Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 36 - Evidence - June 6, 2013
OTTAWA, Thursday, June 6, 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 10:30 a.m. to give consideration
to the bill.
Senator Irving Gerstein (Chair) in the chair.
The Chair: Today we will continue our consideration of Bill C-377,
an Act to amend the Income Tax Act (requirements for labour organizations.)
Yesterday, we heard from representatives from various organizations.
Today, in our first hour, we are pleased to welcome Ken Georgetti, President
of the Canadian Labour Congress; Stephen Ginsberg, Executive Director, CAW
Legal Services Plan; Ralf Hensel, General Counsel and Director of Policy,
The Investment Funds Institute of Canada; and Ron Sanderson, Director,
Policyholder Taxation and Pensions, Canadian Life and Health Insurance
As is our tradition at this committee, we will start with opening
statements from each, starting with you, Mr. Georgetti.
Ken Georgetti, President, Canadian Labour Congress: Thank you for
inviting me to speak today. The Canadian Labour Congress is the largest
democratic organization, representing 3.3 million workers in 25,000 local
unions, branches and lodges, federations of labour and labour councils in
every imaginable occupation from coast to coast to coast.
The brief you received from us outlines our main issues with Bill C-377,
but let me summarize. Bill C-377 is a solution in search of a problem. It
wrongly violates Canada's Constitution and the Charter of Rights and
Freedoms. You have heard from eminent constitutional experts who have
testified that Bill C-377 falls outside Parliament's jurisdiction. It
relates not to the tax authority of the federal Parliament but the
regulation of trade unions or labour relations. It causes Canada's Privacy
Commissioner concern and it offends the intent of federal and provincial
privacy laws. It creates an unfair advantage for non-union construction
contractors and an uneven playing field in the labour market. It ignores the
basic facts of the democratic structures of trade unions and the legal
frameworks within which trade unions already operate. Out of a wide range of
non-profit and professional organizations that democratically, and, I might
add, appropriately, govern their own affairs, from doctors to lawyers to
engineers to accountants, Bill C- 377 exclusively singles out unions for
punitive and costly treatment. It does so only for crass political gain for
the Conservative Party and their allies.
You, honourable senators, can put a stop to this mistaken and error-ridden
legislation. You can do so completely in keeping with your important role in
the Canadian Constitution as the house of sober second thought. It is within
your mandate to protect Canadians from a political failure by the House of
Commons and from overreaching special interests with very deep pockets.
Despite what radical Conservatives would have you believe, this bill is
nothing more than political retaliation. It does not address an existing
problem or cure any actual mischief. At its core, this bill is political
bullying. Why else would the The Globe and Mail newspaper editors, in
December, when this bill passed the House of Commons, refer to Bill C-377 as
nothing more than "a witch-hunt''? The Globe is hardly known for its
pro-labour sentiments, but it called Bill C-377 for what it is.
The truth is that the bill's main proponent, Merit Canada and their
president, Terrance Oakey, had at least eight private meetings with senior
officials, including Nigel Wright in the Prime Minister's Office, to
facilitate the passage of Bill C-377. The truth is that this misguided
legislation will cost taxpayers upwards of $60 million. The truth is that
the Canadian and Quebec bar associations and the Federation of Law Societies
of Canada and some of this country's most prominent legal scholars have
voluntarily come forward and told this committee that Bill C-377 breaches
the Constitution, offends the Privacy Act and violates solicitor-client
The truth is that the courts will overturn this bill, so why continue
pushing it? We believe it is just for one reason — money. There are some
radical Conservatives who have long demonized organized labour. Pushing this
agenda is simply a fundraising campaign to pad the Conservative Party war
chest, and they are contorting their own principles to meet these goals.
Bill C-377 was passed by a government that praises less bureaucracy and
less oversight, that is wrongly cutting tens of thousands of public services
jobs to Canadians, but Bill C-377 would do the opposite. As other witnesses
have testified, this bill will lead to a greater cost and responsibility for
federal departments such as the Canada Revenue Agency, more bureaucratic red
tape, more public servants and more government oversight. All of this
hypocrisy simply is unfair to attack unions.
The Chair: Mr. Georgetti, two minutes to conclude, please.
Mr. Georgetti: The Senate has a great opportunity. You can defend
our Constitution, you can defend our Charter of Rights and Freedoms, you can
save Canadian taxpayers $60 million, you can reject an unprincipled and
discriminatory attack on workers and their democratically run unions and you
can demonstrate that the role of the Senate is an essential part of our
I welcome your questions.
Ralf Hensel, General Counsel and Director of Policy, The Investment
Funds Institute of Canada: Good morning, honourable senators. My name is
Ralf Hensel, and I am the General Counsel, Corporate Secretary and Director
of Policy for fund management issues for The Investment Funds Institute of
Canada, or IFIC. On behalf of IFIC and its members, I am pleased to be here
today to discuss our concerns with respect to Bill C-377.
IFIC is the national association of the Canadian mutual funds industry.
Its members comprise investment fund companies that sponsor, manage and
administer funds, as well as firms that distribute funds across Canada. As
of April 30 of this year, the industry in Canada comprised about $910
billion in assets under management. About 12 million Canadians own mutual
funds for their retirement savings and investment needs. My remarks will
echo those that will be presented shortly by Mr. Sanderson on behalf the
CLHIA. Furthermore, a letter outlining our concerns was submitted to this
committee on February 19, 2013.
Our members' concerns with this bill relate to unintended consequences.
We believe that Bill C-377 as currently drafted inadvertently creates a
reporting requirement for mutual funds that will impose on them a costly and
unnecessary administrative burden that will ultimately be borne by the
millions of Canadians who own them. The bill's stated purpose is to require
public disclosure of financial information from labour organizations. It was
clearly not directed at publicly offered mutual funds. The bill adds section
149.01 to the Income Tax Act, in which labour trust, this is the key term,
is defined to mean, and I will get a little technical:
. . . a trust or fund in which a labour organization has a legal,
beneficial or financial interest or that is established or maintained in
whole or in part for the benefit of a labour organization, its members
or the persons it represents.
The reporting obligation is imposed on the labour trust, and it is
subject to fine if it does not comply. Labour trust is cast in so broad a
manner that we believe on a fair and reasonable interpretation it captures
any trust or fund offered to the public in which there is a single unit
holder or beneficiary who is a member of a labour organization. That fund
would then be subject to the bill's full disclosure requirements.
At its essence, then, any mutual fund that has just one investor who is a
member of a labour organization would be tainted and therefore subject to
the bill. Whether the tainted fund would need to report on the personal
investments of only those who are members of a labour organization or all
the investors in that fund is not entirely clear, but we cannot believe that
requiring public reporting by public mutual funds on the personal investing
and savings activities of investors, whether or not members of labour
organizations, was the intent of the drafters and promoters of this bill.
Generating and filing the specified reports will itself be an unwarranted
administrative burden for fund companies, but that burden pales in the face
of the activity necessary to ascertain initially and on an ongoing basis
every investor's relationship, if any, with a labour organization — every
current investor, and remember, 12 million, and every new investor in every
series of every fund managed by every firm, which is a lot of "every''s.
There are over 9,000 series of funds. This is a Herculean effort to be
required. An individual's affiliation if any to a labour organization is
irrelevant to his or her personal investment decision and to the assessment
of which funds would be suitable for them. Investment advisers would not
request this sort of information. Instead, they would focus on risk
tolerance, investment objectives, financial wherewithal — the sorts of
information that must be obtained for them to comply with their "know your
Union affiliation information has never been requested from investors,
nor is it currently being requested from potential investors when they seek
to buy mutual funds. Even once collected, this information would have to be
probed regularly to test whether any current fund investors have become or
cease to be affiliated with a labour organization since becoming investors
in the fund. It will therefore be very difficult and very expensive for the
fund industry to comply with the bill in its current form, especially as it
appears this is an entirely unintended consequence of the breadth of the
definition of labour trust.
As we recommended in our February 19 letter, at a minimum, the definition
of labour trust must be revised to require a much more substantial
connection between a particular fund and a labour organization. For greater
certainty, it should be revised to explicitly exclude public mutual funds
and other similar trusts and funds that were not meant to be included.
I believe CLHIA has already offered some detailed wording for a carve-out
of this sort to address these issues. We recommended that the words "in
whole or in part'' be removed from the definition and replaced with the word
"wholly'' so that only trusts or funds wholly or exclusively maintained for
the benefit of the labour organization, its members or the persons it
represents would be subject to the requirements. I appreciate that this
might not resolve all of the issues put forth by CLHIA — and we can discuss
that — but IFIC and its members would be pleased to review any suggested
amendments to the definition or to the bill more broadly to consider whether
they resolve these issues. With that, I will conclude my remarks and look
forward to your questions at the end.
Stephen Ginsberg, Executive Director, CAW Legal Services Plan: I
appreciate the opportunity to speak to senators today. Also, the chairperson
of our board of trustees, Mary Jane Mossman, is in attendance here today.
Many of you might know her as a faculty member of Osgoode Hall Law School
who has been, throughout her esteemed career, very involved in access to
justice. Our letter is already before you. It is dated January 11, 2013. It
explains in detail the structure of our organization, CAW Legal Services
Plan, which is a generic name for 32 employee trusts that are legal services
I will not repeat all of what is in my letter other than to emphasize
that we are an independent organization. One half of the members on our
board of trustees are from General Motors, Ford and Chrysler, and the other
half are from the CAW union, Canadian Auto Workers. We started in 1985. We
currently provide legal services benefits to approximately 87,000 plan
members, their spouses and dependents. These are personal legal services. We
do not provide any legal services for the union, just for its membership. We
are asking for a very simple amendment to Bill C- 377 — more of an
administrative matter — that the words "a group legal services plan'' be
added to the list of exempted benefit plans currently set out in subsection
149.01(6)(b). To just give an idea of some of those — I am sure that
you know them — some are: an employee life and health trust, a group
sickness and accident insurance plan, a group term life insurance plan and a
private health services plan. These are all similar to group legal services
plans. It is just that we are not that well known. Not that many Canadians
have this type of benefit.
The original version of the bill, as you know, did not contain any
exemptions for employee benefit plans, but, to his credit, Mr. Hiebert was
the one who recommended to the House of Commons Standing Committee on
Finance that the bill be amended in that regard. Unfortunately, as I said,
we were not included in the list, but we believe that this omission was
unintended. We are, to use Mr. Hiebert's words, "a benefit-paying
institution,'' a related benefit firm. I quote from when he spoke before the
House of Commons standing committee: ". . . the bill's definition may have
had the unintended consequence of capturing certain benefit-paying
institutions. . . I would encourage. . . an amendment. . . that would
clarify that pension, health care, and related benefit firms are not
captured by the reporting requirements of my bill.''
He also stated that his amendments were, in part, due to privacy
concerns. I quote again: ". . . to ensure privacy for the identity of
individuals. . . receiving benefits [and]. . . reinforce the confidentiality
of solicitor-client privilege. . . . it is not the purpose of my bill to
impinge on the privacy of individual Canadians.''
Mr. Hiebert's comments obviously support our request to be included in
the list of exempted employee benefit plans. We have a top 10 list, if you
will, not in any particular order, of reasons why we should be added to the
exemption that already exists.
First, our organization is not a union. We are an employee trust, under
section 248 of the Income Tax Act. In fact, as I mentioned before, we are
actually 32 employee trusts. There is an employee trust for every
collectively bargained legal services plan. Companies such as GM, Ford and
Chrysler have this benefit for their workers, as do Lear and Magna. Some of
the Magna shops, as you might know, are represented by the CAW, and the CAW
has bargained this benefit into some of the collective agreements. Those are
just examples, so that is the kind of reporting that we have. That is all
reported under section 248 of the Income Tax Act.
Second, we do not receive any money from unions or from union dues.
Third, we do not receive any money, benefits or special subsidies from
Fourth, we do not engage in, nor do we spend money on, any political
Fifth, we receive our funding from premiums paid by the corporate
sponsors. In other words, just like other benefit plans, the companies pay a
premium for the services, and that is how we receive our funding.
Sixth, our members pay income tax on the premiums paid by our corporate
sponsors, so all of those premiums, divided by the membership, ends up going
on T4 A slip, which is added to the members' tax base. Not only do we not
receive any tax benefits, but our members pay tax on this benefit. Unlike
health benefits, legal services plans are not exempted as a taxable benefit
under section 6 of the Income Tax Act.
Seventh, each of our legal services plan trusts file an annual tax
return, a T3 tax return, pursuant to section 248 of the Income Tax Act.
Eighth, our organization is, obviously, a benefit-paying institution, to
use Mr. Hiebert's words.
Ninth, we have thousands of transactions and disbursements every year. We
opened over 36,000 cases or requests for services in the year 2012. We pay
lawyers who are on our panel for these services. We reimburse some of our
members who go to lawyers not on our panel, and this would involve an
extreme amount of reporting for each one of these 32 trusts.
Tenth, privacy for the identity of individuals receiving legal services
benefits is obviously extremely important. There is solicitor-client
privilege in all of our benefit transactions. As we noted in our letter,
there has been a considerable amount of discussion, at federal and
provincial levels, about access to justice. This is a way for access to
justice, and we hope that you can add this small amendment to the bill.
Ron Sanderson, Director, Policyholder Taxation and Pensions, Canadian
Life and Health Insurance Association Inc.: Honourable senators, we are
pleased to share our views as you consider Bill C-377. The Canadian Life and
Health Insurance Association is a voluntary association whose member
companies account for over 99 per cent of Canada's life and health insurance
business. The industry provides a wide range of financial security products
to about 26 million Canadians. Our principal concern with this bill is
privacy. As drafted, the bill could make public the benefit payments we make
to individual Canadians. We already report required information for tax
purposes, but that information is confidential. We believe that this bill
would be at odds with reasonable consumer expectations of privacy for their
medical and financial affairs. Other evidence, including from the Canadian
Bar Association, also raises this concern.
Canadian Life and Health Insurance Association Inc. has made
representations regarding this bill to its sponsor and to the Commons
Standing Committee on Finance. We have focused on what we believe was a
broader than intended scope, which would have required reporting
contributions to and payments from workplace employee benefit plans. We do
not believe that the bill was intended to make public information relating
to reimbursement of costs for prescription drugs or for a child's
orthodontics or similar benefits that arise because of an employment and
insurance relationship. However, that is what the original bill would have
As noted in the Privacy Commissioner's evidence, amendments in the
Commons addressed these issues in part. Those changes might not remove all
health benefit plans from the bill's scope. Other amendments have created
ambiguity, so some important drafting changes are still needed if the bill
is to proceed. In particular, the bill provides that labour trusts must
report transactions involving an individual or entity, where those
transactions' total value exceeds $5,000. Let me drill down and reiterate
Mr. Hensel's evidence. Proposed subsection 149.01(1) defines "labour trust''
to include a fund maintained, in part, for the benefit of labour
organization members. "Fund'' is not defined. Contracts, such as group term
life insurance policies, are characterized as labour trusts, which seems
unusual since there is no fund specifically associated with such contracts.
As drafted, funds need not be exclusively intended or operated for members
of a labour organization.
The bar association described impacts on group registered retirement
savings plans, but the problem is broader. For instance, if a member of a
labour union were independent of her union activities to hold units of a
retail mutual fund in an RRSP, then that fund would appear to constitute a
labour trust under this bill. It would appear that the mutual fund would be
tainted so that all other investors in the mutual fund, despite being
unrelated to the union member and having no union membership themselves,
would find their personal financial transactions to be a matter of public
record, searchable by anyone, anywhere.
Under proposed subsection 149.01(5), payments made through a third party
or contractor would be reportable. Would health and dental benefits payable
by an insurance company acting as an insurer or as an agent of an employer
be publicly reportable? Surely, these outcomes would not be acceptable as a
matter of public policy and are not what the bill truly intends.
Proposed paragraph 149.01(6)(b) exempts certain single-purpose
labour trusts from public reporting if their activities relate exclusively
to administration, management or investments under certain benefit plans.
Such an exemption would not appear to be available to an arrangement like
retail mutual funds, and this seems unreasonable.
If this bill is to proceed, we believe that labour trust is too broadly
construed and should be narrowed. The bill should focus on specific
activities rather than all activities undertaken by a too broadly defined
labour trust. On January 31, we provided your committee with recommended
changes to the bill's text together with our rationales for those changes. I
would be pleased to respond to any questions arising from those
recommendations or more broadly.
Senator Segal: Thank you. I have two questions. I have one for Mr.
Georgetti and one for Mr. Hensel.
Mr. Georgetti, I am one of those who happen to believe that a democratic
process is made stronger when members of trade unions, trade union
federations and others actively engage themselves in the political process
in support of whatever political party they think is most reflective of the
interests of their members. There are constraints under law with respect to
financial contributions that we all face.
I want to get your sense of what this bill, should it be passed in its
present form, would do to that dynamic. As you will know, labour leadership
often takes positions; rank and file members tend to vote in a way that
reflects the Canadian population generally. I would be interested in your
own sense, because of your experience as a labour leader in this country,
many parts of the country, what you think this bill, if it were passed,
would do to the dynamic between unionized members across the country and the
political process overall.
Mr. Georgetti: Thank you for the question. Let me lay out roughly
the structure of the CLC. We have about 3.3 million members. Unions
representing about 1 million of those members do have a stated political
bias and support a political party. The majority, though, are neutral in
I do not think this bill by itself will have any effect on how we conduct
ourselves and what we do, but I think it will, by its disclosure mechanisms,
give arguments and ammunition to those who want to argue that unions should
not be involved at all in any political issues, and the use of union dues
should be, by legislation, restricted to just collective bargaining. That
would go contrary to the last Supreme Court decision made on this issue in a
case called Lavigne, where the Supreme Court actually said that we
not only have a right to be involved in politics but we have an obligation.
We take that obligation seriously. We are critical of governments when they
put legislation in that negatively affects us, and we are complimentary of
governments when they do not.
We have looked at our positions on those issues across a large period of
time, with Liberal and Conservative governments federally, and the level of
our criticism and commentary on legislation has not changed a bit. We just
think that the reaction of this government is such that they take our
criticism as political commentary rather than what it should be taken as,
which is constructive criticism.
Senator Segal: Thank you. Mr. Hensel, as I heard you talk about
the 12 million mutual fund holders across Canada and the impact in terms of
the cost of the disclosure, am I reaching by suggesting that this bill,
inadvertently perhaps, would be a tax on 12 million Canadians who have
invested in good faith and are hoping to get benefit from those mutual funds
before they retire, that this is actually a tax bill on individual Canadians
who have invested in good faith in mutual funds?
Mr. Hensel: I would not go so far as to call it a tax bill. Our
concern would be that the cost of compliance with the bill would be spread
across the entire spectrum of investors. As I said, when one investor in the
fund theoretically is now subject to the bill, that fund may have another
10,000 investors in it.
Senator Segal: You have to spread the burden of the cost.
Mr. Hensel: Absolutely. It not a tax, per se, just an increase in
the administration costs for the funds.
Senator Segal: Of course, but as I understand mutual funds,
administrative costs are what are taken off before the holder of the fund
Mr. Hensel: Yes.
Senator Mercer: Gentlemen, thank you for being here to discuss
what I describe as just bad legislation. I do not want to get into a
philosophical discussion of why it is bad legislation, but I want to talk
about the cost, if this legislation is passed, of implementing the
legislation — to government, we will find out later — what will be the cost
For example, Mr. Georgetti, you have many unions that are members of the
Canadian Labour Congress. They will have to set up a structure in which to
collect and report the data. Have you been able to estimate the cost? I
apply the same question to the other witnesses, but I will start with you,
Mr. Georgetti: We have not yet done that. We have done a
calculation in my operation, and I will provide that in a minute.
I would like to put on the record that the Canadian Labour Congress makes
up 3.3 million unionized workers. There are another 1 million unionized
workers out there that do not belong to our congress. Our congress
represents 25,000 entities that are captured under this legislation that
would have to individually report. That is 25,000 individual reports that
would have to come in from the congress' affiliates, labour councils and
When we saw this legislation, I asked our accounting department to give
us a cost. Our budget is about $20 million per year, and the cost to set up
a database to collect this information would be $400,000. Our ongoing cost
to collect this information — to be able to segregate it and collect it in a
way that would be presentable — would be $400,000 annually. If you
extrapolate that across our system, you are talking in the tens if not
hundreds of millions of dollars to our union movement, which would have to
be expended to collect this bureaucratic information.
Senator Mercer: Perhaps that is the purpose of this.
Mr. Hensel: I would say the cost that our industry would face is
twofold. It would not just be the monetary cost of reaching out to 12
million investors who have never had to provide this information, but there
is an additional potential cost. When they are approached to provide this
information and say, "It is none of your business,'' we could argue that we
are required by law now to obtain it. They would then say, "I am going to
switch to some other product that is not subject to this bill and where I
would not have to provide that information.'' There is the potential fallout
to the industry of losing a number of investors who may just put the money
into a bank account or a GIC where they are not going to be required to
provide the information.
We have not been able to estimate at this point what it would cost to
reach out to 12 million investors and to implement a process to go back
regularly and probe the information because it is an ongoing obligation.
First you have to bring the funds into compliance with the act, and then you
would have to maintain that compliance. It is very large.
Mr. Ginsberg: We have not quantified the cost, but it would
considerable, at least tens of thousands of dollars, but there are also
unintended costs, such as the cost of people who are named as receiving more
than $5,000 of benefit, and for what purpose? Even if it just says for legal
services, you can have a situation where someone does not want anyone to
know that they have been involved in a family law dispute, for example. I do
not know what the cost would be of people complaining to us that someone saw
their name somewhere and what can we do about it.
Mr. Sanderson: Absent detailed reporting requirements from CRA, it
is rather difficult to estimate, but just as a back of an envelope
calculation, I looked at Mr. Hensel's membership. If we use the reported
information from the U.S. in terms of their time to report, my rough
calculation is that his industry would have to add 1,300 people annually
just to do the report.
Senator Mercer: My final question is to Mr. Georgetti. I met with
members of police unions across the country who were here a short while ago
to talk about this proposed legislation. Their concern was even greater
because they think this may expose them and their families to security
risks. In one case, a policeman related a story about the difficulties they
have in dealing with organized crime when people find out personal things
about them. A policeman from Halifax reported that a member of organized
crime said to him, "I see your daughter takes swimming lessons on Thursday
afternoons.'' That would send a chill down anyone's back.
Have you talked specifically to members of law enforcement unions across
the country about their specific problems because of the sensitive nature of
the work they do on behalf of Canadians?
Mr. Georgetti: Yes, as well as workers in social welfare and
victim relief and all sorts of programs like that.
The other serious concern we have is the disclosure of financial
information of seniors and people in retirement that could be victims of
scammers because people would know how much money they have. This is really
an unnecessary intrusion and why the Privacy Commissioner has expressed
serious concern about this proposed legislation. People have a right to
We do not see how disclosing this information is of any help to anybody
in the country, other than a small group of people that I believe you have
already heard from.
Senator Ringuette: I have been researching this bill for a few
months. I want to thank you because you have brought to our attention this
morning a larger scope to the bill, which I found in my research regarding
mutual trust funds and health. We are looking at private information of
maybe 20 million Canadian workers and their families.
As well, I have been following another bill that is before the other
place. One ex-Tory member of the House of Commons had sponsored a private
member's bill to disclose the salaries of deputy ministers and assistant
deputy ministers earning $188,000 and more. The Harper government put
forward an amendment to change that amount from $188,000 to $444,000.
Senator Ringuette: This bill requires the publication on a public
website of the names of working Canadians who receive $5,000. However,
salaries that are 100 per cent financed from tax dollars are not to be put
on a public website by this government. Talk about a double standard. I
would like to have your comments on that.
The Chair: Are you directing that to a particular individual?
Senator Moore: Stephen Harper!
The Chair: Who would like to respond?
Senator Ringuette: Have fun for once, gentlemen.
Mr. Sanderson: No one else is as foolish as I am to comment.
Everyone at this table believes that transparency and accountability are
good things. We also balance that against reasonable expectations of
privacy. Bill C-377 seems to go in one direction on that front and the bill
to which Senator Ringuette refers seems to go in an opposite direction.
Senator Ringuette: Completely.
Mr. Sanderson: I cannot imagine that such a range of responses can
be viewed as good public policy.
Senator Ringuette: Thank you.
Mr. Georgetti: There already is full disclosure in our system for
our members to have access to that information. It exists in our
constitutions and in every labour code in Canada, except, coincidentally,
Alberta, where it does not exist.
Inside that system, we have looked at the issue. Of the 4.4 million
members, I think there were four complaints last year that had to go to
labour boards for members to get information that they wanted.
In terms of the behaviour of this government, every piece of legislation
and every budget has a trick in it to attack us. In fact, a private member's
bill was tabled yesterday to change the Canada Labour Code. The existing
policy is that the Minister of Labour consults with employers and employees
before changing the labour code. This private member's bill proposes to
change the structure of the labour code without any consultation with either
of the parties involved in collective bargaining in a very good system that
achieves settlement 99.6 per cent of the time.
Senator Ringuette: They completely bypass the democratic system.
Mr. Hensel, do you have any comments? Do you agree with the comments just
Mr. Hensel: Having focused on the impact to the industry, I have
my personal view. Assuming that this information is relevant to produce,
there has to be a better way of doing it. The particular definition that we
have trouble with is not that long, but it is quite detailed as well as
extremely broad. I cannot believe that was the intent. It makes you wonder,
as you said earlier, when you have bills that are so broadly written and so
broad in their scope.
Senator Maltais: Mr. Hensel, in your brief, you said that all
Canadians with investments in mutual funds will be subject to this
legislation. Are you sure? Can you give us that assurance today?
Mr. Sanderson: It is our understanding that the definition of
"labour trust'' has two branches.
Senator Maltais: That is not what you said. You said that all
Canadians who have mutual funds will have to disclose them on a website.
That is what you told us. Are you really sure of that?
Mr. Sanderson: To the extent that every mutual fund has at least
one labour union member participant, I believe that is a true statement,
Senator Maltais: You should have said "union members.'' I am a
Canadian, I have mutual funds administered by a major bank and they can bear
interest from mutual funds owned by unions. I will not be required to
Mr. Sanderson: To the extent that you have a transaction with that
fund involving more than $5,000, I believe you would be —
Senator Maltais: You were not listening to me. Please listen. I
have mutual funds in an RRSP administered by a bank, which shall remain
nameless. That bank can conduct transactions that involve union mutual
funds, but I am not required to declare them.
Mr. Sanderson: Yes, I believe that the institution would have to
report with respect to your transactions if they exceed $5,000.
Senator Maltais: No, I am sorry. Go talk to the financial
institutions. It is all very well to come here and tell us all this, but go
talk to the financial institutions. You are a major group of insurance
companies, but do not come here this morning and tell me something like
that. I am not buying it. Get the right information. You have a group of
lawyers next to you. It is up to the institution to do it, not the holder,
because I am not a union member.
Mr. Sanderson: I believe we may have different readings of this
proposed legislation, which perhaps highlights how poorly drafted this
actually is. We believe our interpretation has merit.
Senator Maltais: I think mine has merit as well.
Senator Massicotte: Thank you for being with us today. First let
me make a comment relative to Mr. Hensel, Mr. Ginsberg and Mr. Sanderson:
your points are well raised. I think it would be easily addressed by small
amendments to the proposed bill. I do not think that is the intent of it,
but thank you for raising these issues.
I will also make a comment on the argument of cost, which I have heard
much about. I must admit I am having considerable difficulty understanding
it because disbursements are easily trackable with various software, for
example, like Quicken software. You can easily track this information within
30 seconds. I will not delve into that, but I must say that the cost issue
does not have much credibility with me.
The fundamental issue is the adequacy of the current transparency, if I
can address my question to Mr. Georgetti. I do not have a firm opinion on
this, but that is the issue. Is there adequate information for the public,
if it is pertinent, or the union members to get the information?
Most provincial labour codes require audited financial statements, I
understand. In fact, most provinces request that the audited financial
statements be sent to all members. Many people testified it is not
automatically sent: members must ask.
Mr. Georgetti, could you describe what the practice is? In fact, even on
your own website, why can we not find these financial statements on people's
websites? I have searched many labour organizations. Why the secrecy?
Why, even worse, wait for members to ask for relative information to make
it publicly available?
Mr. Georgetti: First of all, members do not have to ask. Financial
reports are given, usually every one of our affiliates has monthly
membership meetings where members can attend and get the financial
statements from the structure in their system, through recording or
financial secretaries at their meetings.
We have provincial and annual conventions where financial reports are
tabled by the secretary/treasurers of the respective organizations with
elected delegations having the ability to question, amend or alter any of
Members can ask for further audited financial statements. If they are not
satisfied with the statements they get, they can appeal to the labour boards
of their various provinces. As I mentioned, four happened last year, where
members were not satisfied with the level of detail they got, and were
satisfied after that process was enacted.
These organizations are owned by the people who fund them, which is our
membership. They receive a tax deduction of about 20 per cent of their union
dues that the government writes off their taxable income.
For the most part they fund these organizations with their own money,
they are operated in that way and are reported to those memberships to the
satisfaction, as you can see, of the vast majority of our members.
That is a very good system. They are wide open. If you want to get
financial reports, you can actually attend those conventions. The doors are
never locked. We do not publish them, for various reasons, on our website so
people like Merit Canada and others cannot get a hold of our financial
information and get an advantage over construction unions in bidding
processes and other things.
Senator Massicotte: What advantage could they get? The only one I
saw publicly was CSN, a Quebec-based organization that had the financial
statements on site, but it was for three years combined with significant
delays. I do not understand this competition argument. If you see financial
statements, as I am sure you do, they are very generic and broad based. In
fact, financial statements on every public company in Canada are available,
which probably frequently represent your employers, so why not?
Mr. Georgetti: These are private organizations, just like medical
associations and law societies. These are private organizations that are
accountable to the people who fund them: our members. The Canadian public
does not fund unions.
Senator Massicotte: I appreciate that.
Mr. Georgetti: Our membership does. That is who we are accountable
to, to the satisfaction of the vast majority. You can see this evidenced by
the fact that there are very few complaints from our members about their
satisfaction level of the detail they receive from their unions on the
Senator Massicotte: Must they ask for it, or does every member
automatically get it in the mail?
Mr. Georgetti: It depends on the constitution of the unions. Many
unions send out their information to their individual members. Some wait for
the members to ask for it. As I said, members can access that information by
attending a regularly scheduled membership meeting of their local union
anytime they want.
Senator Massicotte: Therefore, if you attend a local union
meeting, financial statements of that quarter are remitted to each
individual at that meeting?
Mr. Georgetti: Presented on the floor of the meeting, yes.
Senator Massicotte: He does not have to ask for it. We heard from
the Air Line Pilots Association yesterday that they must ask for it. As an
example, in a union of 1,400 people, if only 38 people get the financial
reports, with the argument that it is good governance and they represent us,
why is there hesitancy to bring this information public?
Mr. Georgetti: It is hard to have a regular membership meeting of
airline pilots. Where is their gathering point? It is a difficult structure.
The local unions, which are the vast majority of the structure, have
regularly constituted membership meetings where they report on the entire
operation of the union all the time. It is available.
Senator Massicotte: With significant detail? Even in financial
statements it is very broad based and not very informative. Do they go into
greater detail in that financial statement?
Mr. Georgetti: Yes.
Senator Bellemare: I have a question for anyone who can answer it.
In comparison to the U.S. legislation on transparency, are the provisions
the same for disclosing financial information on trust funds and their
beneficiaries, for example?
Mr. Sanderson: Perhaps I can take a first crack at that. Over the
course of your hearings there have been significant comments regarding the
U.S. labour reporting programs.
We have not examined them in detail because we do not believe that we
are, or are intended to be, caught under the U.S. regime. Therefore, there
really is not a direct comparison for financial institutions in Canada.
While I believe your question focuses on financial institutions and
investment funds, I do not know that either Mr. Hensel's organization or
mine have looked at what the requirements would be under the U.S. law. I
believe they do not exist, actually, because we are not labour
Mr. Ginsberg: I am a former president of the American Prepaid
Legal Services Institute, which is an umbrella organization affiliated with
the American Bar Association. It is an umbrella organization for all legal
services plans in the United States and a few in Canada.
I have never heard of any of the American legal services plans having to
do anything like this as far as their legal services plans are concerned.
They obviously have to abide by trust laws in ERISA, but not this kind of
Mr. Georgetti: The legislation in the U.S. applies to labour
organizations larger than $250,000 in annual revenue, and it also applies to
all employer groups and all other groups in the U.S.
Senator Moore: I thank the witnesses for being here.
Mr. Georgetti, you mentioned Merit, and others who have been here in
support of this bill have said that, because union members deduct union dues
under the Income Tax Act, all this private information should be made public
on the World Wide Web. They do not think that because they get a benefit
under the Income Tax Act — by way of being able to deduct their various
association dues, entertainment, and so on — that that should cause them to
make their private information available.
For the record, what do you think about the fact that just one side of a
negotiating situation would have all the information and the other side
would not have the private information of the party across the table from
them? What would that do to the bargaining system and the free enterprise,
commercial system we have in Canada?
Mr. Georgetti: The first thing that comes to mind is the Merit
shop, the CFIB, LabourWatch and the Canadian Taxpayers Federation. They are
all openly anti-union. If you look at their board structure, they all sit on
each other's boards. You are talking about one group. You have not heard
from the Council of Chief Executives or the Canadian Manufacturers
Association supporting this legislation because I would suggest they
probably do not or want to stay silent because they understand the impacts
You can imagine that you are in a collective bargaining situation and the
people across the table have intimate knowledge of how much money you have
available in your strike fund and revenue resources to be able to sustain a
labour stoppage if one has to happen. Settlement usually comes when one or
the other party says they will take a step that will cause disruption in the
workplace. If you cannot sustain that financially, it seems to me that part
of the crux and the thrust of bargaining, the leverage that you have in
collective bargaining, is lost in that process because the other side has
knowledge of your financial information that they probably should not have.
It has worked very well. It stops a lot of disputes. If that does happen
and they have access to that, it will change the balance of collective
bargaining and the balance of power in collective bargaining.
Senator Tkachuk: Does the financial information you provide now to
your members not have information as to your cash reserve, which would give
an indication of your ability to handle a strike?
Mr. Georgetti: Absolutely.
Senator Tkachuk: You would give that to them?
Mr. Georgetti: Absolutely.
Senator Tkachuk: Mr. Chair, I would like to spend a few minutes
with this gentleman after the meeting to find out how he contains all the
information within his organization and does not have any leaks.
Mr. Georgetti: We do, senator. We do.
Senator Tkachuk: I think our Internal Economy Committee would be
very interested in that.
Mr. Georgetti: We can certainly help you with that.
Senator Tkachuk: Thank you, Mr. Georgetti.
Senator Moore: Mr. Georgetti, I want to give you a chance to
respond to that.
Mr. Georgetti: Once in a while, it does happen, and it does cause
us concern. Our members are free to do whatever they want with that
information. They have it in their hands. I think they know well enough that
if they supply it to the employer, it disadvantages them at the bargaining
table. We have great loyalty among our own membership. We also have only one
cause, and that is to try to get the best deal we can for the people we
represent, and they understand that. I guess that is why. Sure, from time to
time, some of our members probably do slip our financial information to our
employers. We do not like it, but it is their right to do that.
Senator Ringuette: When the officials from the Canada Revenue
Agency were in front of us a few weeks ago, they clearly indicated that
they, CRA, do not view this as a tax bill. They see this as a disclosure
bill. My question is a little iffy, but as you have indicated, Merit Canada
is a great supporter of this bill. Up until last December, Merit Canada had
been in existence since 2008 and had not filed their income tax report for
2010, 2011, 2012. All of a sudden, when it was highlighted at the House of
Commons committee, they put forth the file. My question to each and every
one of you is, are you up to date with your income tax filings?
Mr. Sanderson: Since I am the one who actually has taxation in my
job title, I can absolutely say that personally and corporately and, to the
best of my knowledge, all of our members are absolutely up to date. Large
regulated financial institutions cannot take the reputational risk of not
being on side with respect to Canadian tax law, provincial tax law, the
Mr. Ginsberg: I can also say that all our T3s are filed, all T4A
slips issued and our members have paid tax on this benefit.
Mr. Hensel: I am not the chief financial officer of IFIC, but I
can speak quite confidently that we are up to date on all of our filings,
including GST filings.
Mr. Georgetti: All of our organizations as well as filing our
taxes have certified audited statements by reputable auditing firms in
Canada done regularly to certify our books and make sure that our members
are satisfied that the audits are complete.
Senator Ringuette: Thank you. That confirms that all four of you
are certainly living up to your corporate taxation obligation as Canadians.
I have asked this many times in regard to our committee meetings: Is
there any way that we can amend this bill that will satisfy the
constitutional requirement, the Charter requirement and the privacy
requirement? So far, everyone is saying no. I understand, Mr. Hensel, that
you are suggesting a certain small amendment. On the whole, how can we deal
with this bill so that a reasonable Canadian would agree with this bill
being passed and their private information being disclosed to the world?
Mr. Hensel: I would suggest that one of the concerns, as Mr.
Sanderson said, is that our members file financial information on our unit
holders for taxation reasons, for trust. You know all the accounting they
do, the RSP information. That is all highly confidential. That is not
available to anyone with access to the Internet who can get it that way.
That is one of the main things that needs to be looked at. Does it
necessarily have to be complete public disclosure in that way? If it is for
a particular review, and I will not go into the merits of what I think about
the bill generally, but if it is a matter of specific information that is
sought to be disclosed, does it have to be public? Can it be in a more
confidential way? That would alleviate a lot of the concern.
My members would still have a major concern about the need to have to go
back and contact every one of our unit holders and get this information,
which is, in our opinion, completely irrelevant to the decision to invest in
the first place and to their investment objectives. It is a bit of a
distasteful question to have to go back to ask them because it really is not
relevant. My first reaction is, what will their reaction be, and how many of
them will say they are not interested in this and leave the fund?
Mr. Georgetti: You have to look at the motivation for the bill.
Mr. Hiebert has testified twice now that he has not had a complaint from a
union member that motivated this bill. What is the motivation behind the
bill? Is it to solve a problem or not?
If they said that anyone receiving a tax concession, a tax break or tax
deduction from the Canadian government must make reporting of this nature,
it would be a lot harder for us to argue that the bill is discriminatory.
However, the way it is written now, as I said, a blind person could see that
this bill is slanted and biased and discriminatory towards one group in
Canadian society, and that is labour unions.
Senator Massicotte: Mr. Georgetti, you seem to be very much aware
of the U.S. system. You referred to the minimum requirement, and you are
probably aware of the LM2 reporting format. What is the requirement of the
United States for larger labour unions, and what has been the consequence on
your negotiating capacity and your relations with members?
Mr. Georgetti: The density of the labour unions in the United
States is less than 8 per cent. It is falling regularly. It is much tougher
to organize in the United States. It is much tougher to collectively
bargain. They have a much more difficult time with their employers in the
U.S. They find that this legislation is onerous and expensive on them. It
takes away from money that they would otherwise use to organize new workers
into unions and to fund campaigns.
Senator Massicotte: The greater transparency caused all these
Mr. Georgetti: The cost of this thing has an impact on that, yes.
Senator Massicotte: How about the transparency? I have a bit of
difficulty buying the costs, the impact.
Mr. Georgetti: I do not know why you have difficulty with cost.
Senator Massicotte: How about the transparency issue? There is
greater disclosure in the United States. Is that a consequence of why the
labour union participation in the United States is much lower?
Mr. Georgetti: No, not at all. What I have been told anecdotally
is that access to that information is minimal and not very many people use
it. Even the right wings who say they use it say the information is useless
for what they actually want, and they have not got that yet.
Senator Massicotte: In summary, with the increased transparency,
there is no significant consequence other than the costs?
Mr. Georgetti: There is no significant consequence to us?
Senator Massicotte: Yes.
Mr. Georgetti: Not just on the cost, but it would have a huge
effect on collective bargaining.
Senator Massicotte: Has that been the case in the United States?
Mr. Georgetti: Yes.
Senator Massicotte: Describe that, if you do not mind.
Mr. Georgetti: The employer now knows when you go to the
bargaining table the financial condition you are in and your ability to
sustain a work stoppage if you have one with them. It is a great advantage
to an employer who may want to force you on strike or lock you out knowing
full well you cannot fund a dispute if your cash reserves are low.
Senator Massicotte: Are you talking about a strike fund?
Mr. Georgetti: Absolutely.
Senator Massicotte: If you remove that, are there any other
Mr. Georgetti: It would have a consequence on organizing, yes.
The Chair: Thank you to our panel. You have been very helpful in
our deliberations. On behalf of all members of the committee, I would like
to express our appreciation for your appearance today.
For our concluding panel, we are pleased to welcome in person the
Honourable Frank Corbett, MLA, Minister of Labour and Advanced Education of
the Government of Nova Scotia; and by video conference, Mr. Jeff Parr,
Deputy Minister of Family Services and Labour of the Government of Manitoba.
We appreciate you both appearing before us today. Mr. Corbett, please
Hon. Frank Corbett, MLA, Minister of Labour and Advanced Education,
Government of Nova Scotia: Thank you, senators. Greetings from warm and
sunny Nova Scotia, but for those folks who are going home, it is going to
rain this weekend.
It gives me great pleasure to represent Nova Scotia here this morning. I
will declare some of my biases. As a proud son of a coal miner and UMW
member for over 47 years and a family member of 15, I am used to crowds, so
I want to get on with this, but again, I appreciate you allowing me to
I am here mainly to speak as the Minister of the Nova Scotia Department
of Labour and Advanced Education and express our opposition to Bill C-377. I
know you have heard from a number of labour organizations, legal
associations and various experts from across this country, and I know there
are serious questions and concerns about this bill.
First, Bill C-377 is a discriminatory attack against organized labour. It
subjects unions to tougher reporting than most other organizations. I note
this bill will not impose the same requirements on the National Citizens
Coalition or like organizations. This bill is heavy-handed, unbalanced and
very likely unconstitutional. The bill insults the contribution that
organized labour has made to positive public policy developed in this
country, including the development of CPP, EI, family allowances, universal
health care and maternity leave, to name a few. We are concerned that this
bill is designed to weaken the voices of progressive public policy.
I understand you have heard from the Canadian Bar Association on the
issue of constitutionality, that they have concerns about whether this bill
violates the jurisdiction of the provinces with respect to regulations of
labour organizations. I share those concerns of the bar association and
others with respect to provincial jurisdiction over labour relations.
I share the concerns of many presenters before me with respect to the
privacy rights of trade union members. The Privacy Commissioner of Canada
has outlined serious privacy concerns with this bill.
This proposed legislation does nothing to help union members advance any
economic or public policy good. This bill does not respond to the real
challenges facing Canadians like skills development but is simply designed
to harass unions and impose unnecessary administrative burdens on organized
labour for the benefit of those who oppose unions.
I have been a representative of the people of my province since 1998, and
I have been involved with the labour movement, both from a union leader
position and on political issues for many years prior to becoming a member
of the Nova Scotia assembly. I hear the concerns of the people I represent
on a daily basis and have never had any individual come to me and complain
about union financial disclosure. I do not know what issue this bill is
supposed to address, but I do know it does not address issues important to
the people of Nova Scotia. This bill, if passed, will create an unneeded
burden on labour organizations in my province and, I would say, in other
provinces across this country.
To meet this additional financial burden, labour unions will be forced to
reduce the services provided to their members or increase the dues paid for
no good apparent reason. In fact, in Nova Scotia, members of trade unions
are already entitled to a copy of all their union's financial statements at
no cost to the member. We have legislation that ensures this right, so I am
not sure what benefit this bill will add for our union members or anybody
else in the province of Nova Scotia.
In the province, the labour relations climate has been very good. We
promote fairness and productivity in labour relations. In fact, we have
restored stability so that more than 97 per cent of labour contracts are
settled without a work stoppage. The government, private business and labour
organizations work hard together to ensure that labour concerns and
collective agreements are negotiated appropriately and fairly. There is a
level of respect that is based on partnership and on balance. These
principles are not represented in this bill but, I would say, are to the
This bill has the potential to disrupt collective bargaining at a time
when we need greater cooperation between governments, organized labour and
business to resolve our economic challenges. We should be focusing our
attention on the skills challenge facing Canadians and not on unnecessary
legislation that would only hamper our efforts and relationships with unions
and employers. This bill does not contribute to our shared collective
objectives to grow the economy of this great country. Instead, it diverts
energy, resources and money; and so I ask: To what end?
We have more important items on our skills agenda now, so we need to
partner with our unions and our employers to work collectively to grow our
economy and to grow the nation of Canada. No one will be helped by the
passage of Bill C-377. I urge you to vote against this bill and end this
needless attack on labour organizations.
Jeff Parr, Deputy Minister of Family Services and Labour, Government
of Manitoba: Let me begin by thanking you for the opportunity to present
our concerns with regard to Bill C-377, an act to amend the income tax
requirements for labour organizations. As you know, I am the Deputy Minister
for Family Services and Labour, and I am speaking today on behalf of the
Government of Manitoba.
This bill would amend the Income Tax Act to require labour organizations
to file a detailed information return with CRA on their income and
expenditures and a breakdown of their activities to identify resources
allocated to political activities, lobbying, education and training, labour
relations, general operations, et cetera. The material contained in that
information return would then be made public by the minister, including
publication on the department's website.
The Manitoba government continues to have significant concerns about Bill
C-377. Our first major concern has to do with jurisdiction. In Canada,
responsibility for labour relations and the regulation of workplaces for
approximately 92 per cent of the labour force rests with provincial and
territorial governments. The federal government is responsible for only a
small proportion of Canadian workers, about 8 per cent, employed in
federally regulated workplaces. Each government in Canada independently sets
its own legislative priorities and establishes its own approach to labour
relations and regulation. As a result, there are differences in how each
government approaches its responsibility for regulating labour.
In spite of that, in Canada there is a general but identifiable Canadian
mainstream in labour regulation. This can be attributed in part to the
information exchange, professional development and collaboration promoted by
the Canadian Association of Administrators of Labour Legislation for the
last 75 years. This has also come about because consultation with labour and
employers has become a more prominent feature of Canadian government's
approach to developing labour legislation, policy and programs. Employers
and labour organizations play an important role in shaping Canadian labour
We have worked very hard in Manitoba for more than a decade to foster
meaningful social dialogue with our labour and employer partners. Working
through consultative bodies like our Labour Management Review Committee or
the Workplace Safety and Health Advisory Council, we have been able to reach
consensus on more than 20 pieces of legislation that have subsequently been
passed unanimously by the Manitoba legislature. This, in turn, has
contributed to a remarkable level of stability in Manitoba's labour
The regulation of unions and their activities in Canada is done through
the labour relations legislation in each of our respective jurisdictions.
The federal government regulates approximately 8 per cent of the Canadian
labour force through the Canada Labour Code and the Public Service Staff
Relations Act. Labour relations and union activity for the remaining 92 per
cent of the Canadian labour force is regulated through provincial labour
The Manitoba Labour Relations Act is intended to promote orderly
collective bargaining. It is administered by the Manitoba Labour Board, an
independent administrative tribunal with specialized expertise in labour
relations matters. The Labour Relations Act provides a means which a group
of employees can choose a union to represent them. They have to satisfy the
Manitoba Labour Board that the majority of employees want to be represented
by that union. Once certified by the Labour Board, the union may then
bargain collectively on behalf of those employees to reach the collective
agreement with its employer. Like labour relations legislation in other
Canadian jurisdictions, Manitoba's Labour Relations Act contains a number of
provisions that protect the rights of employees to organize free from
interference by their employer. It also contains provisions to ensure that
unions fairly represent the interests of the employees in its bargaining
Like most other Canadian jurisdictions, it also contains requirements for
all provincially regulated unions to provide members, at no cost, with a
copy of financial statements setting out the union's income and expenditures
in sufficient detail to disclose accurately the financial condition and
operation of the union and the nature of its income and expenditures. I
would also note that unions are membership-based organizations with
constitutions, elected executives and membership delegate conventions. Union
leaders are elected by their membership and serve at the pleasure of those
members. Financial statements are audited and reported to elected executive
bodies, union locals and delegates at convention. Respectfully, the proper
vehicle for regulating financial disclosures of unions is labour relations
legislation in each of our respective jurisdictions rather than the Income
Each jurisdiction has a mechanism for undertaking consultation with our
labour and employer partners to build consensus on how to approach labour
relations issues that demand legislative changes. Each jurisdiction has its
specialized administrative tribunal with decades of experience to administer
the provisions of labour relations legislation. With this in mind, it
appears that Bill C-377 strays significantly into provincial jurisdiction by
regulating the financial disclosures of unions, the great majority of which
are regulated by provincial governments.
Our second major concern has to do with singling out labour organizations
for special treatment under the Income Tax Act. I understand the federal
government tax expenditures or deductible union dues and professional fees
is about $795 million annually. However, Bill C-377 focuses entirely on
financial disclosures of unions. It imposes no new requirements on
professional bodies such as those governing doctors, lawyers, engineers, et
cetera. There are also hundreds of employer and industry advocacy
organizations with a mandate to represent the interests of their members and
member employers, in part through lobbying and political representation, and
sometimes by representing a group of employers in collective bargaining.
Provisions of Bill C-377 do not affect those organizations.
With respect to registered charities, which I understand has been
referenced a number of times as a basis for the provisions of this bill, I
would note that they are creatures of the Income Tax Act; and the CRA
provides the administrative oversight. In contrast, unions are creatures of
labour relations legislation in the respective provincial or federal
jurisdiction and oversight is provided not by the CRA but by labour
relations boards with jurisdictions over those unions.
If there is a real concern about transparency for organizations enjoying
tax benefits under the Income Tax Act, a much better approach would be to
engage the affected sectors and organizations in a dialogue leading to
changes that treat them all in a similar fashion. In the absence of a
broader approach to transparency under the Income Tax Act, it would be
advisable not to single out unions for special treatment, especially because
for 92 per cent of the labour force, labour relations and regulation of
labour matters are provincial responsibilities. There are established
legislative regimes in each province, territory and federally for regulation
of labour relations and union activities.
Senator Black: Thank you both for your very thoughtful,
well-prepared comments today. Minister, I have two questions for you, if I
may. As we are nearing the end of our hearings, I am trying to focus in on
some issues that are still causing at least me a little bit of uncertainty.
I am quite sure you can help me with this.
We have had a number of individuals and, in some cases, groups come
before us to say that, notwithstanding what you have suggested this morning,
minister, they could not get access to the information they required from
unions and that they felt they had no input into the political and social
causes or spending that the various unions were involved with. What would
you say in response to that?
Mr. Corbett: I would say that there are people today who would say
that they do not feel they are getting the response they would like from my
government or from your government. It is a part of — if you want to call it
— frustration. They say, "We do not agree with the way your government is
going.'' However, they do pay taxes, and they move forward with it. I really
have to go back and put another hat on from years ago. It has been 15-plus
years since I was an active officer of a union, but I worked for a year and
a bit for the CLC. I worked for the old NABET union and, after that, for the
Communications, Energy and Paperworkers Union. You have to see it from a
couple of perspectives when you are looking for financial statements. There
would be one from your local. There would be one, more than likely, from the
national and possibly a third from an international. Those are documents
that are, I would say, unless there is some chicanery somewhere, fairly easy
to obtain. I speak as a practitioner.
Senator Black: I understand your point of view on that, but not
everyone has told us that. My question to you is: What do you say to those
Mr. Corbett: It is like when people come to my office with an
issue and say, "I cannot get access to a public service.'' Part of my job,
as their representative or as a member of the executive council, is to have
them tell me what it is and then to help them to work through it. Did they
ask the right question, or were they just told, "That is none of your
business. Get away from me?'' Was it just that they asked a very large
question and wanted a narrow answer? I do not know. Having not had that
question asked of me directly, it is impossible for me to answer.
Senator Black: Mr. Chair, I have another question, if I may. It is
a question for both of the witnesses. I would just like you, in summary, to
tell me why you think this bill will disrupt collective bargaining.
Mr. Corbett: It is an intrusion, as I said in my remarks, into a,
by and large, provincial domain. As witnesses prior to me have said, it
shifts a balance to the other side of the table. The whole idea of
collective bargaining is to do it on balance. As I said, 97 per cent of the
collective agreements that are hammered out, if you will, in the province of
Nova Scotia, are settled without any work stoppage. I would say that those
numbers are not unreflective of the national average. We have a system that
works well, and, when you then roll a grenade into the room, you will
disrupt that balance. That is what this bill is. It is a grenade in the room
of collective bargaining.
Probably somewhere, wherever he is, former Senator Joe McCarthy, is
saying, "This is a great bill.'' We are seeing people behind doors here. We
are seeing the reds here. I really do not believe that this helps collective
bargaining, and I believe it shifts the balance of knowledge and disrupts.
The Chair: Mr. Parr?
Mr. Parr: I am sorry; did you want me to respond to that as well?
Senator Black: I am happy to repeat it.
The Chair: Please.
Senator Black: Mr. Parr, specifically in your letter of April 4,
you said that this legislation will unbalance and seriously disrupt labour
relations between employers and unions. I am asking you to summarize why you
think this bill will be so disruptive.
Mr. Parr: All right, thank you very much. First, I would say that
provincial governments are competent in labour relation matters. They have
been regulating for decades, and this is the business of provincial
governments, rather than the federal government.
Second, I did mention our experience working with our labour and employer
partners to consult, reach consensus on legislation and move it forward into
the legislature, and we have had remarkable success there. As I mentioned,
we have passed more than 20 pieces of labour legislation unanimously in the
provincial legislature. This is due to the fact that we engage our partners
in discussion, work our way through issues, bring it to a close and bring it
This is how we do our business in Canada with respect of labour
relations. The way this bill comes forward is entirely outside of that
perspective. It has not come about as a result of meaningful dialogue
between employers and labour; it was a private member's bill. I understand
that there are different vehicles for making legislation, but this is not
something that comes through the mechanism that we have in place to
establish and build on the relationships we have already established. It
will tip the balance, as the minister said. I think the other point I
mentioned is that it singles out unions for special scrutiny, when there are
other organizations involved in political activity — lobbying activity —
that are not touched by this bill at all.
Senator Ringuette: Thank you, gentlemen, for being here. For the
record, not only do Nova Scotia and Manitoba share the same concerns that we
have heard, but we have also received a copy of a letter from Quebec and
Ontario. I am hearing that New Brunswick is also putting something together
in regard to this bill. We have at least five provinces that are
I have questions for both of you. The first is: In your provincial
jurisdiction, do you have privacy laws that are akin to the federal ones?
Mr. Corbett: We do. I would say they are not as stringent as the
federal laws, but we have privacy laws, yes.
Mr. Parr: Yes, Manitoba has freedom of information protection of
privacy legislation. I do not know exactly how it compares to the federal
laws, but I would suspect it is similar. There are significant requirements
for us to maintain privacy of the information we receive.
Senator Ringuette: The federal commissioner for the Privacy Act
has come before this committee, and I asked her if this legislation passed
the Privacy Act smell test. Her answer was no. Would this legislation pass
your provincial privacy act smell test?
Mr. Corbett: No. This is a bad bill. There is an old family friend
of ours who used to say that you cannot make chicken salad out of chicken
"bleep.'' You can fill in the last word. This is what this bill is. It is
not meant other than that. It is an intrusion into the privacy of our
citizens. It is an intrusion. It does not even take into effect the multi-
layers of collective bargaining. Senators here from Nova Scotia would
certainly understand that the trades have two levels of bargaining. They are
called the mainland building trades and the Cape Breton building trades.
They are groups of trades — pipefitters, plumbers, carpenters and so on.
This is a whole other realm of how they relate, and they relate in another
way in that they also have multiple employer pension funds. How is that
reported? This bill does not contemplate any of those significant ideas, and
I am sure that other provinces also have those trade councils that bargain
for a mass. I think we kind of know the layout of how it is done.
You bang out a base agreement, and then there are sub-agreements from
that. How is all that meted out? No way, no how does this bill contemplate
that. The stuff that is in here offends me, and the stuff that is outside of
it offends me.
Senator Ringuette: Thank you.
Mr. Parr: I am not an expert in privacy legislation. I would defer
to the federal Privacy Commissioner for characterizations. That said, I do
appreciate that, within this bill, the disclosure would include third party
information related to contractual arrangements unions may enter into with
third parties, and we are prohibited from releasing third party information
when we get requests for information. In that sense, it would also be
problematic with the privacy legislation in Manitoba.
Senator Ringuette: I have looked at the New Brunswick code of
labour and its balance in regard to its requirement. Its requirement is both
directed to the employee organization and employer organization to supply
the same disclosure to its members and also to the Minister of Labour. Can
you confirm that it is the same case in your provinces with the balance of
Mr. Corbett: The balance of disclosure in Nova Scotia is that we
have in there, for our purposes, for the purposes of the Trade Union Act,
that unions have to disclose. That burden is not there as greatly for the
employers. It is there to a point, but not as greatly.
Mr. Parr: What you would find in our legislation, and probably a
lot of legislation, is that there are more requirements imposed on unions
about how they interact with their membership than there would be with a
comparative multiemployer organization.
There is no requirement, for example, for employer organizations to be
certified by the Manitoba Labour Board. They can come together and bargain
collectively on behalf of a number of employers, where the union has to be
certified and there are a number of requirements how the certification takes
place and how they demonstrate the majority of support and, as I mentioned
before, their requirements for financial disclosure to members, which our
legislation is silent about how it deals with employer organizations.
It goes back to my initial point: We are already regulating labour
relations and trade unions. We are doing a good job at it. This legislation
really is getting in our way. It is our business.
Senator Tkachuk: Before I begin, I wanted to ask the clerk if we
have received any other briefs or requests from other provinces to come
before us on this issue.
Keli Hogan, Clerk of the Committee: Except for the submissions
that were sent out to members yesterday for the provinces, we have not
received any others.
Senator Tkachuk: Which provinces?
Ms. Hogan: I believe it is Quebec, Ontario, Nova Scotia.
Senator Tkachuk: The two here plus the other two.
Ms. Hogan: Exactly, but all provinces and territories were invited
to appear before the committee.
Senator Tkachuk: Thank you. I wanted to clarify that.
I have a couple of questions. Mr. Corbett, I know you are here as the
minister, but you are also here as a member of a political party. You
receive donations from unions, I would think, the NDP party, in your
Mr. Corbett: No, we changed the legislation.
Senator Tkachuk: You do not receive any?
Mr. Corbett: No.
Senator Tkachuk: Do they donate as individuals?
Mr. Corbett: Many businesspeople donate as individuals. If someone
was a member of a union, they donate. Some corporations donate.
Senator Tkachuk: I want to ask a question that has been sort of
circled around at these committee hearings. When I join a non-profit
organization or a club, let us say the Knights of Columbus or an
organization like that, I buy a membership. I do not get a tax deduction. I
understand that we are having this discussion because unions and other
organizations, like law societies and medical associations, it has been
implied, get tax deductions or tax credits for the purchase of a membership
in a union. What is the philosophical justification for any of them getting
a tax deduction for joining a union? I mean, if you are a doctor and you are
a member of the medical association, I do not understand why they get to
deduct it. Why am I paying for that?
Mr. Corbett: You are not.
Senator Tkachuk: I am. I am a taxpayer. I do not get a deduction
to join any association.
Mr. Corbett: If you were member of a union, you would.
Senator Tkachuk: That is exactly right, but that would take care
of the issue. Then you would truly be a private organization. My point is
that if you did not get a tax deduction, why would we care what the
organization was doing internally and as far as their financial statements
are concerned? This legislation is here, it seems, because it concerns the
Canadian taxpayer because members get a tax deduction. I do not understand
why they do get a tax deduction. I do not understand why any of the
associations get a tax deduction. What is the philosophical imperative? Why
are we doing that? Why do governments do that?
Mr. Corbett: You guys write the federal code. I do not.
Senator Tkachuk: I know.
Mr. Corbett: The reality is that there are organizations that do
get it, right? There are professional organizations.
Senator Tkachuk: Exactly.
Mr. Corbett: Do you think that a plumber being a member of the UA
local is no more professional, that their work is less valued, if they
belong to this organization for purpose of collective bargaining? I believe
all work is —
Senator Tkachuk: I do not think any of them should get a tax
Mr. Corbett: Then we should debate your philosophical differences.
I believe it does.
Senator Tkachuk: What is the justification for that?
Mr. Corbett: The justification is because the group is there to
pay into a group. Whether you are a medical doctor or whether you are an
electrician or whether you are a CPA, there is a group that does a larger
piece of work for you to which you are a member of and, therefore, it allows
you to have that deduction. I support that.
If you continue this line of question, what you are saying is the Rand
Formula has to go; is that the crux of your questions?
Senator Tkachuk: It is not the plumber. Most of the plumbers do
not belong to unions. They get to pay for the deductions of the plumbers who
do belong to unions, do they not? That is a tax deduction.
Mr. Corbett: No, I —
Senator Tkachuk: It is not that funny. It is a fact. I do not know
why these people get tax deductions.
Mr. Corbett: I look in the telescope to see the stars, and you
look through the blind end and see very little. I believe it is very
important. This formula has worked. I do not find it offensive, and most
Canadians do not find it offensive, just the private member who moved this
Senator Tkachuk: I am asking your opinion. I did not mean to be
offensive, and you do not have to be offensive. I am just asking your
Mr. Corbett: I have given it.
Senator Tkachuk: I have a right to do that.
Mr. Corbett: Absolutely, and I have right to be here as an elected
official of the Province of Nova Scotia.
Senator Tkachuk: That is exactly right. Thank you.
Senator Massicotte: Thank you to both of you for being with us
today. We are obviously deliberating and trying to grapple with this bill
and understanding its consequences. I will not get into the jurisdiction
argument. Nobody likes encroachment on anybody else. I will avoid that
issue. The essence of the issue we are dealing with is the accuracy of
information to union members in particular. In both your cases, the
provincial labour laws require an audited financial statement.
Mr. Corbett: Yes.
Senator Massicotte: Some people will argue that is not good enough
and not adequate because in most places it is only distributed to those who
ask. That is, you could argue, a difficult process where there could be a
sense of intimidation or a sense of resistance, and some people say not. The
other comment I hear frequently, and I am not sure how many audited
instruments you have read, but I have read thousands, is that they do not
say very much. They are very summary. They do not provide much detail. I am
quite sure that 99.9 per cent of union members, and probably senators, would
not have any idea what the audited statements are trying to tell you
That is the crux of your argument; is that adequate? Why is it adequate
when we know few people take a look at it and few people understand it? Why
is that adequate in the legislation of your provinces?
Mr. Corbett: It is not restricting anyone, senator, from looking
at it. For those who want to look at it and for those who want to delve
deeper, it is there. There are countless pieces of legislation on our books
and the federal books that affect the everyday lives of people, but does the
average Canadian delve into the nuts and bolts of that legislation? However,
when there is a direct effect on them, they can delve deeper into it.
I have attended meetings as a rank and file member and as an officer. I
asked questions on the balance sheet and the audited statements. I have had
to defend the spending practices of various unions.
It is like asking why people have disengaged from the voting process. It
is all a matter of desire to get involved and the lengths to which you want
to go. I do not think there is any badness going on to hide money or
anything. It is as simple as asking questions. Different unions hold their
meetings in different fashions, but by and large it is open to their
Mr. Parr: I am sorry, but this does get into jurisdiction. If
there is a need for additional disclosure to union members, it is up to the
provincial jurisdictions to deal with that. A number of us have already done
that. Those that have not need to do so.
This bill does not deal specifically with distribution of information to
members; it is public distribution. While a number of people would like to
know what is going on with the financial activities of unions, I am sure a
number of other people would like to know about the financial activities of
the Canadian Taxpayers Federation, the Canadian Federation of Independent
Business and chambers of commerce, and this bill does not deal with them. It
singles out unions, and there is already a regime to regulate unions, and
that is through labour relations legislation. We have that in place. When we
make changes to our labour relations legislation, we do it through
consultation; we do not just impose it. That is the difference.
This is a different legislative structure, as I said. Trade unions are
regulated under the Labour Relations Act. We have competent bodies, labour
relations boards, to enforce requirements.
Senator Massicotte: I am trying to avoid the jurisdictional
argument. If we get involved in that, we can allow the Supreme Court to
judge the issue. The essence of the issue is information. Under the Ontario
Securities Commission, and perhaps your own provincial securities
commissions, when an organization has a certain number of shareholders it is
deemed to be public and the amount of information they must provide is
significantly more than what unions have to provide. They have to produce
audited financial statements that have to be mailed to the shareholders, and
most often these corporations will publish that information on their
Why not go that far? Obviously, you have not felt the need. Why the
limited approach to the delegation of information to union members?
Mr. Parr: As I said, you cannot avoid the jurisdiction.
Mr. Corbett: I agree with the deputy minister. I will not address
jurisdiction. You spoke about security commissions. They have their role and
their rules, as do the labour relations boards of various provinces. That is
where it is to be found for labour, not with any of the financial
arrangements of a private investor and how a corporation acts.
The multiplicity of responsibilities of a union are far different than
they would be if I opened up Frank Corbett Gold and started opening gold
mines and mining investors. My purpose is very narrow in trying to extract
that ore from the ground and make money, and hopefully make money for my
The purposes of the Trade Union Act and labour relations boards are
multifaceted. They are about trying to get collective agreements signed in a
proper way. It is about how a union goes from signing cards to being
certified. There are many more checks and balances on unions than what are
scoped over here.
Senator Massicotte: I am not sure that there are more checks, but
to allow the checks to be prudent and well-judged, you must have
transparency of information. You must have adequate information, and that is
where the concern lies. I know that you can argue that is not the federal
jurisdiction. I would say, why do you not get it fixed if there is a
problem, but you obviously seem to think that adequate information is not an
Mr. Corbett: Yes, I agree with you.
Senator Bellemare: Actually, I have a question for both of you. It
is along the same lines as the previous questions and comments on
Legislation around the world is increasingly moving towards more
transparency from unions and employer associations. France has passed
legislation along those lines. Even in Quebec, in 2011, provisions to that
effect were added to the labour code for the construction industry.
In terms of deductions for union dues, the option union members have to
deduct them from their taxes, is that not an argument for transparency in
how union funds are used? The fact that union dues are tax deductible is the
argument used to support Bill C-377.
What is your reaction to that argument? I know that you disclose
information to your members. However, wider disclosure does not necessarily
mean disclosing all the information as set out in Bill C-377. But
philosophically speaking, if you will, is that not an argument for public
transparency? What are your thoughts on that?
Mr. Corbett: Senator Tkachuk and I have kind of kicked this one
As to public good, I do not understand why the government needs this
information today. What is the difference between a trade union in 1965 and
in 2013? As I said in my opening remarks, it smacks of McCarthyism. It seems
to be a philosophical issue.
I am fairly young, but I remember the Hal Banks stuff and some of those
issues. Are there bad people involved with the trade union movement? I
suspect there are bad people in every walk of life.
There are very good laws on how unions are governed and how they spend
their money. I would say that the democracy in most unions is better than
the democracy we use to elect people.
Senator Massicotte asked about participation. In every province members
have the right to make a complaint if they think their union is not doing
its best to represent them. Unions are already very heavily governed. With
respect, I do not think that serves anybody's knowledge of how a union is
governed or how a union should work. We always got along without it.
The Chair: Mr. Parr, did you wish to add anything?
Mr. Parr: The Manitoba government certainly supports transparency.
You are quite right that is the direction all governments are going. Your
point with respect to this bill is that it singles out one particular
sector. There are many existing income tax preferences that benefit
organizations involved in political activities or lobbying; and they are not
touched by this bill.
If the expectation is that we will see higher levels of transparency for
people and organizations that receive tax benefits, then it strikes me the
approach to take would be to take it on as an issue broadly rather than to
single out one particular sector. That would be the approach I would
With respect to how unions are regulated internally, I would say again
that belongs to the respective jurisdictions that have responsibility for
Senator Mercer: Thank you both, especially Minister Corbett; it is
always good to see a fellow Nova Scotian here.
I am afraid that sometimes a question is asked in McCarthy fashion: Are
you now or have you ever been a member of a trade union?
Mr. Corbett: Yes, and I am still a member.
Senator Mercer: My answer to that question is, yes, as well. It
really drives me crazy that we are focusing on trade unions whose people
have done very good work on behalf of Canadians. Even those who are not
members of unions have benefited greatly from the good work of members of
My next question is: Has either of you done an analysis of the costs that
will be borne by the unions in your respective provinces?
Mr. Corbett: The short answer is no. Contrary to the beliefs of
some, we do not sit at all the union tables. I sat in the audience when
other presenters were here, who would know much more than I about the impact
of the financial side of this bill on their organizations. It is hard for me
to answer that because I do not have direct information.
Mr. Parr: Similarly, I would have to say that we have not done an
analysis on the tax burden or the cost implications for unions affected by
Senator Mercer: If this bill were to pass, and I hope it does not,
I would be interested to see this on the agenda of the Canadian Association
of Administration and Labour Legislation the next time it meets. It would be
an interesting topic. I would like to be a fly on the wall for that one.
Senator Moore: Thank you, Minister Corbett and Mr. Parr, for being
here. Mr. Corbett, you are the Minister of Labour. Earlier, we heard from
Mr. Georgetti that of the more than four million Canadians covered by the
Canadian Labour Congress, they had only four complaints last year with
regard to seeking additional financial information from their unions. Have
you had any complaints in Nova Scotia, sir?
Mr. Corbett: I have been the Minister of Labour for about three
months, so I am not aware of any; but I will try to get an answer for you.
Senator Moore: I thought your being around the labour movement in
your province you might know what is going on; but that is fine. Mr. Parr,
do you have a comment from the perspective of Manitoba?
Mr. Parr: As we were preparing to come today, we had some
conversations with our colleagues at the Manitoba Labour Board. We have not
seen complaints coming forward for quite some time, I would think, with
respect to disclosure by unions to their members. It is not something that
comes up very much.
Senator Ringuette: I have an issue that I want to bring forward
when the panel is done; I am sorry.
Senator Massicotte: My question has been answered.
Senator Maltais: I will speak as a former union representative.
Say someone is not happy with their union or feels badly represented for
various reasons. If he decides to change unions, can he do so without any
Mr. Corbett: Yes. A group might want to move from one union to
another. They might not like union A because the collective does not feel
that it is being represented. It is not uncommon for groups to change
affiliation. It happens from time to time.
Senator Maltais: Let me give you a very specific example; if a
union has gone through a raiding period and the majority opts for a
particular union, it is certain that, when they are placed, they will get
priority over the remaining members who opted for a different union. Is that
the case with you?
Mr. Corbett: Where the union has members with options, those who
want to straight-out decertify and get rid of the union altogether can do
so. There is a time period in the legislation during which they can do that.
In the same time period, they could go to another union. Often they might
want to leave union A and go to union B or union C. Depending on various
labour relation boards across the country, they may have a run-off, if you
will, to decide on the union. The majority rules the day.
Senator Maltais: I am not familiar with Nova Scotia's labour
legislation, but I am sure you can enlighten me. Do unions place members
with companies when there are major projects under way, such as a bridge? Do
the unions assign the workers to the company that has the contract?
Mr. Corbett: You are asking about a group of employees trying to
unionize a non-unionized location. I am looking at my senators from Nova
Scotia here, who know what example I am going to use, I believe: Michelin
The Chair: I am going to ask you to wrap up.
Mr. Corbett: There are large investments because you have to
mobilize and send a lot of people in. Michelin has three or four operations
in Nova Scotia. It is an expensive process. Often they use many people to
come in and try to unionize those types of shops.
The Chair: I would ask Minister Corbett and Mr. Parr to bear with
me. I have a comment from Senator Ringuette that wants to be on the record
and changes the subject slightly.
Senator Ringuette: This pertains to what was said publicly
yesterday about an opinion from former Mr. Justice Bastarache. I asked for
the opinion of our witnesses, Mr. Bruce Ryder, who appeared before the
committee and is a constitutional professor at Osgoode Hall. He has sent it
to the committee, and I trust that it will be distributed to all members of
The Chair: It will be circulated to the members of the committee.
We will see that it is done. No one has read it.
Senator Ringuette: Thank you.
The Chair: Minister Corbett and Mr. Parr, on behalf of all members
of the committee, I would like to express our great appreciation for your
presence today. Thank you. This meeting is concluded.