Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs
Issue 12 - Evidence, October 18, 2006
OTTAWA, Wednesday, October 18, 2006
The Standing Senate Committee on Legal and Constitutional Affairs, to which
was referred Bill C-2, providing for conflict of interest rules, restrictions on
election financing and measures respecting administrative transparency,
oversight and accountability, met this day at 4:05 p.m. to give consideration to
Senator Donald H. Oliver (Chairman) in the chair.
The Chairman: Honourable senators, I would like to call this meeting
of the Standing Senate Committee on Legal and Constitutional Affairs to order.
This is our twenty-sixth meeting in relation to our study of Bill C-2,
providing for conflict of interest rules, restrictions on election financing and
measures respecting administrative transparency, oversight and accountability.
The bill is more commonly known as the federal accountability bill.
As senators, our witnesses and members of the public both here and across
Canada on television know, this bill reflects a central portion of the new
government's agenda. It is one of the most significant pieces of proposed
legislation brought before Parliament in recent years. The committee is giving
the bill the extensive, careful and detailed study that it deserves.
During more than 88 hours of meetings to date, we have heard from in excess
of 138 witnesses. These witnesses have discussed topics ranging from
accountability, ethics and conflict of interest, parliamentary privilege,
political financing, the parliamentary budget office, access to information,
privacy, whistle-blowing, audit powers, procurement and lobbying.
For this meeting, we will be focusing on the question of lobbying and
Today, I am pleased to welcome Ms. Elaine Flis, President of Public Affairs
Association of Canada. The association's principal objective is to help public
affairs professionals succeed in their work by providing them with forums for
professional development, the exchange of new ideas and networking. Ms. Flis is
presently a senior consultant with Enterprise Canada.
Joining her today is Mr. Jayson Myers, Senior Vice-President and Chief
Economist for the Canadian Manufacturers and Exporters. The CME, as it is
called, has a mandate that is to promote the competitiveness of Canadian
manufacturers and enable the success of Canadian goods and services exporters in
markets around the world. Welcome.
On behalf of the committee, I would like to thank you for your presence. You
can go ahead now, and after your presentation we will open the floor for a
questions and discussion period which will, no doubt, be quite useful to all the
Please proceed, Ms. Flis.
Elaine Flis, President, Public Affairs Association of Canada: Mr.
Chairman, honourable senators, as you may know, I also work in support of the
Liberal Party. However, I speak today only on behalf of the public affairs
PAAC is a non-partisan organization and I am here today in a non-partisan
capacity. PAAC speaks for a much wider spectrum of professionals than just those
who do government relations or lobbying. We represent people in pursuits as
diverse as public relations, corporate social responsibility, regulatory
compliance and other aspects of good corporate or organizational citizenship.
Yes, some of us are lobbyists. Lobbying is an important part of public
dialogue in a democracy. In this context, the proposed legislation imposing new
rules on lobbying could detrimentally affect the general public good, if it
proceeds without change. Aspects of the bill are counter to the interests of a
healthy dialogue between government and the governed.
We in public affairs, with a few rare exceptions, are ethical people. It
pains us when some politicians and commentators focus on the misbehaviour of a
very few lobbyists, much as I know it pains politicians when people focus on the
misbehaviour of a few of them.
Since this committee exists to look at these matters beyond shallow rhetoric,
I wish to put our position in context and offer constructive suggestions for
Public affairs professionals, including lobbyists, work for small enterprises
as well as large ones. They work for non- governmental organizations, charities
and advocacy groups. Our clients include groups that speak for ordinary
Democracy is about giving voice to the concerns of all citizens. Yet
government can be so complex as to frustrate attempts by many of these groups to
be heard. Professionals who help corporations, advocacy groups, not-for-profits
and NGOs speak to government are a necessary part of the mechanism of democracy.
We guide people through the complexities of public policy-making. We help
them make their case. We help government hear those important points of view.
It is clear this government intends to focus on our industry for further
regulation, and that is their right. They campaigned on it in the last federal
election. Yet we believe certain aspects of the proposed legislation have not
been fully considered and could act against accountability and ethics.
Certainly, there have been people in our industry who have drawn scorn
because of their relationships and how they conduct business. They were rooted
out and their tactics exposed. That sort of checks-and-balances system holds
many industries to account.
We in public affairs have taken our own steps to discourage unethical
practices, through the introduction of a code of behaviour in our Statement of
Ethical Principles. Our industry is as ethical as many — more so than most
because the focus on our activities is so intense — yet it faces particular
economic challenges through onerous regulations or overzealous application of
rules. We believe if the regulation contemplated by this proposed act comes into
effect, those most detrimentally affected will be NGOs, charities and smaller
The reason for this is that larger corporations are already used to rules and
red tape. Smaller interests are another matter. Onerous rules — and the costs
associated with them that larger interests can afford — may not be affordable to
the smaller players. If new rules are to come, they should deal with the
transgressors rather than simply add a new burden to all.
With that as context, we offer suggestions so that Bill C-2 can become a
framework to selectively punish the bad apples rather than become a straitjacket
for those who advocate for legitimate causes.
The bill should spell out rules that apply equally to corporations, NGOs,
charities and unions but that will not have the effect of curtailing lobbying on
behalf of the latter organizations, which are typically not so well funded as
big corporations. Requirements that big corporations can afford and small
organizations cannot unfairly punishes the smaller.
Grass roots advocacy is the communication between individuals and their
elected officials. Volunteer advocates for not-for-profit organizations, such as
those focused on medical research for specific diseases, could be driven away
from the socially useful work fearing that these regulations will make
lawbreakers of them.
Consider the additional filing requirements for people lobbying government.
Every month they would have to file the names of senior public officials with
whom they met, the date of the communication or meeting and many other
particulars. It is a considerable additional burden.
The proposed act should close loopholes that allow lawyers to exempt their
activities under the guise of solicitor- client privilege. Such privilege is too
important to allow it to be used as a cloak for lobbying activity involving
lawyers and government officials. Certain activities are legal and should be
protected by solicitor-client privilege, but experience with lobbyist
registration across Canada is that many lawyers hide behind their privilege to
engage in lobbying without regulation. This is something that should be
We have concerns about the bill's prohibition of contingency fees.
Contingency fees are considered a valid approach in almost all other areas of
our economy, where they are called "pay for performance." We agree that
contingency fees should not be permitted on certain projects where public money
may flow, such as technology partnership grants. Elsewhere, it amounts to pay
for performance and that ought not to be discouraged.
Some have suggested a further tightening of contingency or success fees to
include in-house lobbyists. Not only would this degrade the incentive to
perform, but we believe it would be an inappropriate intrusion into the contract
between employer and employee. Whether such a provision would be enforceable or
even legal is a question that may yet arise. What we ask the committee to
consider is whether it is right. We believe, rather than impose a blanket
prohibition on performance-based fees, that it makes better sense to impose
rules on specific activities, such as grant applications, so that the spending
of public money is not directly tied to a contingency fee. This is the currently
the case and we believe it to be effective.
Where properly focused, the proposed legislation should be tough. We think
that contravention of the Lobbyists Code of Conduct should be an offence as
should obstructing the commissioner of lobbying. It should be an offence to
contravene a prohibition imposed by the commissioner. Ethical lobbyists can live
with such rules.
The Public Affairs Association of Canada supports the spirit of the proposed
accountability act. We understand it addresses the same spirit of ethics and
accountability that we have long supported in our industry and written into our
own ethical code. We would like to see it fine-tuned so as to hit the right
targets, and not cause collateral damage.
We appreciate that a very few lobbyists have done unethical things, but the
majority of ethical lobbyists help citizens and interest groups make their case
in a democratic fashion. Let us not pinch off such necessary government
relations in our haste to get at the bad actors in the business.
Jayson Myers, Senior Vice-President and Chief Economist, Canadian
Manufacturers and Exporters: Thank you for the opportunity to present our
perspectives and some of our concerns on behalf of Canadian manufacturers with
respect to the proposed federal accountability act.
I am registered as an in-house lobbyist under the Lobbyists Registration Act.
My job is to provide the best advice I possibly can to policy-makers at all
levels of the federal government as well as to provincial governments across
Canada, based on the views of our member companies, as well as in my considered
judgment and my expertise in the fields of business and industrial economics,
technological change and international business. I view my role as an important
one in the development of good public policy in Canada.
My effectiveness in carrying out my responsibilities depends on my integrity
and that of the association for which I work. My colleagues and I are committed
to meeting the highest ethical standards. Like any well-managed organization,
CME has clearly defined rules and procedures in place regarding professional
conduct and potential conflicts of interest. CME is in full compliance with the
current compliance under the Lobbyists Registration Act. We have procedures in
place to ensure that accurate information is provided and updated on a regular
basis. We meet annually with officials of the Office of the Registrar of
Lobbyists to review our compliance procedures.
Today, I speak on behalf of CME as a lobbying organization as well as on
behalf of our members. Canadian Manufacturers and Exporters is Canada's largest
trade and industry association. It is Canada's oldest trade association. Our
3,000 members come from across all sectors of manufacturing services. Close to
90 per cent of our members are small and mid-size enterprises. We estimate that
they account for about 70 per cent of Canada's total manufacturing output and
about 90 per cent of our total exports. In turn, these are sectors that
contribute 24 per cent directly to Canada's economy and employ over 2.4 million
CME and our member companies strongly endorse the objectives of the proposed
federal accountability act, namely: to minimize possible conflicts of interests
between public duties and private interests of public office holders; encourage
competent persons to seek and accept public office; facilitate interchange
between private and public sectors; enhance transparency with respect to
activities of paid lobbyists; and, strengthen compliance with and enforcement of
the Lobbyists Registration Act.
We would, however, recommend that three further objectives be added and
respected in Bill C-2 and should be taken into consideration of the drafting of
regulations pursuant to this proposed act.
First is the need to ensure that the views of Canadians and the collective
interests of organizations are well represented to senior public officials. This
is a critical requirement, as Ms. Flis has explained, of any well-functioning
democracy and is especially important in a pluralistic democracy such as
Second is the need to ensure that disclosure requirements under the proposed
act respect both the legislative privacy rights of Canadians and the protection
of commercially sensitive and confidential information. CME is on record in
expressing the importance of exempting the disclosure by public officials of
commercially sensitive information. We believe that the current provisions of
the proposed act, now before this house, provide adequate safeguards in this
respect. For instance, the right of Crown corporations, like Canada Post and
Export Development Canada, to refuse the disclosure of trade secrets or
financial, commercial or technical information that has consistently been
treated as confidential by those organizations is important for their clients
and for the competitiveness of the services they provide.
Third is the need to ensure that the regulatory requirements of the bill make
it simple and inexpensive for both public office-holders and lobbyists to
understand and comply. Regulations must be clear, must provide certainty with
respect to their interpretation, and they must ensure the speedy resolution of
interpretive disagreements and requirements.
Our concerns are primarily with respect to the nature of the regulations that
will be developed in accordance with the proposed act. First is the definition
of senior public office-holder. It is easy to identify ministers and deputies by
their title, but it is not so simple to identify senior public office holders in
government departments and agencies who do not carry those titles but who have
equivalent status. It is difficult for anyone outside of the country to keep
current with the position or status of civil servants. Sufficient clarity must
be provided by government that will enable the easy identification of persons
deemed to be senior public office-holders under the proposed act and amendments
to the Lobbyists Registration Act.
Second is the frequency and level of detail that will be required with
respect to communications between lobbyists and senior public office-holders.
The amendments to the Lobbyists Registration Act do create a significant
administrative burden on the part of both lobbyists and senior public
office-holders. We are concerned that detailed information requirements, as to
the nature and subject of communications, will create an overly onerous,
complicated and costly process for both the regulated parties as well as for
those officials overseeing compliance. In that case, many businesses are likely
to opt for third parties to represent their specific interests to public
officials, and that response would only serve to reduce transparency while
giving more business to consultant lobbyists around town.
Outside organizations will be more reluctant to express their views to senior
public office-holders. We are particularly concerned that detailed disclosure
requirements could result in the publication of commercially sensitive
information. We are also concerned that detailed disclosure requirements could
chill communication and consultation between senior public office-holders and
outside organizations. Such ongoing communication is vital to the development of
sound public policies and programs.
Third is the definition of prearranged meetings and calls. At what point does
casual conversation become lobbying activity?
Fourth is the need for greater clarity with respect to the obligations of
participants in private-public interchanges or of private-sector individuals
asked to become members of boards or advisory groups or who have direct advisory
role to senior public officials. All participants have a strong interest in
ensuring that public interest is protected by ensuring that any conflicts of
interest are avoided. From the perspective of business, it is important that
such participation meets the highest possible ethical standards.
With respect to private-public interchange, it is necessary for participants
to have a clear understanding of what limitations Bill C-2 might place on the
activities of individuals who take part and of their employers both while the
exchange takes place and after employees return to their original places of
work. For example, would the fact of a government employee working on an
exchange with a private-sector company prevent that company from doing business
with or receiving any services from the department where the official was
previously employed when that company would otherwise have been eligible to do
so? Similarly, would a private-sector employee who works on exchange with a
government department or that employee's company be limited to their ability to
deal with a department or other agencies once the assignment has ended? It would
be important to ensure that companies and individuals taking part in any
exchange program neither gain undue advantages nor suffer any penalties as a
Clearly, there is a need for extensive consultations in drafting the
regulations that will support the proposed legislation. Respect for the
democratic rights of Canadians and the development of good public policy both
demand that a balance be struck between measures that enhance transparency and
accountability on the one hand and provisions that safeguard private and
commercially sensitive information and that allow for the effect of consultation
and representation of private-sector interests on the other hand.
We believe the federal accountability bill provides a basis for significant
improvement in the quality of the government's regulating function.
Accountability is the key to better regulation ensuring that public officials
perform their duties while taking into account the regulatory policy and
applying it rigorously to every case. The federal accountability bill makes
deputy heads accountable in their own right to all parliamentary committees for
ensuring compliance with government policies, including the government's
Canadian Manufacturers and Exporters recommends that the regulatory policy be
issued as a Treasury Board directive. This would mean that the bill would also
require deputy heads to register in writing any disagreement with ministers over
the application of the regulatory policy with the Secretary of the Treasury
Board. It would require consideration and decision by Treasury Board on the
issue and a record of that decision would be deposited with the Auditor General.
We believe that such a measure, coupled with the provisions of the federal
accountability bill, would promote greater compliance by regulating departments
and agencies with government regulating policy and would create more efficient
and effectively enforced regulations for all Canadians.
The Chairman: Ms. Flis, you said that you have concerns about the
federal accountability bill's prohibition against contingency fees. You also
talked about pay for performance and success fees, et cetera. Years ago, when
Senator Cowan and I began practising law in Nova Scotia, it was not considered
proper or professional for lawyers to charge a contingency fee, so the law
society did not permit it initially. That prohibition was in place because it
was not considered professional for a professional to be charging a fee and then
adding a big bonus to it depending on one's success. I have been thinking about
that old prohibition, so I cannot help but wonder: If lobbyists can be paid $500
to $1,000 per hour for doing their job, why should they require a balloon
contingency fee, dependent upon their success? Why not leave it to the clients
to determine that figure, based on their opinion of the lobbyists' performance?
Why should contingency fees not be prohibited?
Ms. Flis: It goes to the question of choice. For example, in the case
of an in-house consultant, that decision should be made internally by the
employer and the employee internally. That is a performance-based system. Sales
representatives receive commission based on their performance. Any such bonuses
or fees for an in-house consultant should be determined by the employer and
To your point regarding consultants and their clients, we do not think there
should be a restriction. Again, it is a question of choice for the clients to
decide whether they want to provide a bonus or incentive. That should be their
The Chairman: Certainly, I agree with that. Do you consider such fees
Ms. Flis: Yes, performance-based systems are professional.
Senator Day: The first area I wish to explore is the five-year
cooling-off period. Can you comment on whether it is necessary to increase the
cooling-off period to five years to achieve the separation? With that five-year
wait, are we likely to lose some good talent in government because we have
dissuaded individuals from working in government and in ministers' offices?
Ms. Flis: The five-year cooling-off period would be excellent for the
industry as it stands. However, it is a bit extensive. As you know, government
is highly complex and can be a maze for some people to navigate. A specific
understanding is required to enable an individual to counsel someone on the
navigation process through government, for example how to meet with a member of
Parliament or how to develop a strategy and approach for policy. A five- year
cooling-off period could dissuade individuals from leaving an in-house or
outside consulting position and moving into government, where they have a
We are seeing that a bit now with the current government in the sense that
there was discussion early on that it was difficult for them to find qualified
senior staff that could understand government and manage a bureaucracy.
Increasing the cooling-off period to five years would be a disincentive to
bringing good people into government.
Senator Day: Would you be content to leave it as is or should it be
Ms. Flis: We believe it should be status quo.
Mr. Myers: We would be happy with the status quo. The safeguards
around conflict of interest would limit the activities of people who have been
in government and then move into consulting positions where they work with
people with whom they had previous dealings in government and deal with specific
issues that speak to their expertise in government.
There are two issues, and Ms. Flis has spoken to both. First, some people in
our organization have made a decision to not pursue a career in government
because of concerns around potential limitations on future employment. This is
not necessarily because of Bill C-2 but some of the provisions in it would make
that a bit more onerous. I am sure it would mean a loss of talent and expertise
that is important in government. This interchange between the private sector,
elected officials and senior officials of the public service is extremely
important for good policy development in Canada. There would be that loss in
government as well as a loss in the ability of these people to come into
associations like ours and to be able to help us develop good public policy.
Senator Milne: Ms. Flis and Mr. Myers, you have spoken about the
cross-fertilization of ideas between the public and private sector. This
five-year cooling-off period gives me great concern.
I had a cousin who worked with Bell Canada, setting up its original microwave
system. I am not giving away trade secrets, because this was in the 1950s. He
went from Bell Canada. He was on loan to the Department of National Defence to
help the Canadian military set up the same kind of relay system. Would that be
allowed under this proposed legislation?
Mr. Myers: I am not sure, and these are some of the issues that must
be spelled out in the regulations. That is why better direction should be
provided that recognizes some of these issues and provides a better balance.
Senator Milne: The government would be able to borrow expertise from
the private sector over a certain project that needed to be done in the national
interest and then that person could immediately go back to the private sector
and not be stuck for five years before returning to work.
Mr. Myers: It also depends on the level of position that they hold in
the government and the types of decisions that they have been asked to make
Ms. Flis: It also speaks to what Mr. Myers had mentioned in terms of
the definition around a senior public office- holder. There are some areas that
do require clarification. It is not necessarily a specific position within an
office and not always is it in a political office, let us say a chief of staff
or a senior policy adviser. There needs to be clarity around that issue.
Mr. Myers: I would like to add one more point, not specifically on the
issue of the five-year cooling-off period but on the issue of some of the
disclosure requirements that are required on the part of senior public servants
or people who have been appointed by ministers or by the Prime Minister to serve
on advisory boards. There are a number of Canadians who are appointed every year
to serve in advisory positions, and one of the questions that we have is about
the provisions of this act and the disclosure requirements, the need to provide
monthly information about the on-going communications. That would certainly make
it very difficult for many Canadians, not only in business but also from other
non-governmental organizations to play that key role in a senior advisory role
Senator Day: I heard Mr. Myers' point with respect to the definition
of "senior public office-holder" and Ms. Flis made mention of that as well. Is
there anything that you can help us out with here? I agree with you that it is a
cumbersome definition when it talks about section 128 of the Public Service
Employment Act for part of the definition of a senior public office-holder. That
is at page 66 of Bill C-2. It then goes on to section 2 of the Financial
Administration Act. You are running all over the place. Finally, if someone is
missed, there is a possibility of regulations under section 12(c.I). It
would be almost impossible for someone to determine whether he or she might
possibly fall within that definition.
Do you have any proposals as to how we can tighten that up?
Mr. Myers: This would be a matter for regulation, and my only proposal
is that the government keep a registry of who is considered a senior public
office-holder and that identification is made prior to communication.
My concern, though, is that people outside of government may be trying to
communicate with people in government, not knowing that they are senior public
office-holders and not, therefore, registering the communication and then be in
non-compliance with the act. It is a problem, but the only way that we can
manage this is for the government itself and for senior public office-holders
themselves to identify their status. No one will read the act and no one will be
able to identify who holds a senior position, given all of the gradations of the
Ms. Flis: I suggest that there needs to be consistency in the
definition, and it needs to be clear whether it is a position within a
minister's office or whether it is all staff, it needs to be consistent.
Senator Day: Our job here is to try to improve the legislation where
we can. This is in the act as it now appears in a very broad sense, leaving, as
I said, a great deal to regulation, but also including references to two other
acts. I agree with you it should be clear, but we are not sure how it should be
On your way back home, if you have any thoughts about the definition, it
certainly would be helpful if you could send those along to the clerk.
Mr. Myers: If it is not clear to you and to senior people in
government, then it will be very difficult for anyone outside of government to
Senator Day: Mr. Myers, are there any companies in your organization
that use contingency fees? At the present time a contingency fee is permissible,
but as I understand it, if there is a provision for a contingency fee in the
contract, it must be stipulated so that the current registrar of lobbyists would
know about that. That is open, transparent and everyone could find out that this
lobbyist is working for this organization to try to get them something through
the government, but it is all above-board. Now it is being banned outright and
it is going in the opposite direction to my friend Senator Oliver's point about
lawyers. Lawyers were never allowed contingency fees, but now they do in most
jurisdictions, as long as it is open and transparent.
Is it now a widespread practice and will it therefore be a major impact, Mr.
Myers, in relation to your members?
Mr. Myers: In our organization, our rules of conduct do not allow
contingency fees. None of our members pay contingency fees for what we do on
their behalf. That speaks to one of the points that Ms. Flis has made about the
difference, perhaps, between organizations that lobby on behalf of the members,
like associations, like other interest groups and what are considered "in-house
lobbyists" and other consultants who may be paid contingency fees for the
performance that they achieve.
Ms. Flis: I cannot speak, unfortunately, for specific companies that
belong to the association. I would not suggest that it is widespread and that it
is common practice, although within some of our members and private companies it
is an employee-employer decision, not so much a consultancy, like the outside
consultants. It is all about openness and transparency, which, I believe, is the
point that you make. If it is open and transparent and it is private funds, then
we feel that that should be allowed.
Senator Day: What was the problem that is trying to be addressed by
this and what impact will it have? You have answered the first part of that
question and you are unaware of any problems. You would have told me about
Ms. Flis: I am not aware of any.
Mr. Myers: In project development, the procurement process and
contracting options, many companies have contingency fees built in as part of
their performance compensation. Again, it should be open and transparent. Many
businesses work that way.
Senator Day: You point out that the difficulty with the contract
lobbyists who cannot have contingency fees whereas an in-house lobbyist who
meets with success will receive recognition for the work. In effect, that person
is receiving a contingency fee.
Mr. Myers: For in-house lobbyists it is likely not a contingency fee,
which is more for the consultant lobbyists. Whether it is a contingency fee or a
bonus for achieving success might simply be a matter of semantics.
Senator Day: One is addressed and one is not addressed
Mr. Myers: Right.
Ms. Flis: The key differentiator is public funds versus private funds.
Senator Day: Does it surprise you that there is no definition of
"lobbyist" in the Lobbyists Registration Act?
Mr. Myers: Yes, it surprises me. You can call me a lobbyist and I am
proud of my work because I play an important role in the development of good
public policy in Canada. There are specific activities in which people represent
organizations, especially if they are looking for contracts or special
advantages for their clients. If we are to provide a specific definition of the
kinds of activities under the umbrella of lobbying, we should look at that
Ms. Flis: As someone whose background is primarily in the
not-for-profit sector dealing with volunteers and grass- roots advocates, I deem
that a key point. I read the proposed accountability legislation as someone who
used to be a lobbyist for the Juvenile Diabetes Association when my volunteers
across the country met with members of parliament or senators. Would they be
Senator Day: Could each of the witnesses prepare and send to the
committee a definition of "lobbyist"? Lobbyist is referred to in the current
act in the preamble but not in text of the document, which I find quite strange.
Senator Stratton: A volunteer for not-for-profit organizations is not
considered a lobbyist because the work is voluntary. A person who is paid for
such work is considered a lobbyist. I am curious to know how you would define
The Chairman: The witnesses will send that by mail, senator.
Senator Cowan: Following up on the same point, it is my understanding
that unless you are paid to do something, you are not a lobbyist. If you are
volunteering your time for an organization or a cause, you are not required to
report and, therefore, you are not covered by this definition.
Ms. Flis: Certainly, we will provide something substantive to the
committee; however, some volunteers receive an honorarium or a per diem. The
definition needs clarification.
Senator Cowan: Senator Stratton is correct in saying that when someone
works purely on a volunteer basis, there is no requirement to report.
Ms. Flis: It is not defined so it is not clear.
Senator Cowan: If you have concerns about that, we would like to hear
about it, because I do not believe the intent is to cover such a situation.
The other part on the contingency fee is in respect of the small
organization. Senator Oliver talked about people paying a lobbyist $500 per
hour. He was talking about large corporations and organizations that have a
budget for that kind of expenditure. It seems to me that many people will
require the services of lobbyists in the best sense but do not have the money to
pay or to promise to pay those rates up front. It is arguably legitimate that
they would pay based upon success. As long as that is disclosed, then what is
Maybe you have to carve out an exception for receipt of grants but it seems
entirely reasonable to allow a kind of contingency arrangement, in particular
for smaller organizations that simply do not have the money to agree to pay
large sums of money up front without some assurance that they will receive
something in return for their expenditure.
Mr. Myers: I would agree with adequate transparency.
Senator Cowan: Perhaps we would be better served by insisting on
readily accessible disclosure rather than on prohibitions, which often go too
far and cover too much and create all kinds of unforeseen circumstances.
Disclosure will get to most of the problems.
Ms. Flis: I would be surprised if you would find someone in the
profession of government relations or public affairs that would be against
Mr. Myers: One of my concerns is that we are paid fees by our members
to undertake a specific public policy initiative for their benefit. For example,
an analysis that I am preparing is on how to speed up drug approvals. This is in
the interest of a number of pharmaceutical companies but also in the interest of
good public policy in Canada. I am paid a fee for undertaking that project and
the fee is not considered a contingency fee, but the fee will be significantly
higher if we are able to achieve an outcome at the end of the day.
I am a little concerned about the definition of "contingency fee." Would
that in any way restrict the kind of membership fees that an association like
CME would charge our members for actually achieving good public policy outcomes?
Senator Cowan: I agree and I do not see what harm is done to the
public good by permitting exactly that kind of arrangement. Certainly, the
performance of in-house lobbyists will be reviewed on an annual basis. If they
have done a good job at professional lobbying, they can legitimately expect a
bonus. Whether it is called a bonus or a contingency fee, I do not see anything
wrong with it.
Senator Baker: My one question will go back to the original question
asked by Senator Oliver at the beginning of the meeting and the careful manner
in which he put it. It has been shown that it is perhaps a key question.
You said that you have concerns about the prohibition of contingency fees.
The chair then asked you an interesting question because in recent years,
federal legislation has changed substantively. For example, the phrase "shall
not be assigned" has entered various acts. I will give you an example. As
Senator Cowan and Senator Day have pointed out, it is common practice to have
contingency fees or success fees or agreements. If lawyers represent a client
who cannot afford to pay up front, as the example used, and success is attained
at the end of the day, then there can be a contingency fee of between 15 per
cent and 25 per cent or, in some particularly complicated injury cases, it could
be higher. However, what has crept in are the words "cannot be assigned," and
they have crept into acts, for example, like the Canada Pension Act, under which
there are ongoing appeals; I give you the example of the Canada pension
disability. Therefore, it is against the law now for the federal bureaucracy to
recognize that a lawyer has signed a contingency agreement with a claimant who
has been battling for years, and it has gone through the Court of Appeal. In the
act it says, "cannot be assigned," and the courts have interpreted that to
mean "no contingency fee."
The chair asked you this key question: What is wrong with it, if, at the end
of the day, you are successful and then the person can afford to pay you what
would have been in the contingency agreement or a deal that you have made
Granted, the lawyer would have to trust the person he or she is representing.
In order to get paid, you would have to have that trust, and I imagine many
lawyers today refuse to take cases because of this change in the law, namely,
"cannot be assigned." I am using Canada pension as an example.
What do you think of the chair's question that you can have a law that says
"cannot be assigned," meaning "no contingency arrangements," but that you
could have a private deal with your client that was outside of the realm of that
definition in the act?
Ms. Flis: First, it needs to be open and transparent and fully
disclosed; second, we differentiate between private and public funds.
Senator Baker: Give us your definition. Could you explain "private
and public funds"?
Ms. Flis: "Public" means government money.
Senator Baker: You would be lobbying for government money.
Ms. Flis: We would be lobbying for a government grant. I am just using
it as an example. If I am working for a corporation with a specific measurable
objective that I achieve, there is a performance bonus associated with that.
Senator Baker: Do you mean that you obtained the government money?
Ms. Flis: No. That is not government funds. I am talking specifically
taking from government. That is an internal.
Senator Baker: If you were lobbying on behalf of a client for certain
government contracts or attention or licence or whatever, is that private money?
Ms. Flis: If it is government money, it is government money. It is
Senator Baker: Do you agree that for any dealings with the government
there should not be a contingency agreement?
Ms. Flis: I would agree in the case of public funds, for a grant.
What I am referring to specifically is a performance-based system. If you
have an arrangement with a client or you have an arrangement with your boss to
achieve a certain goal and objective, you have a base salary and, let us say,
you get a 10 per cent bonus if you achieve this goal. That should be permitted.
Senator Baker: What you object to in this act is that the prohibition
of contingency fees, according to you, only applies if it does not involve
something that you are getting from the government.
Ms. Flis: Government funds.
Mr. Myers: The good management of the administration of government
funding programs might deal with that issue. It is clear that in those programs,
the payment for contingency fees is not allowed. This is what a number of
programs already do. It is just a matter of good government program
administration and good review of government programs. I am a little worried
that we are trying to solve a specific problem by legislation and getting too
complicated and too complex.
Senator Joyal: Mr. Myers, I would like to quote your brief because you
have raised an important issue. I quote the top of page 3:
We are concerned that detailed information requirements as to the nature
and subject of communications would create an overly onerous, complicated and
costly process for the regulated parties as well as for those officials
overseeing compliance. In that case, many businesses are likely to opt for
third parties to represent their specific interest to public officials, a
response that may reduce transparency but create a thriving business for
Further, on page 3 you say, "The definition of "pre-arranged meetings and
calls". At what point does casual conversation become lobbying activity?
My perception is the more you try to constrain the natural flow of exchange
by all kinds of reporting mechanisms or an obligation to report, you create a
reaction, and that reaction is to go underground.
You have probably drawn our attention to that because you speak from
experience. What experience led you to conclude that we are doing here might
have unintended consequences of not creating more transparency but pushing
relationships between the private sector and government officer into an area
whereby there would be less clarity?
Mr. Myers: That is a concern. Most of our members are small companies,
and they do not want to be involved with a great administration burden in terms
of monthly disclosure, even though they may be dealing quite frequently with
senior public officers.
My concern is that if you make it onerous in terms of the time or the
resources or the information that must be disclosed, or make it costly or
complicated, companies will go to other parties and have them lobby on their
behalf. That weakens not only their input, involvement and engagement in good
public policy-making, but also probably takes many of these discussions out of
the public realm and into the realm of private-sector lobbyists.
This act will be effective if people comply with provisions and the
objectives of the act will be achieved if it is easy to comply with. If this
third objective were recognized in the act, there would be a balance. Based on
this act as it sits right now, if you give regulators the power to regulate the
act, it will be difficult to know how much information and communication must be
reported. It is important to provide that balance so that the regulating process
does not become so cumbersome that you lose the public-sector dialogue that is
so important and that you find that companies will say, "We are not going to be
engaged directly with government officials. We will go to consultants and take
that out of the public-sector debate."
Senator Joyal: In other words, would it serve the private consulting
firms if the regulation were heavy, complicated and demanding for any
businessperson who does not have time to file all those reports?
Mr. Myers: The people who know their way around the regulations will
make a lot of money.
The Chairman: Mr. Myers and Ms. Flis, on behalf of the committee I
thank you very much for coming forward and responding to senators' questions.
Senator Baker: I forgot to mention during my address what a great job
Ms. Flis has done over the years for the not- for-profit sector in this country.
She has performed admirably.
The Chairman: Honourable senators, we are now returning to the issue
of political financing. We have before us Errol P. Mendes, professor at the
Faculty of Law, the University of Ottawa. Professor Mendes is a frequent speaker
and media commentator on international business ethics, constitutional and human
rights topics across Canada and the world. He has been invited to present
numerous briefs to the Parliament of Canada and has acted as an advisor to the
Government of Canada in these areas. Welcome, Mr. Mendes.
On behalf of the committee, I would like to thank you for your presence. I
give you the floor without further ado, and after your presentation we will open
the floor for a questions and discussion period which will, no doubt, be quite
useful to all the committee members.
Mr. Mendes, after you present your brief the first questioner will be Senator
Zimmer, who has expertise in this area. I note from your paper that you have
read the extensive testimony we have received from more than 20 witnesses on
this area of election financing. We would like you to emphasize the areas that
are new and have not been mentioned by the other 20 witnesses on this subject
when you make your presentation.
Errol P. Mendes, Professor, Faculty of Law, University of Ottawa, as an
individual: Thank you very much for your invitation to appear before this
I regret to say that I will make my comments in English only because it is
easier for me to express my thoughts using that language rather than French.
Senator Nolin: That is a pretty good level in the other official
Mr. Mendes: Permit me to begin by positing that in a parliamentary
democracy it is of the utmost importance that ethics and the accountability in
the institutions of government and the public service be treated by those who
seek to impose legal structures on these issues as an opportunity for improving
the citizens' trust and confidence in government. It should not be used as a
sword to draw blood in the ring of partisan politics. In the end, it is partisan
politics and all parties that lose the confidence and trust of the people. For
example, if one side debases the other party as the party of corruption in order
to be seen as the champion of ethics and accountability. This course of action
will result in all politics and all politicians falling into disrepute.
It is also important that legal frameworks in ethics and accountability be
examined for counter-productive, unintended consequences and weakly-tested
assumptions that can wreak havoc on the body politic in the end.
It is in this spirit that I come before you, in the final stages of your
deliberations, to point out in one key area of the bill, namely political
financing, that unintended consequences may result due to some weakly-tested
assumptions in critical parts of Bill C-2.
I want to begin with the weakly-tested assumption that because large
corporations and unions can improperly influence parties in elections with their
substantial contributions all businesses, unions and associations should be
banned from contributing. Bill C-2 totally bans these entities.
The total prohibition of corporate contributions assumes that all
corporations are big and endowed with sufficient resources to be able to
manipulate the electoral and political systems in our democracy. In fact, the
majority of corporations in this country are medium, small and very small
corporations. Industry Canada gives the following statistics on the extent of
small businesses in Canada, and I quote from the Industry Canada website:
Small businesses, establishments with fewer than 100 employees, are an
important force in Canada, accounting for nearly 98 per cent of all
enterprises. The majority, 80 per cent of Canada's small firms, have fewer
than five employees and are labelled micro-enterprises. Nearly 99.8 per cent
of the 2.2 million businesses in Canada are small and medium-size enterprises,
having fewer than 500 employees.
Thousands of corporations consist of one person or a few individuals carrying
on their livelihoods as they would if they were unincorporated but have chosen
the corporate form for legitimate tax reasons. According to the CIBC report,
almost 60 per cent of all small business owners in Canada see themselves as
"lifestylers" who use their businesses as a means of earning income while
balancing other commitments or lifestyle choices. Why should thousands of
Canadians be denied the right to contribute the $1,000 limit out of the earnings
vehicle that is best suited to contribute for them to the political process?
They can contribute personally outside the corporate structure, but why are we
denying them the ability to contribute from the vehicle best suited to their tax
and lifestyle situation? This denial may well result in a reluctance to
contribute as an individual.
There is a vital freedom of expression and association right guaranteed under
the Canadian Charter of Rights and Freedoms at stake, which previous witnesses
have not addressed. The Supreme Court of Canada has stated in several cases that
political contributions are a form of protected expression and can only be
subject to reasonable limits demonstrably justified in a free and democratic
society, which is section 1 of the Charter. Justice Beverly McLachlin emphasized
that total prohibitions should not be contemplated even where the protected
expression is commercial expression. I do not have time to read out the whole of
her majority decision in RJR-MacDonald Inc. but I will cite the relevant
...A full prohibition will only be constitutionally acceptable under the
minimal impairment stage of the analysis where the government can show that
only a full prohibition will enable it to achieve its objective. Where, as
here, no evidence is adduced to show that a partial ban would be less
effective than a total ban, the justification required by section 1 to save
the violation of free speech is not established.
Given that the Supreme Court is willing to strike down total prohibitions
against advertising and promotion of harmful, and some would add deadly, tobacco
products, would one expect there to be even more concern about the total
prohibitions on one of the most vital forms of political expression; the right
to contribute to the political process?
This was confirmed in another Supreme Court of Canada decision, the Libman
v. Quebec decision, which held that the total prohibition on third party
expenditures in the Quebec Referendum Act outside the yes and no committees was
a violation of the Charter's freedom of expression. The court held that the
total prohibition on third party expenditures was a more drastic infringement on
freedom of expression than was necessary to achieve the objective of the
government. They suggested a financial ceiling of $1,000, which would be less
intrusive and which the Quebec government subsequently accepted and adopted.
Would not the Supreme Court, in a constitutional challenge to Bill C-2,
suggest a similar, rational and proportionate limit for corporations and perhaps
trade unions to contribute to the political process in Canada?
If the underpinnings of our Canadian, and indeed other parliamentary free and
democratic societies are to permit freedom of association to pursue collective
goals, which is the foundation of the trade union movement, and economic
liberty, which is the foundation of corporate enterprise, is it not passing
strange that these actors are totally prohibited from participating in the
political process? Indeed, the focus on rational and proportional limitations on
political financing is to be found in all the major Supreme Court of Canada
decisions on election financing.
It should be noted that Parliament in 2002 reacted to a decision of the
Alberta Court of Appeal, which I describe on page 4, by amending the Canada
Elections Act to raise the $1,000, third party election expenditure limit to a
substantial total of $150,000, of which no more than $3,000 could be spent in an
A future prime minister took these new limits to the Supreme Court again,
arguing that they constituted a violation of the Charter's right of freedom of
expression. In Harper v. Canada, he lost, albeit in a majority decision
of six judges who concluded that the limits were proportional and allowed third
parties to use modest means of advertising to inform the electorate of their
message in a manner which would not overwhelm Canada's political parties or
other third parties.
You have heard from other witnesses that even though Manitoba and Quebec have
legislated total prohibitions on corporate donations, they may have some growing
concerns as to whether that was the right choice in the first place. You have
heard from Mr. Pierre F. Côté, who was Quebec's chief electoral officer for 20
years, that he and others in Quebec are beginning to question whether the total
prohibition on corporate contributions was a good idea. In fact, he also
mentioned to you that he convinced Justice Jean Moisan of the same position, who
made similar recommendations to go back against the total prohibition to the
Quebec government in June of this year.
The Supreme Court of Canada decisions raise the need to examine the very low
threshold of permitted contributions by individuals to political parties. If the
Supreme Court has concluded that $150,000 by third parties is an appropriate
limit, are the individual limits too low?
Turning to page 6, is there a sound rationale for allowing one or more
individuals who organize themselves to constitute a third party to have more
influence in an election campaign through the $150,000 limit than another
individual who wants to contribute as a concerned citizen to the electoral
process through the present contribution limits of approximately $5,000, but
which would be limited to $1,000 or $2,000 if you take the totality of the
provisions after the enactment of Bill C-2?
While several witnesses before this committee testified that the average
contributions by individuals are under $1,000 in this country, it should be kept
in mind that these limits do not seem to take into account the possibility that
Canada may be moving toward more frequent elections due to unstable minority
governments. A $1,000 limit today may be totally inadequate in a few years'
The Chairman: Professor Mendes, is it your intention to read the
Mr. Mendes: I am about two minutes away from finishing.
The Chairman: Okay.
Mr. Mendes: This committee should look at the unintended consequences
of too frequent elections. It is important to look at other jurisdictions that
we can legitimately compare ourselves with and who place a high value on the
integrity of the political process. Australia, New Zealand and the U.K. have no
limits. I am not suggesting that we have no limits; however, defined and
proportionate limits should take into account the reality of running election
I will not read out to you what other European democracies have done in terms
of limits that are far above the $1,000 limit. Others have appeared before you
and given you the statistics. Indeed, the Province of Alberta — the home of the
Prime Minister and other senior ministers — also has higher limits.
Before we settle on a very low limit of $1,000, we must ask ourselves, should
the federal Canadian electoral framework be so different from these other
countries and our own provinces? What is the danger we are trying to avoid
before we open ourselves up to the dangers of unintended consequences and much
more frequent elections? Some would argue that given the frequent elections,
even the present $5,000 limit may be too low.
Another critical unintended consequence of Bill C-24 — the previous bill and
this bill, as was pointed out by Mr. Seidle in his presentation — was that we
may be turning political parties into empty shells. What I have to add to that
is the possibility that we may be also placing too high barriers to the new
entrants into the political process in Canada. For example, would a new federal
First Nations' party that has not fought in previous elections have an equal
opportunity to contest elections, given that it would not have the ability to
have access to the public subsidy, and therefore open up the possibility of a
Charter section 15 violation? I set this scenario as an exam question two years
ago in my constitutional law class. Most of my students concluded there was a
potential violation of the Charter. It did not surprise me that last Thursday,
an Ontario Superior Court judge agreed with them, and I guess myself, when he
ruled that excluding small third parties from access to the $1.75 public subsidy
did constitute a violation of the Charter.
Until today, I did not have access to the actual decision so I am just
quoting from The Globe and Mail article on the decision.
I consider that the existence of the threshold diminishes public confidence
in the electoral process and encourages a public perception that the threshold
exists only to benefit the major political parties, who alternate, from time
to time, in forming the government and are in a position to maintain it.
As my best students correctly concluded, this violated both section 13 and
section 3 of the Charter, the right to vote. We should take note of Justice
Matlow's description of what he thought the right to vote in section 3 of the
Charter entailed. He basically stated, as other Supreme Court of Canada
decisions have stated, that the right to vote is much more than the mere right
to enter a voting booth and mark a ballot that is counted in an election.
It is not beyond the realm of possibility that if this decision reaches the
Supreme Court of Canada, the court could strike down the whole electoral scheme
in Bill C-24, rather than just agreeing with the remedy ordered by Justice
Matlow, as there were substantial policy reasons why the government had the 2
per cent national threshold limit. This result could necessitate the wholesale
revamping of the public subsidy scheme and, indeed, then the scheme in Bill C-2.
I remind the committee of Mr. Seidle's statement that we are creating a
unique party system in Canada which relies overwhelmingly on public subsidies to
the extent of creating a state system of political parties.
In closing, I would like to ask you to examine the potential of other
unintended consequences in other parts of Bill C-2. In particular, I suggest you
examine how other issues relating to conflict of interest and ethics do not
undermine the critical need for establishing a culture of values and ethics in
the Public Service and Government of Canada.
You have heard similar concerns from former Ethics Commissioner Bernard
Shapiro in this area. Experience from both the public and private sectors around
the world have demonstrated it is not a surfeit of rules, audit committees and
lengthy mandated audit reports that is the best guarantee of ethical and
accountable behaviour. The experience of the private sector in the U.S. has
shown that the imposition of the Sarbanes-Oxley Act morass of legal compliance
rules, controls and audit requirements has not prevented some of the biggest
frauds since the Sarbanes-Oxley legislation.
Thought should be given in Bill C-2 to introduce the opportunity for the
Ethics Commissioner to promote a culture of values and ethics into the
parliamentarians and senior public office-holders through cooperative learning
exercises, partnerships and values building initiatives.
In closing, a persistent lesson that millennia of human governance has taught
us is that the constraints of values, virtues and moral courage are far more
enduring than the compliance of laws and that the seeking of perfection is the
enemy of the good.
Senator Zimmer: Thank you for your critical points.
Based on the research you have done on jurisdictions with higher or no limits
on individuals or businesses and trade union contributions and in light of the
possibility that Canadian federal elections, which you mentioned would become
more frequent in the coming years, what limits would you suggest on
Mr. Mendes: I would have liked the electoral offices of this country
to do an analysis of the existing law with the existing limits to see whether
they were adequate or working before any new limits were imposed. To my
knowledge, there has not been an analysis of the existing law. We should first
learn from ourselves before we learn from others as to what our experience has
been. I would say that should be the first step to learn what has been the
experience, good and bad, of the existing law.
Senator Zimmer: At this point we have no empirical evidence of that
Second, you make the point that consideration should be given to how Bill C-2
promotes cultural values and ethics. You mention that at the last part of your
report on page 8 and 9. You suggest mandating the Ethics Commissioner to offer
"cooperative learning initiatives, partnerships and values building
I wonder if you could expand on what the initiatives could entail and
assuming they have been implemented in other jurisdictions, give us an idea of
Mr. Mendes: Let us take Sarbanes-Oxley Act in U.S. as an example. In
that example, there is a morass of compliance rules, yet it does not stop some
of the biggest frauds. Many corporations have indicated that these things do not
stop. What you must do is to have knowledge learning sessions by every single
employee in the company to understand that it is not just legal compliance but
knowing the foundation of doing the right thing is values and ethics, not laws.
All the best business and law schools around the world show it is a culture of
values and ethics that protects against wrongful action more than compliance
Senator Joyal: I listened with great personal interest to your
presentation. When we read all the decisions of the Supreme Court of Canada, in
relation to the interpretation that they gave to the electoral act, the court
had an expensive interpretation of section 3 and section 15. In most cases, they
have twinned those two sections of the Charter of Rights and Freedoms.
It seems to me that if we apply the three questions of the Oakes test to the
prohibition of corporate financing, the first question is what objective is the
legislation trying to achieve? Of course, the court will read the introduction
of the act and the preamble or take into account the information document added
to the act. You know quite well how they try to understand the objectives of the
act. At the second step, they would ask the means taken to achieve that
objective. They would proceed through the ban of corporate financing. Third,
they want to discover if it is the minimum means to achieve the objective stated
in the first question. That is the normal reasoning of the Supreme Court to
conclude on the acceptability or nonacceptability of the limits and, in that
case, prohibition. Fourth, they would enquire as to the norm in a reasonable
democratic society. They would come back to the section 1 question of the
Charter. I suspect that they would check at the provincial level, because it is
in Canada, and then with the Western world where countries are recognized as
being democratic systems. We all know that countries outside of Canada have not
banned corporate financing. You cannot find solace to your question outside of
Canada. You would go to provincial governments and in the provinces of Canada,
two have banned financing and one is considering reopening it.
To me, a reasonable test of section 1 would conclude that it is not necessary
in a democratic system to ban corporate financing. We have had some small
parties come in to testify. I do not know if you had the opportunity to read
their testimonies, but some of them are contemplating challenging the
constitutionality of that specific section of Bill C-2 on the basis that it is
an undue burden on small parties although the court has recognized small parties
as an essential part to democratic life in Canada.
As I said in the Senate this afternoon, when I commented on the decision of
Justice Matlow that I read in full, I am leaning to the conclusion that this is
unconstitutional. This is a feel-good kind of proposal. Corporations do not vote
so they should not be allowed to participate in the financing process of
elections. As you said, if they do not support a political party, they can form
a third group and spend $150,000 during an election and involve themselves more
in the electoral process than if they would give $1,000 to a small party or
candidate or riding associations. The court would take into account all of that
before concluding that those sections are unconstitutional.
Mr. Mendes: That is the reason why I came, at this late stage, before
you because I had growing concerns that there were fundamental issues that were
not being addressed by many of the witnesses who appeared before you. I finally
decided that I could not sit idly by. I recently gave a two-hour lecture on the
Oakes test and all the points that you have raised.
The court would focus on the minimum impairment test, especially in the area
of freedom of expression. Chief Justice Beverly McLachlin has made a point of
saying that total prohibitions in the area of freedom of expression will not be
allowed, even in the case of harmful or deadly products such as tobacco. If you
are talking about allowing freedom of expression even in the case of commercial
expression, which most people want to ban, and decisions are clear that a total
ban on that would not be permitted, how much more so would it be in the most
protected and valued form of expression — political expression? That is where
the court would focus.
Senator Joyal: The court will put a lot of emphasis on the decision in
Harper v. Canada. As I said, a company or group of companies or corporation
could come together and intervene in an election or a referendum, which is even
more emotional, and spend up to $150,000 for instance in the province of Quebec
— 75 ridings times $3,000, which is the amount permitted per corporation during
an election campaign. In doing that, they would be intervening in the election
process and trying to influence public opinion. If that is legal, how can you
ban $1,000 per corporation to a candidate at the riding level? That does not
fly. The system must be logical.
Mr. Mendes: There are some serious issues with the rational connection
test for all the reasons that you mentioned, Senator Joyal. There does not seem
to be an underlying rationality when you compare the $150,000 limit with the
public subsidy with the total prohibition. There is no logical foundation,
especially given the potential for more frequent elections than we are used to
because of unstable minority governments. Speaking in a non-partisan way, are we
lending ourselves for all parties to create major difficulties for themselves?
Senator Joyal: I might have another question on the smaller parties
and the Matlow decision in Figueroa on removing the candidate threshold.
We discussed Bill C-24 in this committee. I do not remember whether Senator
Stratton was on the committee at the time but I believe that Senator Nolin was
in attendance. We raised the point that it establishes a threshold for small
parties for no reason for the objective of the legislation.
Mr. Mendes: That is why I was equally opposed to Bill C-24. That is
what my constitutional exam question was on — the constitutionality of the
previous proposed legislation. Not enough attention has been given to both Bill
C-24 and Bill C-2 and how they fit together and the potential for grave problems
that they can place before us in the entire area of political financing,
especially now, as you say, Senator Joyal, given the decision of Justice Matlow,
if it is upheld. I do not know whether it will be appealed. The foundational
public policy reasons for Bill C-24 are starting to fracture. This is serious.
It is time to look at the entirety of the political financing system in our
Senator Joyal: Am I not right that Justice Matlow presided over the
first court level in the Figueroa case? Justice Matlow brought down the
first decision in the Figueroa case, whereby the obligation to run 50
candidates was struck down. It was reversed at the appeal level but reinstated
at the Supreme Court of Canada.
Mr. Mendes: That is right.
Senator Joyal: He was the one who studied the Canada Elections Act in
the context of the challenge on the basis of the previous exclusion.
Mr. Mendes: In his decision, Justice Matlow refers to the familiar
face in the courtroom — Figueroa.
Senator Baker: I am interested in one particular question. I was just
looking through the headnotes of 13 cases in which the courts have referenced
your writings, Professor Mendes. They range from the Court of Appeal of Quebec
in two or three cases, the Court of Appeal of Alberta and the Court of Appeal of
Saskatchewan. Usually, where they have quoted you, I have noticed that there is
a red flag at the top. This means that the case was overturned but they are
using Professor Mendes at the appeal court that overturned a lower court. The
first case at the Federal Court of Appeal notes that in his instructive article,
"The Crucible of the Charter: Judicial Principles v. Judicial Deference in the
Context of Section 1," Errol P. Mendes points out that even in criminal law
cases where the state acts as singular antagonist, the Supreme Court has given
deference to Parliament on their choices.
My question to you, Mr. Mendes, is this: When you reviewed Bill C-2, what
struck you as the main point in the bill that you envision a court of appeal
making a determination on regarding section 1 of the Charter, for which they
will quote one of your articles again because you are recognized as the
authority? Could you give us a guess as to what section of this bill might end
up at either the Federal Court of Appeal or the Supreme Court of Canada where
your name will be emblazoned across the front again with a red flag?
Mr. Mendes: I believe that it would be on the issue that I present in
my brief, which is of deep concern to me for the future of all political parties
in this country: the linkage between the total prohibition on trade unions,
associations and corporations with the previous structure of the massive public
subsidy, which is creating dysfunctional political systems — "empty shells,"
as Professor Seidle said, and, as Senator Joyal has said, the fact that you can
just cloak yourself in a third party and suddenly your limit goes up to
$150,000. I realized when I listened to all the witnesses that none of them had
put all the pieces together. I had to come here and say that my profound worry
is that the whole thing could be declared unconstitutional.
Senator Stratton: Are you aware that the Province of Manitoba, my home
province, has banned corporate donations?
Mr. Mendes: Yes.
Senator Stratton: As well, Manitoba has put a cap on individual
donations. It seems to be working rather well. I know the provincial Progressive
Conservative Party has had to relearn how to fundraise, and it has done so quite
successfully. They have retired their debt and are in the black. It has not been
challenged in court, to my knowledge, in either case. The system seems to be
operating quite well in Manitoba.
Mr. Mendes: I know that, Senator. The difference one should keep in
mind is that the limit in Manitoba is $3,000.
Senator Stratton: Essentially, it is the same.
Mr. Mendes: It is my understanding, although I might be wrong, that
there have been fairly stable majority governments in Manitoba's history. I do
not think they have a history of minority governments. My concern is about when
we combine the different elements of Bill C-2 in the federal setting, where
there is the potential, given the reality of the Bloc Québécois, for a permanent
era of minority governments in Canada. The Manitoba analogy might not be the
appropriate one and could actually lead to our not realizing that we are
adopting a structure based on Quebec and, to a lesser extent, on Manitoba, which
is different in terms of the reality faced by the electorate.
Senator Stratton: We do not know that. However, if you go to Manitoba,
as a concrete example of success, it is there. There is not really a long
history of minority governments in Canada, either.
Mr. Mendes: The fact that there has not been cannot limit us to
preparing for what could be, especially given the reality now.
Senator Stratton: There is one instance.
Mr. Mendes: We have had quite a few elections in two years. Reality is
now creeping in, and we have to start addressing ourselves to that. I accept
that Manitoba has had the system; it has had a $3,000 limit. There has been no
litigation, but that does not mean there will not be some one day. That is my
response to you.
Senator Day: Mr. Mendes, given that we are trying to improve this
proposed legislation and get a system that will work and given that the
amendments with respect to political financing are so soon after Bill C-24 that
we do not have much history to look at that would drive the changes, could you
talk to us about the frequent elections and what you think we should do with
Bill C-2 to compensate or provide for the possibility of more frequent
Mr. Mendes: You have to look at the rationality of having a $150,000
limit for third parties when entities can combine themselves into third parties,
have that limit and therefore have as dramatic an impact on the election as we
saw with the free trade election. You have to reach an understanding between
that high limit and the present contemplated limit of $2,000 altogether plus the
absolute prohibition on companies. What major stopgap measure can you suggest in
this bill that would at least give some rationality to the different elements of
political financing? It is too late now in the deliberations to scrap completely
the political financing part of Bill C-2, but put in place some stopgap measure
with an additional proviso to examine the entire system, given the frequency of
elections, the possibility of unstable minority governments and the fact that
Justice Matlow may well be upheld on appeal and the underlying structure of Bill
C-24, on which Bill C-2 is based, may disappear.
Given the lateness of this intervention, my suggestion is to come up with a
rational structure. It could be the $5,000 limit of the previous bill or even
higher, depending on where your deliberations take you. However, it should be
regarded only as a stopgap measure with the understanding that there must be a
larger analysis of the reality of political financing in Canada.
Senator Day: Have you had a chance to think about or make any comments
in relation to the provision that there is a $20 maximum cash donation, and
after that, donations must be receipted?
Mr. Mendes: It is reasonable for governments, and I go back to Senator
Baker's question, to have a margin of appreciation to determine what is and is
not reasonable in terms of the small amounts of cash that could result in
malfeasance if raised higher. For those areas, government should be given a
margin of appreciation for the limit. I am not so much concerned about that as
with the overall structure of political financing as a whole to be compatible
with the foundational constitutional requirements of the Charter.
Senator Day: Several witnesses, especially from smaller parties, have
made two points. One is that they are not geared towards a populous approach,
only to their supporters. A witness from the animal rights party said they might
have contributions from only a few people, but those contributions might be
fairly large because their supporters believe in what the party is doing. He
asked whether that causes a problem with respect to accountability. They let
people know about it. How will they influence a government in an adverse way by
lobbying and advocating for animal rights and being able to sponsor programs
through individual donations? He said they are out of business with a limit of
Mr. Mendes: That was Justice Matlow's concern in his decision
regarding the public subsidy. His foundational concern about Bill C-24 is
whether we are allowing small parties to compete equally with the traditional
parties so that the political system does not become frozen. The foundation of
any democratic political system is to keep the system open enough so that it can
allow the political process to be renewed and refreshed. He was concerned about
such situations' leading to smaller parties not being able to establish
themselves, and he endorsed the broader conception of the right to vote as
meaning more than just putting your vote in a ballot box.
If the issues that he raised result in a freezing of the political process to
the established parties, yes, the courts would be concerned about that.
Senator Day: Your argument would be that that would support a higher
Mr. Mendes: Going back to the answer I gave Senator Zimmer, there
should be an analysis of what is right and what is wrong with the present
situation in terms of the $5,000 limit. Until you have that analysis, how can
you possibly say whether any other limit is right or wrong? It is absolutely
essential, if you do give a stopgap measure of more than $1,000, that you should
also add that there should be a profound analysis of what went right and what
went wrong with the previous regime.
Senator Day: Have you done any analysis of the current Elections Act
in relation to convention expenses?
Mr. Mendes: There again, practical issues must be taken into account.
If convention fees are more than $1,000, does that freeze out completely any
further contributions? I believe the Liberal Party faced that issue with its
leadership convention at the end of November. If convention fees did freeze out
other contributions, one might argue that the very holding of leadership or
political conventions was jeopardized by very low limits.
The Supreme Court of Canada has said that there are two ways to infringe
freedom of expression in this country. One is direct, intentional violations and
the other is unintended adverse effects on freedom of expression. Both would be
caught by the prohibition against undermining political expression in this
country. I am sure Senator Joyal knows of the Irwin Toy decision where
the court clearly said that not only intended but also unintended violations
could be caught under section 2 of the Charter.
Senator Day: Do you have any opinion as to whether convention expenses
should be included as political expenses?
Mr. Mendes: I am not an expert in that area, and you have heard from
the Commissioner of Canada Elections. I would leave it up to his greater
expertise to determine that.
Senator Milne: Mr. Mendes, I am going back to the third-party
provisions set up in the year 2000. Am I to understand that if I resigned from
the Liberal Party and formed my own party consisting of myself and my neighbours
on either side and called it the Lone Pine Tree Party, or something like that,
instead of being limited to $1,000 spending, we would be able to donate $3,000
to each of the ridings in our area and spend the rest of our $150,000 on
national advertising to say the government was rotten?
Mr. Mendes: That is pretty much true, but in the electoral district
you could not donate it.
Senator Milne: You could use it.
Mr. Mendes: Absolutely, yes. At least from the Harper v. Canada
decision, that is right.
Senator Milne: That is peculiar, when I am presently at the limit from
having donated to my own caucus expenses here in Ottawa, and then paying
convention fees, I am over the $1,000 limit, and I have not given a cent to my
Mr. Mendes: If someone were to go to court to say that you are
prohibited, let us say, from going to the convention and you claim that that is
an unintended violation of your right to engage in the political process, that
is a possible constitutional argument right there.
Senator Milne: Many senators I know are choosing not to go to the
convention for that exact reason.
Mr. Mendes: That is very interesting.
Senator Milne: They are over the limit.
Senator Stratton: I am curious, Senator Milne. You are saying that
your Senate caucus expenses are tax receiptable by your party?
Senator Milne: I do not know. I get some sort of a receipt.
Senator Stratton: Our caucus does not. It is considered our personal
expense, as I think it should be.
Senator Cowan: I assume that the public policy reason for imposing
limits is to prevent the perception or the reality that political parties or
candidates can be bought. That is the only reason for doing it. All of us would
agree that the amount of contributions we make ought to be disclosed, and it
seems to me that it is the disclosure that is the deterrent for excess
contributions. If you were a candidate and I was your fundraiser and I knew that
the cost of running your campaign in your riding was $75,000 and someone came in
and offered me $50,000, I would say that is completely unacceptable because that
is not a reasonable amount for one person to contribute towards an individual
However, this bill restricts it to what seems to me to be an unreasonably
small amount for someone to contribute. Even $5,000 is a small amount. Now, to
look at an even lower limit seems to me to be unreasonable.
I do not see a public policy reason for distinguishing between individuals
and corporations and unions.
Mr. Mendes: There is general agreement among the experts. You may have
heard from them that it is reasonable for a government to determine that large
corporate donations can affect rational and objective decision making by people
who should not be focused only on one special interest or one area of interest.
I think most experts, myself included, would say it is reasonable for
governments to impose limits on corporations and trade unions and associations.
Senator Cowan: Also individuals.
Mr. Mendes: Also individuals, to prevent undue capturing of
politicians by special interest. I think most people around the democratic world
would agree with that.
That being said, one must take into account the reality that in Canada the
vast majority of corporations are individuals who are incorporating for tax
reasons; they are no different from you and me. I read the statistics to you.
The vast majority of businesses in this country are very small businesses.
That is why I am pleading to look into untested assumptions. Yes, government
has a right to try to limit the undue influence of big corporations and big
trade unions. There must be some focus and some rational and proportional limits
on them. We must also take into account the small and micro enterprises that are
basically an incorporated form of individual enterprise.
Senator Cowan: Do you see any reason to distinguish between a cap for
an individual and a cap for a corporation? Is there any public policy basis upon
which you would make that distinction?
Mr. Mendes: Yes. History has shown that major corporations can have an
undue influence. I think government is legitimately able to cap those, whereas
individuals as a whole, other than very rich individuals, do not have the
ability to contribute the huge amounts of money that make them special interest.
For that reason, I think government does have a legitimate right.
Senator Cowan: I accept that there is a reason for putting a limit of
X dollars for an individual. If it is a reasonably low limit, whether $5,000 or
$10,000, why would you not have the same limit for a corporation?
Mr. Mendes: Absolutely. That is what I am suggesting. If you decide,
for example, to have a limit of $5,000 or $6,000, have the same limit for the
Senator Cowan: Can you see any public policy reason for
distinguishing, on that basis, if you have a reasonable limit?
Mr. Mendes: None at all. That is basically the thrust of my
presentation here. As long as you also make it clear to corporations, if you
were to go that way, that they should not and cannot. As Mr. Côté has argued
quite strenuously, they could do end runs around the legislation by contributing
the same amount individually in addition to having their employees contribute.
To me, that would be breaking the spirit and the letter of the law.
As long as you can arrange that, I am in agreement with you. If you have a
low enough limit of $5,000, $6,000 or whatever you decide, there should not be a
difference between individuals and corporations for the reason that I mentioned.
Senator Cowan: Did you have a look at the parts of the bill dealing
with the limitation periods for prosecutions and investigations?
Mr. Mendes: Yes.
Senator Cowan: Do you have any comments on those?
Mr. Mendes: I was afraid that you would ask me about other parts of
the bill that I do have some knowledge on and I could spend the next six hours
with you. The only issue I would refer to you to keep in mind is that the
Supreme Court of Canada has already said in the Askov decision that in
the case of criminal trials six months is a very long time. I gather the limit
here is ten years.
Senator Joyal: Summary conviction — it is not under the Criminal Code.
That is the distinction and the argument they use.
Senator Baker: Mr. Mendes is pointing out that under the Criminal Code
the limit is six months, and this bill extends the summary conviction offence to
Mr. Mendes, you are absolutely correct, as Senator Joyal would admit.
Mr. Mendes: I prefer to limit myself to that answer, in case you keep
me here forever.
Senator Cowan: You anticipated my final question. On page 8 of your
submission you ask us to examine the potential of other unintended consequences
which you do not have time to go into. As Senator Day explained at the
beginning, our job is to do what we can to improve the bill. As you are aware,
we have heard a number of suggestions from a number of witnesses, and we are
struggling with how we do this. All of us are in favour of the general thrust of
the bill but are concerned with the phrase "unintended consequences." Many
witnesses have complained that their particular organization or interest is
caught as an unintended consequence of some part of this omnibus bill, which was
put together very hurriedly and, not to anyone's surprise, does contain a number
of unintended consequences.
We would be grateful if you could provide us with other thoughts. I mentioned
the business about the limitation periods. If there are others we do have some
time this evening and we would be delighted to hear from you on those.
Mr. Mendes: I can briefly refer to a matter I heard when I was a
member of the audience, and that is the contingency plans. We should keep in
mind that there is a division of powers in this country. To my understanding,
contingency fees are a provincial jurisdiction — property and civil rights.
There is one example where you may intend, for very good reasons, to have the
provision in there, but you do not want to be undermined by the underlying
constitutional structure in our country.
Senator Cowan: Perhaps if there is time after the other senators'
questions, I can come back to the issue.
Senator Ringuette: The funding that political parties receive from
government is, in my perspective, dangerous if we look at a party state system
and how much political parties are funded by the general taxpayer revenue. One
could consider that that is not a voluntary contribution on the part of the
I believe in fairness and a balanced approach to the political and democratic
process. You said earlier, and it is true, that we do not have the benefit of a
complete analysis of what happened with Bill C-24, and now we have this new bill
that we must examine and try to improve.
Do you think that, in order to make some real improvement to Bill C-2, we
should also review the public subsidy per vote and balance that with the
political contribution from individuals, corporations, trade unions and third
parties? We have not looked at the entire picture. We are looking only at this
tiny picture, and it is blurred in regards to political financing. Please tell
me your best recommendation so that we can have a balanced system for a valued,
Mr. Mendes: I hear and understand the underlying issues that you are
raising in your question. I think that Justice Matlow's decision is a call for
us to do exactly what he is suggesting. If he is saying that the original public
subsidy scheme under Bill C-24 is unconstitutional, and he has offered a remedy
that may or may not be upheld in the Court of Appeal and the Supreme Court of
Canada, it is really a call to fully understand what went on with Bill C-24
before even getting to Bill C-2. For example, if his remedy was to give to all
small parties the public subsidy per vote received regardless of whether they
received 2 per cent, what does that do to the public subsidy scheme in terms of
accessibility? Does it satisfy completely their charter rights? Can one argue
that the Bloc Québécois, which is limited to one part of the country, is
receiving an unfair subsidy, as it does not have to contest across the country,
whereas all the others do? There are some foundational things to be discussed.
Senator Ringuette: As well as independent candidates.
Mr. Mendes: Yes. Justice Matlow has raised one issue, but by doing
that he has opened up many other issues to be discussed.
I want to return to the issue that if the present proposed limits in Bill C-2
stand, that again affects the Bill C-24 subsidy as now determined by Justice
Matlow. How does that link into the $150,000 limit for third parties? There is
an intricate structure. I was reticent to come before you, but when I realized
no one else was doing it, I felt I had to come before you to point out how these
other areas are linked in together.
Senator Ringuette: Yes. Money coming from the state to political
parties comes from the general taxpayer. Some could argue that that enforces
democracy, but some could also argue that it does not, because all taxpayers are
forced to contribute to political parties. They may or may not want to. I am
sorry. That issue is more blurred now for me than ever.
Senator Nolin: My colleague raises an interesting question about that
balance between the individual donation and the state. Under the old system we
had for many years, the public donation is built on the donation of the
individual; a part of your donation is a tax break, and there is a limit to
that. Given your answer and the intriguing question put by my colleague Senator
Ringuette, was that system not the best?
Mr. Mendes: Yes.
Senator Nolin: Period. Forget the rest.
Mr. Mendes: I am not here to criticize Bill C-2. I am here equally to
criticize Bill C-24.
Senator Nolin: When we dig into Bill C-24, we have to ask where the
end is. We need to put a cap on it.
Senator Joyal: We never knew at the time. I am sorry for interrupting.
Senator Nolin raises a very important issue. We raised it but received no
answer. We cannot measure the impact on the basis of unintended consequence that
would have for the money raised by the parties. We now have figures and charts,
as provided by Professor Seidle. Another element of unintended consequence is
that as more taxpayers support the system and it becomes more a public system,
that is, a system financed at a greater percentage from public money, then the
government has all the more reason to move in and regulate. Therefore, you
create a situation whereby the political parties are now an extension of a
government agency. That is a very important change in the system.
Mr. Mendes: The most astonishing part of that analysis is the fact
that the Bloc Québécois, if I am correct, is receiving almost 100 per cent of
Senator Joyal: It is 420 per cent.
Senator Nolin: We do not want to get into the specificity of the Bloc
Québécois. Senator Ringuette asked about when the public purse should become
involved and to what limit or what extent. The decision you mentioned raises the
question of limits. There should not be limits, if I understand that
Mr. Mendes: There should be?
Senator Nolin: There should not be. If we want the system to be fair
for everybody, why limit it to 2 per cent? Why should a party be limited to 2
per cent to have access to that money? That is the kind of question. My question
is whether that old system was probably the best one.
Mr. Mendes: That is right. You have an enormous political issue. You
have people in the other place demanding that you send this bill back right
Senator Nolin: We are used to that. This is not the first time, and
probably not the last.
Mr. Mendes: You obviously must do something. The issues that have been
raised so far are so enormous that you will not be able to do it in the next
week or two. To satisfy the other House you have to think of some stop-gap
solution, but with the proviso that you have a much larger analysis of all the
related issues. Justice Matlock's decision will obviously demand that. You are
in a very difficult situation.
Senator Nolin: The driving philosophy was undue influence in the
system. The state is putting a lot of pressure on a very select number of
political organizations and not on the others. That is a problem; that is not
Mr. Mendes: That is a huge problem.
Senator Nolin: Speaking of influence, it goes both ways.
Senator Joyal: You have raised the issue that the new system, based on
a per capita amount of money on the basis of a vote, creates an extraordinary
situation whereby the Bloc Québécois's funding has increased by 420 per cent in
comparison to what they were raising before.
When we voted in Bill C-24 we questioned ourselves on the basis of one dollar
one vote, and we were answered by the Department of Justice at that time that it
was the only way to respect the Charter, by not making a distinction between
voters and the amount of money.
Senator Nolin will remember that I had calculated that instead of having a
simple equation of one dollar per vote, if you had the equation of one dollar
one vote and the number of candidates you run nationally, the result was more or
less what they were raising before through the usual approach. It varied by a
I put that to the test with the Minister of Justice at the time. I told the
minister that the equation I proposed is closer to what we know already. It
takes into account that if you run 308 candidates across the country you have
more costs to incur and you must spread your revenue across the country. If you
run a slate of candidates only in one province, you concentrate all your
expenses and exercise influence on the result, which is much greater in
comparison with the responsibility that you have to play at the national level.
I was told that that proposal would probably be in violation of the Charter. I
am not convinced at all.
What do you think would be the evaluation of such a proposal?
Mr. Mendes: I think they should have listened to you. I do not think
it would have been a violation of the Charter. There are enormous national unity
reasons why you should have been listened to. Need I say anymore? I think that
was very bad advice. I am not afraid to say that.
The Chairman: On page 3 of your brief I was interested in the way you
were using the RJR-MacDonald Inc. precedent. You read only from the
bottom section of that quote:
A full prohibition will only be constitutionally acceptable under the
minimal impairment stage of the analysis where the government can show that
only a full prohibition will enable it to achieve its objective. Where, as
here, no evidence is adduced to show that a partial ban...
The point is that the court ruled in favour of the tobacco companies because
the government tendered no evidence that a full prohibition was needed.
As for the ban on union and corporate contributions, there could be
compelling evidence on the need for that. In this case they decided the way they
did because they called no evidence.
Mr. Mendes: That was an issue in the court, and both the Chief Justice
and Justice McLachlin, as she then was, and another judge pointed out the lack
of proper evidence put forward to the court. My question back to you is about
the evidence under Bill C-2.
The Chairman: I am not here to answer the evidence. The point is, once
the proper evidence is adduced, there could very easily be a different result,
and the court in this case left the door wide open for that with their explicit
language, and I quote from your brief:
Where, as here, no evidence is adduced to show that a partial ban would be
less effective than a total ban, the justification required by s. 1 to save
the violation of free speech is not established.
Therefore, the door is open.
Mr. Mendes: Yes. Keeping with one of the senator's comments, they
would look at comparable jurisdictions to find out if there has been what they
call the mischief which a total ban was designed to achieve.
The Chairman: We do not know until they have the evidence. That is my
Mr. Mendes: With respect, part of being a legislative committee is to
see whether that evidence can be produced by looking at comparative
jurisdictions or provincial jurisdictions in this country.
The Chairman: That is not necessarily the role of a legislative
Senator Zimmer: I have one further question in supplementary to what
Senator Day asked.
Some say the reason the bill limits corporate donations to $1,000 is that
otherwise they could buy undue influence. Some companies spill more than $1,000
when they drink. It just is not a factor.
Using the same logic, in the past two and a half years with the new bill and
Bill C-24, I have been approached many times by people saying that if I do not
do certain things or pass certain bills they will not vote for my party. My
point is that many times they raise it. They have to eliminate the $1,000
because it could buy undue influence. By the same analogy, people are saying
they will not give me my vote. Therefore, are we saying we should eliminate the
vote? Of course the answer is no.
They always use the logic only for money, but people can buy your undue
influence just as much, if not more, with the vote. Would you agree with that?
Mr. Mendes: That is why one should look at the rationale of limits and
analyze whether they are rational and proportionate. If the existing $1,000 can
buy influence, I think we are in a sorry state. As you say, apart from people
using unethical means to gather $1,000 from every single employee, $1,000 should
not influence any major decision making in this country. If it does, we are in a
very sorry state. That would be my answer to you.
Senator Zimmer: Second, they could use the vote in the same way.
Mr. Mendes: Absolutely. There are many ways to try to exert undue
influence on decision-makers — not only money.
Senator Zimmer: Some communities gather together and are able to do
Senator Day: I would like to touch on the public-funding issue and the
comment you quoted about shell political organizations. There is nothing going
on at the riding level and everything is happening where the money goes to the
We have heard from several small parties again that it is very burdensome for
them. That is why I was asking the question earlier about the $20. The small
parties pass the hat around at meetings. It is difficult for them to give
receipts for $25 donations.
In your view, would it be appropriate to have special rules for smaller
organizations than larger organizations or do the rules have to be the same for
all political parties?
Mr. Mendes: In general, you must be cautious about having different
rules for different parties. There are ways you can accommodate smaller parties
through perhaps a relationship with the Chief Electoral Officer for dispensation
in terms of reporting periods. However, in general, there must be uniformity to
ensure that people are not abusing the electoral systems for their own purposes.
Senator Day: Then we must ensure that the rules we have are not
oppressive to the smaller organizations.
Mr. Mendes: That is correct.
Senator Day: That is what we are trying to do in this analysis.
How do you react to the comment that corporations do not vote and therefore
it is fine if we exclude them from the political process?
Mr. Mendes: I urge you to look at the statistics from the Industry
Canada website. That statement assumes that all corporations are big. However,
80 per cent of Canada's small firms have fewer than five employees; the majority
of corporations in this country are essentially incorporated individuals, with a
few employees. I question whether that assumption should stand, rather than
having a more sophisticated and analytical examination to find a limit between
$1,000 and no total prohibition that is a reasonable limit for both individuals
Senator Day: In Bill C-2, there is a provision that prosecutions will
be sent to a new director of public prosecutions. Have you had any opportunity
to think about that? Can you comment on that?
Mr. Mendes: I wish I could say no — I do not want to comment on that.
Frankly, I worry about whether it was necessary, given that there was already
independent prosecution authority in the Department of Justice.
Again, it is an area where I think the government has decided to do this. I
think we should see whether or not it will work. It is something they are very
keen on doing, but I think there should be a time limit to see whether or not it
will work. In the end, it will be interesting to see how much work that office
If it does not have enough work, there will be a question of whether keeping
it separate is useful. It has created enormous upheavals in the workings of the
Department of Justice. It will be interesting to see how it works out in
practice and whether there is enough work for it to do.
Senator Day: Once you create the structure, is there not the danger
that winding it down will be disruptive as well?
Mr. Mendes: Absolutely; that is the case with many things that are
being wound down or put up at the moment.
Senator Cowan: To go back to the point I made earlier about additional
issues that you may have had a chance to look at and that would help us in our
efforts to improve this piece of legislation, I think you made a number of
useful suggestions in several areas. I wanted to give you an opportunity to give
us any further thoughts or comments you had on other parts of the bill.
Mr. Mendes: My overall comment is that, as I mentioned with the
political financing, you have a major challenge in front of you; the other House
is expecting you to deliver this back in a short space of time. There could be a
whole range of areas in the bill that could work but may also have unintended
I would plead with you to keep an eye on the area of political financing, and
the whole area of codifying the conflict of interest and code of ethics rule,
which could, as Mr. Shapiro testified before you, lower the threshold rather
than increase it.
As I mentioned, values and ethics are not about minimums, but rather about
maximums, about creating a culture of integrity and ethics. The private sector
has learned that big time and the public sector is learning it too.
Think about what additional structures you want to propose to create this
culture of ethics and accountability, both in the political arena and in the
public service of Canada. It is critical. If you focus only on compliance, you
may end up in a worse situation than previously. Think about how you would
prepare to have additional measures to create this culture of ethics and
I worry about the impact the bill will have on several areas. I know you have
had several discussions on the single ethics commissioner for the Senate and the
House of Commons. Without being forced to stay here for much longer, one of the
things that I have mentioned to others is that there is a Supreme Court of
Canada decision in the New Brunswick broadcasting case that says that
parliamentary privilege is part of the Constitution of Canada. Therefore,
nothing can interfere with your function as a deliberative body, both in the
House of Commons and in the Senate.
If anything in the bill interferes with your parliamentary privilege, you
should pay careful attention to it. Examine whether the single ethics
commissioner does affect the way you function as a deliberative body.
Senator Cowan: Do you have a view on that?
Mr. Mendes: Yes, I do. I think that if the Senate is to be maintained
as an independent deliberative body, some thought should be given to how, if you
have a single ethics commissioner, the functions of that office will be separate
for the Commons and for the Senate so that you are allowed to continue to
function as an independent deliberative body separate and apart from the House
of Commons. Maybe there could be a division of functions — one office but
Senator Cowan: The proposal is a single officer.
Mr. Mendes: I think the political imperative is leaning that way.
Again, the timeline is short. As Senator Oliver has mentioned, you have to
deliver this back to the other House shortly. Even if it is a single ethics
commissioner, think about having separate functions to allow you to continue to
have your independent deliberative functions.
Senator Cowan: Though I was not here at the time, I understand this
was a major issue and there was a bit of a standoff between the previous
government and senators who felt strongly that it was necessary to have an
independent ethics officer in order to maintain that parliamentary privilege you
Mr. Mendes: I think Senator Oliver is an expert in this area, so I
will defer to his expertise. I think creative methods can be devised. Even if
you do have a single officer, have separate, distinct functions so that you
maintain your independence as a deliberative body.
The Chairman: Professor Mendes, on behalf of the committee, thank you
very much for coming here tonight and sharing your views on many topics.
The committee adjourned.