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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.

[English]

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 10:30 a.m.

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 organizations.

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 and Australia.

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 requirements.

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 consideration.

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 questions.

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 this legislation.

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 payee.

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 administration,

(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 Constitution.

Senator Ringuette: Could you table all these written documents to the committee, please, through the clerk, so all the members will have a copy?

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 yourself?

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 criteria.

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 court decision.

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.

[Translation]

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.

[English]

Four or five billion dollars a year are collected by labour organizations every year.

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.

[Translation]

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 work.

Based on that example, could you tell me what the person would get for $1,200 in labour relations services?

[English]

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 disclosure.

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. 2(d).

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 parliamentary committee.

The Chair: Thank you, Senator Campbell and Mr. Hiebert.

Senator Moore.

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 thing.

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 a thing.

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 constitutional requirements.

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 lately.

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 does.

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 do not.

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 to address.

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 so.

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 these institutions.

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 forget that.

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.

[Translation]

Senator Bellemare: I have a question along the same lines as the previous questions.

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?

[English]

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 have.

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 my guest.

[Translation]

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?

[English]

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.

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 accountable.

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 organization.

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 area.

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., Past President.

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 each.

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 members.

By way of example, we had set —

The Chair: I will ask you to conclude shortly in order to move to questions.

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 privilege.

Thank you for your time, and I look forward to any questions you may have.

The Chair: Thank you very much.

Next, from the Barreau du Québec, is Mr. Gilles Trudeau.

[Translation]

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 Canada.

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 and privacy.

I agree with what has been said and I sincerely thank you.

[English]

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 constructive.

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 group RRSPs?

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 bill.

[Translation]

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 labour relations.

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?

[English]

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 reporting.

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.

[Translation]

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 and Freedoms.

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 organizations —

[English]

The Chair: Senator Ringuette, you will use up your time with the preamble. I would like to have an answer to a question.

[Translation]

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?

[English]

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.

[Translation]

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.

[English]

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?

[Translation]

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.

[English]

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.

(The committee adjourned.)