will come back to you? I assure you that I will.
Senator Maltais: I will not get into the constitutional aspects,
because I am not a lawyer, but there is one thing that interests me and I
would like to know more about it. I am not sure whether you have made the
assessment, but do you have an idea of the total union dues collected by all
Canadian unions? I think all union members pay dues, which must amount to a
considerable sum of money. Have you broken down or separated the
contribution money that is only used for labour relations such as collective
agreements and the money for donations? Have you done the math to find out
the total amount being collected?
Mr. Hiebert: There are four or five billion dollars.
Four or five billion dollars a year are collected by labour organizations
In terms of the breakdown you have requested separating lobbying
activities versus labour relations activities, that information is simply
not available at the present time. It would be for Canadian labour
organizations if my bill were to pass. If you wanted to look at those
Canadian labour organizations that have to report to the U.S. Department of
Labor website, there you can see the breakdown of how much time they spend
on these different categories. However, there is nothing in Canada for all
labour organization that breaks down that kind of information.
Senator Maltais: For instance, say I am a union member of any
given Canadian union and I pay $1,200 in union dues a year. As a union
member, I expect the money to be invested in labour relations to increase my
quality of life, my salary and my benefits. That is basically how unions
Based on that example, could you tell me what the person would get for
$1,200 in labour relations services?
Mr. Hiebert: What they would get would depend greatly on which
labour organization they are a member of and how they spend that money. For
the vast majority of members of labour organizations, and certainly for the
entire public, they have no idea what that money is for or how it gets
broken down in particular. As you suggested, they assume it is to enhance
the life of the employee or the member of the labour organization, but no
specifics in most cases are ever provided and certainly no information is
provided to the public. That is why this legislation is so important.
As I mentioned at the outset, most of our G7 trading partners already
have this information. The United Kingdom, France, Germany and Australia are
not countries that take labour relations lightly. The United States has had
it since 1959. I want to point out that when it was adopted in 1959, it was
adopted at a time that the Democrats controlled both the House of
Representatives and the Senate, the Democrats being the party with historic
ties to organized labour. They felt it was necessary and appropriate for the
American people to have access to this kind of information, and thus they
also have access to this information for a subset of Canadian labour
organizations because of their affiliation with U.S. labour organizations.
Again, this is not new disclosure. Most democratic countries that we are
strongly related to already have this disclosure. It is an anomaly that
Canada does not have this disclosure, so this legislation will simply bring
us into line with the rest of the labour organizations in Canada and with
our other trading partners.
Senator Campbell: Thank you for coming today, Mr. Hiebert.
I quote: ``Bill C-377 is a solution in search of a problem. It does not
address an existing problem'' or cure any actual mischief. This, in fact, is
simply red meat for the neo-Conservative portion of the party to keep them
happy in the near future.
I will not take the constitutional question away from Senator Ringuette,
but I would like to know your connection with Merit.
Mr. Hiebert: As you might have read in the news, Merit is one of a
number of organizations that support this legislation, and they are
certainly not the only ones. I have heard from a variety of groups,
individuals, media, academics and labour organizations that currently
voluntarily disclose this information and feel that their counterparts
should also do the same. The cross-section of people interested in this
legislation is broad, as demonstrated by the Nanos poll I cited earlier
which suggested that 83 per cent of Canadians wanted this kind of labour
disclosure and 86 per cent of unionized workers in particular wanted this
Senator Campbell: That Nanos poll is interesting because it turns
out that the Nanos poll and the question you used was actually cooked. The
unions have pointed out to you that in fact the question in the Nanos poll,
the preamble to it, simply would not stand up to any kind of scrutiny. Your
83 per cent is, like many things, smoke and mirrors.
Are you aware of the financial reporting requirements the federal
government and various provinces already have for unions?
Mr. Hiebert: I am.
Senator Campbell: Can you describe them for me, please?
Mr. Hiebert: The disclosure that seven of ten provinces have for
labour organizations is for members of those organizations and not for the
public. This bill focuses on public disclosure through the Income Tax Act.
There is no comparison necessary.
I do want to point out, however, that Nanos does stand behind its polling
and the answers it received in relation to this question.
Senator Campbell: Considering where pollsters are right now after
the British Columbia election, I would not hold much faith in that.
You said you have spoken to many members of the unions who have
complained to you. Do you know how many complaints from union members were
filed last year with provincial and federal bodies that oversee unions under
the disclosure laws?
Mr. Hiebert: I do not.
Senator Campbell: According to provincial labour relation reports,
in 2010-11 there were a total of zero complaints filed by union members
regarding financial reporting in Manitoba, New Brunswick and Nova Scotia. In
Ontario, there were a total of five complaints. In the federal jurisdiction,
there were two complaints, both of which were withdrawn. British Columbia
saw a single complaint filed in 2011. This represents five complaints. I
would like to know who these members were. This is, ``Oh, somebody told me
something,'' without backup. It is like someone told me this was
constitutional, with no real backup.
I want to touch on this one question: Did you attend the committee
meetings in the house?
Mr. Hiebert: As many as I could.
Senator Campbell: Did you attend on the day the Canadian Bar
Association went to the standing committee?
Mr. Hiebert: I reviewed their submission. I cannot recall if I was
actually at the meeting.
Senator Campbell: On page 3 of their submission to the House of
Commons Standing Committee on Finance, the Canadian Bar Association said:
In particular, the requirements that the labour organization file a
statement detailing its disbursements for political activities, lobbying
activities, organizing activities and collective bargaining activities
could be unconstitutional, counter to the Charter's protection of
freedom of expression under s. 2(b) and freedom of association under s.
The Bill interferes with the internal administration and operations
of a union, which the constitutionally protected freedom of association
precludes, unless the government interference qualifies as a reasonable
limitation upon associational rights. It is unclear from the Bill what
the justification is for these infringements.
The Chair: Do you have a question?
Senator Campbell: This is the Canadian Bar Association. It is made
up completely of lawyers, as far as I know. What is your answer to that?
Mr. Hiebert: Again, any number of organizations and individuals
have declared in the past that legislation coming from this body will be
deemed unconstitutional. It is often seen as a political argument that does
not necessarily bear truth once it is tested in the courts. The fact that
they have made that assertion does not necessarily deem it to be the case.
Senator Campbell: The assertion that it is constitutional does not
make the case either.
Mr. Hiebert: This is absolutely correct, but we have assessments
by the Attorney General of Canada and by other lawyers and by this
The Chair: Thank you, Senator Campbell and Mr. Hiebert.
Senator Moore: I wanted to pick up on the questioning of Senator
Massicotte with respect to private companies and comments about disclosure.
As he mentioned, they receive tax benefits. They get to write off dues. They
get to write off lobbying fees as business expenses against income.
Therefore, I do not understand why a union would be targeted for the same
Mr. Hiebert: I have tried to —
Senator Moore: It is not good enough to say it is apples and
oranges. There is one taxpayer and one code of income tax law, and we get to
write off certain things depending on the categories we are in. A private
company or a public company gets to write off all these expenses, and they
do not disclose them necessarily. Private certainly do not, yet you want a
union to do that. I do not understand the rationale.
Mr. Hiebert: As I pointed out at the beginning, there are a couple
of reasons. Labour organizations receive a substantial public benefit to the
tune of $500 million a year due to the tax deductibility of their dues. A
Canadian subset of labour organizations already discloses this information
to the U.S. Department of Labour website. Similar public benefits through
the tax act accrue to charities and have done so for 36 years, and they have
had to disclose as well.
It is my belief that an institution that receives substantial public
benefits also has a corresponding public duty to transparency and
accountability. Unions, labour organizations, are distinct institutions,
unlike private or public corporations, unlike professional associations. In
principle, if a member of the House of Commons or the Senate brought forward
a bill requiring similar disclosure for other institutions receiving
substantial public benefits, in principle, I would support that kind of
legislation for the very reason I am supporting this legislation.
Senator Moore: You mentioned that unions receive a benefit of $500
million through these tax provisions. How much is the benefit to private
corporations annually through these tax provisions?
Mr. Hiebert: Again, private corporations are not entities I am
interested in with this legislation, so I could not answer your question.
Senator Moore: I suggest you should be.
I understand the bill covers the term ``labour relations activities,''
and that phrase includes:
. . . activities associated with the preparation for, and
participation in, the negotiation of collective bargaining agreements
and the administration and enforcement of collective agreements to which
the labour organization is a signatory.
Do you think it is right that a union should divulge its tactics and its
thinking to the public and, obviously, to management? Where is the spirit of
two parties negotiating collective agreements, each finding their own way
and working to a solution? I do not understand how you could recommend such
Mr. Hiebert: In proposed paragraph 149.01(3)(b)(ix), I
state that the labour relations activities — and you read the definition of
it — need only be disclosed in aggregate. I am not interested in the details
of what a labour organization is doing with the money that they are spending
in that area.
However, I do want to point out that other labour organizations in
Canada, the United States, Germany, the United Kingdom, France, Australia,
et cetera, have all had this kind of disclosure for many years now, and it
has not impacted or impeded their ability to negotiate with the companies
that they are working with. It has been par for the course and certainly has
not impacted their negotiations.
The Chair: Thank you, Mr. Hiebert.
I will move now to the balance of the time for Senator Ringuette. Do you
have your information ready now?
Senator Ringuette: Yes.
I wish to go back to the House of Commons and the experts that were in
front of the committee. I suppose that, this being your bill, you must have
paid very close attention to what was going on in the other place.
Senator Campbell already raised the issue that the Canadian Bar
Association says that it is not constitutional. We have Mr. Notebaert who
says that it is not constitutional. We have Professor Alain Barré of the
Department of Industrial Relations at Université Laval who says it is not
constitutional — it is against the Charter, and it is against the Privacy
Act. We have also Professor Henri Brun, a constitutional law professor, who
says the same thing, that this is not constitutional and is an infringement
on the Charter of Rights and Freedoms.
Furthermore, I discovered that Canada had signed a convention at the UN
in 1972 — with the International Labour Organization at the UN — that gives
the right to collective bargaining. The precise type of legislation in front
of us would contravene the UN convention that we signed in 1972 and would
bring Canada to a complaint level at the UN at the same level as Bangladesh,
Guatemala and Pakistan.
Mr. Hiebert, when you did your research in regards to going into
unconstitutional rights of Parliament with regard to the management of
labour organizations, whether they are worker organizations or employer
organizations — because here, again, your bill is not clear. Basically, you
know very well — or I hope that you listened to the House of Commons meeting
— that your bill is unconstitutional, does not respect the provincial
jurisdiction of civil rights —
The Chair: Senator Ringuette, the question, please.
Senator Ringuette: Mr. Chair, the sponsor of this bill has not
managed to meet the first criteria of a bill in front of Parliament; that
is, to meet the fundamental law of the land, the Constitution of Canada. Mr.
Hiebert has not been able to demonstrate to us today that it does meet the
The Chair: Any concluding remarks, Mr. Hiebert?
Mr. Hiebert: Yes, of course.
Thank you, Senator Ringuette for those comments. I will try to address
all those items that you mentioned.
As already pointed out, honourable senators, there has been a
subcommittee in the House of Commons that deems whether a private member's
bill should proceed. There are four criteria. One of them is whether the
bill is constitutional. It is an all-party committee, and that all-party
committee deemed my private member's bill to fulfill that obligation that it
is within the bounds of the Constitution.
Senator Ringuette: Was it all the people of that committee or a
majority of that committee?
Mr. Hiebert: It was the majority —
The Chair: Senator Ringuette, let Mr. Hiebert conclude.
Senator Ringuette: We have had similar situations in the Senate
Mr. Hiebert: In addition to that, the Attorney General of Canada,
House of Commons lawyers and others have testified contrary to the opinions
of others on the constitutionality of this bill. That is it not uncommon; we
have seen that kind of debate happen before in this august chamber. I guess
we will not really know unless it faces that kind of a challenge, if it ever
Senator Ringuette: I can tell you that in early March I made three
access to information requests with regard to constitutional —
The Chair: Senator Ringuette. Senator, please.
Senator Ringuette: — and none of your ministers supplied it yet.
Mr. Hiebert: Mr. Chair, would I have an opportunity to reply to
the other aspects of her question?
The Chair: Yes.
Mr. Hiebert: You referenced the Privacy Act and PIPEDA, the
Personal Information Protection and Electronic Documents Act. The Privacy
Commissioner also testified before the House on my bill and did not cite a
single conflict with any part of either the PIPEDA or the Privacy Act in
relation to Bill C-377.
You referred to a 1972 UN convention. You have to keep in mind that my
bill does not regulate labour organizations in any way —
Senator Ringuette: Yes, it does.
Mr. Hiebert: It does not, actually. It simply requires them to
disclose how they spend the money.
Considering that the United States, which hosts the UN, and Germany,
France, Australia and the United Kingdom are all members, I would presume,
of this convention, and they all have similar disclosure legislation, I
cannot see how this legislation, which is mirrored after the American
legislation, would conflict with that.
The Chair: I will use my discretion and extend courtesy questions
to two senators.
Senator Segal: Mr. Hiebert, you and I share a political
affiliation. We disagree fundamentally on this bill, but I recognize that
your intent is to be constructive and helpful. Whatever our disagreements
might be, the notion of private members working to improve the quality of
life in this country is something that I think we should applaud.
I do not understand the evil that this bill seeks to fix. Since we are
Conservatives, we believe in less government, not more government. Being
Conservatives, we believe in not increasing the nanny state — that is,
sticking its nose into different private parts of life, corporations, trade
unions and others, I would have thought.
You and I will know that in the great dictatorships of the world, tax law
is often used for the purpose of crushing independence and the freedom of
expression. The Soviets and the Russians, even under the present
administration, have done it for years. We see it in Sri Lanka; some
newspapers are licensed and have certain tax-reporting requirements; others
Why would you think that the structure of labour relations in Canada, the
relationship between business and the working men and women who are
unionized, would be enhanced by this kind of tax law? You have said it is a
tax law. In other countries that you have referenced, I think we understand
that there it is part of a labour relations regime that is very different
from the sanctions available to Her Majesty under tax law. I am interested
in understanding the evil that you believe this bill is absolutely essential
Mr. Hiebert: Thank you, Senator Segal, for your opening remarks.
In particular, we do share a common interest in the Commonwealth and have
worked closely together, and I have always enjoyed that opportunity to do
Again, the purpose behind the bill ultimately is to increase the
confidence that Canadians have in these institutions that receive
substantial public benefit. The Canadian public, through the treasury,
foregoes $500 million a year in money, in taxes, in an effort to support
Similarly, we provide tax credits to charitable organizations. That is a
way of supporting those institutions, inspiring or encouraging Canadians to
give to those charities. However, the counter-obligation that those
charities have is to disclose how they spend their money and the salaries of
the employees that exist within those institutions. They have had to do so
for 36 years. You have never heard charities complain, ``Oh, don't make us
disclose because it hurts us.'' Of course not, because they recognize that
that level of transparency and accountability actually increases the
confidence that Canadians have such that they give even more money to those
institutions. It is that transparency and accountability. This is an
interesting place to be talking on this day about transparency and
accountability and how important that is to the Canadian public. Let us not
Canadian labour organizations have had to disclose this information since
1959, not to any source in Canada but to the U.S. Department of Labour. Does
that make sense? Of course not. Why should there be two playing fields for
labour organizations in Canada? That is not fair whatsoever. This bill
levels the playing field. It makes it equal for everyone involved.
Who has an interest in this? Public policy-makers, the media, academics,
think tanks. Public disclosure is good in and of itself. It really is. That
is why it is so important to Canadians.
Keep in mind that just recently this body, your Senate, passed Bill C-27,
the First Nations Accountability Act. You saw fit to pass that act. Although
there were, as far as I recall, not a large number of organizations or
individuals calling for that accountability and transparency, it was deemed
appropriate under the circumstances to disclose the salaries of chiefs on
these different Native reserves.
Similarly, disclosure for labour organizations is something that
Canadians want. They want it from you. They want it from me. They want it
from MLAs. They want it from Crown corporations. We have provided that level
of transparency, and it increases the confidence that they have that we are
doing the right thing with their money. I believe that when they see that
labour organizations are using the $4 billion to $5 billion that they
collect every year in an appropriate manner, then their confidence in those
institutions will also increase.
The Chair: Thank you, Mr. Hiebert.
Senator Segal: Do I get another question?
The Chair: I will put you down on a second round.
Senator Bellemare: I have a question along the same lines as the
You keep referring to the 1959 American act. You also cited other
international pieces of legislation, including French legislation. I took a
look at the American legislation, the Labor Management Reporting and
Disclosure Act of 1959. I also looked at the French legislation that was
passed under the Sarkozy government. In both cases, it is exactly the same
thing: in the United States, unions are required to increase transparency,
and so are the employers; the same goes for France where employers, employer
organizations and the whole professional world are required to strive toward
transparency. In both cases, those pieces of legislation are not tax laws;
they are laws that really fall under labour relations.
Why did you not use the same approach as the U.S., for example? You are
talking about creating a level playing field, but in those cases the level
playing field also includes employer organizations in negotiations.
Why did you decide not to go in that direction?
Mr. Hiebert: I used the Income Tax Act because that is the model
that we have in Canada for holding institutions accountable. I have
referenced the charities, and I will not repeat that they have had to do
that for 36 years and that it has increased the confidence that Canadians
In terms of transparency for other institutions that you referenced —
professional associations, employers, corporations — there is some degree of
transparency. We have talked about the public corporations right now. If you
or another member of this chamber or the House of Commons were to bring
forward a private member's bill to provide that level of accountability and
transparency for those organizations that you cite, in principle I would
support that legislation. I have no trouble with that kind of accountability
and transparency because I believe it is good, wherever it is to be found.
When I drafted my particular piece of legislation, there were constraints
under which I was placed. The House of Commons private member's office, or
the legislation that provides this opportunity for members to write a bill,
puts restrictions on how much you can cover. I cannot expand beyond a single
field of interest. Therefore, I drafted this legislation to a unique set of
institutions. Labour organizations are unique. They are unlike corporations
or professional associations in many, many ways. That is why I focused on
those institutions. However, if you or others would like to increase
transparency and accountability, as they have in France, as you suggest, be
Senator Bellemare: Would that approach not upset the balance in
the relations between corporations and workers? Basically, since you have
not included them and since unions will be the only ones taking part in
negotiations, would that not create a bias in the bill?
Mr. Hiebert: Again, the legislation that I am proposing is very
similar to the U.S. legislation you said you reviewed. At the present time,
Canadian labour organizations fall under that level of disclosure, and I
have not heard them complaining since 1959 that it puts them at a
disadvantage when it comes to negotiating with their corporations. It is
simply not an issue that has come to my attention, because they have had to
adapt. They have adopted the disclosure and the requirements, yet they
continue to survive and, in many cases, thrive.
The Chair: Thank you, Mr. Hiebert. I will stop round one, which
concludes our tightly crafted questions. We will move to round two, which
are the short, snappy questions.
Senator Massicotte: I will be very quick. When you reviewed the
American disclosure requirements, even for large unions, it is always the
total amount of receipts, in other words, per capital tax, fines, fees. In
your case, we often see the words ``statement of.'' What is a statement of
loans payable? What is your intent there? Is it a list of accounts payable?
It is a statement of aggregate amount or just a one-liner saying, ``The
total is this?'' For the Americans, it is always a total amount. What is
your intent in the proposed legislation?
Mr. Hiebert: My intent is similar to the statements that you would
see, the more general statements from a public corporation or similar
institutions that have to use the general accounting principles.
I recognize that there are questions, perhaps like this one or others,
that will have to be evaluated and assessed and recommendations made by
members of the CRA as they seek to implement this legislation. That is meant
to be a guiding principle.
In terms of the actual specifics or the types of lines on those
documents, I will leave it to the bureaucrats who are held responsible for
adopting and implementing legislation to figure that out.
Senator Massicotte: There is a law.
The Chair: I am sorry, Senator Massicotte, but I have to move on.
Mr. Hiebert is being kind by staying a few extra minutes.
Senator Campbell: Mr. Chair, I will give my time to the Honourable
Senator Segal: Mr. Hiebert, in a free enterprise society, do you
believe that private corporations publicly traded or privately held have the
right to plan in private for market share growth, product design,
technology, and labour relations? Is that a right of privacy you expect that
private corporations should have?
Mr. Hiebert: I guess it would depend on to whom they are
Senator Segal: I used the word ``private.'' It is owned by a
private company and they are going about trying to make better cheese or
better car parts — whatever. Should they have the right, in your view, to
plan in private?
Mr. Hiebert: Well, to a particular degree, perhaps.
Senator Segal: How do you feel about trade unions that want to
plan for the purposes of protecting their members' rights, safety in the
workplace and labour negotiations? Do you have a view as to whether they
have the right to plan in private?
Mr. Hiebert: They currently do, both the ones that have to
disclose to the U.S. Department of Labour and the ones that do not. They
currently have that right to plan, and this bill does not require them to
disclose their plans.
Senator Segal: I think this is important. You do not think that
the information that you are mandating by statute that they would have to
disclose would have any impact on their ability to plan in private. You
think that that information would reveal absolutely nothing about their
organization, which would then raise the question: Why would we have this
legislation to begin with?
Mr. Hiebert: The proposed legislation requires the reporting of
aggregate numbers in the area of the core responsibilities of a labour
Senator Segal: Not completely.
Mr. Hiebert: No, no, it does.
Senator Segal: The wording is very unclear. The early part of the
bill, as has already been pointed out, asks for specific details of
expenditures of $5,000 or more and a list of employees earning $100,000 or
more, unless I misunderstand.
Mr. Hiebert: That is correct. It is similar to the sunshine
legislation in Ontario. When it relates to general overhead, labour
relations activities and to organizing, all of those things require an
aggregate disclosure. It is one big number or, depending on the size of the
union, one small number itemizing how much they spent in that particular
Senator Segal: That would reveal nothing, in your view.
Mr. Hiebert: It would reveal nothing.
Senator Segal: Why have it in the bill?
Mr. Hiebert: I think it is useful for Canadians to know how much
of their money is spent on those kinds of activities. How could you make a
comparison of whether the amount of money spent on political activities and
lobbying is in reference to those activities?
Senator Segal: May I have one more question?
The Chair: You are now on your time.
Senator Campbell: That was a good question on my time.
Senator Segal: I have perceived correctly, I believe, that one of
your genuine concerns, with which I have some great sympathy, is the notion
of political donations or other activities being pursued by unions in a way
that is not made public for their members and the rest of society to
understand because that kind of clarity and transparency is part of how we
like to see our elections run. That is a positive motivation. Do I
understand that correctly?
Mr. Hiebert: No, I do not think you do. It is not dissimilar to
how charities currently disclose their information. They have to identify
the amount of money spent on administration and indicate money spent on
salaries. Canadian federal charities are not allowed to participate in
political activities over a certain threshold. That information is also
required to be disclosed but does not suggest an ulterior motive behind the
government or Canadians for wanting to know this information.
Senator Segal: You will have seen coverage — as I think we all
have — of the difficulties that a particular IRS office in the U.S. has
about allegations yet to be substantiated that they were treating
organizations associated with the Tea Party and various patriotic groups
perhaps unfairly relative to those groups filing for legitimate tax-free
status under the American charitable provisions. That has produced a
controversy which the White House and others are trying to deal with.
What is it about the CRA that gives you a compelling sense of confidence
that if this bill were to pass we unwittingly might find ourselves, not for
any political purpose, in a circumstance where various officials ended up
using the information, the provisions and the sanctions of this bill in a
fashion that might produce for our friends at the political centre and
centre-left in this country — who, last time I checked, had the right to
organize — what is happening to our friends on the political centre and
centre right in the United States?
Perhaps as a Conservative you have more belief in the bureaucracy than I
have because I am always troubled when there is too much authority and
reporting responsibility in the hands of the bureaucrats, not because they
are bad people but because they make honest mistakes.
Mr. Hiebert: The same fear or concern could be expressed with the
disclosure requirements for charities, yet you do not see members of the
public service using their power and authority to eliminate or prevent
charities from being registered — at least not as far as I am aware. You
have to give them the benefit of the doubt. The track record of the CRA has
been pretty good from what I can tell. They have been able to administer a
similar piece of legislation as it relates to charities for some time now.
They have demonstrated an expertise in being able to receive that
information and post it on a website that anyone can view, as I have done.
The skills or the experience required to do what I propose under this bill
is very similar. I would not see a challenge for them to replicate that.
The Chair: Thank you, Mr. Hiebert, for being here. Your appearance
today has started our review off very robustly. On behalf of all members of
the committee, I express our appreciation to you.
In this second hour, we are pleased to welcome representatives of the
legal profession in Canada. Joining us today are, from the Canadian Bar
Association, Mr. Michael Mazzuca, Chair, National Pensions and Benefits Law
Section; from the Barreau du Québec, Mr. Gilles Trudeau, Representative; and
from the Federation of Law Societies of Canada, Mr. John J.L. Hunter, Q.C.,
Mr. Mazzuca, I believe you have an opening statement, to be followed by
Mr. Trudeau and Mr. Hunter. The floor is yours.
Michael Mazzuca, Chair, National Pensions and Benefits Law Section,
Canadian Bar Association: Mr. Chair and honourable senators, I am
pleased to be here today on behalf of the Canadian Bar Association. The
Canadian Bar Association is a national association representing over 37,000
lawyers from across Canada. The association's primary objectives include
improvement in the law and the administration of justice. It is with that
perspective that the CBA has examined Bill C-377.
It is also important for me to stress that the Canadian Bar Association,
through its various legal sections, takes steps to ensure regional diversity
and also diversity of perspectives and ensure that those different
perspectives are reflected in our submissions.
I am Chair of the Canadian Bar Association's National Pension and
Benefits Law Section. Our section takes great concern and pride about its
regional diversity and the diversity of perspectives we have on our
executive board. Accordingly, we have members on our executive from across
Canada. We also have members who bring to our board different perspectives.
We have lawyers from large, small and medium firms; we have in-house counsel
on our board; and we also have lawyers who represent plan members, as well
as lawyers who represent corporate interests.
Our submissions, which are before you, have been prepared by and
supported by all of our executive members on the Pension and Benefits Law
Section, as well as the Privacy Law Section and the Constitutional and Human
Rights Law Section of the Canadian Bar Association.
Having reviewed Bill C-377, it is the Canadian Bar Association's
submission that it should not be passed into law due to a number of concerns
we have with respect to its contents. Those concerns are really four-fold:
the first deals with privacy; the second concerns constitutional aspects;
the third is its application to various funds; and the fourth is its impact
on the sanctity of solicitor-client privilege. Let me deal very briefly with
First are the privacy law concerns. I think we can all accept that
transparency is important, but the Canadian Bar Association is concerned
about the highly particularized nature of the disclosure required by Bill
C-377. We have expressed those concerns previously. I and the Canadian Bar
Association do not believe that those concerns were addressed through the
amendments; in fact, the amendments made earlier likely amplified our
concerns because they made it ever more clear that the type of disclosure
required is on a very particularized basis; that it does require disclosure
of each payer and payee for transactions in an aggregate that exceeds
$5,000. It also requires particularized disclosure regarding salary and
benefits. These are not aggregate disclosures that are required by the bill.
Those are the types of particularized disclosures, especially when it comes
to salaries in the private sector, that are unprecedented. The bill itself
does not present a substantive justification for that intrusion.
Second, on the constitutional concerns, I think our concerns previously
set out in our submissions still remain and were not addressed by the
amendments. We still have concerns that the bill may impede upon Canadian's
freedoms of expression and association as it interferes with the internal
administration and operations of a trade union.
Third, with respect to its application to various funds and benefit
plans, we had expressed our concern early on that the bill would encompass
much more than trade unions. We were happy to see in the amendments that
registered pension plans and a small group of other types of plans are now
exempted. I believe that is a positive step, but we are still very concerned
about the broad nature of the term ``labour trust.'' The bill captures not
just trade unions and trade organizations, but also labour trusts. ``Labour
trusts'' is very broadly defined in the bill. If you break it down, it
includes essentially any trust or fund maintained in whole or in part for
members of a labour organization.
As a result of that broad definition, there are still many trusts and
funds in this country that would be caught by this bill, because many trusts
and funds are maintained in whole or in part for the benefit of union
By way of example, we had set —
The Chair: I will ask you to conclude shortly in order to move to
Mr. Mazzuca: I will be as quick as I can.
It includes group RSPs, supplementary pension plans, retirement
compensation arrangements and vacation pay trust funds. There is not even an
exclusion in the bill for statutory funds; something like a provincial
workers' compensation fund would be caught, arguably, by this bill. We did
submit and still submit that the bill should not apply to labour trusts.
Regarding the point of solicitor-client privilege, I will assert that we
had originally requested and continue to request that the bill have a broad
exclusion for documents and information protected by solicitor-client
Thank you for your time, and I look forward to any questions you may
The Chair: Thank you very much.
Next, from the Barreau du Québec, is Mr. Gilles Trudeau.
Gilles Trudeau, Representative, Barreau du Québec: I would like to
thank this Senate committee for giving the Barreau du Québec the opportunity
to express its views on the bill. The Barreau du Québec is the professional
body that represents Quebec's 24,000 lawyers.
We have of course looked very closely at the bill, which is an amendment
to the Income Tax Act brought forward by the federal government, the federal
legislator. However, as a tax law, it is important to note that it is a
piece of legislation that directly regulates the internal management of
unions. As my colleague from the Canadian Bar Association and my colleague
from the Federation of Law Societies of Canada mentioned earlier, we share
some concerns about the constitutional validity of this bill. I will go over
them quickly and I hope that we will have an opportunity to discuss them in
greater detail later on.
First, we are wondering what the benefit is of specifically regulating
the internal management of unions. The bill explicitly targets the financial
transparency in the management of unions, through what is supposed to be a
tax law. We have doubts about the benefit of targeting labour organizations
by suggesting that, because they receive public money, they must make their
internal management public or at least all the financial aspects. And as you
know, they must do so in great detail.
Beyond the title of the bill—which is what we have to look at when we try
to determine its constitutional validity — the bill, based on its content,
is really a piece of legislation aimed at a player in labour relations and,
as a result, it is really about labour relations. That raises some major
concerns in terms of constitutional validity. The first very important
concern is that, in Canada, under the Constitution Act, 1867, the regulation
of labour relations falls exclusively under provincial jurisdiction. The
federal legislator has exceptional jurisdiction over labour relations in
organizations that conduct federal activities. Yet that is not the case with
this bill, because it does not seek to regulate the labour relations of a
federal entity. Under our Constitution, only the provinces have the power to
regulate the internal management of a player in labour relations and
industrial relations in Canada, which is what the bill referred to us is
trying to do right now.
There is definitely a major concern in that respect. I heard the hon.
member Hiebert say that it was a matter of creating a level playing field.
Of course, all disclosure requirements for unions in Canada vary,
precisely because it is a provincial matter and all provincial jurisdictions
can be different from each other.
However, this bill largely requires the disclosure of financial
information by unions, but this requirement is imposed on unions under a
number of provincial labour relations laws, including the Quebec Labour
Code. However, those laws deal with labour law. They are labour relations
laws, not tax laws.
In the United States, the Landrum-Griffin Act is a labour relations law.
It is an amendment to the Labor Relations Management Act of 1935. So it is
not a tax law. As a result, we have serious doubts about the constitutional
validity of this bill.
In addition, it is not because a House of Commons committee says it is
constitutional that there will be no constitutional debates in Canadian
courts, including the Supreme Court of Canada. Just like me, you know that
many cases are validated by provincial legislatures or by Parliament and
then they are struck down by the courts.
Our second concern about the validity of this bill is the issue of
lawyer-client privilege. That was extensively discussed by my colleague and
it will also be discussed later on. We fully share the same views. The
Barreau du Québec is also a member of the Federation of Law Societies of
Our third constitutional concern has to do with the political activities
of unions and the requirement of full disclosure imposed by this bill. Let
us not forget that not only does the exact amount of expenses over $5,000
need to be disclosed, but also the names of the payers and payees.
Political activities are a union's main activities. A union protects the
interests of its members before employers, but also before legislators. That
is its main field of activity. Lobbying and political activities are at the
core of its activities.
So we are concerned about the unions' fundamental freedom of expression
being infringed upon in terms of the detailed public disclosure of their
political activities. That is a major concern. We have the same concern
about the freedom of association, which is also enshrined in the Canadian
Charter of Rights and Freedoms.
The unions are required to fully disclose their lobbying activities,
their political activities, their training and education activities, their
officers' salaries, and so on. This bill requires the disclosure of
sensitive information, which falls under the freedom of association, a
freedom guaranteed by the Constitution.
The bill's potential encroachment on the freedom of association will not
hold if challenged in court, unless the legislator is able to demonstrate
that a superior interest is being served, which justifies this encroachment.
The Barreau du Québec is also concerned about the constitutional validity
I agree with what has been said and I sincerely thank you.
John J.L. Hunter, Q.C, Past President, Federation of Law Societies of
Canada: Thank you, Mr. Chair and honourable senators, for allowing us to
participate in this interesting discussion.
I am here on behalf of the Federation of Law Societies of Canada. Just so
you have a sense of the players and do not think we are all just piling on,
my friend Mr. Mazzuca is here to represent the Canadian Bar Association,
which is the lawyers of Canada. My constituents are the law societies. Those
are the regulators, and it is part of the self-regulation of law societies,
the Barreau du Québec being one of the significant members of the
federation. We are here as the national voice of the legal regulators.
I am here with somewhat narrower concerns than my colleagues. The
federation is not here to take a position on the constitutional validity of
the legislation or on the wisdom of the legislation. We are here for the
same reason that I was here last year on a different piece of legislation —
and you will no doubt have other of my successors here in future on
legislation — and that is the concern that the regulators have about the
importance of protecting solicitor-client privilege and information that is
privileged as a result of solicitor-client relationship. I am sure all
honourable senators here are aware of the importance of that privilege and
the importance that the courts have placed on that privilege. This is a
consistent theme for us as regulators. We feel it is a part of our
responsibility. Whenever there is legislation that deals with disclosure of
information that might trench on to the solicitor-client privilege, we think
it is important that we come and remind everybody about the importance of
that, and also try to deal constructively with the issues that arise on
legislation that raises potential problems of disclosure.
I am well aware, as you will be, that the legislation before you has
changed since it was initially drafted. Initially, there was nothing in the
legislation to protect solicitor-client privilege. There now is. There are
provisions in two of the subsections that exclude from the disclosure
requirement matters that are privileged. We were very pleased to see that
because it seems to indicate an intention by the proponents of the bill that
there is not a desire or objective of having privileged information released
as part of this legislation. We think that that is positive and
The difficulty we have, though, is that the way the bill has been
amended, those exclusions apply only in respect of two of the twenty
subsections in the legislation. They create an ambiguity in the legislation
that is an unnecessary ambiguity. I am proceeding on the assumption that the
proponents of the bill accept the importance in all respects of not
requiring disclosure of privileged communications. I draw that inference by
the fact that in subparagraphs (xix) and (xix.1), there are specific
exclusions protecting solicitor-client privileged information. If I am wrong
about the intent and if the intent is to only protect it in respect of a
couple of the categories of disclosure and not in respect of the rest of the
bill, then we do have a concern about that intent because we think it should
be a general intention of protecting privileged information. From what I can
understand, the intent of this is not to require unions to disclosure
privileged information. It is requiring them to disclose financial
information of a different nature.
Assuming I am right on the intent that we can infer from the fact that
these provisions have been added to the bill, then we have a problem with
the drafting. The problem is a simple one. By including those exclusions
only in two subsections and not the other parts of the bill, an ambiguity
has been introduced that is bound to lead to litigation and bound to create
unnecessary difficulties. I say ``unnecessary'' because if the intention is
to preclude the release of privileged information, a very easy way to do
that is simply to have a subsection that applies to the entire bill and
simply says, as we have suggested in the written material provided to you,
that nothing in these sections shall require the disclosure of information
protected by solicitor-client privilege. That does it. I am hoping that is a
constructive suggestion because if that is the purpose of including these
limited exceptions, that type of change in the legislative drafting will
achieve that purpose.
If you leave it the way it is, the problem is that you have a built-in
ambiguity. I will give a quick example. A union goes to a lawyer for advice
on collective bargaining, which of course a union will do. They will want to
get some advice, know their rights and how to do it properly and within the
law. They want skillful assistance in the negotiations. The lawyer sends a
bill. I am guessing it will be more than $5,000. Is that a disbursement?
The Chair: Everybody understood that.
Mr. Hunter: Is that a disbursement by the union on legal
activities, or is that a disbursement on collective bargaining activities?
If it is a disbursement on legal activities, then the information is
privileged from disclosure. However, if it is a disbursement on collective
bargaining activities, as the bill is now drafted, it is not. If it is both,
which it probably is in that instance, what is the union to do? When is it
offside and when is it onside? All of this can be resolved — and I assume I
am right about the intent because why else would the provisions be included
— by including the two lines we have suggested that will apply to the whole
bill and deal with solicitor-client privilege in a comprehensive way.
The Chair: Thank you Mr. Hunter.
I will start with Senator Oliver for questions.
Senator Oliver: My question follows on the questions about
constitutionality and the Charter of Rights and Freedoms where we have
freedom of expression and freedom of association. It has been suggested that
the best way to get around it, if in fact there is a problem, is to delete
two sections from the proposed bill. Without deletion, is there any other
way that you have thought of changing, altering or varying the language that
could give full protection to freedom of association and freedom of
expression under the Charter so it would not be infringed and if there were
a Charter challenge it would not be defeated?
Mr. Mazzuca: The Canadian Bar Association sees the
constitutionality aspect as a more broadly based concern than simply two
particular sections. I think it is the breadth of the disclosure required
overall that is potentially offensive of the Charter. It is not any two
particular sections you have highlighted.
Senator Oliver: Have you drawn proposed amendments to cover the
breadth of the disclosure?
Mr. Mazzuca: No, we have not. The only thing that the Canadian Bar
Association has done is provide the other house with draft language
concerning the issue of labour trusts. However, that would not have
addressed the constitutional concerns we highlighted.
Senator Oliver: In your remarks you mentioned a concern about many
trusts and funds. What specifically did you have in mind when you mentioned
Mr. Mazzuca: If a group RRSP is maintained in whole or in part for
the benefit of union members, it would very arguably fall within the
definition of labour trust. If you are a labour trust, you have the same
disclosure obligations under this bill as a labour organization. A group
RRSP would have to provide all of the disclosure that is set out in the
Senator Massicotte: Thank you for joining us this evening. My
question is not about the legal aspect because I understand your legal
arguments. My question is about the practical aspect, meaning all the
information required. It is cumbersome and extensive. However, the proponent
stated that the information required is the same as the information required
in the U.S. legislation; is that correct?
Mr. Trudeau: I am not familiar with all the details of the U.S.
requirements under the Landrum-Griffin Act. I suspect that the legislation
proposed here is very similar. I will not comment on this because my mandate
is not to comment on the circumstances under which the Landrum-Griffin Act
was passed in the United States or the philosophy behind U.S. legislation on
However, once again, I would like to stress that the Barreau du Québec
does not represent unions, but we are concerned about the constitutional
aspect and whether this bill is consistent with the Canadian Constitution.
With that in mind, it is understood that, by simply reading the bill,
anyone can notice how much information is required, and we all agree that
tracking every financial transaction that must be reported and included with
all the required information such as names and purpose, will call for a
significant amount of union resources.
As a result, this requirement affects the exercise of freedom of
association since it undermines the very activities of unions and the way
they choose to allocate resources to their activities. The activities of
unions have everything to do with the freedom of association. Just at an
administrative level, such a large amount of information requires major
union resources that will not be allocated or paid by membership dues, and
will not even be allocated for the purpose of these associations, which is
to defend the political and professional interests of union members.
Senator Massicotte: Mr. Mazzuca, do you know whether the
requirements are comparable to those in U.S. law?
Mr. Mazzuca: I am certainly not an expert in U.S. law and would
not hold myself out as such. What little I know about U.S. law is that it is
labour legislation. I believe the reporting, if I am not mistaken, is to the
U.S. Department of Labor. The reporting is mutual, so it applies to both the
unions and the employers, and I believe there are also threshold limits to
the reporting. Only unions of a certain size would have to adhere to the
Senator Massicotte: In the United States there are three levels,
depending on the size of the union. For the very large ones, they also have
to disclose all transactions in excess of $5,000. The proposed legislation
is vague; they use the word ``statement.'' There is lack of clarity with the
legislation. However, from what I read in the schedules on what is required
in the United States, there is an argument to be made that it is quite
similar, except they are more specific and clear, and it applies to only
large unions. The question would apply to small ones because the requirement
under what is being proposed is the same no matter what the size and they
may not have resources to provide that kind of information.
Senator Maltais: To follow up on a comment made by Senator
Campbell who said that this bill is red meat for the Conservatives, I would
like to remind him that we like our steak blue.
Thank you very much for being here, gentlemen. I am happy to see you. You
are three leading legal experts; you are the ones representing practically
all the lawyers in Canada and I am really happy to see you here.
Bills are drafted in the House of Commons by law clerks who are lawyers.
Perhaps after the meeting, you should meet with your members and train them
better; we would have better structured bills. Your members are the ones
paying those dues and the bills are all messed up.
After the meeting, perhaps you should go to the House of Commons, get the
people of Quebec and Canada together and make good law clerks out of them.
That is how you would avoid coming and wasting your time here.
Mr. Trudeau, you talked at length about the right of unions to be
involved in political activities — and I agree with you. How do you define
those political rights?
I read the papers after every election campaign. Fifty per cent of unions
in Quebec are accused by the Chief Electoral Officer of infiltrating
election campaigns and spending money that they did not report. Could you
define exactly the right to political activities, which you so rightly
mentioned in your brief? It has to be a legal point, because the Chief
Electoral Officer also has lawyers.
Mr. Trudeau: Your question is very interesting. By union political
activities, I do not mean mostly partisan activities. That practice is
fashionable, especially in Quebec. Providing financial support to a
political party can be included in a definition of union lobbying from a
political standpoint. Based on their interests, unions in the U.S. and in
Canada have always supported one political party over another at the federal
or provincial level. However, the political activities of a union are much
broader in scope. They need to ensure that the interests of workers are well
represented before political decision-makers or any given political
authority. In fact, part of the Canadian union movement — the American
movement as well — is exclusively responsible for those activities. The main
organization is the Canadian Labour Congress (CLC). The CLC is not
responsible for collective bargaining. The member unions are responsible for
it. The CLC is made up of provincial unions, provincial federations, at the
federal level, with a view to carrying out lobbying activities and making
political representations across Canada.
In each Canadian province, there is a labour federation. Quebec has the
Fédération des travailleurs et travailleuses du Québec. The mandate of these
federations is not collective bargaining. Collective bargaining is the
responsibility of FTQ's constituent unions. FTQ's mandate is basically to
ensure that, at all levels of political office, the interests of workers who
are members of FTQ associations are well represented. Of course, that
includes election expenses. However, that is certainly not at the heart and
core of political activities.
This bill does not discriminate in any way when it comes to expenditures.
It requires a statement that will be made public in a tax law. It requires a
statement of the proportion of activities carried out by staff members who
are responsible for strictly political activities. Under the financial
aspect, it requires the detailed disclosure of political expenditures if
they exceed $5,000. In that sense, this bill affects political freedom and
freedom of expression. We might even think that the aspects guaranteed under
the Canadian Constitution and the Canadian Charter of Rights and Freedoms
are being affected.
Senator Ringuette: Thank you very much for being here. I greatly
appreciate your comments, which seem to confirm that this bill is
unconstitutional and that it infringes on provincial jurisdiction first and
foremost and that it is not consistent with the Canadian Charter of Rights
At the outset of my research, I submitted a request for information to
the Privy Council, the Department of Finance and the Prime Minister's
Office, asking for the legal opinion documents that they received, given
that they supported this bill in the House of Commons. I made the request at
the beginning of March and today is May 22. I still have received no
information at all.
You can understand that, just now, when the first witness appeared, the
sponsor of the bill, I was not very happy to hear that no experts gave
testimony to the House of Commons and that the minister supported this bill.
Ninety per cent of accredited unions across the country are accredited by
provincial governments under various labour codes. The remaining 10 per cent
receive this accreditation under the federal labour code. There is a balance
in the fact that the same requests for information from members go to both
the labour and employer organizations that deal with labour relations.
Despite the natural assumption that a government is supposed to pass laws
that achieve peace and good governance, this bill, at first glance, if I
read it correctly — I am not convinced that it only applies to labour
The Chair: Senator Ringuette, you will use up your time with the
preamble. I would like to have an answer to a question.
Senator Ringuette: Is there a way to amend a bill like this so
that it becomes constitutional to begin with?
Mr. Trudeau: The question has been answered in part or for the
most part. The Barreau du Québec is saying that the very substance of the
bill is problematic in light of the Canadian Constitution. Not one provision
in particular, but the whole bill. This entire piece of legislation, this
bill in its current form raises a number of constitutional concerns in
several areas, which we have listed.
The first one is federal jurisdiction over labour, which is very limited,
exceptional and, as you said, limited to employers and unions that operate
in federal sectors. But that is not the case here.
A previous question identified the problem. Although the three of us
represent all the lawyers in Canada, as professionals, we all have our
opinions about the constitutional validity of the bill. We will provide an
opinion to the best of our knowledge and expertise. Unless it is very
obvious and the answer is cut and dried, these matters generally leave room
for debate. We have seen that. A bill can be presented in a way that raises
doubts, which need to be addressed, depending on the audience. Courts are
the ones that decide on those matters.
In terms of constitutional validity, it is all very well for lawmakers to
pass it thinking that it was within their power to do so. However, it is not
the government's legal experts or professional associations that have the
last word; it is the courts and the Supreme Court. Like me, you must have
surely read the Supreme Court rulings on constitutional matters. There are
nine justices. Often the nine justices do not even agree among themselves on
what to do with the constitutional disputes they have to decide on.
As a result, no one will be able to tell you with certainty that this
bill will be found unconstitutional. However, most of our arguments and
concerns suggest a constitutional problem that will inevitably — I think we
can all agree — end up in court.
So why would a legislator introduce a piece of legislation whose
constitutional foundation is questionable?
Senator Segal: I wanted to ask a question to the panel. I do not
exclude Mr. Hunter, but he was good in being precise about the specific
concern that he is here to advance. I think his advice on that is very well
taken. I did want to ask the other two colleagues, if I could, about the
question of oppression.
In business law, the notion that a company might make decisions that
favour one set of shareholders over another or one set of receivables over
another produces engagement with the notion of oppression. Why are these
people not being treated the same way you would treat these other people?
This piece of legislation, it strikes me, whatever its intention might be,
has the effect of imposing upon organized labour a series of requirements
that you have said precisely and clearly are not equally imposed upon other
players in the same game. Corporations — small, public or private — may have
other disclosure rules, but not in this context.
In the legal context, quite aside of constitutional questions, quite
aside of the protection of client-lawyer privilege and quite aside from the
notion of circumventing provincial legislation by using the Federal Tax Act
but running into constitutional problems nevertheless, would it produce
another problem about the actual balance and fairness of labour negotiations?
The law would seem to have had the federal government tilt through the tax
act against the trade unions in a way that would make the actual negotiation
process intrinsically unfair because one side would have disclosure
requirements that the other side would not have.
There is some bias in that question; I understand that.
Mr. Mazzuca: In our submissions, we looked at that unfairness
largely from the constitutional perspective. Our submissions do not deal
with it in the aspect you are putting forward.
In our September submissions, we deal with the concern that that type of
regulation of labour relations is being done through a tax code. I think
that, in and of itself, raises concerns about the propriety of the bill.
Mr. Trudeau: Absolutely. However, your question raises a political
issue first and foremost. If you set aside the constitutional arguments, as
you are suggesting, legislators are sovereign. So they can pass a piece of
legislation that is unbalanced in terms of labour relations or that is
biased against unions and employers. Legislators are free to adopt any type
of legislation they want, but they must comply with the Constitution when
they pass legislation. They have to do that even with your arguments. If
there was no constitutional argument, it would be a political issue. Has the
party in power that controls the House of Commons been well advised
politically to propose a bill like that? It is purely political.
Legally speaking, this has to do with the Constitution. But the Canadian
Constitution, especially since 1982, includes the Canadian Charter of Rights
and Freedoms that binds the federal legislator, provincial legislators, the
municipalities and so on. The Charter contains a specific freedom, the
freedom of association, which is protected under the Constitution against
any violations and unjustified impediments by legislators. The Supreme Court
of Canada has recognized for a number of years — it was really established
in 2007 in the B.C. Health Services decision we talked about in our
brief — that union activities related to collective bargaining are also at
the core of the freedom of association.
That is part of the Canadian Constitution. So when we have a bill that
specifically targets the union, a player in collective bargaining, protected
under the constitution, and it requires the union to make public sensitive
information about the union's mandate — which is protected under the
constitution, at least when it has to do with collective bargaining
activities and the protection of its members — this bias you are talking
about, which could otherwise be a political issue, becomes a constitutional
issue because of the Canadian Charter of Rights and Freedoms and the freedom
of association. That is what the Barreau du Québec and my other colleagues
are saying. That is an argument we cannot ignore as legislators. That is our
country's fundamental law.
Senator Ringuette: What if a labour organization signed a
contract, whether for human resources or services, that would be above
$5,000, but in that contract there was a non-disclosure clause?
Mr. Trudeau: It is not the Barreau du Québec talking, but you are
asking for a legal opinion. My instinct is to say that the law takes
precedence over a contract.
Mr. Mazzuca: It is rare for lawyers to agree on a topic or an
issue, but I agree with Mr. Trudeau.
The Chair: That is a wonderful way to conclude. On behalf of all
of the members of our committee, I express our great appreciation to our
witnesses. You have been helpful in our understanding of this bill.